Brian Zinchuk is editor and owner of Pipeline Online
Premier Scott Moe in Prince Albert on Aug. 26. Government of Saskatchewan screenshot
PRINCE ALBERT – When it comes to this trade war, placing export tariffs on our oil and potash is not a great idea. An export tax is like a tariff, but paid to the government of the exporting country as opposed to the company receiving the imports. Or as Google puts it, “Export Tax: Charged by the home government when goods or raw materials are shipped out of the country. Tariff: Charged by the domestic government when foreign goods are brought in.”
Taxing our own energy exports is not going to help, especially for Eastern Canada, he explained on Aug. 26.
That was the thrust of Premier Scott Moe’s comments on Aug 26 with regards to the ongoing trade war with the United States. More and more voices, from former Alberta Premier Jason Kenney to callers on the Evan Bray Show have suggested that Canada should use its oil production for leverage in the escalating trade war.
In a 19 minute speech to a press conference in Prince Albert, with his cabinet standing behind him after a cabinet meeting, Moe took a different approach, and he made several subtle and not-so-subtle digs at the previous Justin Trudeau-led government, particularly when it comes to the failed Energy East Pipeline.
Moe said, “What we as a province cannot and will not support is any kind of export tariff on our natural resources or any of our resources that are being exported to the U.S. or through the U.S. to other areas of the world.
“What we have faced, and what those very industries have faced, over the course of the last decade or better are some very flawed policy discussions and flawed policy implementations in our nation for far too long.”
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Potash
“Let me start with the potential suggestion of an export tax on potash. Saskatchewan, in the not too distant future, will be providing half of the world’s potash. That would be a tremendous economic hit to our province and to our nation. First, Canadians would lose jobs. Second, farmers on both sides of the borders would pay more for that crucial fertilizer. Third, the United States of America most assuredly would switch to buying potash from other nations around the world, nations like Belarus, for example. We would lose a long-term customer to some degree, and indirectly, I think it’s fair to say there are much closer nations that will not deal with a country like Belarus when it comes to potash procurement.
“This would be a tremendously flawed policy on behalf of Canadians.
“We today in the potash industry are using all, virtually all North American ports to ensure that we can get that product to the world. This again is due to a flawed policy in Canada when it comes to our port governance, in particular the structure of the board at the Port of Vancouver, which is not representative of the three prairie provinces that export the bulk of the product out the port of Vancouver.
“We are restricted due to those policy decisions that have been made that are that are utilizing port capacity in Canada to export other products from other areas of the world and to import other products from other areas of the world, thereby restricting our ability to export more products like potash out the port of Vancouver.
“We have asked for that structure to change, the board structure at the port to change, to prioritize the Canadian economy, to prioritize the Prairie provincial economy, so that we have true access to the world through an efficient port system, and ultimately build that industry for years into the future.
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Oil
“Similarly, we cannot in any way support the adding of export tariffs on a product like oil. Again, it would be an unsustainable hit to our Canadian economy and, in particular, our Saskatchewan and Alberta economy. Canadians would lose jobs immediately. We, as a nation, would lose investment immediately.
“And I would put forward that an export tariff on oil would have a far greater impact on those that are living in Eastern Canada than it would even on those that are directly working in the energy industry. Twenty to 50 per cent of Canadians’ refined petroleum products, our diesel, our gasoline, is produced through products that are produced in Western Canada, travel through the United States of America back into Canada, to be refined and utilized. An export tariff on that Canadian Western oil would most assuredly result in a much higher price on gasoline, largely in eastern Canada.”
Here he referenced the failed Energy East Pipeline Project, which would have allowed Western Canadian crude oil to transit all the way to Ontario and eventually New Brunswick on an entirely Canadian route. That pipeline was originally planned to be in service by December, 2018, but never proceeded as TC Energy pulled the plug, citing the federal government’s moving of the goalposts on regulatory issues.
Here’s why it’s important: The significance is that currently Central Canada gets much of its oil from Western Canada, but it does so via the United States. The Enbridge Mainline (which ships nearly all of Saskatchewan’s oil production for export save the small amount that goes by rail) goes through North Dakota, Minnesota and Wisconsin to its terminus at Superior, Wisconsin (the very western tip of Lake Superior.) From there the Enbridge Lakehead system sends some of that oil through Line 5, passing through the upper and lower peninsulas of Michigan to Sarnia, Ontario. Line 6 goes to the south end of Lake Michigan and via other pipelines hook around through the lower peninsula of Michigan and also terminates at Sarnia. If Energy East had been built, with 1.1 million barrels per day of capacity, it could have eliminated the dependence on the American route to get our oil to Central Canada. But since it wasn’t built, and since then, Michigan has been pushing hard to shut down Line 5, Ontario and Quebec could find themselves cut off from Canadian oil.
Energy East map. National Energy Board/Canada Energy Regulator
And if this trade dispute leads the U.S. to turn off the taps to our own oil, they have a crucial bargaining position. If Canada in any way cuts off or places an export tax on oil going to the U.S., the Americans can just as easily cut off or tax our own oil going to our own country via the U.S.
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Moe said, “Again, this is only a function of a flawed policy discussion that we have had in this nation over the course of the last decade or better, where we see those very, in all too often, those very same individuals that are promoting export tariffs on a product like oil, 10 years ago, were the very same individuals standing up and saying we should not build important energy security infrastructure like the Energy East Pipeline.
“Flawed policy 10 years ago, flawed policy today. We should not make the same mistake twice.
“Our support for Canadian counter tariffs, when they we do support Canadian counter tariffs when they are focused when they are targeted, and more importantly, they are in place for the short term, and they are making every effort to bring our American partners back to the table and for us to return to that negotiating table so that we can find an agreement, find an agreement and move forward, and I think this is a point that everybody can agree is the end goal of everything and should be the target of everything that we do.
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Should we pull American booze from the shelves?
“But in the meantime, given the increased tariffs that the United States of America has put on Canadian and Saskatchewan goods, given the counter tariffs that are in place, we need to protect ourselves, and I know there’s been many that have been asking if Saskatchewan is going to make changes with respect to American alcohol that is being made available in this province. And our government has decided throughout this that we want to leave the choice with the people of Saskatchewan. That is a very important core value for this government to allow Saskatchewan people to make their own choice. And we believe that that ability to not have government in your life to the degree possible is a very core value of the families that live here, and I would say that Saskatchewan people are choosing, American alcohol sales in our province are down 40 percent, and I think that that actually sends a much stronger message than any government-ordered ban that could be put in place.
“The sale of Saskatchewan-made products has increased at the very same time. So while we see Saskatchewan residents walking away from American products and choosing Canadian-made, of which we encourage them to do, if and when we take any measures in this province, the goal of those measures is one: return to the table with deliberate and intentional measures, and find our way to a negotiated trade agreement.
“But as I said, we do also need to defend ourselves. So on August 22nd, things changed in this province, with respect to alcohol procurement, and in particular Saskatchewan alcohol being exported to the United States of America, there was a 50 per cent tariff that was applied to Canadian alcohol exports into the U.S. And so, on September the eighth, Saskatchewan will reciprocate that tariff on American alcohol that will come into our province.
Moe also spoke of the significance of using Canadian product and companies in procurement for both public and private projects.
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Data centres
He spoke of how “Bell Canada is 100 per cent a Canadian company, and it is building the largest data center in Canada as we speak, there are 1000s of individuals that are working on the construction of that project today. There are over 800 long-term careers in security, in logistics, in maintenance, in hospitality that are going to be a direct result of that investment in Saskatchewan, and we believe that that Bell Canada data centre will be good for our province, providing those jobs for workers across Saskatchewan and providing that economic security for families.
“And we’ll be announcing very shortly in the next 24 hours or so the guidelines that the government has been following and has established for any future data centre projects and that those investments that will come to our province, but I can tell you today that one of the highest priorities and requirements in the Government of Saskatchewan, considering additional data center investment in this province, is that it is a Canadian proponent like Bell Canada.”
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Flawed policy on pipelines
Moe continued, “As I said earlier, Canada, we, have put ourselves in a very vulnerable position today, partly due to flawed policy that has blocked projects in this country that have often gone ahead in the United States of America. Projects like expansion to our port facilities that can ultimately provide the opportunity to expand our economy and attract investment in places like the potash industry, partly due to flawed policy discussions around how we can create true energy security across Canada by important nation-building energy projects like the Energy East Pipeline or something of that nature.
“In doing so, and by implementation of that flawed policy, we have given up some of our economic security. We certainly have given up some of our energy security, which is becoming evident today, and ultimately, putting at risk our very sovereignty.
“We should not make that mistake or any of those mistakes again in the future. We need to do better.
“We need to do better as Canadians, building our domestic policy so that we can build our food security, continue to expand our energy security to other Canadians and to countries around the world, and ultimately continue to expand our economic security and our national sovereignty and the sovereignty that we contribute to the continent of North America. We are here as a government to support and defend Saskatchewan and Canadian businesses at every step. We are here to be very intentional and direct in our decisions, and at times that will involve reciprocal action.
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“But we are very intentional in our goal, which is for our American counterparts and our Canadian government to return to that negotiating table, so that we can find a path forward to a trade agreement that is going to benefit the North American economy and benefit families on both sides of the 49th parallel.
“We also want to ensure that workers continue to be supported during this very unstable and uncertain time. The federal government has announced support measures for workers and for businesses, and those supports, I would say, need to be set up, and we will continue to work with the federal government, so that they can be delivered in such a way that actually supports and helps those families that are impacted by either the U.S. tariffs or our Canadian counter tariffs.”
“So, while we support these countermeasures, we also understand that they are going to harm businesses, workers, and families-not just in Canada, but also in the United States. It’s not the course of action that we would have ever hoped for. It’s not the course of action that we want to be on, but unfortunately, it is action that needs to be taken at this time.
“The best path forward for Canada and the United States of America, for Canadians and Americans, is for both of our economies to move forward with a free and fair trade agreement, so that we can ensure that we have a sovereign continent.
“We will all have choices to make in the days, in the months, and hopefully not the years ahead. There is no road map for what we are currently facing in this nation or on this continent, but I would commit this government to this: that the Saskatchewan government will be listening to Saskatchewan business owners, to Saskatchewan workers, and most importantly to the families that live here. Listening, and we are going to act on your behalf to make the best decision that we can at a very uncertain and unprecedented time. So I will close how I started with some words from the former prime minister from Prince Albert, Saskatchewan, with a quote, and I quote: “One Canada, where Canadians control their own destiny.”
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