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Tories face rising water pressure
ERIC REGULY
It had to happen. The water export issue is back and the federal government, zombie-like, seems destined to sleepwalk into a deal that may have gruesome economic and environmental consequences for Canada.
Canada does not export water in bulk form, via pipeline or tanker, to the United States, in spite of various private sector efforts to open the spigot. If you're American and you want Canadian water, you have to buy it in plastic bottles with fancy labels. That's about to change. At least that was the prediction made last month at the Global Business Forum conference in Banff. There, Paul Michael Wihbey, president of a Washington consultancy called GWEST -- the Global Water and Energy Strategy Team -- said "it is nearly inevitable that bulk water exports from Canada" will occur within the next "two to five years." Former Alberta premier Peter Lougheed has said the same.
GWEST (which has a research alliance with Calgary investment bank FirstEnergy Capital), has been a close observer of the politics surrounding Canada's sporadic water export eruptions for years. It trots out the usual arguments in favour of exports. Canadians have much more water than they need; Americans have much less; water is renewable (though some scientists disagree on this); trade it like any commodity and the exports could deliver Canadian governments and investors a Niagara of cash.
Specifically, GWEST thinks a water pipeline between Manitoba and Texas could be built for $4-billion (U.S.) to $9-billion. By coincidence (or not) Paul Cellucci, the former American ambassador to Canada, last month called for bulk water to be traded on the open market.
The Stephen Harper government has not pronounced on water exports, or admitted there are no national water rules beyond the Canada-U.S. agreement to prevent water diversions from the Great Lakes. But if the Tories have made one thing clear in their short time in office, it's that Canada will align itself with American interests, as it has in Afghanistan and the Middle East. Under the last Tory government, Canada gave up any notion of energy sovereignty. Why would the latest batch of Tories resist doing the same with water? What the United States wants, the United States usually gets.
Canada has been under pressure to sell water to the United States for decades, and some of the pressure has come from Canadians. Shortly after he was appointed Canada's chief trade negotiator, in 1986, Simon Reisman (quoted in the 1988 book Water and Free Trade, edited by resources economist Wendy Holm) said "water will be the most critical area of Canada-U.S. relations over the next 100 years." He was a strong proponent of bulk water exports, which "would be able to reap enormous economic benefits for this country."
Then came the infamous now-you-see-it-now-you-don't water exclusion in the Canada-U.S. free-trade agreement. During the negotiations, water exports were off the table, that is, water was special and would not be treated as a tradable good like oil. Mysteriously, the exemption did not make it into the final draft.
In short, this appears to mean that once NAFTA-protected water exports start, they can't be stopped, at least without potentially onerous financial penalties. Since then, several Canadian and U.S. companies have tested federal and provincial water export policies and laws, or lack thereof. For various reasons, each case failed. Mr. Wihbey thinks another test is inevitable soon.
Environmental concerns aside -- it's an open question whether Canada even has a surplus of water -- what's wrong with water exports? Ask the Canadian auto industry or the Alberta oil sands companies or any manufacturer that depends on plentiful supplies of cheap water (most do). They operate on the assumption that they have the long-term right to use that water. Now imagine that water becomes a tradable good under NAFTA. All of a sudden, Canadian industry would compete internationally for water supplies they had taken for granted. That means they would be competing domestically as well, because every litre that leaves Canada is one less litre available to supply Canadian needs.
Canada's farmers have already figured this out.
They are terrified of water exports. More than 200 farming groups across Canada have endorsed a resolution to exempt water from NAFTA. Alberta's farmers already feel threatened by the oil sands, whose appetite for water has gone from the voracious to the obscene. It takes about four barrels of water to make one barrel of oil from the oil sands.
Water is a vital economic tool. Exporting water is tantamount to exporting jobs. Mr. Wihbey says businesses in Texas are already struggling to find water supplies and may have to leave the state if they come up dry. They're welcome to come to Canada. Or we can build a water pipeline to Texas to allow them to stay put, and fill their pools too.
Relinquishing water rights to NAFTA means relinquishing the sovereign right to manage Canada's resources. In a world of scarcer and scarcer reserves of fresh water, water is the most valuable economic tool this country possesses. It can be used to attract new industries. Or it can be exported to build industries elsewhere.
ereguly@globeandmail.com
ERIC REGULY
It had to happen. The water export issue is back and the federal government, zombie-like, seems destined to sleepwalk into a deal that may have gruesome economic and environmental consequences for Canada.
Canada does not export water in bulk form, via pipeline or tanker, to the United States, in spite of various private sector efforts to open the spigot. If you're American and you want Canadian water, you have to buy it in plastic bottles with fancy labels. That's about to change. At least that was the prediction made last month at the Global Business Forum conference in Banff. There, Paul Michael Wihbey, president of a Washington consultancy called GWEST -- the Global Water and Energy Strategy Team -- said "it is nearly inevitable that bulk water exports from Canada" will occur within the next "two to five years." Former Alberta premier Peter Lougheed has said the same.
GWEST (which has a research alliance with Calgary investment bank FirstEnergy Capital), has been a close observer of the politics surrounding Canada's sporadic water export eruptions for years. It trots out the usual arguments in favour of exports. Canadians have much more water than they need; Americans have much less; water is renewable (though some scientists disagree on this); trade it like any commodity and the exports could deliver Canadian governments and investors a Niagara of cash.
Specifically, GWEST thinks a water pipeline between Manitoba and Texas could be built for $4-billion (U.S.) to $9-billion. By coincidence (or not) Paul Cellucci, the former American ambassador to Canada, last month called for bulk water to be traded on the open market.
The Stephen Harper government has not pronounced on water exports, or admitted there are no national water rules beyond the Canada-U.S. agreement to prevent water diversions from the Great Lakes. But if the Tories have made one thing clear in their short time in office, it's that Canada will align itself with American interests, as it has in Afghanistan and the Middle East. Under the last Tory government, Canada gave up any notion of energy sovereignty. Why would the latest batch of Tories resist doing the same with water? What the United States wants, the United States usually gets.
Canada has been under pressure to sell water to the United States for decades, and some of the pressure has come from Canadians. Shortly after he was appointed Canada's chief trade negotiator, in 1986, Simon Reisman (quoted in the 1988 book Water and Free Trade, edited by resources economist Wendy Holm) said "water will be the most critical area of Canada-U.S. relations over the next 100 years." He was a strong proponent of bulk water exports, which "would be able to reap enormous economic benefits for this country."
Then came the infamous now-you-see-it-now-you-don't water exclusion in the Canada-U.S. free-trade agreement. During the negotiations, water exports were off the table, that is, water was special and would not be treated as a tradable good like oil. Mysteriously, the exemption did not make it into the final draft.
In short, this appears to mean that once NAFTA-protected water exports start, they can't be stopped, at least without potentially onerous financial penalties. Since then, several Canadian and U.S. companies have tested federal and provincial water export policies and laws, or lack thereof. For various reasons, each case failed. Mr. Wihbey thinks another test is inevitable soon.
Environmental concerns aside -- it's an open question whether Canada even has a surplus of water -- what's wrong with water exports? Ask the Canadian auto industry or the Alberta oil sands companies or any manufacturer that depends on plentiful supplies of cheap water (most do). They operate on the assumption that they have the long-term right to use that water. Now imagine that water becomes a tradable good under NAFTA. All of a sudden, Canadian industry would compete internationally for water supplies they had taken for granted. That means they would be competing domestically as well, because every litre that leaves Canada is one less litre available to supply Canadian needs.
Canada's farmers have already figured this out.
They are terrified of water exports. More than 200 farming groups across Canada have endorsed a resolution to exempt water from NAFTA. Alberta's farmers already feel threatened by the oil sands, whose appetite for water has gone from the voracious to the obscene. It takes about four barrels of water to make one barrel of oil from the oil sands.
Water is a vital economic tool. Exporting water is tantamount to exporting jobs. Mr. Wihbey says businesses in Texas are already struggling to find water supplies and may have to leave the state if they come up dry. They're welcome to come to Canada. Or we can build a water pipeline to Texas to allow them to stay put, and fill their pools too.
Relinquishing water rights to NAFTA means relinquishing the sovereign right to manage Canada's resources. In a world of scarcer and scarcer reserves of fresh water, water is the most valuable economic tool this country possesses. It can be used to attract new industries. Or it can be exported to build industries elsewhere.
ereguly@globeandmail.com