| Submit your comments on this article |
| Great White North |
| Canada threatens to divert U.S. oil imports to Chicoms |
| 2005-10-20 |
| From East Asia Intel, subscription req'd. Canada might restrict its crude oil exports to the U.S. in favor of sales to China as retaliation in a longtime trade dispute, Prime Minister Paul Martin hinted in an early October speech in New York. The dispute has been simmering for years but boiled over in May 2002 when the U.S. imposed 27 percent duties on Canadian softwood lumber. The World Trade Organization recently upheld the American contention that Canadian exports were subsidized and could damage U.S. industry. But WTO ruled that the American anti-dumping fees were not legal. The U.S. has collected some $5 billion and distributed it to American producers. So if the WTO ruled in favor of the US on the Canadian softwood dumping issue, and said that US companies were not allowed compensation, then the only thing that was accomplished is that the WTO said that Canada was wrong, nothing else, no consequences. Martin and other Canadian government leaders have been careful not to directly link the softwood conflict to any oil punishment. But when Chinese President Hu Jintao arrived in Ottawa for a four-day visit in September, it came on the heels of U.S. Treasury Secretary John Snow's survey of Alberta's oil production. Link but no link, heh heh. Beijing has been working to transfer control of Husky Oil from its favorite Hong Kong billionaire, Li Ka Shing, to one of its government oil companies. And last year China announced it was willing to invest heavily in oil sands reserves, which make Canada, now the world’s No. 7 producer, potentially one of the world’s largest and most stable energy sources. Li Ka Shing's company, Hutchison Wampoa fronted for the Chicoms. They also have the port contracts at both ends of the Panama Canal, among other things. The Chicoms are thinking long term grand strategy. Just days after Martin’s speech, Canada’s Acting Natural Resources Minister John McCallum conferred in Beijing with the presidents of two of China's largest state-owned oil companies. McCallum said China could be importing 400,000 barrels of oil a day from Canada within seven years. He called for quick implementation of the almost-unnoticed declaration of a Canada-China "strategic partnership" announced during the Hu visit. If Canada is not careful, the Chicoms will own them, through systematic business acquisitions. This does not bode well for the US. "This is not a threat, and there is no linkage," McCallum said. "I am saying that Canada is pursuing its national interest to sell our energy resources and our other resources all around the world to get the best price and the most secure markets that we can ... The government is saying that if the U.S. doesn't respect NAFTA [North American Free Trade Agreement] rules on wood, then what does that mean for NAFTA rules in other areas, including energy?" This could cause the US to rethink the routing of the proposed Alaska natural gas pipeline, a HUGE projet. There are two proposed agreements for Canadian transit to the Lower 48 states, and one Alaska route to a LNG terminal in Valdez. Complex trade relations between the world’s two largest traders would still present many complications to a closer Canada-China energy relationship. Oil-producing Alberta Premier Ralph Klein reminded Martin publicly that it was not Ottawa’s decision of how and where its energy would go, since control of subsoil resources is a provincial prerogative. And therein lies the rub. But if the Chicoms are the big players in energy holdings in Alberta, it would seem to me that they would call the tune. We better get our energy house in order. |
| Posted by:Alaska Paul |
| #12 US softwood lumber is a campaign contributor. Not a large contributor or even a particarly large industry, but enough to get Congress and the Administration in line to "protect" them at the expense of US consumers and (smaller matter) overall relations w/Canada. The same way our relations with PRC are distorted to protect companies who want access to the Chinese market. Just sayin' - it would be as bad or worse with the Dems in control - will either party (or a new one) ever be willing to put US national interest first again? |
| Posted by: Angomonter Gloluter5517 2005-10-20 22:36 |
| #11 The Cannucks have got a valid beef on the softwood lumber issue. We went outside of a WTO process we both agreed to adhere to. Pity is we should just be taking the cheaper lumber and putting it into lower home prices (among other things) rather than corporate welfare for Weyerhaeuser. |
| Posted by: Classical_Liberal 2005-10-20 21:05 |
| #10 lotp: That works in a market in equilibrium. When demand outpaces supply, it works less well. Demand always matches supply. At some price. If the Canadians want to subsidize Chinese oil consumption by selling below market price just to stick it to Uncle Sam, that's their prerogative. Think of it as an aid program. I just can't see that it will hurt the US more than it will hurt Canada. For Canada to compensate for lower sales of lumber by settling for lower total sales (because of some preferred price at which oil is being sold to the Chinese) of oil is just so idiotic, I can't believe this guy is doing this on economic grounds alone. I understand that Canada's population is 10% Chinese, but the cumulative negative economic impact from such stupid deals will alienate the other 90% of Canada's population that isn't Chinese. |
| Posted by: Elmenter Snineque1852 2005-10-20 20:29 |
| #9 Where would Qanada be if we closed the border to commercial traffic and brought all of those manufaturing jobs back that support, just one among many, the auto industry? And we stopped buying Qanadian qrap? Gosh, think they'd like that as our tat for their tit? Stupid protectionism cuts both ways - but in this case it would gut Qanada far worse than the US. as other have pointed out. So much for any BS PR about Martin. |
| Posted by: .com 2005-10-20 19:44 |
| #8 Touche! LOL! I gotta mention that to my Liberal friends. |
| Posted by: Rafael 2005-10-20 19:38 |
| #7 That works in a free market. It appears that Canada (and other countries, like Venezuela) want to set up a situation where oil trade is governed by government-to-government contracts with different prices for different countries. This is the perfect stimulus to produce what all of these countries have been complaining about to begin with: war for oil. |
| Posted by: Abdominal Snowman 2005-10-20 19:28 |
| #6 helllooo ANWR! |
| Posted by: Frank G 2005-10-20 19:23 |
| #5 if Canadian oil goes to China, then the oil that had originally been earmarked for China is available for sale That works in a market in equilibrium. When demand outpaces supply, it works less well. |
| Posted by: lotp 2005-10-20 18:49 |
| #4 Martin and other Canadian government leaders have been careful not to directly link the softwood conflict to any oil punishment Prudent of them, since a) we're one of their largest trading partners overall and b) such retaliation violates several international agreements unless it's done in a not-entirely-obvious-or-at-least-somewhat-plausibly-deniable way IIRC. |
| Posted by: still anon 2005-10-20 18:47 |
| #3 Hong Kong billionaire, Li Ka Shing, head of Hutchinson Whampoa... aka Doctor No. |
| Posted by: Anonymoose 2005-10-20 18:11 |
| #2 What Mark said. Let the Chinee take the downside price risk and let the US enjoy the benefit of chinee capital. Even better the oil is very easy to |
| Posted by: Shipman 2005-10-20 17:17 |
| #1 Um... Oil is a fungible commodity. if Canadian oil goes to China, then the oil that had originally been earmarked for China is available for sale. If they would withhold all oil sales, that would screw up prices, but it would cost them all the revenue during that time. |
| Posted by: Mark E. 2005-10-20 16:41 |