Canadian diplomat warns on tariffs, energy policy

A Canadian diplomat warned Wednesday that Wisconsin businesses could suffer if his country slaps tariffs on U.S. products over a tiff involving meat.

Roy Norton, the Canadian consul general in Chicago, told a luncheon in Madison that his country and the U.S. are usually amiable trade partners. Wisconsin benefits greatly from that relationship. One-third of the Badger State’s exports are bought by Canadians, and nearly 145,000 Wisconsin jobs depend on that trade, he added.

But he said Canada has lost more than $1 billion in sales of beef and pork since the Country Of Origin Labeling (COOL) took effect in 2009. He said the World Trade Organization has twice sided with Canada, but the U.S. has ignored those rulings.

“We’ve brought another case to the WTO,” he said. “If the U.S. is again found to be breaching your trade obligations to Canada, and if you continue to fail to address the issue, our government has made clear we’ll have no choice but to implement tariffs on an equivalent value of principally U.S. agricultural exports to my country.”

Norton also addressed the controversy over the Keystone XL Pipeline, which would bring petroleum from the oil sands of northern Alberta to U.S. refineries. The project must be approved by President Obama.

“We respect your process, but we do hope that a decision might come soon,” he said. “And we dare to hope that the decision will align with the highly rational case that has been made for ‘KXL.'”

He knocked environmental groups for using the pipeline as a litmus test to judge Obama. And he argued that Canada has a clean energy record and that the oil sands product is more safely transported by pipeline and cleaner than coal.

“Alberta oil sands production emits only two-thirds the greenhouse gases that are emitted by coal-fired electricity generation just in the state of Wisconsin,” he said, noting the Obama administration’s new rules on reducing carbon pollution.

Norton lauded plans by Enbridge Energy Co. to triple carrying capacity to 1.2 million barrels of oil a day via the $7 billion Mainline pipeline replacement project. It would ship more oil from Canada and North Dakota through Wisconsin than what the Keystone line would carry from western Canada to the Gulf Coast.

Boosters of the Wisconsin and Keystone pipelines say both are key tools to trim U.S. dependence on foreign oil, which Norton said often comes from countries at odds with both the United States and Canada. Enbridge’s pipeline brings so-called Bakken crude from North Dakota and Montana, as well as oil sand crude from Alberta to U.S. refiners.

In the discussion over country-of-origin labeling, Norton said part of his job is to expand trade between the United States and Canada. Because of the spat over meat processing, however, he said tariffs could be applied to 30 commodities bought from Wisconsin. Those products are worth $436 million annually and are equal to 35 percent of the state’s agricultural exports to Canada. He predicted tariffs would result in job losses on both sides of the border.

“We don’t want to do this at all,” explained Norton, who said he has lobbied Wisconsin federal legislators in recent weeks, including U.S. Sens. Ron Johnson and Tammy Baldwin. “But countries like mine don’t have many alternatives when, year after year, the USA simply ignores its legal obligations. We profoundly hope that responsible leaders will step up and address this problem soon.”

Norton also said Canadians are “puzzled” by opposition to the Keystone project, which he argued would be the 85th pipeline to cross the U.S.-Canada border. Environmentalists have said they are concerned about spills from the pipeline, but Norton said those risks are minimal. Opponents also have charged that extracting processing petroleum from the tar sands is exceptionally polluting. The Canadian diplomat, however, said Alberta petroleum is as clean the heavy oil imported from Venezuela.

“Your officials told us during the NAFTA negotiations that you wanted guaranteed access to our oil,” he said. “You were concerned then about the Middle East, about relying on petroleum from regimes hostile to U.S. interests.”

He said his country then developed its oil industry, almost exclusively, to sell energy to the United States. Canada now supplies a third of the U.S. petroleum imports, he added.

“No one is asking you to guarantee that you’ll buy our oil when you no longer need imported oil,” he said. “What we can’t comprehend is why you would prefer to buy it from Venezuela, Iraq or Saudi Arabia.”

Norton said he is confident the Keystone project will be built eventually. But in the meantime, he said his country has learned that it needs to diversify its customers and not be almost entirely dependent on the United States to buy its energy.

Still, he noted that his country is in the midst of building new hydro-electric dams in northern Manitoba. Some of that energy will end up being used by Wisconsin customers. State utilities have contracted to buy 108 megawatts of power annually starting in 2016 and 308 megawatts beginning in 2027.

“Importing renewable power from Canada can help Wisconsin meet its requirements – both for more electricity and for more non-polluting electricity,” he said. “Changes to Wisconsin’s laws make that transaction with Manitoba more viable. It’s truly a win for everyone.”

The luncheon in Madison was sponsored by Wisconsin Economic
Development Corp., American Petroleum Institute and Enbridge Inc.

— By Brian E. Clark


Wisconsin Economic Development Corp.

Enbridge Inc.

American Petroleum Institute