Miss Donald Trump yet?
Transition documents suggest that Joe Biden plans to rescind the permit to construct the Keystone XL pipeline as one of his first acts as U.S. president. This would be a blow not only to Canada’s oil and gas sector, but to relations between the two countries in the wake of the disastrous Trump presidency.
And it will strain national unity, once it becomes clear that Prime Minister Justin Trudeau is prepared to surrender on Keystone while still fighting tooth-and-nail to win an exemption from the Biden administration’s Buy American initiative, which would harm manufacturers in Ontario and Quebec.
Western separatists are wrong to assert that the Liberals don’t care about the region’s interests – the Trudeau government was so committed to the Trans Mountain pipeline it bought the company. But the first priority of any federal government, Liberal or Conservative, is going to be preserving jobs in Central Canada, where most people live. That’s simply the way of the world.
Mr. Trump was a friend to oil and gas. He reversed former president Barack Obama’s rejection of the Keystone project, issuing the presidential permit to allow the pipeline to cross the Canada-U.S. border.
As a candidate, Mr. Biden pledged to reverse the reversal. TC Energy, Ottawa, Alberta and Saskatchewan were hoping they would at least be given a chance to make the case for Keystone. That case is compelling.
Construction is well under way, with the cross-border portion of the line already completed. Cancelling the project will cost thousands of jobs in both countries. TC Energy is committed to reducing carbon emissions, while the oil that replaces what Keystone would provide American refineries comes from countries with little or no commitment to fighting global warming.
By cancelling Keystone at the outset of his administration, Mr. Biden would be saying he has no interest in hearing what Canada has to say, which is the kind of reflexive, reason-free action that you might have expected from Mr. Trump.
“Peremptorily revoking the permit without first giving Canada a chance to make its case wouldn’t exactly send a signal [of] renewed friendship that he has promised towards America’s closest allies,” Roland Paris tweeted Monday. Prof. Paris, a political scientist at University of Ottawa, was Mr. Trudeau’s first foreign policy adviser.
Mr. Trudeau will protest, but eventually give way, for several reasons. First, he wants to establish strong relations with the Biden administration, and a protracted fight over Keystone would not be a good start.
Second, he shares the incoming president’s commitment to economic restructuring through investments in green technologies to fight climate change. Keystone lies outside those parameters.
Third, Mr. Trudeau’s highest priority is to win a Canadian exemption from the Buy American provision in the new administration’s US$700-billion procurement and R&D program. Buy American rules could freeze central Canadian manufacturers out of the U.S. market, while also disrupting supply chains.
But energy is as crucial to the North American economy as manufacturing. Richard Masson, executive director at the University of Calgary’s School of Public Policy, says he believes Mr. Trudeau should integrate the Keystone XL pipeline into a comprehensive Buy North American pitch.
“The whole North American economy can be more efficient if we work together rather than if we start setting up barriers,” he said in an interview. “That is the argument that we need the Canadian government to make, and this pipeline is part of that argument.”
But he is “not very optimistic” the argument will prevail. Keystone has become such a lightning rod among environmentalists and their allies that Mr. Biden wouldn’t dare reverse himself even if he wanted to.
Democrats have traditionally been suspicious of trade agreements that put local manufacturing jobs at risk. Under Mr. Trump, Republicans became equally protectionist. Despite their deep polarization, the Americans have reached a consensus in rejecting the globalization of trade.
The Canadian and Mexican governments, to their great credit, were able to preserve the fundamentals of a continental market by renegotiating the North American free-trade agreement. But that agreement won’t save Keystone XL, any more than a court challenge will.
For as long as Joe Biden is president, Keystone is dead.
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John Ibbitson