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trade war

The ties that bind Alberta's energy wealth and the B.C. Interior are strong. But some fear a trade war over pipelines and wine could open a long-lasting rift , reports Kelly Cryderman

Ian MacDonald, president of Liquidity Wines in Okanagan Falls, B.C., prepares to open the winery’s tasting room on Feb. 9, 2018. Alberta’s government has announced a ban on B.C. wine imports are part of an escalating fight over Kinder Morgan’s Trans Mountain pipeline expansion.

Ken Cheung has one foot in British Columbia, and another planted back in Alberta.

The Kelowna restaurateur and wealth management adviser lived in Calgary for three decades, before making the mild, dry Okanagan city his full-time home in 2008. But he often returns to Calgary for work, and says Albertans are at least 30 per cent of the client base at his Basil & Mint Restaurant and Bar in the busy summer months.

While Mr. Cheung believes the Trans Mountain pipeline expansion is a needed project for Alberta and the country, he's dismayed with Alberta Premier Rachel Notley's decision this week to bar B.C. wine imports into her province. He fears the ill will between the two provinces could grow, and that some Albertans will choose not to visit or vacation in B.C.

Related: Alberta's ban on B.C. wine will hurt Albertans most, restaurateurs warn

Interactive: What Kinder Morgan's Trans Mountain pipeline could mean for the B.C. coast

Wine producers, small businesses and the workers they employ eventually could feel the brunt of the trade dispute, he said. "B.C. relies on Alberta just as much as Alberta relies on B.C."

Far from the pipeline opposition centred in the B.C. Lower Mainland – where Alberta and its oil-focused economy might seem like a faraway place – the ties that bind Alberta's decades of energy wealth and the B.C. Interior are strong. Ms. Notley's high-profile wine-ban gambit hits at the heart of the close relationship, and makes the political manoeuvring more personal.

"Short-term-wise in B.C., I think we are okay. But as a Canadian, I don't like it. We already we have to deal with the NAFTA uncertainty. We should not fight among ourselves," Mr. Cheung said.

He is far from alone in having loyalties to both provinces. Albertans not only buy huge amounts of B.C. wine, but they camp and vacation in B.C., get married in B.C., and they retire and buy property in B.C. Alberta energy and construction industry brass have plowed their wealth into wineries in the B.C. Interior and on Vancouver Island.

Walt Judas, chief executive of Tourism Industry Association of BC, said wineries not only grow grapes and produce wine, their restaurants, grounds and facilities are major tourist draws. While the wine ban will affect at least $70-million in B.C. imports to the prairie province, Alberta visitors to B.C. also spend about $1.4-billion in dollars annually.

Mr. Judas worries that the sentiment behind the trade impasse could dampen Albertans' desire to travel to B.C. It's a tit-for-tat he said could escalate if B.C. residents begin avoiding Alberta products.

"It creates a rift between people who are ultimately friends, and family," he said.

The British Columbia Real Estate Association reports that Albertans buy at least one in 10 homes sold in the Okanagan – and that figure was 15 per cent when crude prices were higher. Many Albertans also buy properties on Vancouver Island, especially in communities such as Parksville and Comox, with their strong retiree contingents, as well as the southeastern corner of B.C. Even Ms. Notley and her family own a vacation property in that Kootenay region.

Albertans are "ubiquitous" in the B.C. Interior and the Kootenays in the summertime, Mr. Judas added. "I have jokingly said to people many times over the years, particularly when you go to the Okanagan or the Kootenays in the summer, it's like Kelowna, Okanagan, Alberta, or Fernie, Kootenay Rockies, Alberta."

In fact, it's sometimes difficult to differentiate between who is an Albertan and who is from B.C. Two years ago, Kelowna Mayor Colin Basran said his city's unemployment rate was only high because of the Alberta oil patch workers from Kelowna who had lost their jobs in the oil-price downturn, and returned home.

The close relationship doesn't mean there hasn't been tensions. Philip Collins, a Calgary oil executive who has owned property near Kelowna for 13 years, said there has always some strains. The monied Albertans and Vancouverites who have flooded in to buy sun-drenched properties have not always received a warm welcome from longer-term residents who can't afford to live on the lakefront.

"They've been calling us Calgreedians for a decade," said Mr. Collins, chief executive officer of Calston Exploration Inc.

The cash infusion by Albertans into B.C. wine country is apparent. In Okanagan Falls south of Penticton, Liquidity Wines Ltd. is controlled by Albertans who have made their money in the energy industry. Liquidity president Ian MacDonald said the two neighbouring wineries immediately adjacent to Liquidity are both owned by Albertans, too.

Ian MacDonald, president of Liquidity Wines in Okanagan Falls, B.C., prepares to open the winery’s tasting room on Feb. 9, 2018. Alberta’s government has announced a ban on B.C. wine imports are part of an escalating fight over Kinder Morgan’s Trans Mountain pipeline expansion.

"I don't know the exact percentage but I would have to say that a surprisingly large percentage of wines here in the Okanagan Valley are partially or completely owned, in some fashion, by Albertans," said Mr. MacDonald.

It remains to be seen how hard the Alberta ban on B.C. wine will hit the small business, he said. The winery, which he said operates on very small margins and has high operating costs, is now blocked from supplying its Alberta retail and restaurant clients. But some clients have written to offer support.

"I don't think it's a simple subject for Albertans," Mr. MacDonald added.

And in reaction to Alberta's ban, Liquidity and a group of other wineries will host a Vancouver event later this month celebrating both B.C. wines and Alberta beef and bison producers. In a news release, the group said that "instead of reacting with hate and opposition, a group of B.C. wineries has decided to remind everyone that they love Alberta."

Late Friday – after four days of national turmoil, demands for federal intervention and assurances from Ottawa that the federal Liberals are working on it – Ms. Notley announced a further measure: The creation of a task force aimed at soliciting advice "to further defend Albertans."

The task force members include former Liberal New Brunswick premier Frank McKenna, former federal justice minister Anne McLellan, former Syncrude Canada president Jim Carter and legal constitutional scholar and professor Peter Hogg.

"Alberta is preparing retaliatory measures," Ms. Notley said in a news release, adding the task force "will help ensure Alberta's response gets Ottawa's and B.C.'s attention."

Still, it appears much of the frustration over the wine ban is not directed toward the Alberta Premier, who calls the two provinces "friends" and described the decision to order the Alberta Liquor and Gaming Commission to stop buying wine from B.C. as a difficult one. Ms. Notley argues her hand was forced because of B.C.'s "campaign" to stop increased exports of Alberta oil.

"Especially with Calgary having such a tough time the last few years, I can understand why [ Ms. Notley] thinks this has to be done," Mr. Cheung said, referring to the oil-price drop that hit Alberta's economy hard the last three years.

"The pressure should be on the federal government. They're the ones who approved this, and they should take the lead to fight the war – not the provinces."