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The big question for provincial leaders as they prepare next year’s budgets is whether low oil prices are a brief and unusual blip or a longer-term development that will lead to dramatic change. Newfoundland and Labrador Premier Paul Davis is preparing for the more dismal view.Paul Daly/The Canadian Press

It's not quite Danny Williams' five-alarm, scorched-earth campaign, but Newfoundland's new premier is making it his business to tell people that Stephen Harper has reneged on a deal.

Paul Davis has a much more even-keel style, and it seems pretty clear that he's still hoping to get the federal government to give. Still, he's already said, bluntly, that he can't trust Mr. Harper. Now he's spreading the message.

"This is a big deal to Newfoundland and Labrador," Mr. Davis said in an interview. "And it's a particularly big deal to rural parts of the province."

Some people have likened it to Mr. Williams' vocal opposition to Mr. Harper's unilateral changes to the Atlantic Accord in 2007. This time, Mr. Harper doesn't have to worry it will cost him Newfoundland seats. His Conservatives don't have any, and aren't likely to win any next year.

But this dispute could raise pesky complications for the Canada-European Union Free Trade deal that the Prime Minister counts as one of his greatest accomplishments. It makes it easier for critics like the NDP to pick holes in it. And it can't help that another Tory premier is railing that Mr. Harper's and his team are faithless double-crossers.

Mr. Davis argues Ottawa is trying to undo a deal it made during the EU trade deal negotiations. Ottawa wanted to negotiate better access to Europe's seafood market, so the EU wanted Newfoundland to drop its so-called Minimum Processing Rules, or MPRs, set up to require fish to be processed in the province. To convince Newfoundland to do it, Ottawa agreed to pay $280-million into a $400-million transition fund for Newfoundland's fishing industry.

Now, Mr. Davis argues that the federal government is trying to set so many conditions on the fund it has essentially scuttled the deal.

What can the Premier do? His government could say it will no longer support the Canada-EU trade deal. "That's something that we have to determine," he said.

Technically, it doesn't matter. Ottawa signed the deal, not the provinces. But not applying the trade deal in Newfoundland's provincial jurisdiction could cause big problems. That's what Mr. Davis is threatening to do – to refuse to lift the MPRs. "If the Prime Minister lives up to the agreement, we will relinquish the MPRs," he said.

That could be important. The trade agreement hasn't been ratified yet, and the EU has been nervous that the provinces might not be bound by it. And if the deal does go ahead, and the EU firm feels the MPRs are costing them money, they could sue Canada.

The dispute about the fund is mainly about what the money is supposed to cover. Newfoundland says it's a fund for revitalizing the fishing industry. But Rob Moore, the federal minister for the Atlantic Canada Opportunities Agency, argues it's for "compensation" for the losses Newfoundland suffers from ditching the MPRs.

Mr. Davis's government has released a pile of correspondence that details rushed talks between Ottawa and Newfoundland as the EU trade talks were coming down to the short strokes. Newfoundland wanted to be bought off. Trade Minister Ed Fast kept insisting that the fund could only be used to help displaced workers – but Newfoundland insisted it wanted a fund for "industry renewal and transition." Eventually, with the clock ticking in the EU talks, Mr. Fast agreed. After the trade deal was announced, federal officials confirmed it.

Now, other provinces with fisheries don't like the idea Newfoundland gets a $400-million fund for things like marketing and revamping equipment, which give it an edge. That's obviously a headache for Ottawa. Mr. Moore set more restrictive conditions. Newfoundland doesn't t even expect big losses from dropping the MPRs, Mr. Davis said, although he added: "But we can't predict what will happen in 10 or 15 years."

But of course, a deal is a deal. The letters Newfoundland released show that Ottawa and the province disagreed, and hammered out an understanding that the $400-million was for renewing the industry, not just compensating losses. Mr. Moore's office says it doesn't want confrontation, and the feds have "always been clear" that the fund was to compensate Newfoundland for "demonstrable" losses. But Mr. Fast's letters, in which he struck the deal, said no such thing.

So now, the Premier is spreading the word that his province has been swindled. He's not vitriolic, at least not yet. But he's trying to put pressure on Mr. Harper. "My job is to ensure that the Prime Minister lives up to the agreement," he said.