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pipeline spat

Alberta Premier Rachel Notley gives opening remarks at an emergency cabinet meeting in Edmonton, Alta, on Jan. 31, 2018.JASON FRANSON/The Canadian Press

Premier Rachel Notley has instructed Alberta's alcohol regulator to block about $70-million worth of wine imports from British Columbia in retaliation for proposed rules that would effectively prevent Kinder Morgan's Trans Mountain pipeline expansion.

The attack on B.C.'s cherished wine industry is Ms. Notley's second attempt in less than a week to hurt the economy of Alberta's neighbour as the fate of a $7.4-billion pipeline expansion threatens to create an escalating trade war between the two NDP governments. B.C. Premier John Horgan promised a response.

"I know a lot of Albertans who love B.C. wine," Ms. Notley said. "I'm one of them.

"Just like I know a lot of British Columbians who love to drive their cars, fly in planes and heat their homes using Alberta energy products."

Ms. Notley also noted that residents of Kelowna West, which is in the hub of B.C.'s wine country, will vote in a by-election next Wednesday. However, that riding is a Liberal stronghold. Ms. Notley did not warn Mr. Horgan before announcing the policy at an afternoon news conference on Tuesday.

Alberta's steps, however, are small.

B.C.'s wine exports to Alberta made up less than half of 1 per cent of its total exports to its closest neighbour, according to the most recent statistics. Last week, Alberta formally ended negotiations to buy additional power from existing B.C. infrastructure, although the talks had already chilled.

B.C. has announced regulations that would block an increase in diluted bitumen shipments to the coast while a panel considers whether the oil sands product can be properly cleaned up if it spills in water. This could slow or even kill Kinder Morgan Canada Ltd.'s Trans Mountain pipeline expansion project.

Mr. Horgan said in a statement issued in response to Alberta's move that his government has "every right to consult" with its residents about the best way "to protect our lands and waters from the potential impacts" of a heavy oil spill.

"Our consultation on proposed new regulations hasn't even begun, but Alberta has seen fit to take measures to impact BC businesses," the statement said. "We stand with BC wine producers and will respond to the unfair trade actions announced today."

Albertans bought about 17.2 million bottles of B.C. wine last year, Ms. Notley said. B.C. exported $61-million worth of wine and brandy to Alberta, accounting for 0.34 per cent of B.C. exports to the province in 2014, according to the most recent Statistics Canada data. B.C. beer exports to Alberta came in slightly lower at $58-million. Ms. Notley, in her news conference, mulled taking action against B.C. beer, too.

A lobby group for Canada's restaurants, bars, and caterers called Alberta's announcement a "reckless decision."

Restaurants Canada said Alberta is using Alberta consumers and B.C. businesses as pawns. "As a country, we are trying to strike down domestic and international trade barriers, and this decision moves us in the completely wrong direction," said Mark von Schellwitz, the vice-president for Western Canada.

University of Calgary economist Trevor Tombe said of all the retaliatory measures available to Alberta, this was a good one. While the wine ban will affect only a small portion of total trade, it will receive a disproportionate amount of attention, particularly in light of the by-election.

"It's going to punch above its weight."

B.C. wine is easily substituted for varietals from other parts of the world – so while the trade war will not benefit anyone, Ms. Notley's move will hurt B.C. wine producers more than Alberta wine drinkers, he said.

Ian Tostenson, president and CEO of the B.C. Restaurant and Food Services Association, said his organization's executive will ask members on Wednesday to buy more B.C. wine to offset the Alberta boycott. "It's a countermeasure," Mr. Tostenson said. "People in the [B.C.] wine industry are going to lose sales. We're going to replace those sales."

Ms. Notley again demanded Prime Minister Justin Trudeau deploy tactics to prevent B.C. from writing what she considers unconstitutional legislation.

The Prime Minister's office on Tuesday said it had no new comments on the matter. Natural Resources Minister Jim Carr's spokesperson said Ottawa stands behind its decision to approve the Trans Mountain expansion.

With reports from Kelly Cryderman in Calgary and Ian Bailey and James Keller in Vancouver

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The federal government says the Kinder Morgan pipeline expansion will go ahead, despite a restriction promised by the B.C. government. Natural Resources Minister Jim Carr replied to Opposition grilling on the topic on Thursday.

The Canadian Press

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