Alberta wants a fair deal from Canada, but can’t seem to get one. Should it build a firewall? Stop trying? Separate? This is one of a series of opinion pieces adapted from the new book, “Moment of Truth: How to Think About Alberta’s Future,” in which some of Canada’s most respected thinkers on the subject debate what the best next steps are for Alberta — and for Canada.
If attempts to strengthen Alberta’s position in the federation are
ignored, the bolder option for a common market, a break from Canada and
closer association with the United States, will become the only credible
course of action. ...
Alberta has a serious need to strengthen its economic position within Confederation. The status quo is no longer viable.
There are a couple of sensible ways this might be accomplished in the near term, but if those efforts fail, Alberta might be left with no choice but to break with Canada and pursue a closer associating with the United States.
Indeed, a common market association with the U.S. may be the only credible course of action.
The health of Alberta’s economy and the province’s ability to trade with the rest of Canada and the world is not simply dictated by the laws of supply and demand, but also critical considerations of public regulation, judicial decision-making, political stability and market access, which, in recent years, have posed major challenges and risks to Alberta’s economic health, growth and development.
When it comes to Alberta’s strategic trade and investment options, the fundamental question is whether the province’s objectives can best be met by pursuing a much more comprehensive interprovincial free trade in Canada and deriving access benefits from Canada’s preferential trade agreements (USMCA, CETA, Canada Korea, etc.), or through a more independent approach by Alberta with the rest of Canada and with the world. ...
... Economist Robert Mansell calculates that Alberta was “by far the largest net fiscal contributor (of any province) over the period 1974-1985, with an average annual net contribution of $7,512 per person, and over the period 1993-2018, with an average annual net contribution of $4,546 per person.” Further, Albertan oil is of growing importance to refineries in Quebec, though public perceptions in Quebec are not aligned with this. As one study notes, “Quebec’s supply of crude oil from Western Canada ballooned from less than one per cent in 2012 to 44 per cent in 2017.”
The argument for removing internal trade barriers is even more compelling today, as the world’s two largest economies joust between themselves for mercantilist advantage, leaving small- and medium-sized countries to fend for themselves as best they can. If ever there was a time to complete free trade within Canada it is now. The International Monetary Fund predicts that the result would stimulate much greater GDP growth (roughly four per cent growth in Canada’s GDP) than the United States-Mexico-Canada Agreement. It would also strengthen Canada’s competitive edge and bargaining leverage in global trade.
However, achieving this goal will require leadership and tenacity from Ottawa, which is not assured. Internal free trade also continues to meet with resistance, primarily from Quebec and Ontario, and is more aspirational than real. The original agreement contains 130 pages of “exclusions.”
The federal government must also act to bolster, not hamper, a sector that contributes 10 per cent of Canada’s GDP. Alberta should demand that the federal government exercise its constitutional power over interprovincial pipelines and approve Energy East, while dismissing Quebec’s right to duplicate regulatory review. Recent court decisions on the Trans Mountain Pipeline endorse this approach.
Alberta, alongside other provinces, should also press for a more open regulatory and policy environment that attracts, rather than repels, investment in Canada and facilitates exports. Unlocking the internal blockages for investments and for exports of Alberta’s key oil and gas resources will be the most critical aspect. These have been severely hampered in recent years by constipated federal regulations, by blanket opposition to pipelines by provinces like Quebec and British Columbia, and by limp support from Ottawa other than the expensive purchase of the Trans Mountain Pipeline. ...
Alberta’s leverage on federal transfers should be used to try to reverse the trend in the past decade during which actions, or simply inertia, by Ottawa and certain provinces have hobbled Alberta’s most promising avenue for growth. But if attempts to strengthen Alberta’s position in the federation are ignored, the bolder option for a common market, a break from Canada and closer association with the United States, will indeed become the only credible course of action.
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