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Canada calls oilsands controversy side issue to EU free trade talks

The Canadian Press | February 21, 2011

Canada calls oilsands controversy side issue to EU free trade talks

By Julian Beltrame, The Canadian Press

OTTAWA - The federal government is seeking to overcome a potential stumbling block to a free trade deal with the European Union by moving EU objections to the oilsands off the table.

Trade Minister Peter Van Loan says the issue of oilsands fuel exports is being discussed outside the main talks, which Ottawa hopes to wrap up by year’s end.

Responding to a Reuters report out of Brussels that Canada has threatened to scrap the deal if the EU goes ahead with plans to bar oil imports that originate from the oilsands, Van Loan said the issue is being treated separately.

"Canada and the European Union are working to resolve this issue outside of the negotiations towards a free trade deal," he said in an email response.

The minister acknowledged, however, that the issue is of concern to Canada.

"Oilsands derived fuel should be treated on a similar basis as other crude oil sources and decisions must be based on sound scientific evidence," Van Loan said.

Van Loan was not available for an interview, his spokesperson said in forwarding the email response.

The EU has proposed changes to a fuel quality directive aimed at reducing emissions from transport fuels by 10 per cent in the next decade, which could potentially lead to treating the oilsands differently from conventional oil.

In a preliminary weighting of the carbon footprint of fuels, Europe has judged petrol from conventional oil to have a value of 85.8g of carbon dioxide per megajoule of fuel, whereas oilsands oil would be measured at 107g.

Trade lawyer Steven Shrybman says Canada does not currently export oil to Europe, but the EU still sees it as an important issue because it wants any trade agreement it signs to comply with international environmental agreements.

European environmentalists have pounced on the issue, saying Canada could raise a complaint under the World Trade Organization once a deal is signed if the oilsands face discriminatory barriers or duties.

"Europe is saying our commitment under international environmental agreements have to take precedence in any complaint you might have about our trade practices, and Canada says no to that," said Shrybman, who works with the Council of Canadians, which opposes the deal.

"Canada doesn’t want Europe to create a precedence that other countries will follow."

Shrybman said he has not heard that Canada threatened to walk away from the talks to protect the oilsands.

But the nature of the talks could add a complicating factor. Since provinces have been invited to participate as full partners, it’s not clear whether a free trade deal with the EU would be signed against Alberta’s objections.

Van Loan has called a successful conclusion to the negotiations his top priority on the free trade front, noting the EU represents an economy similar to that of the U.S. in terms of size and composition.

A joint analysis estimates an agreement to liberalize economic exchanges in goods and services would give the Canadian economy a $12-billion annual boost and that Europe would benefit even more.

Opposition has built on both sides throughout the negotiations, with Canadian activists expressing concern that the deal would open up provincial government procurement to companies in Europe.

Critics say this would give European companies an inside track on such provincial procurement as Ontario’s green plan and could even mean that municipal water systems may be privatized, as many are in Europe.

Another area of contention is the varied programs Canada and Europe have to protect agricultural interests.

Van Loan has said everything is on the table in the talks, but that some issues may require a less than a straightforward solution.

 source: Canadian Press