Excerpts from a submission of the Canadian Arctic Resources Committee to the House of

Commons Standing Committee on External Affairs and International Trade

Yellowknife

25 November 1987

In the North...the attractiveness of free trade may be very much coloured by what the federal government is perceived to be doing, or not doing, in areas such as northern constitutional development, water policy, and energy development...CARC would like to take advantage of the opportunity supplied by the Standing Committee to convey some of our thoughts concerning free trade. We invite the Standing Committee to consider a number of points:

1. It is incumbent on the advocates of a free-trade agreement to demonstrate persuasively that the agreement will bring net economic benefits to Canada; in the absence of net economic benefits to Canada, there appears to be no valid sovereignty, security, or cultural reason for Canada to enter into such an agreement.
2. In discharging the obligation to prove that the free-trade agreement will bring net economic benefits to Canada, it is not adequate for its proponents to suggest that the agreement will merely head off adverse economic impacts on Canada flowing from United States protectionism. If the purpose behind the free-trade negotiations were limited to maintaining the status quo, then provisions regarding investment, energy pricing and security, and government procurement would not be necessary; in that case, only an exchange of undertakings regarding trade dispute procedure would have been required or desired.
3. It is incumbent on the advocates of the free-trade agreement to demonstrate that, in addition to the agreement bringing net economic benefits to Canada, it will also bring net economic benefits to Canada's major regions (Atlantic Canada, Quebec, Ontario, the Prairies, British Columbia, the North).
4. In the event that net economic benefits to the various regions cannot be demonstrated, then the full text of the agreement must adequately protect the ability of the federal government to stimulate economic development across various regions and the ability of provincial and territorial governments to stimulate economic development within regions. We are concerned that the government procurement and investment provisions of the free-trade agreement might well be used to strike down regional economic development tools relied upon by provincial and territorial governments in the past (such as the current GNWT bidding preference for N.W.T.-based companies. It is essential (a) that the agreement guarantee types of regional development incentives that will not be subject to subsequent challenge; and (b) that there be an adequate number and mix of such incentives.
5. The energy provisions of a free-trade agreement, as described to date, present serious concerns. First, any commitment to put U.S. and Canadian energy consumers on an equal footing by way of the sale and pricing of Canadian energy supplies amounts to more than free trade-in times of shortages, it amounts to "forced trade". Second, Canada is pledging all of its energy resources while the United States is pledging only a fraction; this lack of reciprocal U.S. obligation to Canadian consumers is transparently inequitable-the limited U.S. undertaking with respect to the export of 50 000 barrels per day of Alaskan oil (which cannot now be refined in Canadian refineries) invites suspicion about some kind of larger agenda regarding the production and transportation of arctic hydrocarbons.
6. It is essential that the provisions of any free-trade agreement be very clear in protecting Canada's ability to determine the location, timing, and rate of energy exploration and development; non-discriminatory pricing and the sharing of production must not eliminate Canada's ability to make its own determinations as to the policy trade-offs between energy development on the one hand and energy conservation on the other. One way to help ensure that decisions about northern energy exploration and production are consistent with regional preferences for sustainable development would be for the federal government to conclude "energy accords" with the territorial governments and northern aboriginal groups in the near future.
7. The free-trade agreement should avoid any new binding commitment, above and beyond international law and the terms of existing agreements, that Canada make its lands and waters available as energy transportation corridors. In its recent (September 1987) report on oil security, the Standing Committee on Energy, Mines and Resources, without calling any northern-related evidence, and ignoring existing commitments and policies of the Government of Canada developed over the past 10 years, urged the identification of an oil and gas corridor from Alaska to the Mackenzie Valley across the north slope of the Yukon. The committee has gone even further in backing the opening of the Arctic National Wildlife Refuge in Alaska to oil and gas exploration-a position that is in direct contrast to the stated position of the Government of Canada and the governments of the Yukon and Northwest Territories. The wording of a free-trade agreement should not add any momentum to these sensitive issues, nor should the free-trade agreement precipitate any compromise on the Northwest Passage sovereignty dispute that would entail Canada "guaranteeing" commercial marine traffic through the passage; nothing in the free-trade agreement should reduce Canada's ability to protect its environment.
8. Existing agreements entered into between Canada and the United States regarding non-renewable resource development must be honoured. Specifically, the free-trade agreement should reinforce U.S. fulfilment of the various undertakings that were made through the Alaska Highway pipeline agreement. (It will be recalled that this agreement led Canada to enact special legislation, create a separate northern pipeline agency, and pre-build portions of the pipeline.)
9. The agreement must be consistent with Minister McMillan's recent assurance that Canada will not divert fresh water for export purposes; the definition of resources under the agreement must specifically state whether water is included or excluded.
10. It is likely that future land claims settlements in the eastern and central Arctic, the Mackenzie Valley, and Yukon will contain provisions providing aboriginal peoples with preferential economic opportunities not available to others (for example, priority of access to sports lodge locations and the opportunity to negotiate special employment and training benefits associated with major projects). It is important that the rights of aboriginal peoples, and the ability of Canadian governments more generally to pursue affirmative-action and related programmes, not be compromised by a free-trade agreement.
11. The North relies more heavily on public-sector expenditures than any other part of Canada; because of high costs, the booms and busts of the hard-mineral and hydrocarbon sectors, and the neglect of the traditional renewable resource economy, northern peoples are especially reliant upon governments to supply a variety of housing, health, education, and other social programmes. Like other Canadians, northern residents need concrete assurances that existing governmental discretion over the design, delivery, and financing of social programmes will not be altered by a free-trade agreement; such assurances should be explicit in the text of an agreement.
12. Canada must not lose control over its ability to make cultural policy. While federal ministers have made welcome assurances about the free-trade provisions negotiated in this area, federal intentions will no doubt be measured by the willingness to commit financial resources to various cultural fields over the next 12 months; now would be a good time to put native-language broadcasting on solid ground.
13. A strengthening of economic ties with the United States should be regarded as complementary to, not a substitute for, liberalized trading arrangements with other nations, as pursued on both a multilateral (GATT) and bilateral basis. Closer economic ties to the South argue for a conscious attempt to develop ties in other directions; improved relations with all our circumpolar neighbours, as advocated in the June 1986 Report of the Special Committee of the Senate and House of Commons on Canada's International Relations, becomes even more logical and desirable.