Western Canada seeks LNG, energy pledges in Liberals’ Indo-Pacific strategy

Western Canada seeks LNG, energy pledges in Liberals' Indo-Pacific strategy
Rajan Sawhney makes a comment during the United Conservative Party of Alberta leadership candidate's debate in Medicine Hat, Alta., Wednesday, July 27, 2022.

As the Trudeau government fleshes out its Indo-Pacific strategy, Western Canada is seeking more certainty from the Liberals on expanding energy exports to Asia.

“There are people in Ottawa who understand what our energy mix is, and what it has to be in the future,” Alberta Trade Minister Rajan Sawhney in an interview this week.

“And there are others who are pushing back.”

Last November, Foreign Minister MĂ©lanie Joly unveiled the government’s approach to the Indo-Pacific, which calls for deeper economic and cultural links with countries that can counterbalance China’s growing influence.

Sawhney said the strategy was seen as a positive first step in Western Canada, but that it needs to respond to more of her region’s trade issues. The Alberta minister is planning a summit so provinces can touch base and make a concerted pitch to Ottawa to refine parts of the strategy.

In a recent virtual event held by the Canada West Foundation, experts from the Prairie provinces noted that their region has a disproportionate amount of trade with commodity-hungry China.

Stephen Nagy, a Canadian who works as a politics professor at the International Christian University in Tokyo, said Western Canada’s ties with China mean the region is at the whims of Ottawa’s relations with Beijing.

Nonetheless, he told the panel the trade relationship is “a net good” for Canada.

“During the pandemic — during the highest point of tension between China and Canada — trade between Western Canada and China increased,” he said.

Nagy said the federal strategy does a good job of listing ways Canada can continue to build on its economic ties with China, by limiting business involving technology and sensitive industries but broadening agriculture and resource exports.

He argued that Liberal ministers have been less clear, with some calling for closer trade ties and others advocating an overall pull away from China. He said he worries the mixed messaging will only get worse amid allegations of election interference.

“It will impact western Canadian exporters and how they need to think about the region,” Nagy said.

He also argued the strategy’s value statement on the environment and Indigenous rights “has mismatches for the region’s needs,” since many countries are focused on development over sustainability, and have varied understandings of reconciliation.

Mac Ross, Pulse Canada’s director of trade policy, told the panel his sector faces serious challenges in Asia, despite Canada being the world’s top exporter of pulse crops.

“There really is, we feel, a major opportunity for western Canadian agriculture to position ourselves as the leading supplier of agri-food products in the region,” Ross said for Winnipeg.

“At the same time, this is a region of the world where protectionist and anarchic tendencies are on the rise,” he said.

India and Pakistan have slapped sudden tariffs and crop fumigation policies that have created headaches for exporters. Nepal and Sri Lanka have implemented abrupt import bans on certain products to try stabilizing domestic cash flow.

“The common feature among all these issues is that Canada has really had no advance warning. These issues only became apparent once shipments were denied entry at port, or in transit at the time,” said Ross.

“It’s become a game a bit of a game of Whack-a-Mole, with increasingly less of a cohesive strategy on how to proactively address these systemic issues in a region like the Indo-Pacific.”

Ross argued Canada is falling behind its peers in building the strong relationships in Asian markets that can help anticipate and challenge such trade barriers.

Meredith Lilly, a Carleton University economics professor who participated in the panel, said the federal strategy lacks specifics, such as how exactly the trade-commissioner service will scale up and when businesses will be offered more supports to expand into the region.

“It was very clear that officials did not actually have a developed work plan for implementation,” said Lilly, a former senior advisor to former prime minister Stephen Harper.

Still, she said the lack of concrete plans gives provinces a chance to get on the same page and push Ottawa to emphasize certain topics — though she warned that contradictory demands from provinces would delay Ottawa scaling up its involvement in the region. She argued that a domestic clash over softwood lumber policies hampered Ottawa’s response to disputes with the U.S.

Lilly added that the Liberals might want to reconsider some of their environmental policies, such as proposed regulations to cap emissions from fertilizer and the scope of federal carbon pricing, given the likelihood that such provisions will make Canadian products more expensive in the global marketplace.

Corporate groups like the Business Council of Canada were critical of the strategy for not outlining a pledge to get more energy to market, such as a commitment to ramp up exports of liquefied natural gas (LNG) to East Asia.

Lilly said that is particularly crucial given how many pipeline projects that had foreign support have been thwarted in recent years.

“Canada has a damaged reputation in the area of being able to bring promised energy infrastructure to market, and foreign investors are not suddenly going to believe that we can build new infrastructure just because it is carrying fuel sources that the government now supports,” she said.

Sawhney said the Liberals must address that challenge in their financial plan this spring.

“In this budget, I am looking for a more comprehensive statement and support for the energy sector in general,” she said.

Sawhney has held roundtables in Calgary and Edmonton about the Indo-Pacific strategy, and spoken with her peers in the other three western provinces.

She said the three most common topics are energy, agri-food expansion and a desire for more foreign-credential recognition and immigration supports to bridge labour gaps. She said the first two had “very little in terms of substance” in the strategy.

Sawhney said she met with Global Affairs Canada staff in Ottawa while Joly was abroad on diplomatic business, and pushed for LNG to be reflected in the strategy

“The response was a little bit defensive,” Sawhney said.

“It was more like, ‘Well, we’re really focused on renewables, this is where we’re going and we’re really focused on transition.’ And I said, ‘Look, so is Alberta. We are all aligned; we’re all going in the same direction. But we cannot ignore the reality, which is that there is still a place for oil and gas.'”

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