Tuesday, May 15, 2012

Canada looks to China for resource exports

For a century Canada's economy has been tightly related to the US's. But now officials in Canada are looking increasingly toward China. And it's partly our own fault.

Part of the change is hostility from the Obama administration; more about that below. But that's not all the story. The economic slow down has decreased US demand for Canadian products and commodities. And the US has a huge resurgence in energy production - natural gas and oil - which tends to decrease US demand. At the same time Canada's oil production is increasing. So they are looking for markets: China!

The relationship with the US is still huge - 67.7% of Canada's trade. There have been ups and downs in the relationship, but NAFTA - North American Free Trade Agreement - increased the relationships. 

The Chinese have been investing in Canada at an increased rate the past few years. The two countries are getting closer.

Meanwhile, as I reported a few days ago President Obama ignored the approvals by his own State Department for the Keystone XL pipeline and delayed his decision until after the 2012 election. Cute! But the Republicans wrote into law approval within 30 days in January. So Obama bravely rejected it. Canada got the message. Look to China.

Companies in Canada are proposing to increase the capacity of an oil pipeline from Alberta to Vancouver, BC and separately to build a new one, the Northern Gateway pipeline from Alberta to Kitimat in Northern British Columbia. OilPrice 

Also Obama is blocking Canada's entry into Trans-Pacific Partnership. He is ridiculously accusing Canada of his own sin - protectionism. What lesson does Canada take from this Obama trick? The US under Obama is a less reliable partner. This adds another reason that Canada is looking east.

Wall Street Journal - subscription required

Photo: Trans Alaska Pipeline. From Tony Mazzocchi Center

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