Canada West Foundation president Gary Mar joins Alberta Primetime to discuss Canada’s changing global trade relationship, including new agreements with China impacting Alberta industries. This interview has been edited for clarity and length. Michael Higgins: How big of a shift in trade dynamics does this potentially represent, and could it set the stage for expanding trade alliances away from the United States? Gary Mar: First of all, the relationship between Canada and China has always been one that has gone in cycles from wild optimism to the depths of despair. We can all agree during the imprisonment of the two Michaels, that was the low point of Canadian-Chinese relationships. Having said that, this is a step in the right direction. I think the prime minister went into China eyes wide open that he was looking to increase our economic opportunities without giving up anything on national security in Canada, and trade in commodities like canola or seafood products or energy. The United States is the largest consumer of oil in the world, at about 20 million barrels of oil a day. China is number two at about 16 million barrels of oil a day. Our canola which was hit with tariffs in response to tariffs on Chinese EVs put in by President Biden and Prime Minister Trudeau, really was a very, very devastating impact on canola producers in Western Canada. Full credit goes to [Saskatchewan] Premier Moe who has been working on this relationship for some amount of time. It shows the importance that sub-national governments can have in helping shape a national agenda. In this case, the deal signed by the prime minister with Xi Jinping. MH: How important was it to get this foothold in China before the Trump administration makes a play? GM: That’s a very interesting question, because we do know the president plans on going to China, I think in March. We also know other world leaders are planning on going there, notably Premier Li of South Korea, and Keir Starmer, the prime minister of the United Kingdom, are trying to go in and make deals. The only criticism I’d have of Prime Minister Carney’s mission is he didn’t stop in South Korea and Japan first. It would have made sense for him to go there because those two countries have really bolstered their diplomatic missions here in Canada. They’ve come out and indicated they want energy from Canada. They want to do more trade with Canada. It would have been stronger had the prime minister gone there before he went to Beijing. Nonetheless, it is what it is now. When it comes to setting the tone with China, it was interesting to see President Trump say, well, that’s what leaders should be doing. If they can get a deal, that’s great. We don’t know down the road if President Trump may retaliate in some way, shape or form. We can’t predict that with any certainty whatsoever, but so far so good. The president hasn’t indicated any negative blowback against Canada for doing this deal with China. MH: What kind of impact do you see this having on Alberta’s push for another pipeline to the west coast? Safe to say this deal with China was already on the radar ahead of the Ottawa-Alberta MOU. GM: I think so. Because if you look, for example, where is the oil going? That’s in the Trans Mountain Expansion pipeline. I think a lot of people expected when the TMX was up and running, it would be moving oil into refineries off the west coast of the United States. But in fact, most of it is going to China. So China, although it’s going great guns on electric vehicles and such, they still need a lot of oil. Not just for refining into diesel fuel or into gasoline, but also they need oil to provide inputs for manufacturing processes. If you’re going to make plastics, you need oil. So this probably strengthens the case for building additional pipeline capacity to go to the west coast, or at the very least increasing the capacity of the existing pipelines by putting in more compressor stations and pumping more oil through the existing infrastructure, by running it at higher pressures at more frequent intervals. MH: How much does the Trump administration’s move on Venezuelan oil stand to influence that push for a west coast pipeline? GM: That’s something that’s hard to predict, but in the near term I don’t think it’s going to impact or displace Canadian oil going into the United States. There was a time when Venezuela produced millions of barrels of oil a day, and now they’re down to about a million barrels of oil a day. It’s a similar grade and quality to Western Canada Select but they don’t have the infrastructure within Venezuela to actually produce it. It will take billions of dollars of investment in that country to be able to build up their capacity. The economic case for oil companies is they have to ask: do we want to put more of that oil into the marketplace when the price is south of $60 a barrel? That’s question number one. Question number two is are we willing to put money into the infrastructure in Venezuela not knowing what Venezuela might do in a post Maduro world. Is there sovereign certainty in Venezuela? I think at this time, the answer would be no. If you look at the amount of oil that comes to the United States, Alberta moves about four and a half million barrels of oil a day. That’s significant, compared to the 1 million total Venezuela sends out. They don’t have any infrastructure to get that oil. Even if they do land it on the Gulf Coast, they don’t have any infrastructure to get it up into the U.S. Midwest. Geography is Canada’s advantage when it comes to moving oil into U.S. marketplaces.
