Brian Lee Crowley

Water, water all around — unless you’re landlocked like Alberta

Being landlocked is a bad place to be generally speaking on the international stage. Coastal states are guaranteed freedom of the seas, but landlocked states may not be able to reach the seas and their commercial bounty without having to bribe neighbouring coastal states. Ottawa was created in 1867 to prevent such extortionary behaviour by Canadian provinces. So what gives when BC is yet again threatening to close off Alberta’s access to tidewater? My views on the issue were laid out in my 12th May column for the Globe and Mail’s ROB. You can read the unedited text below or here online.

Geography distributes its bounty capriciously and the results can be extremely painful for those who end up penalised by their place on the map.  The outcome of the recent BC election may be about the deliver an object lesson in this principle to this country’s only two landlocked provinces: Alberta and Saskatchewan.

Internationally, being landlocked is a very uncomfortable place to be. Unless you are a Botswana exporting diamonds (small, light and high value products that can be shipped by, say, plane) you likely need to put your exports on a ship to get them to world markets, thereby realising their highest value.

Because ocean shipping is so vital to economic success, the world’s nations agree that ships engaged in bona fide commerce will not be obstructed. Nations can’t target the shipping of other countries and demand ransom to let it reach its destination. That’s piracy.

The main exception is when military or diplomatic conflict causes countries to throw up embargoes against offending countries’ goods, or to prevent them from receiving shipments of things like arms or nuclear materials. Such exceptions are exceedingly rare when seen against the volume of ocean-borne trade.

But landlocked states face a completely different obstacle: their goods must cross another country’s territory to get to port. International law is of little help, and the 45 such landlocked states must negotiate access with neighbours who may have conflicting economic interests, historical enmities or simply little interest in helping.

What the neighbours universally have, however, is the whip hand in the negotiations. They tend to use that to extort benefits far in excess of the actual economic value of the infrastructure and services needed to get their landlocked brethren’s goods to port. And having to get their products through a “transit country” makes companies reluctant to invest in the landlocked. It injects a level of political risk that is difficult and costly to manage.

Landlocked countries thus tend to be poorer than their economic fundamentals justify. All because of accidents of geography and the political leverage they create.

Before 1867, the various colonies that were to become Canada suffered from the ability of each to impose tariffs on the products of the other as they crossed their territory. A key benefit of Confederation was explicitly to tear down these barriers, turning Nova Scotian or Quebec products into Canadian products that could move freely across the national territory, including to ports for export to world markets.

But as we’re discovering, the thirst of transit provinces for bounty to allow neighbouring provinces to move their products has never gone away.

Our only Pacific province has lately been the most egregious offender, preying on the vulnerability of landlocked Alberta and Saskatchewan in their efforts to get their resources to world markets.

Take the Kinder-Morgan pipeline, intended to bring Alberta petroleum to Asia via the port of Vancouver. Before the just-concluded BC election, the Liberal premier, Christy Clarke, had already shaken down the pipeline company for $1-billion to “allow” the pipeline expansion to be built. The province has no jurisdiction, pipelines being a federal matter, but the province could threaten enough obstructive behaviour that the company could see that peace with the province might be worth a hefty price tag. This is nothing but Third World corruption carried out at the expense of Canadian resources, a corruption only made possible by the arbitrary fact of Alberta’s landlocked geography and Ottawa’s complaisance.

Now BC has doubled down on transit province bounty-seeking, this time targeting thermal coal. The province has threatened a thermal coal export tax, ostensibly to punish the Americans for their softwood lumber machinations, but the result will be to sideswipe Alberta, which might lose as much as $300-million in sales of such coal now going through the west coast. Saskatchewan hasn’t been targeted yet, but they understand all too well that they are no less landlocked, and therefore vulnerable, than Alberta.

Assuming recounts and other factors don’t change the BC election result, the situation will only worsen. With the Green Party, unalterably opposed to Kinder-Morgan, holding the balance of power count on all the parties to vie to outdo each other in environmental virtue and the chauvinistic promotion of BC interests, as if they can be separated from the national interest of all Canadians. Kinder-Morgan is sure to be a flashpoint. This behaviour is a dagger aimed at the beating heart of federalism.

As for the much vaunted new free trade agreement between the provinces, it is silent on this issue, proving yet again what a paper tiger it is. Meanwhile Ottawa, created in 1867 in part to be the guarantor of the integrity of Canadians’ freedom to trade, looks on benignly.

Who speaks for Canada? Answer came there none.

Brian Lee Crowley (twitter.com/brianleecrowley) is the Managing Director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.

 

 

 

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Provincial “free trade” is anything but

In my 14th April column for the Globe’s ROB I lovingly debunk the notion put about by Ottawa and the provinces that the latter have somehow torn down the barriers to trade within Canada that they themselves have created. The unedited text I sent to the Globe read as follows:

2017 is a big year for Canada. The country was founded 150 years ago in an act of supreme statesmanship. It is the 100th anniversary of the battle of Vimy Ridge, where we came of age in a sustained act of courage, heroism and determination. Governments in Canada are now claiming that their recently announced Canada Free Trade Agreement (CFTA) deserves to keep such exalted company and will come into force on July 1st, Canada’s 150th birthday.

 

Does the CFTA deserve such hoopla? On the contrary. While it represents some modest incremental progress on creating a national market open to all Canadians on equal terms, this progress has much to be modest about. Moreover the sordid backroom horse-trading that gave rise to it, in which rent-seeking interests allied to various governments saw many of their unfair advantages maintained, was the very opposite of what the founders of Canada thought they were conferring on their posterity.

 

Yes, it’s very nice that every field of economic activity is now covered by CFTA, as opposed to the old dispensation where only those fields specifically included were covered. But the price the provinces exacted for this was well over 100 pages of exemptions and exceptions to the principle of free trade within Canada.

 

The really tough areas, such as liquor, financial services and regulatory harmonisation?  Well they have promised to study those some more. Don’t try and sell milk or eggs or any other “supply-managed” product across provincial boundaries. The barriers that forced Newfoundland and Labrador to sell their electricity to Quebec at a fraction of its value remain and nowhere I can find do the premiers promise to give up their latest fad: claiming the right to veto pipelines that cross their territory. Alberta is already considering creating a Crown corporation to handle government construction projects to escape the opening of government procurement they just agreed to.

 

Finally, on actually enforcing the rules of free trade our political leaders raised the monetary penalties for non-compliance. Again, very nice. But they’re hoping you won’t notice they have essentially maintained their Rube Goldberg mechanism in which the complaints of businesses and individuals about unfair actions or practices will be the subject of endless intergovernmental consultations and panels whose decisions will come long after the original business opportunity has died from neglect, starvation and exposure. God help you if you want to get the courts to intervene to make governments follow their own rules, because the governments have made it clear they don’t want those bolshie judges sticking their nose in the provinces’ business.

 

It didn’t have to be this way.

 

The very purpose of Confederation, we often forget, was in large part about freeing Canadians to carry on their profession or business across provincial boundaries. As George Brown famously described the vision its authors had of Confederation: “the proposal now before us is to throw down all barriers between the provinces — to make a citizen of one, citizen of the whole.” Such freedom was explicitly to be a matter of shared national citizenship.

 

Responsibility for achieving Brown’s vision was granted to the national government in a broader federalist arrangement. The essence of federalism is, after all, the creation of a unified national economic space while buttressing local identities, be they linguistic, cultural, ethnic or religious.

 

 

Matters of nation-building or common interest – such as the functioning of the national economy – were thus to be entrusted to the newly-created national government rather than provincial or parochial interests.  That’s why it got jurisdiction over peace, order and good government, trade and commerce and national infrastructure. That’s why there is a national open market clause (Section 121).

 

But that’s not what happened with the CFTA. There the federal government continued the appalling tradition of its predecessors in neutering federal power in order to appease the provinces and territories. The result is not only another bad deal for Canadian businesses, workers, and consumers, it’s a disavowal of Confederation itself.

 

The founders gave Ottawa responsibility for the national economy because they expected provincial governments to speak for provincial interests. That’s precisely what happened. Someone needed to speak for Canada.  Instead the silence was deafening.

 

The sheer number of CFTA exceptions is a by-product of how ill-suited the provinces and territories are to protect and strengthen the economic union. Provincial and territorial ministers naturally care more about the interests of Ontario wineries, Quebec funeral directors, Nova Scotia fur harvesters and PEI architects than about the national interest.

 

The CFTA is not evidence, as its authors claimed, that “Canada works.” On the contrary, it is eloquent evidence of Ottawa’s unwillingness to face down the provinces when the national interest requires it. Ottawa exists for a reason; that reason is not, as one former prime minister tartly observed, to be headwaiter to the provinces.

Brian Lee Crowley (twitter.com/brianleecrowley) is the Managing Director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.

 

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What makes Canada great: My talk to MLI’s Canada 150 Dinner, 16th February 2017

Forget diversity, multiculturalism or social programmes. Despite what you may have heard, these are not the things that make Canada great, however desirable they may be in their own right. The things that have brought untold millions to settle in Canada were here long before these ideas ever saw the light of day.

Instead we have to look for the explanation of Canada’s greatness in things like our grounding in the New World, our tradition of freedom and our willingness to sacrifice to protect what really matters. At least that’s the argument I made in my talk at the MLI Canada 150 Dinner on 16th February 2017.

Multiculturalism, public health care and the Charter of Rights and Freedoms are all well and good. But they don’t get at the essence of why true patriots love Canada, says Crowley.

The willingness to sacrifice in order to protect the freedoms uniquely available to us in the New World: now that, ladies and gentlemen, is a country worth celebrating.

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Think what you like of Kevin O’Leary—He is right to call for the restoration of Ottawa’s economic power

Writing in my fortnightly Globe column I make the case that commentators can harrumph all they want at Kevin O’Leary’s plan to discipline the provinces for damaging Canada’s national economic prospects. He is doing nothing the founders of Canada didn’t plan and allow for.  His rhetoric may be a little over the top, but he is not wrong to say that Ottawa has the tools to discipline provinces who act contrary to the national interest (including via withholding some transfers) and that they should be used when circumstances warrant.

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Celebrating Sir Wilfrid Laurier, the founder of modern Canada, on his 175th birthday

Last November 16th MLI issued my talk in celebration of the remarkable life and achievements of Sir Wilfrid Laurier, the founder of modern Canada and one of my personal heroes.

Laurier deserves a venerated place among the historical figures responsible for making Canada the great country we live in today.

As I argue in the piece, “Sir Wilfrid dwells among us through the wisdom and energy with which he shaped politics, institutions, and especially the ideas underlying modern Canada”.

Laurier’s “courage and vision” are largely responsible for some of Canada’s major achievements during a period where he won four federal elections: Opening Western Canada to mass settlement, welcoming unprecedented numbers of immigrants and unleashing a manufacturing and resource boom across the country.

But outside of those accomplishments, Laurier is worthy of our praise for building a foundation of progress and freedom on which Canada today rests.

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Is Canada worthy of true patriot love?

Inspired by a new Angus Reid/CBC poll that shows young Canadians significantly less likely than their older compatriots to feel patriotic about Canada, I wrote my Oct. 11th Ottawa Citizen column about why Canada is worthy of our honourable patriotic love. Young Canadians may be being led astray by the teaching (if one can call it that) now available to them about Canadian history. This approach to canadian history focuses with unseemly glee and zeal on episodes from our history that to modern sensibilities seem errors, and sometimes huge ones. Acknowledging our forebears’ mistakes, however, is no bar to love of country, and dwelling on those mistakes to the exclusion of earlier generations great achievements is many things, but it is not history, nor an appropriate yardstick by which to measure Canada.

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Premiers once again fail internal trade test. When will Ottawa step up?

As I argue in my March 26th column for the Ottawa Citizen and other Postmedia papers, the Liberals have chosen internal trade liberalisation as the one issue where they see eye to eye with the Tories in looking to the provinces to tear down those barriers. Yet the premiers’ own self-imposed deadline of mid-March for an extensive new deal has come and gone without a peep from any of them. The truth is that the provinces are too busy protecting local interest groups to protect Canadians’ rights in this area. Ottawa alone has the authority and legitimacy to do it, but not yet the will despite the fact that it is Canadians’ rights at stake. Bipartisanship in Ottawa deserves a more worthy standard-bearer than this.

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Guaranteed Annual Income: Wrong solution, wrong problem

In my never-ending campaign to Ă©pater les bourgeois (aka the commenters on the Globe’s comments page), my latest column takes aim at one of their favourite policy prescriptions: a guaranteed annual income for Canadians, delivered through the tax system (also called a “negative income tax”). Almost all the arguments advanced in favour of this alleged panacea are deeply flawed and take little account of incentives, human motivation or of the complexity of administering fairly or cheaply a system that will not be simple but rather devilishly complicated.

This column appeared in the 11 Dec. 2015 edition of the Globe’s ROB in their Economy Lab feature.

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The Liberals’ deep roots in free trade

In my early November column for the PostMedia papers (including the Calgary Herald and the Ottawa Citizen) I talk about the Liberals’ deep commitment to the ideal of free trade, reaching all the way back to Sir Wilfrid Laurier and beyond. Sir Wilfrid, who exhorted Canadains to “seek markets wherever they are to be found” would have been a huge advocate of the recently negotiated deals with the EU (CETA) and other Pacific Rim nation (TPP). The fact that they were one of the signature achievements of the outgoing government should not make the Liberals look any less kindly on them. Anyone interested in learning more about Sir Wilfrid’s amazingly modern vision for Canada and why all parties should be pursuing it, have a look at the book I co-authored with Jason Clemens and Niels Veldhuis called The Canadian Century.

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The Great Game and the Greek crisis

In the so-called Great Game, in which Western powers seek through espionage as well as soft and hard power to counter the influence of disruptors and adversaries like Russia, Greece is now an important pawn. There is little question that Greece has repeatedly abused its obligations to repay its vast debts. But, as I ask in my July 10th column for the Globe’s ROB, in a world where Russia seeks actively and unashamedly to extend its power and influence, can Western powers really afford to close the door on its troubled ally?

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Brian Lee Crowley