NAFTA energy clause draws criticism from Canadian voices on the right and left
CALGARY — As NAFTA 2.0 negotiations begin, an old trade issue with a strange name has emerged to create unlikely allies across the political spectrum and staunch defenders in the oilpatch.
The “proportionality clause” originally appeared in the Canada-U.S. Free Trade Agreement of 1988 and became a major issue in that year’s federal election that returned Prime Minister Brian Mulroney to office. It was replicated six years later in the North American Free Trade Agreement (although Mexico won an exemption).
The clause can be invoked if a government in Canada reduces U.S. access to Canadian oil, natural gas, coal, electricity and refined petroleum products without a corresponding reduction in domestic access to those products — in other words, the ratio of energy exports versus supply must remain consistent, or proportional.
The left-leaning Council of Canadians says the clause erodes sovereignty and gives the U.S. too much control over Canadian energy production.