Kenney wants ‘reprisals’ for blocking Keystone — but what are Canada’s options?

When U.S. President Joe Biden signed an executive order revoking the presidential permit enabling construction of the cross-border Keystone XL pipeline Wednesday afternoon, Alberta Premier Jason Kenney suggested the future of this project could still be up for negotiation, if only the federal government would get tough.

And if U.S. Democrats want to move on and not continue what Kenney called “a constructive and respectful dialogue” about the energy and environmental issues the project raises?

“Then it is clear that the government of Canada must impose meaningful trade and economic sanctions in response to defend our country’s vital economic interests,” he told reporters. “Not doing so would create a dangerous precedent.”

In an interview Thursday with CBC News Network’s Power & Politics, Kenney said he was worried about the precedent that could be set for other pipeline projects if the Americans start retroactively repealing permits.

“The Biden administration refuses to give this country sufficient respect to hear us out on this pipeline. In that policy context then, yes, there absolutely must be reprisals,” he said. “We need to stand up for ourselves.”

WATCH: Alberta Premier Jason Kenney says Ottawa ‘folded’ on Keystone

Alberta Premier Jason Kenney says the federal government ‘folded’ in response to U.S President Joe Biden’s decision to revoke the Keystone XL pipeline. 2:14

But what does Kenney mean by “reprisals”? What’s legally possible? And what’s wise, at this point in Canada’s relationship with a new administration?

Let’s start with the most obvious legal path: seeking damages under Chapter 11 of the original North American Free Trade Agreement.

New NAFTA protects ‘legacy investments’ 

After the Obama administration blocked Keystone’s permit, its owner — then called TransCanada — used NAFTA’s investor-state dispute settlement (ISDS) process to seek $15 billion in damages.

The company later dropped its case when U.S. President Donald Trump reversed the decision. 

Critics of Chapter 11 proceedings say governments should not be constrained in their ability to regulate in the public interest by the threat of lawsuits from corporate investors.

The new NAFTA tried to address this, with stronger measures on the environment and weaker investor protections.

Canada and the U.S. agreed, however, that their ISDS process would continue for three more years, offering “legacy investors” like TC Energy some continued protection.

Because of its $1.5 billion equity stake, the province of Alberta could join the company’s action and try to recoup its own losses. Kenney told Power & Politics he believes Alberta’s case is strong.

But it isn’t a slam dunk. Both TC Energy and the Alberta government could have anticipated that Trump would lose the election and their permit could be revoked. Democratic pledges to block the pipeline should have factored into their investment risk calculations.

On the other hand, Biden wasn’t deterred by the risk of re-igniting a legal case by re-revoking the permit.

“It does set an unfortunate precedent and possibly even has a cooling effect on this type of investment, so I do think Canada should fight hard for this,” trade lawyer John Boscariol told CBC News.

A settlement that compensates for costs and future lost profits could be pricey for the American taxpayer, but it would not reverse Biden’s decision.

Biden acted on ‘climate imperatives’

Chapter 31 of the revised NAFTA also has a state-to-state dispute settlement process — for the times when one country feels another isn’t keeping its commitments.

The U.S. recently initiated a Chapter 31 consultation on Canadian dairy import regulations. Could this executive order on Keystone trigger a Chapter 31 complaint by Canada?

When President Barack Obama made his move, TransCanada argued that Congress, not the president, has the proper constitutional authority to regulate pipeline projects.

Since Democrats will control both the Senate and the House for the next several years, it’s not clear there’s any point in reviving that argument now.

Prime Minister Justin Trudeau, right, meeting with Joe Biden in Ottawa in 2016. (Patrick Doyle/The Canadian Press)

Has the U.S. violated anything in the new NAFTA? That’s also unclear, especially since one of the goals of its do-over was to give governments more power to regulate or legislate in areas like the environment.

Biden’s executive order said the pipeline “disserves the national interest” because the U.S. and the world are facing a climate crisis, and domestic efforts to reduce harmful emissions “must go hand in hand with U.S. diplomatic engagement” as it exercises “vigorous climate leadership.”

“Leaving the Keystone XL permit in place would not be consistent with my administration’s economic and climate imperatives,” it said.

Reacting to the executive order, Prime Minister Justin Trudeau didn’t mention any perceived violations of U.S. trade commitments and made no threats.

“While we welcome the president’s commitment to fight climate change, we are disappointed but acknowledge the president’s decision to fulfil his election campaign promise on Keystone XL,” the prime minister said in his statement Wednesday evening.

International Trade Minister Mary Ng’s office said Thursday that stands as the federal government’s official response.

So what about ‘sanctions’?

Punishing countries that threatened American industries was a feature of Trump’s trade policy.

His administration’s use of “national security” as justification for tariffs on sensitive global commodities like steel and aluminum was denounced as an abuse of measures intended only for emergency situations, such as wars. 

Protecting domestic companies from harm may be important politically, but it’s not “urgent” in a way global trading rules allow.

Retaliation is sanctioned as a remedy following the successful arbitration of a dispute. Even then, it’s meant to be proportionate to the damage done.

When the Trump administration was lashing out with tariffs, Canada joined other countries in demanding a return to “rules-based trade.” 

Canada has tried to play a leadership role on reforms to make the World Trade Organization more effective in resolving disputes.

So it’s difficult to imagine the Trudeau government striking back at Biden’s order with sanctions, however strongly Alberta’s premier insists on retaliation.

While Kenney may resent the fact that steel and auto workers were supported with retaliatory tariffs, while oil and gas workers apparently won’t see the same, the United States’ behaviour in the two cases isn’t really comparable. The steel tariffs were condemned as illegal under global trading rules. Biden’s executive order is not.

Any improvised tariffs Canada could consider now would amount to more taxes on Canadian consumers, at a time when the government wants the economy to grow, not recede further. Lashing out in some other tit-for-tat regulatory fashion to harm the U.S. would most certainly be called out and punished.

Trade wars are not — as Trump once famously suggested — easy to win. Particularly with a much-larger neighbour you need to work with on other files.

“We are going to focus on all of the areas of cooperation,” Foreign Affairs Minister Marc Garneau told Power & Politics Wednesday. “When you develop a relationship with somebody, you take into consideration everything, and there are going to be areas where we have a difference of opinion.”

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As COVID-19 cases in Alberta pass Ontario’s, critics ask: Where is Jason Kenney?

CALGARY — Alberta has surged past Ontario, but it’s a victory no one wanted.

On Monday, the province recorded 1,549 cases of COVID-19, bringing the total number of active cases to 13,166 — the highest in the country. A day earlier, Alberta had for the first time posted a higher daily total than Ontario, a province with three times the population.

But as social media erupted over a recent surge that has propelled the United Conservative-led province almost to the top of Canada’s COVID-19 metrics, Albertans remained free to dine out, shop as desired and gather in groups of as many as 15 or have weddings attended by 50 people.

Premier Jason Kenney, long reputed to be one of the hardest working people in politics, has taken an uncharacteristically hands-off approach to the pandemic, particularly in recent weeks, experts say.

At a news conference 11 days ago — the last time he’s spoken at a COVID-19 presser — he again urged residents to exercise their personal responsibility to curb the near-out-of-control spread of the virus. A few weeks before that, he declared Alberta the “freest” province in the country.

Indeed, as Ontario goes back into lockdown and British Columbia and Manitoba introduce new restrictions, Albertans have remained relatively unencumbered. Kenney has repeated stressed the need to keep businesses open and the economy functioning. He announced the last targeted measures on Nov. 12, which required bars to close at 11 p.m. and stopped group fitness classes.

“COVID-19 is challenging us and we have to rise to this task,” he said at the time, calling outbreaks in long-term care homes in particular, “very troubling.”

But experts say these measures have fallen short of what is needed, and that Alberta will now pay the price.

As cases rocket skyward, the question may be, has the province’s freedom come at a cost?

Kenney, whose second period of isolation due to exposure to COVID-19 ended Monday, was due to head into a cabinet meeting the same afternoon with the specific intent of discussing action. New measures are to be announced Tuesday, but what they will look like is unknown.

“Jason Kenney has a tendency to stick with what he thinks makes sense, whether that’s determined by his ideological perspective or just a sense that he’s right and he knows what he’s doing,” notes Lori Williams, a policy studies professor at Calgary’s Mount Royal University.

“But I think things are getting to the point now where practical realities are just crashing in on Albertans, generally, and that demands a different kind of response.”

Some doctors worry it may already be too late.

Two weeks ago, Dr. Noel Gibney, professor emeritus in the department of critical care at the University of Alberta’s medical school, was among dozens of doctors to write to the Alberta government and propose what’s now become known in other countries as a “circuit breaker,” in which the province is shut down for a short period of time in an attempt to slow the spread of COVID-19 and buy time for the health-care system.

Gibney said he received a note that the letter was received, then watched cases continue to grow steadily. He’s hoping for significant action Tuesday.

“Two weeks from now, the system is going to be absolutely teetering, if not over the brink. And if he doesn’t do it tomorrow, I mean, the consequences, I just cannot imagine. They will be absolutely catastrophic for care in the province.”

When the new numbers were released Sunday, Kenney retweeted Dr. Deena Hinshaw’s plea for people to “continue to follow public health measures,” an appeal to public compliance that has played on loop in the province for weeks, but remained silent. The hashtag #WhereIsKenney was still trending on social media Monday.

In contrast to Ontario Premier Doug Ford, who turns up to a COVID-19 news conference and takes questions most days, Kenney hasn’t attended one since Nov 12.

“How bizarre is that?” asks Dr. Joe Vipond, an emergency room physician in Calgary. “During the Calgary floods, during the Fort McMurray fire, we had our leaders in the media talking to Albertans every single day. This is a magnitude higher than all of those events as far as human toll, and yet, nothing.”



In an email, a spokesperson for Kenney said that the province’s goal from the start has been to protect “lives and livelihoods.”

“The Premier has been front and centre for every major announcement related to the pandemic, including on Nov. 12 when he announced targeted restrictions, and Albertans can expect to see him again tomorrow after today’s Cabinet committee meeting,” the email reads.

But in what some critics see as an attempt to downplay the pandemic, Kenney has emphasized the advanced age of those who have died — “The average age of death from COVID in Alberta is 83, and I’ll remind the house that the average life expectancy in the province is 82,” he told the legislature in May.

Likewise, last week Alberta began publishing a list of the number of people who had died of COVID-19, but also had other health conditions.

“I’ve seen multiple deaths,” Vipond said in response. “I’ve seen people who were living at home quite happily dead in front of me. It’s callous to think that these people, whose deaths could have been prevented, are just cannon fodder.”

Kenney is fond of comparing his province to more populous ones, such as British Columbia, Ontario and Quebec when curtailing spending. But unlike B.C., Alberta has released no modelling since May, and while debate over lockdown thresholds rages in Ontario, Alberta officials have resisted calls to clarify what, exactly, would prompt action.

Ford, in particular, stands in contrast to Kenney. A fellow conservative, he’s taken on a more public role in his province’s pandemic response, a strategy that has not gone unnoticed in the West.

“The one huge contrast between Ford and Kenny is that Ford seems very much to feel the impact of this on the people of Ontario. He seems to have empathy, to be emotionally connected and concerned about the impact of the pandemic, both in terms of health care and on the economy,” Williams said.

“Jason Kenney is much more intellectual in his dealings with things,” she said. “He doesn’t sort of appear to feel the impact that a lot of Albertans do.”

Taken in conjunction with Alberta’s “inexplicable” battle with doctors over pay during a pandemic — after talks broke down, the government cancelled their agreement in February and rolled out its own — and the government’s rejection of the federal exposure notification app in favour of its own version, which as of last week had been used for just 19 cases, Williams says Kenney’s image has suffered.

“I suppose some of this makes sense in terms of Jason Kenny’s attitude toward government, in that he thinks the government should be a bit more hands off and that responsibility and initiative on the part of individuals should be championed, but that doesn’t seem to line up with the reality.”

According to a Leger survey released last week, Albertans were the unhappiest in the country in terms of their province’s pandemic response, with 59 per cent reporting being very or somewhat dissatisfied. In comparison, 31 per cent of Ontarians said the same, as did just 13 per cent of people in Atlantic Canada.

Regardless of what action is taken Tuesday, Gibney says, Alberta is already locked into a trajectory of more cases and more deaths.

He compares Kenney’s focus on personal responsibility to the rhetoric espoused by some Republican leaders in the U.S., and says that, fittingly, the rates of infection and ICU cases in Alberta are beginning to look a lot like the American situation, too.

“There’s no question we’re heading off on our own. Our numbers are starting to look much more like Wisconsin, Texas. And much of the Midwest,” he said.

“It has in my mind, set us on a trajectory where we’re going to have unnecessary deaths that shouldn’t have taken place.”

Calgary-based reporter for the Star. Follow her on Twitter: @alex.n.boyd



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As 330,000 Albertans lose their jobs, Kenney unveils tax cuts, $10B in spending to lift economy

Alberta Premier Jason Kenney says he’s recently been reading about former U.S. President Franklin Roosevelt’s stimulus-spending response to the Great Depression of the 1930s.

It’s likely a timely read, as his government faces the most severe contraction of economic activity and employment in more than a generation.

On Monday, Kenney and finance minister Travis Toews hoped to channel FDR with a plan to counter the province’s double-digit jobless rate and one of the largest economic contractions among Canadian provinces this year.

The Alberta Recovery Plan features $10 billion in new infrastructure spending and a tax cut to eight per cent from 10 per cent, that takes effect as early as Wednesday, in a bid to stimulate the province’s economy.

The approach, Kenney said, inspired in part by FDR’s attempt to stimulate the U.S. economy during the 1930s and also informed by a report written by a panel led by economist Jack Mintz. The panel also included former prime minister Stephen Harper.

“The $10 billion is not necessarily the maximum,” Kenney said of the spending package, adding that details of the infrastructure projects will be announced in the coming days.

Monday’s announcement seeks more provincial investment and incentives for industries, including petrochemical projects to diversify and support the energy industry, irrigation infrastructure to support the agriculture industry and potentially support for a high-speed railway link between Calgary and Banff being studied by the Canada Infrastructure Bank to boost the tourism industry.

The soon-to-be announced new incentives, new spending and cut provincial corporate taxes is an attempt to drive down the province’s unemployment rate and boost investment after the COVID-19 pandemic and the collapse in oil prices sapped business sentiment.

The reduction in oil production during the second quarter contributed to the province’s economic turmoil.

Suncor handout

Every sector in the province took a significant hit during the pandemic and oil prices collapse. Toews said that oil production fell 25 per cent in the second quarter, while the value of non-residential building permits dropped 25 per cent. Meanwhile, retail sales are down 30 per cent and home sales are down 40 per cent since February.

A new Royal Bank of Canada forecast expects Alberta’s economy to shrink by 8.7 per cent this year — the second-worst performing economy in Canada after Newfoundland and Labrador.

“Most dramatically and sadly, more than 330,000 Albertans have lost their jobs. This amounts to the number of jobs Alberta’s economy added over the last decade,” Toews said, adding the official unemployment rate is 15.5 per cent but when the number of people no longer looking for work are counted, the real unemployment rate is closer to 20 per cent.

When the number of people not looking for work are counted, the real unemployment rate is closer to 20 per cent

Alberta Finance Minister Travis Toews

The NDP, the province’s opposition party, called the economic response to the pandemic a “trick” of trickle-down economics, while its leader Rachel Notley called the tax cuts an attempt to “speed up the rate in which he (Kenney) is handing out billions to big corporations.”

Given the current level of economic uncertainty in the province and in the global economy, it will be difficult to measure the effectiveness of the tax cuts on job creation, said Trevor Tombe, associate professor of economics at University of Calgary.

“It’s going to be hard to quantify the implications of any policy change right now,” Tombe said, adding that the province’s estimate of 55,000 new jobs created by the tax cut over the next four years “is not an implausible estimate.”

A rebound in employment is more dependent on global economic conditions than on the provincial economy, said Joseph Doucet, dean of the Alberta School of Business at the University of Alberta.

“It’s really, really hard to be definitive about numbers because we’re not in a regular or usual environment,” Doucet said, noting that the pandemic had upended economic expectations.

Alberta would also table an economic outlook later this summer that would provide a “frank” look at the province’s finances following the coronavirus-induced shutdown of the economy, Kenney said in an interview.

The province had previously planned to reduce corporate taxes to eight per cent from 10 per cent — a 20 per cent cut — over the next two years, but accelerated those changes in an effort to show companies interested in opening offices in Alberta that “the tax gap is real and it’s now,” Kenney said.

Other governments in Canada and elsewhere had previously promised to cut business tax rates but changed their plans as circumstances changed, Kenney said. As a result, those companies “talked to us and said, ‘Come back when you actually get to eight per cent’,” he said.

Business Council of Alberta president and CEO Adam Legge said many companies in the province are poised to lose money this year “and they’re not going to be paying tax anyway.”

“Alberta can be more highly competitive now. It’s more of a long-term piece than helping in a very down year,” Legge said.

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