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Alberta

The USMCA’s self-destruct button: review clause conjures fears of 2018 all over again

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WASHINGTON — It’s been less than three years since the U.S.-Mexico-Canada Agreement replaced NAFTA as the law of the land in continental trade, and there are already hints of the existential anxiety that preceded it.

That’s because of the so-called “sunset provision,” a clause that reflects the lingering working-class distrust of globalization in the U.S. that helped Donald Trump get elected president back in 2016. 

Article 34.7 of the agreement, the “review and term extension” clause, establishes a 16-year life cycle that requires all three countries to sit down every six years to ensure everyone is still satisfied. 

That clock began ticking in the summer of 2020. If it runs out in 2026, it triggers a self-destruct mechanism of sorts, ensuring the agreement — known in Canada as CUSMA — would expire 10 years later without a three-way consensus.

For Canada, the sunset provision “is a minefield,” said Lawrence Herman, an international trade lawyer and public policy expert based in Toronto.

“It is certainly not a rubber-stamping exercise — far from it.”

Of particular concern is the fact that the provision doesn’t spell out in detail what happens if one of the parties indicates that it won’t sign off on extending the deal without significant changes to the terms. 

“The concern is that this could mean, in effect, that we’ll be into a major renegotiation of CUSMA in 2026,” by which time the political landscape in both the U.S. and Mexico could look very different, Herman said.

“What happens then? The government and business community need to be thinking about this and start preparing the groundwork and doing contingency planning now.” 

The deal as it stands is hardly perfect, if the number of disputes is any indication. 

In the 33 months since USMCA went into effect in July 2020, 17 disputes have been launched among the three countries, compared with a total of 77 initiated over the course of NAFTA’s 25-year lifespan. 

The U.S. remains unhappy with how Canada has allocated the quotas that give American dairy producers access to markets north of the border. Canada and Mexico both took issue with how the U.S. defined foreign auto content. And Canada and the U.S. oppose Mexico favouring state-owned energy providers.

The Canada-U.S. disputes are likely to be on the agenda when Prime Minister Justin Trudeau sits down later this week in Ottawa with President Joe Biden, his first official visit to Canada since being sworn in two years ago. 

“The president’s really excited about doing this, about going up there and really going to Ottawa for no other purpose than the bilateral relationship,” National Security Council spokesman John Kirby told the White House briefing Monday. 

Prior meetings between the two have typically been on the margins of international summits or at trilateral gatherings with their Mexican counterpart, Andrés Manuel López Obrador. 

Kirby cited climate change, trade, the economy, irregular migration and modernizing the continental defence system known as Norad as just some of “a bunch of things” the two leaders are expected to talk about.

“He has a terrific relationship with Prime Minister Trudeau — warm and friendly and productive.”

Trade disputes notwithstanding, the overwhelming consensus — in Canada, at least — is that USMCA is vastly better than nothing. 

“I don’t want to be alarmist about this, but we cannot take renewal for granted,” said Goldy Hyder, president and CEO of the Business Council of Canada, after several days of meetings last week with Capitol Hill lawmakers. 

Constantly talking up the vital role bilateral trade plays in the continent’s continued economic health is a cornerstone of Canada’s diplomatic strategy. The message Hyder brought home from D.C.? Don’t stop now.

“We met several senators, we met people from the administration, and their message was, ‘Be down here. Make your case. Continue to remind Americans of the role that Canada has in their economy,'” he said. 

“We’ve got to … be a little less humble in the United States and start reminding Americans just how much skin in the game that they have in Canada.”

That can be a challenging domestic political truth in the U.S., where deep-seated resentment over free trade in general and NAFTA in particular metastasized in 2016 and persists to this day. 

Biden likes to put a blue-collar, Buy American frame around policy decisions. His original plan to advance electric-vehicle sales saved the richest incentives for vehicles assembled in the U.S. with union labour.

Aggressive lobbying by Canada helped avert a serious crisis for Canada’s auto sector; the Inflation Reduction Act that Biden ultimately signed included EV tax credits for vehicles assembled in North America. 

For many, it was a cautionary tale about the importance of arguing Canada’s interests in Washington. 

A strong U.S. depends on a strong Canada, said Rob Wildeboer, executive chairman and co-founder of Ontario-based auto parts supplier Martinrea International Inc., who took part in last week’s D.C. meetings.

“The USMCA and the ability to move goods across borders is extremely important to us, it’s extremely important to our industry, it’s extremely important to this country, and it’s a template for the things we can do together with the United States,” Wildeboer said. 

“In order for the U.S. to be strong, it needs strong neighbours, and Canada’s right at the top of the list.”

This report by The Canadian Press was first published March 21, 2023.

James McCarten, The Canadian Press

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Alberta

Free Alberta Strategy backing Smith’s Provincial Priorities Act

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News release from Free Alberta Strategy

Premier Danielle Smith had a message for Ottawa last week.

Keep out.

On Wednesday, the Premier rolled out her latest weapon in the fight against federal intrusions into provincial jurisdiction.

If passed, Bill 18 – the Provincial Priorities Act – aims to align federal funding with provincial priorities, ensuring that said funding reflects Alberta’s interests.

The legislation stipulates that any agreements between the federal government and any provincial entities – including municipalities – must receive provincial approval to be considered valid.

Smith has already given it a nickname: “the stay-out-of-my-backyard bill.”

It’s an apt description of the legislation, especially considering that’s what the federal government has been doing for years – encroaching into Alberta’s jurisdiction.

The legislation shouldn’t come as a surprise to anyone.

We all know that most deals the Alberta government enters into with the federal government don’t work out for Albertans.

We end up paying more in federal taxes than gets spent in federal spending on the programs.

The programs come laden with restrictive conditions that undermine our autonomy, and are often detrimental to our ability to provide the services.

This is especially true with regard to the recent agreement between Ottawa and the provinces that allows the federal government to nationalize childcare.

The childcare agreement has come under heavy criticism due to funding shortfalls in the deal.

It also applies to housing, where despite Alberta accounting for 12% of the national population and experiencing the most rapid population growth, it received a mere 2.5% of the total $1.5 billion in federal housing funding last summer.

Jason Nixon, Minister of Seniors, Community and Social Services, is in charge of housing in Alberta – which is provincial jurisdiction.

On the latest rollout of conditional federal housing handouts, Nixon isn’t buying.

“We will not be bribed, with our own money, to increase the time it takes to get homes built with green energy that makes homes more expensive.”

The theory also applies to the federal government’s latest gambit – doing an end-around provincial negotiations and going directly to municipalities, who seem more interested in taking the money than the conditions attached.

Municipalities are provincial jurisdiction.

Bill 18 mandates that entities within Alberta’s jurisdiction, such as municipalities, universities, school boards, housing agencies, and health authorities, must seek the province’s approval before engaging in, modifying, extending, or renewing agreements with Ottawa.

Agreements between the federal government and provincial entities lacking Alberta’s endorsement will be deemed illegal under this legislation.

That’s Premier Smith’s message.

She’s had enough of it.

“It is not unreasonable for Alberta to demand fairness from Ottawa. They have shown time and again that they will put ideology before practicality, which hurts Alberta families and our economy. We are not going to apologize for continuing to stand up for Albertans so we get the best deal possible.

“Since Ottawa refuses to acknowledge the negative impacts of its overreach, even after losing battles at the Federal and Supreme Courts, we are putting in additional measures to protect our provincial jurisdiction to ensure our province receives our fair share of federal tax dollars and that those dollars are spent on the priorities of Albertans.”

Municipal Affairs Minister Ric McIver had additional thoughts:

“For years, the federal government has been imposing its agenda on Alberta taxpayers through direct funding agreements with cities and other provincial organizations. Not only does Alberta not receive its per capita share of federal taxpayer dollars, the money we do receive is often directed towards initiatives that don’t align with Albertan’s priorities.

“Albertans from all corners of the province expect our federal share of taxes for roads, infrastructure, housing and other priorities – not federal government political pet projects and programs in select communities.”

The Provincial Priorities Act is based on existing provincial legislation in Quebec – called “An Act Respecting the Ministère du Conseil executif” – which prohibits any municipal body from entering into or negotiating an agreement with the federal government or its agencies without express authorization from the Quebec government.

That’s right – the Quebec government has the same rule!

So, this boils down to the same argument we’ve been making for years – if Ottawa wants to step into our backyard, it must first seek Alberta’s approval.

Enough is enough – we won’t stand idly by as our interests are trampled upon.

It’s time for Ottawa to recognize Alberta’s autonomy and respect our right to determine our own future.

At the Free Alberta Strategy, we know that constant vigilance is necessary – for every fence we put up, the federal government tries to find a way around it.

We’ll continue to bring you information about what’s happening in Alberta’s backyard and fighting to keep Ottawa out.

The Free Alberta Strategy Team

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Alberta

Building a 21st century transit system for Calgary

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From the Frontier Centre for Public Policy

By Randal O’Toole

Calgary Transit is mired in the past, building an obsolete transit system designed for an archaic view of a city. Before the pandemic, transit carried 45 percent of downtown Calgary employees to work, but less than 10 percent of workers in the rest of the Calgary urban area, showing that Calgary Transit doesn’t really serve all of Calgary; it mainly serves downtown.

That would have worked in 1909, when Calgary’s first electric streetcars began operating and most jobs were downtown. By 2016, less than 15 percent of Calgary jobs were downtown, and the pandemic has reduced that number further.

Rather than design a transit system that serves the entire urban area, Calgary Transit light-rail system reinforced its downtown focus. Transit ridership has grown since the city’s first light-rail line opened in 1981, but it was growing faster before the light rail began operating than it has since then. Now Calgary Transit is planning even more downtown-oriented light-rail lines.

Light rail is an expensive form of low-capacity transit. The word “light” in light rail refers not to weight but to capacity: the American Public Transportation Association’s transit glossary defines light rail as “an electric railway with a ‘light volume’ traffic capacity.” While a light-rail train can hold a lot of people, for safety reasons a single light-rail line can move no more than about 20 trains per hour in each direction.

By comparison, Portland, Oregon runs 160 buses per hour down certain city streets. An Istanbul busway moves more than 250 buses per hour. Bogota Columbia busways move 350 buses per hour. All these transitways cost far less per mile than light rail yet can move more people per hour.

Once they leave a busway, buses can go on any city street, reaching far more destinations than rail. If a bus breaks down or a street is closed for some reason, other buses can find detours while a single light-rail breakdown can jam up an entire rail line. If transportation patterns change because of a pandemic, the opening of a new economic center, or the decline of an existing center, bus routes can change overnight while rail routes take years and cost hundreds of millions of dollars to change.

To truly serve the entire region, Calgary Transit must recognize that buses are faster, more flexible, and can move more people per hour to more destinations at a lower cost than any rail system. It should also recognize that modern urban areas have many economic centers and use buses to serve all those centers.

Besides downtown, Calgary’s major economic centers—the airport, the University of Calgary, Chinook Center, the Seton health center, and others—are mostly located near freeway on- and off-ramps. Calgary Transit should identify ten or so such centers geographically distributed around the region. It should locate transit centers—which need be no more than curbside parking reserved for buses with some modest bus shelters—near the freeway exchanges closest to each center.

It should then operate frequent (up to five times per hour) non-stop buses from every center to every other center. A few secondary transit centers might have non-stop buses operate to just two or three other centers. Local bus routes should radiate away from each center to serve every neighborhood of the Calgary urban area.

Since non-stop buses will operate at freeway speeds, the average speed of this bus system will be more than double the average speed of Calgary’s current bus-and-rail system. Transit riders will be able to get from any corner of the urban area to any other part of the urban area at speeds competitive with driving.

Such a polycentric system will serve a much higher percentage of the region’s workers and other travelers than the current monocentric system yet cost no more to operate. It will cost far less to build than a single rail line since most of the necessary infrastructure already exists. While some may worry that buses will get caught in congestion, the solution is to fix congestion for everyone, not spend billions on a slow rail system that only serves a few people in the region.

It is time for Calgary Transit to enter the 21st century. A polycentric bus system may be the best way to do it.

Randal O’Toole is a transportation policy analyst and author of Building 21st Century Transit Systems for Canadian Cities. 

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