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Canada looks to reset strained US ties with energy pact

Canada’s new prime minister, Justin Trudeau, wants his ‘bromance’ with Obama to yield some concessions on energy

When Canadian prime minister Justin Trudeau travels to Washington DC in March for a state visit with US President Barack Obama, he’ll be looking to reset a bilateral relationship strained by nearly a decade of growing animosity that culminated in the rejection of the Keystone XL (KXL) pipeline in November.

On 10 March, Trudeau will be fêted at a White House gala – the first accorded a Canadian prime minister in more than 19 years. It is an inordinately long time for two countries that share the largest trading relationship and longest undefended border in the world.

Energy is sure to dominate the discussions. And given the KXL rejection – Trudeau supported the pipeline, though he took the decision in stride – there will be lots to talk about.

Trudeau previewed the message he’ll be taking to the US capital at a media briefing in Calgary, where he also met with some of the country’s largest oil producers. Market access for Canadian oil – a topic dear to Canada’s producers, which face transportation constraints by the end of the decade – will be on the agenda. He also spoke of the need to harmonise environmental policies “to create a level playing field” with its North American Free Trade Agreement (Nafta) partners.

“One of the things I’ve been talking about for quite a while is the need to engage with the US – and Mexico – in a continental energy strategy,” Trudeau told Petroleum Economist. “This is something the Americans and Mexico have been asking for for quite some time and something that Canada wasn’t engaged with. We all understand that being able to create a level playing field across North America, with a similar level of engagement and responsibility, is something we should look at with a positive eye.”

Strengthening ties

Much has changed in the two decades since the last state visit. Canada’s oil exports have steadily grown and it is now the largest crude supplier to the US market, by far. Canada shipped 3.6m barrels a day south in December of 2015, accounting for nearly 40% of all US oil imports and more than double the next nearest rival, Saudi Arabia, at 1.24m b/d.

Despite the increasingly tight integration between the two countries – American companies produce roughly half of Canada’s oil – KXL signaled that all was not well with the relationship, especially on the issue of climate change.

Canada’s previous Conservative government’s sceptical climate stance worsened the relationship with Washington and made it easy for Obama to turf the pipeline. It also branded Canada as a climate laggard around the globe. Trudeau wants to change that image by taking leadership on the issue. Now, he seems more than willing to entertain Obama’s green agenda and be part of it. “We want to make sure we’re leading the world in terms of being more responsible on the environment while remaining competitive,” Trudeau says.

As the son of a former prime minister, the younger Trudeau is no stranger to the White House. His father Pierre, who took a notoriously antagonistic stance with his American counterparts on energy issues, attended two state dinners, one hosted by Gerald Ford in 1974 and the other with Jimmy Carter in 1976. Richard Nixon famously toasted the Trudeau fils as Canada’s future prime minister when he was barely a year old in 1972.

In the run-up to Canada’s general elections, Trudeau took pains to cultivate good relationships with the American embassy in Ottawa at a time when former prime minister Stephen Harper was given to belittling Obama over the issue of KXL. The ploy worked. Trudeau and Obama are said to enjoy a strong personal relationship – called a “bromance” by some – that culminated in his invitation to Washington.

For all the cosying-up, it’s not yet clear that the US is ready to grant real concessions to Canada, especially on the energy file. A re-evaluation of KXL seems unlikely as long as Obama remains in office. His term expires in November. Trudeau is keenly aware of the challenge and he says he is prepared to work with any new administration after the US election cycle. But he recognises that time is short.

“Right now as Obama is trying to get things done at the end of his time as president there’s an opportunity for Canada to get things done as well. There’s a nice synchronisation as he wraps up his mandate and I begin mine. There’s a nice alignment that we’ve spoken about that will hopefully set the table for positive relations between Canada and the US beyond the next election. I look forward to that.”

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