Big Oil appears to be a clear winner in the new United States-Mexico-Canada Agreement (USMCA) reached by U.S. President Donald Trump, Canadian Prime Minister Justin Trudeau, and outgoing Mexican President Enrique Peña Nieto.
In fact, the American Petroleum Institute, a Washington-based association representing oil and gas corporations, is already calling on the U.S. Congress to approve the deal.
Their media release on the agreement highlights the five areas they are the happiest about:
“Key provisions of the agreement related to the U.S. natural gas and oil industry include: continued market access for U.S. natural gas and oil products, and investments in Canada and Mexico; continued zero tariffs on natural gas and oil products; investment protections to which all countries commit and the eligibility for Investor-State Dispute Settlement (ISDS) for U.S. natural gas and oil companies investing in Mexico; requirement that Mexico retain at least current level of openness to U.S. energy investment; additional flexibility allowing U.S. customs authorities to accept alternative documentation to certify that natural gas and oil have originated in Canada or Mexico upon entering the U.S.”
While the American Petroleum Institute is celebrating, Friends of the Earth succinctly cautions, “This agreement is an attack on our ability to hold Big Oil and Gas accountable for the damage they cause to our communities.”
Market access
As to “continued market access for U.S. natural gas and oil products”, Alexander C. Kaufman notes in the Huffington Post, “The updated deal preserves a provision that requires the U.S. government to automatically approve all gas exports to Mexico, despite another rule mandating regulators consider the public interest.”
Chapter 11
Here, Kaufman points out, “The new deal limits [investor-state dispute settlement] rights, with one major exception: U.S. oil and gas companies.”
He notes, “Under the rules, firms that have, or may at some point obtain, government contracts to drill or build infrastructure like pipelines and refineries in Mexico — such as ExxonMobil Corporation — can challenge new environmental safeguards Mexican President-elect Andrés Manuel López Obrador has vowed to erect.”
And Brock University political science professor Blayne Haggart has highlighted that Article 34.7 in the new agreement constrains all three governments with a “regulatory chill” effect similar to Chapter 11 thus further restraining future policies to defend the climate.
Alternative documentation
It would also appear that the USMCA will save Canadian-based oil and gas corporations tens of millions of dollars a year.
CBC reports “A border bottleneck that cost Canadian oil producers as much as $50-$60 million every year also appears to have been addressed. Under the old NAFTA rules, oil and gas producers had to prove the origin of their product right back to the wellhead if they were to be exempt from duty at the border.”
That article adds, “[The Canadian Association of Petroleum Producers] says the new trade agreement allows a proportion of diluent — up to about 30 per cent — without Canadian producers paying that fee.”
Energy proportionality
But surely it’s a win that the energy proportionality clause was not included in the USMCA?
That was the odious and controversial provision that prohibited any restriction that would cut oil and gas exports to the U.S. from Canada below a three-year average.
JWN (which has as its motto “trusted energy intelligence”) reports, “With the U.S. gushing oil at record levels, America apparently no longer needs to preserve Canada as its emergency crude supplier. “
While we can (and will) celebrate the end of the energy proportionality provision as a win, the American Petroleum Institute sours the mood when it casually (given its obvious hegemonic power) notes that preserving the provision was “not a priority.”
Good for Big Oil, bad for the climate
Along with energy proportionality, the words “climate” and “warming” were also not mentioned in the agreement despite the United States, Canada, and Mexico respectively ranking as the second, ninth, and 12th biggest emitters of carbon dioxide in the world.
Further evidence that Big Oil won with this agreement is the market’s response when the deal was announced. Reuters reports, “Oil futures jumped more than $2 a barrel Monday, rising to levels not seen since November 2014…”
That article further explains, “Phil Flynn, an analyst at Price Futures Group in Chicago, said the NAFTA deal would boost oil prices because it ‘increases the growth prospects not only for Canada and the U.S., but for North America as a whole’.”
“Growth prospects” means more oil and gas being extracted, more violations of Indigenous rights, more climate refugees, more climate fatalities, more chaos.
While big business is celebrating its win, others suggesting it was the best deal that could be reached, and some just feeling relieved, sober analysis increasingly tells us that three deeply neoliberal governments reached an agreement that hurts people and the planet.
Brent Patterson is a political activist and writer.
Image: nate2b/Flickr
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