Free Trade and Trans Mountain Pipeline

Pipeline Expansion Raises Serious Questions About Direction of the Economy and Its Control

- K.C. Adams -

Action in Vancouver, June 18, 2019, following the announcement by the Trudeau government
that it plans to proceed with the pipeline expansion.

The federal government's buyout of the Trans Mountain Corporation and expansion, with another pipeline to Vancouver, raise serious economic issues that Canadians should consider. These issues are in addition to the environmental concerns and the desire of Canadians to humanize the social and natural environment.

How did Alberta reach this stage that its ruling elite consider that without pipelines to tidewater the sky will fall? Enormous quantities of oil and natural gas have been exported from Alberta for decades, generating billions of dollars in revenue. Where did that revenue go? Who had control of it and how was it invested? It certainly did not go into making the Alberta economy all-sided, stable and less dependent on exporting raw and semi-refined material and the capriciousness of the U.S. imperialists, otherwise it could not be suggested the sky would fall without the Trans Mountain Expansion (TMX).

For all the grandeur of Calgary, the U.S. energy giants and military only have eyes for Alberta's oil and natural gas and could care less for the viability of its economy and well-being of the people. The development of Alberta's energy sector coincides with the integration of Canada as a whole into the continentalism and now globalism of U.S. imperialism. All energy roads and money head south and that includes the Trans Mountain pipeline, which mainly feeds refineries on the U.S. west coast. The BC lower mainland has to import much of its gasoline and jet fuel from the U.S.!

State-Owned Enterprise

  Emergency action outside the Prime Minister's Office, June 19, 2019, to protest the Liberal government's approval of the Trans Mountain pipeline expansion.

The Trans Mountain Corporation is now a state-owned enterprise (SOE), which before neo-liberal globalization and integration into the U.S. Empire, Canadians called Crown corporations. During the era of British colonial control, Crown corporations or SOEs were an aspect of nation-building and opposition to U.S. continentalism as well as being pay-the-rich schemes when big companies, such as the railways, fell into financial trouble.

Destroying Crown corporations or their privatization played a role in integrating the Canadian economy into the U.S. Empire. The U.S. imperialists, in targeting Alberta, have waged a very successful campaign to keep Crown corporations out of the energy sector. The effort to organize Petro-Canada in 1975 as a viable SOE collapsed in 1990 under the sustained attacks from the U.S. energy giants and neo-liberal ideological pressure.

SOEs or Crown corporations in Canada formed part of civil society under British colonialism along with responsible government and the development of liberal democratic institutions. Those institutions are no longer viable under the current conditions of neo-liberal global imperialism, the extraordinary power of the financial oligarchy and the enterprises under the control of specific oligarchs and the victory of U.S. continentalism in integrating Canada into its war economy. Democratic renewal, empowerment of the people and a new direction for the economy are required.

The U.S. imperialists see foreign SOEs as enemy competitors that must be destroyed or privatized so that U.S. oligarchs can gain control and seize the added-value the SOE workers produce. Instead of SOEs, the imperialists have now devised pay-the-rich schemes that hand out public money to powerful private interests as a normal business practice. SOEs, such as Canada Post, benefit the ruling elite as a whole, whereas direct pay-the-rich schemes give public monies directly to the most powerful oligarchs and their enterprises.

Developing countries use SOEs as a defence against plunder by the most powerful imperialists. As countries become more developed and a local ruling elite become more powerful, the SOEs fall out of favour and are replaced with other pay-the-rich schemes and private enterprises, such as Huawei in China.

SOEs were specifically targeted in the neo-liberal free trade deals such as the North American Free Trade Agreement. The conceit is that SOEs do not serve private interests and are therefore de facto unfair competition for private interests, whereas pay-the-rich direct bailouts, state concessions, contracts, loans, tax relief, free state-supplied material and social infrastructure, and tariffs, boycotts and embargoes of entire countries and their production are not or at least not as easily identified as such.

The attack on SOEs is repeated in the new negotiated NAFTA called the Canada U.S. Mexico Agreement (CUSMA). CUSMA Chapter 22 restricts SOEs or Crown corporations from competing with for-profit private corporations even if an SOE is pursued in the public or national interest as defined by a government. However, the Trans Mountain Corporation SOE has been given a special exemption because it benefits the U.S. imperialists, particularly companies on the U.S. west coast, and their war economy and does not compete with any private interests at this time. The federal buyout of Trans Mountain was in fact a bonanza for certain financial oligarchs. The SOE and its existing Trans Mountain pipeline and its proposed expansion will operate at a loss, according to those who have examined the toll fees to be charged the energy companies for shipping bitumen. Also, the U.S. imperialists, with their militarized economy and insatiable thirst for oil, consider the pipelines crucial to deliver feed stock to their refineries on the U.S. west coast.

Gordon Laxer in his report on Trans Mountain Corporation, "Beyond the Bailout," writes, "The CUSMA exemption for the Trans Mountain Corporation makes it even easier for Ottawa to use its unlimited finances to subsidize the pipeline expansion. The exemption states that even though assistance to the corporation may adversely affect the interests of another country in supplying pipeline operation services, 'Canada may provide non-commercial assistance in circumstances that jeopardize' the corporation's viability."

Laxer points out that without the ratification of CUSMA, the existing NAFTA remains in force, which does not include an exemption for the now SOE Trans Mountain Corporation. The NEB approved tolls to move oil through the expanded pipeline are considered low and therefore a state-subsidy and in violation of NAFTA's rules against SOEs.

CUSMA also includes an exemption to allow the Trans Mountain Corporation to "accord more favourable treatment to aboriginal persons and organizations in the purchase of a good or service." This presumably would be to use Indigenous ownership as a weapon against the lack of consent for the pipeline expansion amongst many Indigenous peoples both along the route and in the BC Lower Mainland.

The issue of who benefits (cui bono) from the expansion of the Trans Mountain pipeline holds special interest. The construction is under the control of private corporations as is the supply of material. The energy companies that will fill the pipelines with bitumen are private, mostly foreign, giants. The demand for bitumen will almost certainly come from the U.S. west coast refineries. Canada now has only one small refinery in the Lower Mainland in Burnaby.

The Trudeau government says it will eventually sell Trans Mountain Corporation back to the private sector, in particular to Indigenous investors, but first the operation must be "de-risked." For now, the SOE will reportedly run at a loss given the low tolls to be charged to transport oil and the huge amount invested in buying the existing pipeline and expanding it. The CEO of Trans Mountain even publicly warned investors, including Indigenous investors, to wait until the expanded pipeline is built and operational, and tolls can be increased and the investment "de-risked."

With the extraordinary admission or warning to potential private owners, the CEO seems to be saying: Wait until the expansion is complete and the immense value put into it and then investors can submit bids below the price of production, which the government will consider. Or perhaps a bid can be entertained from Indigenous investors if that mutes opposition to the expansion.

The current direction of the economy, including TMX, is towards war, class privilege for the ruling oligarchs, insecurity for working people, destruction of the social and natural environment and generally an economy and society beyond the control of the people.

Many Canadians are discussing and looking for a new direction for the economy that extricates it from the U.S. war economy, makes inroads against class privilege, guarantees the well-being and security of the people, humanizes the social and natural environment and brings control to the people through democratic renewal and their empowerment.

For further information on the expansion project for the Trans Mountain pipeline see:

- "Alberta Government Passes Legislation to Restrict Oil Shipments to BC," TML Weekly, May 19, 2018; and

Economic Analysis: Trans Mountain Pipeline Buyout

(Photos: TML, A. Nasimi.)

This article was published in

Volume 49 Number 23 - June 22, 2019

Article Link:
Free Trade and Trans Mountain Pipeline: Pipeline Expansion Raises Serious Questions About Direction of the Economy and Its Control - K.C. Adams

    

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