Nafta And Canadian Energy Policy- Analyzing Article 605 And Exposure To International Oil Prices
Abstract
In 2008, Gordon Laxer, political economist at the University of Alberta, and John Dillon, Global Economic Justice Program Coordinator for KAIROS, released a report entitled “Over a Barrel: Exiting from NAFTA’s Proportionality Clause”. The two authors believe there to exist within NAFTA a clause that threatens Canadian energy security and sovereignty in regards to accessing domestic oil and natural gas resources; the clause they refer to is Article 605 of NAFTA. This report analyzes the theoretical and practical implications of Article 605 as it pertains to Canadian access to oil. It does so through a comparative analysis of two scenarios: the first represents a Canada free from any responsibility to the NAFTA energy clause; the second scenario represents the country’s current reality, responsible and accountable to the stipulations of NAFTA and Article 605. The common unit of analysis is exposure to international oil prices – reasons for which are elucidated in the paper. The findings of the research suggest that Article 605 could, indeed, have an impact on Canadian access to oil. Perhaps more controversially, the research also indicates that the current impact of Article 605 could by be quite minimal, and that infrastructure limitations represent a greater impact in terms of Canadian exposure to international oil prices and the possibility of supply shortages.