Introduction
Over the years, Canada has shown the capability to establish and maintain a stable and reliable political and social system, in addition to a healthy and flourishing economy. Even though empirical evidence indicates Canada to have a comparatively small population in relation to its outsized territory, it is remarkable for the wealth of contribution it has made towards global developments.
The stability in Canada’s economy is documented to emanate from its rich and plenty resources, especially in the energy sector, as well as its capability to build an open energy market. These include complex legislative measures that encompass all the territorial authorities, federal and the provincial administration (Jiang 6). Having the biggest oil sands in the world, economists prophesy that Canada has the capability to become the next energy superpower
However, in consideration of the environmental impacts that exploitation of these energy sources has caused to Canada, its surrounding states, and unto the entire globe, these exploitations have generated intense argument. VanNijnatten, Craik, and Studer (44) assert that the numerous controversies that surround energy exploitation in Canada’s oil sands has a diverse impact on the country’s credibility internationally, more profoundly in consideration of awareness of global environmental acts that entail global warming and the global climatic changes. The intense clash is noted to have reached its climax in the recent rejection of Keystone XL pipeline.
This position placed Canada, a long time treasured nation, into an awkward dilemma. Keystone refers to centred source of stability and support; however, in this case, the term fails to fulfil its obligation. Keystone XL pipeline, which was initiated by one of the well-known pipeline company in North America aimed to link a stable and increasing supply of American and Canadian crude oil with the biggest refining market in the US. Nonetheless, since its proposal, Keystone XL pipeline has had a number of critics, hindering its success. Apart from the well-known environmental impact linked to the Keystone Pipeline, there are other various issues that still are contested by a number of stakeholders in this project (VanNijnatten, Craik, and Studer 47).
Key facts about Keystone Pipeline
Black et al. (3) indicate that the Keystone Pipeline is about 2,673 kilometres long and 36 inches wide. This pipeline starts from Hardisty, Alberta and extends to the southeast via Saskatchewan, Montana to Oklahoma. The pipeline has the capacity to convey 830,000 barrels of oil in each single day. Markedly, Trans-Canada undertakes the project; it remains one of the main providers of energy infrastructure in North America. The project is estimated to have consumed 7 billion U.S dollars. Trans-Canada infers that this project will create direct jobs to more than 20,000 individuals and 118,000 spin-off jobs for the period of its construction.
Controversy around Keystone Pipeline: Proponents and Opponents
Immediately the Trans-Canada issued application for the Keystone XL pipeline, a number of stakeholders raised various concerns touching on the possible impacts that this project might bring. Most often, on the one hand, the supporters of the project dwell on the potential economic benefits, and, on the other hand, challengers of the project lay emphasis on the possible environmental risks of the project.
Proponents
Concisely, the involved partners, primarily individuals from the gas industry with the support of both the Canadian provincial government and the Canadian federal government claim that the project in question stand to benefit both the US, as well as Canada. The proponents argue with the points discussed below.
Promote both United States and Canadian economy
Jiang (20) ascertains that the proponents of project argue that its construction has noteworthy contribution to both the US’s energy stability and economy, which is approximately 20 billion US Dollars. In addition, these proponents claim that during the operation life of the pipeline, the two states through which the project bypass will have a considerable income in property taxes.
Job creation both in United States and in Canada
Similarly, the proponents of this project point out that the project should improve the US’s energy stability over a considerable long duration of time. Additionally, the supporters of the projects note that the keystone Pipeline is expected to create direct jobs to more than 20,000 individuals and 118,000 spin-off jobs for the period of its construction to both Canada and the United States (Jiang 26).
Promote national energy security to United State of America
Likewise, the clique allied to the project accentuates that the Keystone Pipeline project can lead to a stable, reliable, and consistent supply of oil to the US. According to Jiang (27), the clique argue that when Keystone Pipeline is completed, the project could possibly supply 5% of the petroleum that is currently consumed by the US. Markedly, the move will cut the US import of oil from Middle East or Venezuela, apparently lessening over dependence on the East.
Pipeline is under strict environmental management
Environmental concern remains the major a thorny issue to the entire globe, proponents of Keystone Pipeline believes that in constructing the pipeline, all the environmental regulations, laws, and obligation will be observed. This will entail compliance to any applicable environmental legislation. In fact, to this point, Trans-Canada, as the primary figure in construction of this pipeline, pledged full commitments to environmental care in relevance to the existing environmental concerns (Black et al. 36).
Canadian Export Competitiveness in the US Market
(VanNijnatten, Craik, and Studer 31)
Opponents
The Keystone Pipeline appears as the most memorable contentious issue in both the US’s and Canada’s large-scale energy project. Critics that include governments, public citizens, politicians, economist, as well as environmental watchdogs have varied reasons to argue against the project. Common to the group is that almost all the allegations that support the project has been challenged. Some of the reasons that opponents give against the construction of the Keystone Pipeline are discussed below.
Keystone Pipeline will lead to excessive oil transportation
Slocum (4) indicates that in opposing the construction of Keystone Pipeline, certain experts have ascertained that there exists an extensive overcapacity of oil pipeline flowing from Canada. The experts predict the overcapacity to arise from the Alberta Clipper pipeline, which is owned by Enbridge, a competitor of TransCanada. Therefore, construction of Keystone Pipeline is arguably unnecessary. Probably, this is because either the Keystone Pipeline will run fully or half empty after a short operation. To these opponents, since a pipeline cannot be converted for any other use, then construction of Keystone Pipeline will be a waste of capital and resources.
Besides, they argue that Keystone Pipeline could possibly create little job in the two nations. According to Slocum (4), the allegations that keystone Pipeline could possibly create direct jobs to more than 20,000 individuals and 118,000 spin-off jobs for the period of its construction to both Canada and the United States is rendered void by a study that established that construction of this pipeline could barely employ between 2,500 to 4,650 temporary construction jobs. In addition, this will result in an elevated oil price in Midwest, thus possibly lessening national employment in both countries.
Keystone Pipeline is exporting energy security
Contrary to the allegations of the proponents of Keystone Pipeline that this project will support the US’s energy stability, as well as reduce the America’s dependence on import of oil from the Middle East countries, a number of experts claim that the project intend to export oil. In particular, the Gulf Coast refiners that is positioned at the end of the Keystones Pipeline route, confirms the claim of export expansion. Moreover, the category of oil sands crude Keystone Pipeline distribution boosts the ability of the project to export the oil (Slocum 13).
Against the claim of the proponents that this project aims to reduce the prices for the US consumers at the pump, in contrary, evidence ascertains that this project could defiantly raise the prices. The project seeks to build a pipeline with a larger capacity to transport more barrels of oil, even without the Keystone Pipeline. Empirical evidence ascertains that currently Canada exports 1.2 million barrels of crude oil to United States. At the same time, the pipeline that exists now can possibly convey approximately twice the current flow (Slocum 14).
This crude oil is refined at the Midwest refineries before being sold to both the United States and Canada’s consumers. Certainly, this move if accomplished will lead to a higher price in the Midwest market, rather than lower the prices as the proponents’ claims. In addition, empirical research indicates that North America oil market has numerous suppliers, such as Midwest link to West Texas International and East Coast Link to Brent, making it enjoy a relatively lower cost. Possibly, since TransCanada is aware of this, the company might be attempting to expand their sales with the Keystone Pipeline project to the Gulf Coast.
In fact, according to Slocum (16), in the Natural Resource Defence Council report released in May 2012, Keystone Pipeline would permit producers of tar sand in Canada to transport crude oil to the Gulf Coast refineries at a cost equivalent to the international prices. This would out rightly reduce supply in the Midwestern, thus levelling the oil price in the region. Therefore, the outcome will mean that the oil prices shoot in the Midwestern region due to scarcity. This scheme will defiantly increase oil prices in the United States. This is in contrast to the claim by the proponents of Keystone pipeline proponents that the project aims to lower oil price in the United States (Slocum 17).
Another outstanding pretence that the proponents of the Keystone pipeline claim is that the project would promote national energy security to the US citizens. This could be in the essence of a steady supply of oil at relatively lower cost to the US’s market. However, on the contrary, empirical research ascertains that the project aims to increase its capacity to export oil to the Texas Gulf Coast region.
Similarly, analyses of the Keystone pipeline project indicate that United States would probably pay $27 billion Dollars extra for the crude oil that comes from Canada (Jiang 28). Evidently, the impact of shift in shipping of crude oil from Midwest to the Coastal refineries in combination to continuous export from the Gulf Coast does not hold for the allegations that this project could possibly promote national energy security to the entire United States of America.
Another deception in the Keystone Pipeline project is the claim by the proponents of the project that it aims to boost the economy of both nations. Notably, both divides collectively agree that the main purpose of construction of Keystone Pipeline project is to connect the production sites of tar sand to the Gulf Coast refineries. The project aims at creating a difference in the oil market. This will definitely ship the landlocked tar sand oil to regions that can easily allow for exportation of the refined oil (VanNijnatten, Craik, and Studer 47). This is a basic fact that is unanimously accepted; yet still, the proponents of this project intend to convince the public that the pipeline would boost the economy of both countries.
The most contented issue in the construction of Keystone Pipeline project is possibly the environmental justice. Debatably, construction of pipeline would violate several environmental justices. On the one hand, the proponents of this project have anticipated some environmental effects that the TransCanada as the construction company is ready to tackle. The company claims to have the capacity to put into control environmental management measures. On the other hand, environmentalists have sampled a number of factors that need to be addressed before the authorisation of the construction. These include the rights of the occupants of lands that the pipeline is likely to pass through, negative impacts on aquatic, land, and biodiversity, as well as carbon emission.
Black et al. (74) point out that a number of opponents of the project mainly for environmental justice such as ecologist, church groups, and climate scientist have vehemently opposed the project citing the various reasons. From the research, the greenhouse gas emission that could possibly to be emitted from the Canadian oil sands might escalate to 82% bigger than the standard currently produced if the project is approved. Clearly, for the survival of humankind in an environment that favours a healthy living in relation to civilisation developments, prohibiting construction of this pipeline is out rightly a deserved act.
Perhaps the proposal by the proponents to allow the pipeline pass through the Sand hills in Nebraska, a vast wetland ecosystem, to the Ogallala Aquifer, which is one of the prime reserves of fresh water known globally, could have been a better option for tackling the environmental risk raised by the opponents. Regrettably, Ogallala Aquifer as noted, extents into eight states; it supplies fresh drinking water to over two million families. In addition, this water source supports agriculture worth $20 billion (Black et al. 89).
Therefore, in instances of any major leakage of oil, this could damage drinking water, putting the lives of a huge number of people at risk. Furthermore, as the research reveals, some sections of the pipeline is expected to pass through a lively seismic region (Black et al. 91). Given these alarming environmental and health risks that the construction of Keystone Pipeline project pose, it would be sensible to prohibit the construction of this pipeline in reverence to the concerns of the humankind.
Besides, the threats that Keystone Pipeline project pose to the ecosystem and the rights of the natives, this project could probably pose an extra difficulty to Canada’s capacity to limit oil extraction in the future. This would arise in the essence that North America Free Trade Agreement (NAFTA) compels Canada to avail to US a similar proportion of its supply of both gas and oil (VanNijnatten, Craik, and Studer 66). Consequently, over exploitation of these Canada’s oil reserves, which this Keystone Pipeline project definitely promotes, would possibly make the country to face a domestic shortfall of energy power in the near future.
Conclusion
The idea of constructing Keystone Pipeline might seems lucrative to the proponents of the project, while from the vast information revealed by this research, the project will have diverse effects on the natives as well as the government of both involved states. It is, therefore, clear that the Keystone Pipeline project is a waste of both resources and endangering the lives of the people globally.
Introduction
North America Free Trade Agreement (NAFTA) was a trade agreement signed by the three major players of North America, that is, the United States of America, Mexico, and Canada; it commenced its operations in January 1, 1994. Due to this agreement, America and Canada suspended the already existing bilateral Free Trade Agreement (FTA), which came into force in 1989. In the new trade agreement that is, North America Free Trade Agreement (NAFTA), both the United States and Canada decided to do away with tariff and nontariff barrier to trade in both goods and services. Additionally, the two states agreed to allow for an improved access to services as well as strengthen their protection against investments by foreign members.
Promptly after the signing of North America Free Trade Agreement (NAFTA), the member states accomplished an additional agreement that was concerned with labour and environmental issues. In this agreement, all the parties to NAFTA had the mandate to impose their respective labour laws and national environmental regulatory. However, the overall economic impact of North America Free Trade Agreement could be difficult to quantify. This could possibly arise because of complexity in trade and investment trends as the two are influenced by several economic variables (Villarreal and Fergusson 2). These may include currency fluctuation, economic growth as well as both global and the specific state’s inflation.
Even though there existed other trade agreements at the time NAFTA was initiated, the new agreement may have hastened trade liberation in the North American States. On the contrary, some argue that these modifications could have occurred in the presence or absence of a trade agreement. However, the fact is that the impact of NAFTA as the most comprehensive free trade agreement is undoubtedly of great significance to the North American States. This is because the initiation of NAFTA is evidently the key to ground breaking of numerous provisions that allow for better trade deals in the North American States. Even with the numerous benefits of NAFTA, the agreement to date has several critics that site various reasons for their opposition to this trade agreement.
Right from the conception of NAFTA, there arose numerous disputes; typically, some were due to it being the first free trade agreement that would encompass two well off, advanced, and an emerging nation. The argument that surrounded this issue was so intense with a number of proponents on the one hand prophesying that NAFTA would assist the involved states to create thousands of job opportunities for their citizens. In addition, these supporters of the North America Free Trade Agreement argued that this agreement would help curtail income disparity in the region.
On the other hand, opponents of North America Free Trade Agreement cautioned that the agreement, unlike is prophesised, would cause huge job loss to the involved states. More specifically, the antagonists argued that the massive loss of employment would most significantly affect the US, as most of its firms would move their production units southwards to Mexico due to the low cost of production in the country. In actual sense, the North America Free Trade Agreement neither led to huge job loss that its opponents panicked of nor brought enormous economic gains that its supporters envisioned. Generally, the net overall impact of NAFTA on the United States’ economy appears moderate to date. This is associated to small percentage of trade that the US has with Canada and Mexico (Villarreal and Fergusson 4).
Key facts about North America Free Trade Agreement (NAFTA)
Pastor (169) notes that the North America Free Trade Agreement (NAFTA) had set aside to tackle numerous issues that hindered free trade amongst the North American Countries. Some of the issues were integrated from the previous free trade agreements, while some issues aroused right at the conception of the agreement.
Amongst the issues at NAFTA that were incorporated from the Free Trade Agreement include providing national considerations for service providers that were covered by the states and loosen monetary service trade. This aimed at facilitating cross-border movements for commercial authorities. Likewise, NAFTA was committed to issuing sufficient national considerations to investments that would originate from an individual. Even though with slight limitations, NAFTA prohibited imposition of routine necessities entailing import replacement, content from the local regions, or necessities for indigenous track down.
In addition, with the effect of NAFTA, this agreement outlawed majority of exports and imports limitations on energy products that would be traded by the NAFTA member-states. Notably, this would include minimum and maximum export prices. At the same time, Hoyos and Iacovone (185) noted that in expanding the magnitude of the central government’s procurement marketplace, the agreement made it possible for dealers from different nations to participate equally in the bidding process. However, this did not include procurement by regional governments.
The issues that arose specifically from NAFTA’s conception takes account of cultural exemptions. Similarly, North America Free Trade Agreement provided for exemptions to Intellectual property rights (IPR), which did not get any considerations in the previous Free Trade Agreement. Moreover, the investment and transport departments in the Canadian energy segment were exempted from the North America Free Trade Agreement. Furthermore, this agreement attempted to tackle vices that are associated to trade such as dumping and countervailing duty by initiating trade remedies against these evil (Dade and Strarr 2). Equally, in the North America Free Trade Agreement, Canada managed to exempt its agricultural sector in supply management system. Nevertheless, Canada devoted to permit for limited escalation in the importation of eggs, poultry, and dairy.
Overview of North America Free Trade Agreement (NAFTA) provision
Dade and Strarr (4) point out that at the time of NAFTA’s negotiations, a vast number of US’s export on agricultural products required import licensing to other states within the North American region such as Mexico. The region trade faced several challenges as some states had several red tapes and other non-tariff barriers that included an official import price, thus the agreement was a blessing to the region. It is worth noting that by the time North America Free Trade Agreement was implemented, the United States and Canada had a cordial relationship that allowed free trade making lesser tariff barriers.
This reflected into one-third of the global output amounting to more or less 1 trillion US Dollars. Likewise, North America Free Trade Agreement promoted tariff and nontariff, trade liberation, foreign investment, rules of origin, rights protection, dispute resolution, service trade, intellectual property, and government procurements (Acosta, Foster, and Sullivan 117). In addition, in a detached NAFTA side agreement, the negotiation incorporated labour and environmental provisions. Considering all these factors, North America Free Trade Agreement (NAFTA) is arguably an admirable trade agreement that purpose to flourish the economy of North American States.
North America Free Trade Agreement economic effects
Both researchers and economic scholars alike have the same opinion that trade liberation upholds a wholesome economic development and competence amongst the trading associates. Nevertheless, in an ideal situation, the partners must undertake short-term adjustment cost for its efficiency. According to Hoyos and Iacovone (189), the situation of NAFTA was an abnormal in the global term. This could possibly be because NAFTA was the first instance where a free trade agreement connected two high incomes and industrialised countries with a poor developing country.
Due to this unique characteristic of the agreement, the agreement received a substantial attention from the stakeholders. Probably, one will accentuate that this was a clear indication for the success of this trade agreement. Additionally, due to the unique characteristic of this agreement, the policymakers had to ensure that all the stakeholders were involved and persuaded to play an active role in the implementation process. In consideration of involvement of the entire stakeholders’ community, it is indeed true that the agreement would generate numerous jobs to the involved states citizens. These could be possible if policymakers and oversees of the project would equally be required for its success.
In addition, the North America Free Trade Agreement (NAFTA) trade liberation could possibly lessen income disparity, as the involved states would perhaps use a stable currency for the prosperity of the region. Besides, Cooper (2) indicates that trade liberation makes price control for the involved partners easy. This would limit exploitation of the public, while at the same time lowers the overall cost of production and manufacturing, as there would be stiff competitions, allowing for ease of access of goods and services. In essence, limitation on exploitation of the public will naturally lead to income stabilisation, thus reducing income disparity to the member states.
Progress of multilateral trade structure
Some critics of NAFTA assert that this agreement undermines the progress of multilateral trade structure, as it is likely to hinder global trade liberalisation. In their view, the US and other national states should not be involved in not only North American Free Trade Agreement NAFTA, but also in other FTAs while they neglect the multilateral trade agreements. This group argues that NAFTA is fostering discriminatory aspects, thus causing trade diversion. As a result, this group asserts that in honour of NAFTA, the involved states divert their trade to the members’ states to fulfil the trade agreement obligations.
Contrary to the argument, empirical research ascertain that the United States and Canada who are major partners in North American Free Trade Agreement only limit their trade to certain commodities, but not all. Similarly, in opposing this critique of undermining progress of multilateral trade, it is equally arguable that even though liberalisation of multilateral trade is crucial, nations should optimally utilise other trade avenues such as regional FTAs, as well as bilateral trade agreements even when they can result in trade diversions.
Villarreal and Fergusson (12) further argue that the regional trade agreements, NAFTA inclusive, could prove exceptionally effective in addressing complex trade barriers. Possibly, regional trade agreements can help in compromising difficult trade regulations, and at the same time helping to provide momentum for multilateral trade with new ideas on tackling each obstacle in trade. Furthermore, economists claim that regional trade agreements could possibly support global trade liberalisation.
In this essence, they assert that regional trade promotes coexistence in such regions – a point that exclusively describes the North American situation. Therefore, to this extent, NAFTA is much more involved in economic integrations than its attempts to eliminate tariffs. Cooper (8) points out that because of NAFTA, Mexico as a member of this trade agreement has affirmed its dedication to economic reforms. This could possibly lead to an efficient economy, making regional trade agreements such as NAFTA to be of great importance.
Other critics of North America Free Trade Agreement argue that the agreement has had numerous unhelpful effects on the region. In this, they claim that the agreement lead to inferior wages and outsourcing the US economic capability (Villarreal and Fergusson 18). At the same time, in Canada, the North America Free Trade Agreement caused job dislocations, in particular, in the in agricultural sector. Despite these critics, several economists, policymakers, and business representatives still have trust in this agreement, and unanimously indicate NAFTA as an achievement.
To date, the economic drivers attempt to re-structure North American Trade Agreement and to give it a force that aims to improve trade affairs, as well as economic amalgamation for the greater region. In fact, both the critics and proponents of NAFTA concur that the three involved States of North America should examine and determine where the agreement failed so that they can rebuild the future of the continent’s economy and trade associations. Possibly, the two groups acknowledge that NAFTA could create more attempts to minimise income disparity within the North American region, an aspiration that was the fundamental reason for the establishment of NAFTA.
Moreover, in an attempt to enhance security in the North American regions, the United States of America, Mexico, and Canada have all put an effort to amplify their cooperation in various fields. These include a common market and transport line amongst others, and most remarkably by partaking trilateral summits, which is recognised as North American Leadership Summit (Villarreal and Fergusson 21). The graph below shows comparison of American new cars retail trade and the Canadian sales and exports of motor vehicle parts. Notably, the recorded increases in sales are due to the impacts of the agreement.
Other issues that calls for the re-structuring of the NAFTA
Apart from the issues highlighted above, other several issues call for re-building of NAFTA. Some of these pertinent issues are discussed below.
The rising number of regional trade agreements
Throughout the world, there is a growing trend of trade agreement to enhance trade relationships with various countries. The biggest threat to North American region is the presence of China in the area. Villarreal and Fergusson (24) indicate that China has made several advancements in the North American region. To this end, economic experts caution that this advancement may hinder an efficient relation within the region.
However, apart from the economic effects that a region is likely to realise by joining such trade agreements, investment ties with neighbouring states enhance corporate governance, climatic justice, industrial rights, as well as democracy in the region. These benefits are likely to diminish in the presence of trade cooperation of any of the North American States with China (Villarreal and Fergusson 25). To avoid these damages in the North American Region, the stakeholders need to modernise the NAFTA agreement.
The benefits are as shown graphically below.
Trade in intermediate goods and chain supply
Various economic professionals lay great emphasis on the significance of North American trade in supply chains management and transitional products. In support of NAFTA, the experts highlight that the governing bodies of the three North American States ought to cooperate in the aspect that may entail an increased investment in cross-border infrastructure. Possibly, this initiative could enhance small-size as well as medium-size business cooperation in the region (Acosta, Foster, and Sullivan 125). Significantly, this could improve cooperation, create job to the citizens and, at the same time, reduce the income disparity in the region.
Conclusion
The world is a complex society with various individuals and with different motives. Like any other trade agreements, NAFTA is not an exceptional; hence, the agreement is noted as making great attempts to promoting peace within the North American region, settle disputes in a constructive manner, as well as stimulate economic growth in the North American region. In addition, NAFTA attempted to provide more choices of product and services with varied quality to the citizens at lower prices, thus cutting the expenses incurred by the citizens. Nevertheless, the agreement failed to seal all the loopholes to its downfall, giving critics an upper hand in this debate. Consequently, attempts to revive the NAFTA should first analyse the weaknesses and amend where necessary to ensure prosperity. Precisely, NAFTA was and still is a good idea for tackling the North American regional issues.
Works Cited
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VanNijnatten, Debora, Neil Craik, and Isabel Studer. Climate Change Policy in North America: Designing Integration in a Regional System. Toronto: Canada: University of Toronto Press, 2013. Print.
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