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British Columbia’s wine industry has become the first casualty in a rapidly escalating trade war between Alberta and B.C. over the Trans Mountain pipeline expansion project.
Alberta Premier Rachel Notley announced Tuesday February 6 that she will instruct the Alberta Gaming and Liquor Control Board to put “an immediate halt” to the import of B.C. wines into Alberta. B.C. wineries sell about $70 million worth of wine to Albertans each year, Notley said.
She hinted B.C. craft beer could be next in line for a boycott, and she called on Prime Minister Justin Trudeau to do more than just say he supports seeing the expansion completed.
“This is one good step to waking B.C. up to the fact that they can’t attack our industry without a response from us,” Notley said. “I want Albertans to know that we are actively preparing measures to get Ottawa to step up and B.C. to back down.”
She referred to the B.C. government’s announcement on January 30 that it intends to implement restrictions on any increased movement of diluted bitumen from Alberta through B.C. by rail or pipeline – a move Notley called an “unprovoked and unconstitutional attack.”
The restrictions on diluted bitumen are not actually in place yet. But Notley said the mere announcement of the restrictions seem designed to “harass investors” in an attempt to convince Kinder Morgan Canada (TSX:KML) to walk away from the $7.4 billion expansion project.
If B.C. were to be successful in halting the expansion, it will mean an annual loss of $1.5 billion to the Alberta economy, Notley said.
Notley’s first move in response to B.C.’s plans was to cancel talks between the two provinces on beefing up transmission lines to facilitate the increased sale of power to B.C. Notley said those power sales could have been worth up to $500 million.
It has been suggested that those talks had stopped long before B.C. announced its restrictions. In fact, the last meeting between B.C. and Alberta officials took place on January 15, Notley said.
Unless the B.C. government backs down, Notley said her government will continue to look at other legal and economic measures, and hinted the next B.C. product that might be targeted is beer, saying that Albertans buy “a heck of a lot of beer from B.C. And it would not actually be a bad thing for Alberta, should more Alberta beer be drunk. So that is a thing that we’re also looking at right now.”
Under the New West Partnership Trade Agreement between the four western provinces, boycotting B.C. wines could cost Alberta $5 million in fines.
Asked if her government is prepared to absorb those fines, Notley responded: “The cost of not going ahead with the Kinder Morgan pipeline is roughly $1.5 billion a year, just to the Alberta Treasury. So, yep.”
“Albertans didn’t want or invite this fight," she said. "Alberta will not stand by and be the only province impacted by another province’s refusal to play by the rules.”
She referred to the fact that the regulation of pipelines that cross provincial borders is outside the jurisdiction of provincial governments. Legally, B.C. may have no authority to implement some of its planned restrictions.
While Notley praised Prime Minister Justin Trudeau for his recent words of support for the pipeline project, she said more than words are needed now.
At a recent town hall in Nanaimo, Trudeau was heckled by anti-pipeline activists. He had some of them ejected and made it clear that his government stands behind its decision to approve the pipeline.
But Notley said the Trudeau government now needs to take active steps to make it clear to B.C. it does not have the legal authority to place restrictions on federally regulated pipelines.
“The Government of Canada has a number of different tools that it can use to stop the Government of B.C. from threatening the investors with an unconstitutional and illegal law," she said.
“Thus far they’ve not yet spoken specifically to the fact that the B.C. government has threatened an unconstitutional and illegal law. So right there, they need to do more.
“We need the prime minister to step up in a very focused way to make it very clear that, under no circumstances, will the province of British Columbia be allowed to pass regulations which govern what goes into a pipeline."
In a written statement, B.C. Premier John Horgan responded that, if Alberta wants to contest B.C.'s proposed restrictions, the proper place to do it would be in court.
"As part of that work, our government has every right to consult with British Columbians on the best possible measures to protect our lands and waters from the potential impacts of diluted bitumen spills," he said.
“If Alberta disagrees they can make that argument in the proper venue, in our court system. Our consultation on proposed new regulations hasn’t even begun, but Alberta has seen fit to take measures to impact BC businesses.
“I urge Alberta to step back from this threatening position. We stand with BC wine producers and will respond to the unfair trade actions announced today.”
