Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Prime Minister Harper Makes Campaign Promise to Restrict Exports of Raw Bitumen

On September 26, 2008, P)rime Minister Stephen Harper made a campaign promise to restrict the export of raw bitumen (in other words, he promised to ban the export of heavy black oil from Canada's oil sands to countries with lax environmental laws (e.g., China and India) and failed to conform with Canadian carbon emission reduction standards). Canadian raw bitumen is the thick, heavy oil trapped in the oil sands that is transformed into fluid crude oil, that can be transported via pipelines.

Currently, about 30 per cent of Alberta's bitumen is exported to the United States, to be upgraded and refined, with more exports in the works.  Prime Minister Harper is said to have included the United States in the basket of countries who might be faced with the ban.

This promise raises a number of trade-related questions. Would a ban on exports of a product primarily located in one Canadian province infringe provincial jurisdiction (since it relates to natural resources, which are under provincial jurisdiction)?  Would Canada be able to ban exports of raw bitumen to the United states or Mexico under Chapters 3 and 6 of NAFTA?  Would such a ban be permitted under any of the general or Chapter -specific exceptions in NAFTA?  Would such a ban be permitted under Canada's free trade agreements with Israel, Chile, Costa Rica, the EFTA countries, Peru or Columbia?  Would such a ban be consistent with Canada's WTO obligations?

With respect to NAFTA, is raw bitumen considered to be an "energy or basic petrochemical good" and be subject to the proportionality rules in Chapter 6 of NAFTA?  Has the United States tariff classification treatment of imports of raw bitumen limited its ability to make arguments in the future.  Has the United States determinations of origin of products derived from raw bitumen after processing in Canada limited its ability to make arguments in the future?

There are a number of cross border and domestic issues that need to e carefully considered by the Canadian Government and extractors and processors of raw bitumen.

If you have any questions, please contact Cyndee Todgham Cherniak, an international trade lawyer at Lang Michener LLP and an adjunct professor at Case Western Reserve University School of Law and teaches a course on NAFTA and bilateral trading arrangements.  Cyndee can be reached at 416-307-4168.

Leave a Reply

remember my information