Ontario Premier Kathleen Wynne turned a few heads recently when she opened the door to buying electric power from Quebec on a long-term basis.
Both Manitoba and Quebec have a wealth of hydroelectric power and Ontario buys more than 80 per cent of its imported power from Quebec already at the market price.
The timing is also curious. The federal government is about to release the details of the comprehensive economic and trade agreement with the European Union, something that may be the catalyst to get the provinces talking seriously about better internal trade relationships.
For the last year or so, groups like the Ontario Clean Air Alliance have been pushing the idea of mothballing nuclear generation at the Darlington station and replacing that power with cleaner hydro from Quebec. They say it will be $1.2 billion cheaper between 2020 and 2050 than the cost of nuclear power if Ontario signs long-term contracts with Hydro-Québec.
The political pressure and lobbying are clearly starting to pay off, but there’s a long way to go. As it stands, about 23 per cent of Ontario’s power comes from hydro with 5.8 per cent from solar, wind, biomass or waste and 11 per cent from natural gas. The heavy lifting, however, is at the Bruce, Pickering, and Darlington nuclear generating stations that produce about 60 per cent of the province’s energy. The province will mess with that source at its own peril.
Certainly, Quebec is hungry for more markets as its U.S. exports fade and the Americans become more self-sufficient while Ontario needs power to develop the Ring of Fire mineral deposits. So the timing is right for both sides.
But what does Ontario have that it could to sell to Quebec? Every viable trade relationship needs reciprocity. That shoe has yet to drop.
McGill University associate professor of economics Christopher Ragan also points out another hurdle. “Increasing Quebec’s electricity capacity means the construction of more hydro generating stations, and this will require more development in Quebec’s northern regions,” he wrote in
The Globe and Mail. First Nations, he noted, will demand a share of the revenues and there will have to be careful consultations and consideration around the environmental impact.
Certainly, interprovincial trade barriers have long been an impediment to commerce in Canada. The idea that Quebec and Ontario are mulling a central Canada pact, much like the western provinces consult each other, makes sense.
Combined, Ontario and Quebec constitute Canada’s largest economic region with 20 million people generating 56 per cent of the national gross domestic product and more than half of the exports to other provinces.
Yet despite a free-trade agreement with the United States and the 1995 interprovincial agreement on internal trade, many businesses face restrictions on what they can sell in other provinces.
The European Union deal presents an opportunity to break down those barriers. In a recent position paper, the Ontario Chamber of Commerce noted the deal would “escalate these internal obstacles to trade unless these barriers are removed within the next two years before CETA comes into force.” It suggested it would cost less than $10 million to resolve some of those issues.
The organization wants Ontario to lead the way in liberalizing agreements under the 1995 deal and form blocks when the provinces can’t reach a full consensus.
Further, any new agreement should cover all levels of government and have a dispute-resolution mechanism through a panel with binding and enforceable powers. The organization also wants significant fines for non-compliance.
In the meantime, opponents of the European trade deal are mobilizing against it. The concerns include the new restrictions on local procurement and potential impacts on public services.
We’ll see. A trade deal with Europe may or may not be a good thing for Ontario since we’ve yet to see all of the informed analyses of it, but it would make a lot of sense to explore capturing some of the $14 billion we’re losing annually to interprovincial trade barriers.
Ian Harvey has been a journalist for more than 35 years writing about a diverse range of issues including legal and political affairs. His e-mail address is [email protected].
