Monday, March 12, 2012

Oil from Canada's tar sands - Of Business interests and national positions

The seal trade and oil from tar sands seem to be two international issues that Canada is facing. The issue of oil from tar sands being more polluting and being declared as such by an EU regulation has been a matter of debate within international trade law community for sometime now. I had blogged about this issue here and here .

Recently the Reuters reported that an EU technical group had failed to reach a consensus about declaring oil from tar sands as more polluting than conventional crude oil. The Guardian covered a detailed piece on the controversy here while another piece here  reported on the latest stand-off.

Canada has taken a strident stand to protect it's local tar sands oil industry claiming that the measure is discriminatory and treats tar sands on a different footing than conventional oil. "National interest" here seems to be defined in terms of the business interests of the domestic oil production companies vis a vis environmental standards and climate protection. Canada has even threatened WTO action against the EU if the measure is not dropped.

An interesting debate between Robert Howse and Simon lester on this is found here and here in the IELP blog with the issue of "like products" in international trade law jurisprudence and whether the measure is discriminatory in violation of certain provisions of the GATT and TBT being discussed in the context of a WTO dispute.

I found another interesting aspect of this dispute in the recent reporting of the stand-off - What position a country takes in the international fora on an issue is guided not only by a "transcient" national interest based on principles of law and justice but on real business interests. This is evident in this:

Reuters in the above piece reported thus:
"I think some (EU nations) were clearly worried about the impact of this directive on their own costs and on their own companies, who are invested in a variety of countries, including Canada, with a number of them having invested tens of billions of dollars in the oil sands," said Oliver.
Big European firms with stakes in the oil sands include Royal Dutch Shell and Total of France."

The belief that certain members opposed the EU measure on the grounds of legal jurisprudence and WTO obligations may be naive. The argument that a country takes is guided by interests of corporations operating there rather than an independent assessment of the international obligations relating to the issue. Interestingly a US Congressional Research Service Report alluded to Chinese business interest in Canada's tar sands industry. Do business interests of large multinational corporations have an impact on decisions of individual member countries? Is this legitimate "national interest"? Am I just being alarmist or is this a non-issue since the reality of international trade and business mandates a close interplay of domestic policy and business interests?


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