October 10, 2018 Read More →

Canada carves out protections for Trans Mountain pipeline in new free trade agreement

The Star:

Experts say an annex in North America’s newest trade agreement could protect the Trans Mountain pipeline expansion from financial difficulties.

The United States-Mexico-Canada Agreement (USMCA) forbids all three governments from giving non-commercial assistance to Crown corporations, meaning governments can’t help corporations restructure debt, rescue a corporation from bankruptcy, or support activities that will have “adverse effects” in another country.

All three governments chose certain Crown corporations to be exempt from these rules. The Trans Mountain Corporation is one of Canada’s picks.

Under USMCA’s Annex IV, the federal government can support Trans Mountain Corporation with non-commercial assistance “for the sole purpose … to return (the enterprise) to viability and fulfil its mandate.” The government is allowed to provide assistance to the pipeline until Trans Mountain Corp. is privatized or 10 years have passed since the original agreement.

Blake Shaffer, an energy adviser at the C.D. Howe Institute, said the annex could put a time limit on the government’s ownership of the Trans Mountain expansion project. “It’s … noteworthy that a countdown is on,” Shaffer told iPolitics. “At the very least, it makes it a credible statement when the federal government says it doesn’t plan to remain in the pipeline business.”

Jack Aubry, a spokesperson for the ministry of finance, refuted that claim, saying there is “no specific” timeline for the divestment to occur — only that the agreement allows Trans Mountain to be exempt from UMSCA rules governing other Crown corporations for 10 years.

More: USMCA protects Trans Mountain from money problems: experts

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