The Keystone of the U.S.-Canada Relationship

With more back-and-forth in Washington over whether jobs will be created or the environment negatively impacted, the U.S. debate over the Keystone...

With more back-and-forth in Washington over whether jobs will be created or the environment negatively impacted, the U.S. debate over the Keystone XL pipeline is now in its seventh year.

Submitted on September 19, 2008, the TransCanada Corporation pipeline application was presumed to be the equivalent of “watching paint dry, the absolute definition of boredom.”  With some 70 pipelines already in existence, the Keystone XL would be just another one, a practical and logical extension of the developing energy revolution underway within North America. The 2,600-plus mile pipeline linking the oil production of western Canada with U.S. refineries along the Gulf Coast was considered a win-win for both countries, economically and strategically.

Instead of being routine, U.S. consideration of the Keystone XL has undermined the confidence between Washington and Ottawa and clouded next steps in the continental relationship.

Having created extra bureaucratic review processes, the U.S. State Department released its “final supplemental environmental impact statement” in January 2014.  That assessment replaced the “draft supplemental environmental impact statement” of March 2013.

In that January 2014 statement, the State Department concluded that Keystone would not significantly worsen global warming.  This should have cleared the way for a presidential decision.  However, the application remains “under review” at the State Department, per White House instruction.

There is a reasonable concern in both countries that the delays on Keystone have undercut the foundation that had been laid with the U.S.-Canada Free Trade Agreement and reinforced by the North American Free Trade Agreement.  Over the past 20 years, Canada has redefined its economic well-being from an attitude of closing the 49th parallel (the border between the two countries) to bilateral economic integration that totals more than $730 billion in the two-way trade of goods and services. Overall, the trade and investment relationship amounts to $1.4 trillion.  This economic nexus is especially notable in the area of energy:  Canada is the number one supplier of energy to the United States.

The relationship between the United States and Canada runs deeper than a pipeline, however.  The two nations share a geographic, cultural, political and economic heritage. As President John Kennedy said in an address before the Canadian Parliament in 1961, “[g]eography has made us neighbors. History has made us friends. Economics has made us partners. And necessity has made us allies”  President Reagan reaffirmed the unique relationship in a 1985 speech in Quebec City:  “We’re more than friends and neighbors and allies; we are kin, who together have built the most productive relationship between any two countries in the world today.”

So, while the keystone of the U.S.-Canadian relationship is a shared set of values and interests, not a pipeline, the irony of the Keystone XL approval process is that it comes at a time when North American energy self-sufficiency is a reality. Unfortunately, U.S. procrastination on the Keystone XL has caused Canada to more vigorously look to Asia for energy export markets.  Such a reorientation could be at the expense of this continent’s prosperity and long-term competitive edge.

This is exactly the moment to enhance an integrated energy market, consolidating the continent’s position in the global marketplace.  The Keystone XL pipeline is an integral step in achieving that objective. 

Daniel Fisk is a Fellow with the Bush Institute’s Economic Growth initiative.