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Ottawa — Canada’s Natural Resources Minister is raising the prospect of a trade fight with the European Union over its proposal to label oil-sands crude as dirty even as both sides try to seal a major deal to liberalize two-way.
In Brussels on Wednesday, Natural Resources Minister Joe Oliver said Ottawa would consider launching a complaint with the World Trade Organization, the global referee for commercial disputes, if the EU proceeds with a fuel-quality directive that singles out crude from Canada’s oil sands as the most harmful to the planet’s climate.
The directive would effectively slap an import tax on oil-sands crude because refiners who use it would face extra costs. EU refiners are required to cut carbon content in fuels by 6 per cent or pay a penalty.
Ottawa fears the directive would hurt Canada’s ability to open new markets for its oil and depress prices for North American crude. “This fuel-quality directive is discriminatory towards Canadian oil and not supported by scientific facts,” Mr. Oliver said.
A spokesman for International Trade Minister Ed Fast said that Ottawa believes Canada’s campaign for better treatment for the oil sands will not affect trade talks with Brussels.
“Both are being treated as completely separate matters and are being pursued as such,” said Adam Taylor, director of communications for Mr. Fast.
Trade experts say the basis for Canada to challenge the fuel directive at the World Trade Organization would be that WTO members are prohibited from discriminating against “like goods” from other countries. Ottawa would probably argue that the EU is breaking trade rules by taking steps to discourage imports of oil-sands crude while not taking the same action against petroleum from conventional wells.
“Fuel is fuel. It’s same product with the same properties and same end uses. Under the WTO agreement, like products cannot be treated differently,” said international trade lawyer Lawrence Herman of Cassels Brock & Blackwell LLP.
The legal battle at the WTO would be whether oil-sands crude and conventional crude are “like goods” under the trade rules.
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