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Fast Times at Pacific Rim High

Written by Brian Hicks
Posted November 7, 2005

Sometimes geopolitics seems more like high school. The self-assured jock (USA) begs all comers to "bring it on," while the brainiac (China) threatens to take his eminently copyable homework and go home.

There's the nice girl next door (Canada) who the jock doesn't appreciate, but soon she'll make him sorry for neglecting her.

The world works in complicated ways, of course, but in many analogical situations it becomes clear that the international system is a macrocosm of our own personal social conflicts.

New Kid on the Block

The Chinese are an up-and-coming rival, which is plain to see. Whether their power threatens to usurp the United States in the near term is debatable. Personally, I do not think that China has the bureaucratic wherewithal to maintain a vast network of international trade alliances while maintaining a lock on political freedom at home.

What is certain is that the presence of China on the scene changes the consideration process that other countries must go through when dealing with the only true Superpower left-some call it Hyperpower-the United States.

It's all a matter of balance.

The United States has been dominant for well over a decade now on the international scene, dictating the pace of most conventions on trade and other affairs.

For example, our attitude towards the Kyoto Protocol (i.e. we officially do not recognize the scientific consensus on greenhouse gas emissions) has created an environment in which Australia can more comfortably withdraw itself from the agreement as well.

We are the first mover, shaker, and subsequently the first target for the spite of those who dislike the world's globalistic bent.

Now it comes time for class elections, and here comes smart but cool China, with his ancient written culture and other stuff he did at his old school. Everyone has to take his word for what a great job he will do as trendsetter and driver of progress in the new milieu.

Canada's ears perk up, knowing that the time has come to show America what he's been missing all these years. Canada just sitting up there with the world's second largest petroleum reserves already producing while the U.S. prefers to deal with the pimp OPEC. Can you believe it?

Timber Ho!

Canada is going to make sure that the U.S. sees her with China everywhere. They share walks on the rocky beaches of British Columbia, francophone nights in cool jazz clubs in Montreal, and even shopping in Toronto's Chinatown to show the new beau just how similar they are.

Canada's got a very real motive for making the U.S. jealous, and that's leverage.

Under NAFTA, the United States is not supposed to levy tariffs against Canadian softwood lumber. But alas, in the name of the U.S. lumber industry, the Bush administration slapped Canada with a 30% lumber tariff in 2002.

Not surprisingly, Canada objects to the double standard and has taken its case to the NAFTA apparatus for arbitration.

This past month, a NAFTA panel comprised mostly of Americans rejected the United States' appeal, and ordered the U.S. to comply with its decision by last week.

When Condoleezza Rice was asked by a Canadian reporter whether she had brought a check for $3.5 billion with her to Canada on October 25, she replied,

"I don't travel with that kind of money."

Well, unfortunately the "common values" Rice trumpeted earlier on in that press conference with the Canadian Foreign Minister won't form the backbone of the reconstruction effort in the Gulf or the continuing bustle of home construction elsewhere in this country.

Who's Playing Who?

In a previous column, I introduced the basketball analogy of China's strategy in securing North American oil. This summer's Chinese bid for California-based Unocal was blocked by the U.S. Congress, which reared its head to defend our pathetic, record-profit-reaping petroleum industry. The logic: How dare the Chinese try to pay above market price for a business Americans drove into the ground!

In the basketball schema, China chooses not to try another jumpshot over U.S. interests. Rather, China does a shake-and-bake move this time, slam-dunking Alberta-based PetroKazakhstan.

But China's skills alone are not winning the game. Canada is spotting it some points, and even moving the basket a little.

Canada's second-largest pipeline manufacturer, Enbridge, recently agreed with PetroChina to construct a conduit from Alberta's vast Oil Sands (which give Canada its #2 status in national oil reserves) to British Columbia's western coast, where it will be shipped to China. This gives China 400,000 barrels a day of Canadian oil from only one arrangement. If Canadian confidence in U.S. trade pacts continues to wane, we can expect Canada to push for more such deals with China.

Just witness Canada's Acting Natural Resources Minister John McCallum, who spent the bulk of his recent trip to Beijing speaking with the heads of China's state-owned petroleum concerns CNPC (PetroChina) and CNOOC (China National Offshore Oil Corporation, who made the Unocal bid).

As McCallum said, "if the U.S. doesn't respect NAFTA rules on wood, then what does that mean for NAFTA rules in other areas, including energy?"

That's a good question, and Canada is going to protect its industries' bottom line by cozying up to China rather than hold its breath for another intransigent Bush answer.

- Sam Hopkins


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