Document Type

Article

Disciplines

International Law

Abstract

Commercially, North America is close to having a single unified gas market. Yet, in political and regulatory terms, there is no "North American Gas Policy." Instead, federal, provincial, and state regulatory decisions continue to be made independently of each other, which impacts negatively upon Canadian imports into the United States as well as on the hitherto unrealized potential for United States' exports into Canada. Decisional consistency and rationality on a common grid is therefore desirable among regulatory regimes in all jurisdictions. However, the commercial realities of a North American gas market, and by implication, other world markets, require "knowledge about processes and issues in the other country." 1 This article discusses the United States-Canada Free-Trade Agreement2 (FTA) as it affects certain legal, economic and environmental concerns relating to natural gas sales.

Although the FTA has not had a dramatic impact on natural gas trade, it provides regulatory stability and removes uncertainty from the market place. An important objective of the FTA is to eliminate barriers to trade and goods between the territories of the parties.' It promotes this objective by allowing proportional access to energy sources and protection against future increases in tariffs. Whether the FTA can truly further economic interests by ending a sectoral approach to economic protectionism remains to be seen. What is clear, however, is that the scope for micro-economic policy - concerning governmental initiatives that attempt to influence sectors of the economy - is lessened by the Agreement. Domestic regulators in both countries have a legal mandate to protect the interests of producers, brokers, pipelines and consumers within their jurisdiction.

Deregulation which is taking place in both countries, albeit with different legal consequences, is helping promote a single North American gas market. The FTA shares broad functional similarity with the European Community initiative to create a Single European Market, namely an international trade law response to global changes in competition and post-industrial society. The Agreement highlights how trade barriers, nationalistic suspicions and entrenched attitudes can be ameliorated in the spirit of commercial reality and international comity.

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