The Democratic candidates, Clinton and Obama have been shouting that if they become President, they will pull out of NAFTA unless changes are made to the trade deal. Clinton has been the more critical of the two, calling the trade agreement flawed, and saying that her plan includes telling Canada and Mexico that the US will opt out unless the core labor and environmental standards are renegotiated and the enforcement mechanism enhanced.
On Canada's part its Trade Minister David Emerson has warned that America's privileged access to Canada's huge oil and gas reserves could be disrupted if Washington cancels the NAFTA accord.'There's no doubt if NAFTA was to be reopened we would want to have our list of priorities,' he said.
Just how serious would this disruption be, if it were to happen? Canada presently exports 63% of the oil that it produces and 56% of its natural gas to the US. And because of NAFTA's proportionality clause,Canada is legally obliged to continue exporting the same proportion of its oil and gas forever even if it faces a shortage at home! Canada is the largest exporter of oil to the US, exporting about 2 million barrels a day,well ahead of second placed Saudi Arabia which exports around 1.5 million barrels a day.
Any disruption in this assured source of supply would have serious implications for US energy security.The argument that what would Canada do with all the oil that it produces if it doesn't export to the US is not well founded. China has been eying Canadian oil for a long time. Alberta's oil sands have 174 billion barrels of oil that can be extracted using current technology.This is next only to Saudi Arabia's reserves of 262 billion barrels.The total amount of oil in those oil sands is estimated to be 1.6 trillion barrels!
China is already Canada's number two market for its oil exports and some Chinese companies have already made small investments in Canadian oil companies.China has indicated that it is interested in making substantial investments in Canada's oil sands.
This debate about NAFTA has already upset a large number of Canadians who feel that the US has lost jobs because of outsourcing to China and not because of NAFTA. What the US finally does remains to be seen. Most likely this talk is only political posturing and will go away once the US Presidential elections are over.