Wheat and Oil: Diefenbaker, Harper and Canadian-American Trade by Matthew Wiseman

Next to Saudi Arabia and Venezuela, Canada claims to be in possession of the third-largest proven crude oil reserve in the world. The Athabasca oil sands (also known as the Alberta tar sands) continue to be a topic of heated discussion in Canada and abroad. Much of the popular debate stems from environmental concerns. The Tar Sands Solutions Network, for example, is a growing international network of organizations that is focused on “stopping the expansion of the Canadian tar sands and its infrastructure of pipelines and tankers, growth that is out of control and happening without consistent care, oversight, or debate.” While I share in a general concern for the protection of human and environmental rights, my ignorance precludes any possibility of my offering an informed voice on the matter. Rather, I think it is important to question the economic purpose of the oil sands.

The economic platform of Canada’s governing Conservative party seems to suggest that the oil sands are responsible resource development. According to Bruce Cheadle of Canadian Press, Harper’s Conservative government has spent $40 million this year alone to advertise Canada’s natural resource sector domestically and internationally. Alberta’s oil reserves, so the Tory message goes, are vital to the growth and stability of a strong global economy. Canada has an abundance of oil and, perhaps more importantly, that oil is “clean” and for sale.

 This is not the first time a Conservative government has attempted to sell an abundant Canadian resource to foreign markets. In the late 1950s, Ontario-born, prairie-raised politician John Diefenbaker campaigned for the premiership of Canada on the promise of unifying a divided nation. A deep recession had placed Canada in its worst economic state since the Great Depression of the 1930s, and Diefenbaker’s vision of “One Canada” became the backbone of a 1957 electoral campaign that would see his Progressive Conservatives capture a surprise minority victory over the Liberal government of Louis St. Laurent.

Diefenbaker’s tenure was marred with difficult foreign policy decisions, not the least of which was the sale of Saskatchewan grain. For much of the twentieth-century, commercial grain exports were vital to Canada’s economic health. Accounting for 27 percent of Canada’s total merchandise exports in the late 1920s, wheat and wheat flour sales comprised the single-largest proportion of Canadian international business. This number dropped to 12 percent by the late 1950s, which prompted Diefenbaker to act. The fiery populist was committed to return the sale of Saskatchewan grain to the fore of Canada’s fiscal agenda but needed to secure a major buyer to do so. After struggling to sell to the United States, Diefenbaker’s government made a bold move in early 1961 when it agreed to sell a large quantity of wheat to Beijing. The agreement secured a major foreign market for Canada’s economy, boosted the popularity of the Progressive Conservatives in the Prairie Provinces, and aided a then famine-stricken China.

Yet, there was just one snag. Imperial Oil, the Canadian company contracted to supply bunker oil to the shipping company contracted to transport the wheat across the Pacific, was a subsidiary of New Jersey based Standard Oil. John F. Kennedy’s administration wanted no part of a trade agreement with Communist China, so the United States Treasury Department vehemently opposed the deal. Despite their infamously sour relationship, Diefenbaker and Kennedy helped resolve the issue and the United States agreed to back down. Still, the Treasury Department moved to impose another blockade on Canadian-Sino trade later that year, which added to the contempt that Canada’s prime minister had for his American counterpart.

 Although today’s Alberta oil is far more lucrative than 1960s Saskatchewan grain, the current economic predicament that faces Harper is strikingly similar to that which faced Diefenbaker. The Conservatives want to sell the Americans, as is evident from an advertising bill of $40 million and Harper’s persistent negotiations with President Barack Obama. But as is the case once again, it seems our friendly neighbours to the south have no immediate need to rely on Canada for resource goods. Despite Harper’s best effort, the Keystone pipeline has yet to move Canadian oil south to be refined by American companies, which - by the way - after refinement would be sold back to Canada.      

The balance of Canadian-American trade favoured the United States in the early 1960s and continues to do so today. Canada has a long and complex history of economic relations with the United States, but has yet to hit a home run in terms of the sale of a natural resource. As a result, Conservative and Liberal governments alike have been forced to look elsewhere to secure major foreign buyers for Canadian goods. Our current governing party seems to be heading down a similar path with Alberta oil, which creates a host of issues that stretch beyond the controversy of environmentalism. Whether or not we take issue with the economic diplomacy of the Harper government, history allows us to appreciate the gravity of American reluctance to Canadian prowess in the global resource market. It seems Harper’s oil may teach a similar lesson to Diefenbaker’s wheat.