The New Staple State:
Political Economy and Public Policy Regimes in Canada’s Primary Industries
Edited By
Michael Howlett
Department of Political Science
Simon Fraser University
Burnaby BC
Keith Brownsey
Public Policy
Mt. Royal College
Calgary, ALTA
Manuscript Submitted to the
University of British Columbia Press
July 29, 2004
Table of Contents
Table of Contents ii
Table of Tables xii
Table of Figures xiii
Part 1 - Introduction 2
Chapter 1 – Introduction – Michael Howlett (SFU) and Keith Brownsey (Mt. Royal College) 3
Overview: Staples and Post-Staples Political Economy 3
Chapter II: “The Post-Staples State: Reconstruction of Political Economy and Social Identity in 21st Century Canada” – Tom Hutton (UBC) 8
Introduction: the post-staples hypothesis in context 8
The 'state' of the 'advanced staples state': defining conditions 12
New and emergent dynamics of regional divergence 19
Implications of the reconstruction of political economy and social identity 32
References 36
Part II: The New Political Economy of Consumption Industries: Agriculture and Fish 38
Chapter III: “Canadian Agriculture: The Elusive Search for Fair Terms of Trade” – Grace Skogstad (Toronto) 39
Introduction 39
An Historical Overview 42
State Retrenchment and Market Liberalism in the 1980s and 1990s 48
Regional Market Integration and Dependence 49
Integration into the Multilateral Trading Regime 52
Redefining State Fiscal Obligations 54
The Role and Impact of Farm Organizations in Market Liberal Initiatives 56
Structural Change in the Agri-Food Sector 60
Looking Ahead 65
References 70
Chapter IV: “The New Agriculture: Genetically-Engineered Food in Canada” – Elizabeth Moore (Agriculture Canada) 80
Introduction 80
Canadian agriculture: a history of applying technology to agriculture 84
Jumping on the biotechnology bandwagon 85
Regulation as instrument of promotion and protection 89
Shifting ground: commercialization of GE food crops begins and challenge grows 94
Government response 96
The road ahead for agricultural biotechnology in Canada 99
The Future of GE food in Canada 102
BIBLIOGRAPHY 107
Chapter V: "The Impact of International Trade Liberalization on the Canadian Fisheries Industry" - Gunhild Hoogensen, (Tromso) 116
Introduction: 116
Trade liberalization, reduction of barriers to trade, tariffs and non-tariff barriers – what does it all mean for the fish? 118
Fish and Trade: 120
A short history: Trade and the Canadian fisheries 123
Status of the Canadian fisheries according to the OECD 128
Subsidies 130
Regional and International institutions: NAFTA and WTO 133
Societal impact 140
The role of the trade agreements and WTO – good, bad, and does it matter? 144
Conclusion: 146
Bibliography- 149
Chapter VI: "Studying Canadian Aquaculture Policy: Issues, Gaps and Directions” - Jeremy Rayner (Malaspina) and Michael Howlett (SFU) 153
1. Introduction 153
2. Aquaculture as a Problematic Post-Staples Industry 158
3. The Existing Canadian Aquaculture Regulatory Framework 165
3.1. The Federal Situation 169
3.2. British Columbia 177
3.3 .New Brunswick 183
3.4. Nova Scotia 185
3.5. Prince Edward Island 192
4.0 Aquaculture Development: A Research Agenda 193
Part III: The New Political Economy of Transmission Industries: Oil and Gas, Electricity and Water 202
Chapter VII: "From Black Gold to Blue Gold: Lessons from an Altered Petroleum Trade Regine for An Emerging Water Trade Regime" - John N. McDougall, (UWO ), 203
The Cost of Bulk-Water Transmission 204
The Emerging Trade Regime Affecting Oil, Gas and Water Exports 210
Free Trade Agreements and Water Exports and Investments 215
Conclusion: The Effects of Free Trade Agreements on National Resource Policies 227
Introduction 231
Sources of Complexity 235
First Nations and Aboriginal Rights 236
Environmentalism and the Sustainable Paradigm 238
The Shift from Keynesianism to Neo-Liberalism in Canada 239
The Establishment of Neoliberal Trade Regimes 240
Neoliberal Epistemic Ideas for Electrical Utilities 242
US Restructuring and its Initial Impact on Canadian Energy Policy Regimes 246
Restructuring in Canada 250
The Proliferation of Actors and Enlargement of Networks 253
Making Sense out of Complexity 255
Hydro as Staple? 256
Modelling Change: Paradigms 260
Questions of Change and Continuity? 262
Current Agenda 265
Conclusion: Electrical Energy Policy : A Research Agenda 267
Social Learning and Metamorphosis 267
Explanations of Provincial Differences 267
Chapter IX: "Canadian Oil and Gas In the Age of Bush" - Keith Brownsey , (Mount Royal College) 271
1. Introduction: 271
2. The Canadian Oilpatch 274
3. A History of the Canadian Oil and Gas Industry 279
3.1 The Colonial Period 282
3.2 The Era of Multinational Domination 284
3.3 The Nationalization of Oil and Gas 290
3.4 The Era of Benign Neglect 299
4. The New NEP and Kyoto 304
5. Conclusions 309
Chapter X: "Offshore Petroleum Politics: A Changing Frontier in a Global System" - Peter Clancy, (SFX) 317
Offshore Petroleum as a Distinct Political Economy 320
Spatial and Temporal Dimensions 322
Offshore Petro-Capital as a Political Factor 328
Technology as a Political Variable 337
Science, Knowledge Domains and Epistemes 341
Federalism and the Offshore Domain 344
The Atlantic Offshore 348
The Arctic Offshore 350
The Pacific Offshore 352
State Strength and Capacities 354
Offshore Petroleum Regulation in the New Millennium 359
Conclusions 364
References 367
Part IV: The New Political Economy of Extractive Industries: Minerals and Forests 381
Chapter XI: “Shifting Foundations: a Political History of Canadian Mineral Policy” – Mary Louise McAllister (Waterloo) 382
Promising Prospects: The nascent mineral industry 384
Embedded Interests: Establishing the Staples Economy 387
Shifting Ground: Competing Interests 390
Competitive Pressures on the Resource Industry: 392
Access to Land Issues 395
Public concerns about environmental impacts 398
Decline of the Resource Community 403
Emerging Conceptual Perspectives 406
Rising to the Challenge? Responses to Change 408
Seismic Shifts or Minor Tremors in the Status Quo? 410
Conclusions: New Frontiers: 416
Notes: 418
References: 418
Chapter XII: “Complexity, Governance and Canada's Diamond Mines” – Patricia J Fitzpatrick (Waterloo) 425
Complexity, Governance and Canada's Diamond Mines 425
The Northwest Territories Policy Community 427
Aboriginal organizations 429
Territorial Government 432
Non-Governmental Organizations 434
Proponents 435
Diamond Development in the North 437
West Kitikmeot Slave Society 439
Community Capacity and Public Participation in the BHP Review Process 440
The Implications of Superadded Agreement 442
BHP Independent Monitoring Agency 446
The Diavik Diamonds (DDMI) Project: Comprehensive Study 447
West Kitikmeot Slave Society Revisited 448
Community Capacity and Public Participation in DDMI EA 449
Superadded Agreements: New Players 452
Advisory Board 453
Cumulative Effects Assessment and Management Strategy 455
Other Diamond Developments in the North 456
Cross Scale Institutional Linkages 458
Conclusion 461
References 463
Tables 469
Chapter XIII: “How Do You Tell the Story? Policy, Staples, Post-staples, and the Canadian Forest Sector” – Jocelyn Thorpe and L. Anders Sandberg (FES, York) 478
Change and Continuity in the Staples to Post-Staples Transition 482
The Staples to Post-Staples Narrative 482
Questioning the Staples to Post-Staples Transition 488
The softwood lumber dispute 489
Forests as carbon sinks 494
Parks as Staples 495
Summary 497
Staples By and For More People 497
Summary 505
Beyond the Staples to Post-Staples Transition 506
Summary and policy implications 512
Conclusion 515
Chapter XIV: “The Post-state Staples Economy: The Impact of Forest Certification as a Non-state Market Driven Governance System” – Benjamin Cashore (Yale) with Graeme Auld, James Lawson, and Deanna Newsom 519
Introduction 519
Emergence of Forest Certification and its Two Conceptions of Non-State Governance 521
Two conceptions 522
Table 1: Different Conceptions 524
Conception One 524
Conception Two 524
Key Features of Non-State Market Driven Environmental Governance 531
Role of the State 533
Role of the Market 536
Evaluations Matter 536
Outside Verification Key 537
Emergence and Support for Forest Certification in Canada 537
British Columbia 542
Standards-setting process 550
U-turn 556
Canadian Maritimes 560
Development of the Standards 564
Irving appeals 567
Conclusions: Non-state Governance 577
Conclusions: Lessons from the Non-State Market Driven Governance 578
Sources 582
Part V: Conclusion 598
Chapter XV - A multidisciplinary consideration of the staples state and natural resource policy regime governance - Adam M. Wellstead, Debra J. Davidson, Richard C. Stedman, and Evert A. Lindquist 599
1. Introduction 599
2.Staples and Post-staples Economies 604
3. Lenses on Approaching the Provincial Staples State 610
4. Staples Policy Regimes and Policy Styles 624
5.1 Traditional Frameworks for Natural Resource Policy-Making 625
Taking a Wider View: Embracing Forest Policy Networks and Communities 627
Policy-making as Contending Beliefs and Policy Learning 628
6. Empirical insights: Agricultural and forest policy making on the Prairies 632
Deep Core 633
Policy Core 633
Data and Methods 636
Results 637
6. Discussion and Conclusion 646
References 649
Contributors 663
Endnotes 664
Table of Tables
Table 1 Canadian and Provincial Government Agri-food Sector Expenditures, Selected Years ($ thousands) 69
Table 1 Summary of Restructuring Initiatives - Hydro Based Utilities 269
Table 2 Summary of Restructuring Initiatives - Mixed Generation Utilities 270
Table 1: Modern land claims agreements settled in Northern Canada. 469
Table 2: Northern and Aboriginal Employment Targets (as identified in the Socio-Economic Agreement) and Actuals at Ekatitm . 470
Table 3: Local Business Supply Targets at Ekatitm (as identified in the Socio-Economic Agreement). 471
Table 4: Timeline of superadded agreements related to the BHP Diamonds Project. 472
Table 5: Northern and Aboriginal Employment Targets (as identified in the Socio-Economic Agreement) and Actuals at DDMI . 473
Table 6: Local Business Supply Targets at DDMI (as identified in the Socio-Economic Agreement. 474
Table 7: Timeline of superadded agreements related to the Diavik Diamonds Project. 475
Table 8: Capacity of the Institutions affecting diamond development in the north. 476
Table. 1.2, Conceptions of forest sector non-state market driven certification governance systems 524
Table 2: Comparison of FSC and FSC competitor programs in Canada 529
Table 3: Key conditions of non-state market driven governance 532
Table 1. Economic indicators for Canada’s natural resource sectors 606
Table 2. The role of resources in provincial exports: 1997-2001 average 607
Table 3 Modes of Coordination within Competitive Capitalist States 622
Table 4 - Structure of Belief Systems of Policy Elites 633
Table 5. The Structure of Core Agriculture Policy Beliefs 640
Table 6. Summary of ANOVA for Factor Core Agriculture Policy Beliefs 641
Table 7. Structure of forest-related policy core beliefs 643
Table 8. Summary of analysis of variance for forest-related policy core beliefs 643
Table 9. Forest-related policy core management beliefs 645
Table of Figures
Figure 1. Policy Instruments, by Principal Governing Resource 166
Figure 1 319
Figure 2 337
Figure 3 - Offshore Petroleum Management Issue Areas and Instruments 357
Figure 2: Amount Forest Land Certified by Country 581
Figure 1. Organizational affiliation of respondents compared with distribution in the population of potential respondents. 639
xiv
Part 1 - Introduction
Chapter 1 – Introduction – Michael Howlett (SFU) and Keith Brownsey (Mt. Royal College)
Overview: Staples and Post-Staples Political Economy
A staple refers to a raw, or unfinished bulk commodity product which is sold in export markets. Timber, fish and minerals are staples, usually extracted and sold in external markets without significant amounts of processing.[1] The significance of having an economy based on exporting unfinished bulk goods lies with how it affects policy-making in specific resource sectors by creating continuing issues with resource technologies, profits, rents, location and availability,[2] how it affects policy-making in related areas such as the environment[3] or transportation infrastructure,[4] and also how it affects policy in less directly affect areas such as welfare, health and social policy.
Having had a staples economy in the past has raised several overlapping problems for Canadian policy-makers. For example, having a staples economy pits economic interests and activities involved in resource harvesting and exploitation against environmental activities such as wilderness, species and habitat preservation and these types of conflicts have been a hallmark of Canada's initial post-1960 experience with environmental regulation.[5] Similarly, populations in staples-dependent areas have reacted to their continued vulnerability to international price fluctuations by demanding, and expecting, a higher degree of social insurance than is the case in many other countries with less volatile economies.[6] This has led Canadian governments to provide a range of social, unemployment and other types of insurance schemes as well as make large-scale public expenditures in areas of job creation and employment in the effort to offset weaknesses in the staples base of Canadian wealth generation and distribution.
However, while most observers would agree that historically Canada can be characterized as a staples economy, there is considerable disagreement over whether this depiction continues to characterise the country. Earlier debates within the staples school itself centered on whether Canada had emerged as an industrial power in the wake of the wheat boom and manufacturing activities associated with the First World War.[7] While the failure of the manufacturing sector to grow outside of wartime led to the re-emergence of staples analysis in the 1960s and 1970s,[8] current debates focus less on the impact of a transition from primary to secondary activities as they do upon the undeniable growth in service sector employment and production in the post World War II era.[9] The idea that the economy has entered a new "post-staples "mode has led to a variety of debates in Canada concerning the consequences for government policy-making.[10] This book examines the nature of the changes occurring in Canada’s primary industries through the lens of the transition from a staples to a post-staples political economy.
As Thomas Hutton has observed, "mature, advanced" staple economies, have the following features:
(1) substantial depletion of resource endowments;
(2) well established export markets for principle staple commodities;
(3) increasingly capital- and technology-intensive resource extraction processes;
(4) increasing competition from lower-cost staple regions
(5) evolution of development from 'pure' extraction to increased refining and secondary processing of resource commodities;
(6) increasing diversification of the industrial structure, with manufacturing, tourism, and local administration and services;
(7) evolution of settlements both within and outside the metropolis;
(8) increasing pressure from "environmental" groups to inhibit traditional modes of resource extraction and stimulate development alternatives.[11]
Thus, while these economies may still be characterized as "resource dependent", their economies are more diffused and diversified than in the past. According to post-staples theory, the late 20th century development of the Canadian economy reflects an uneven and continuing process of economic diversification. For example, while each province reflects unique circumstances of resource availability, historical settlement patterns, and governance, the provinces of Quebec and Ontario have experienced the greatest industrialization, becoming the core or metropolis in the Canadian economy. Yet resource extraction continues to play a significant role even in the centre, and megaprojects of recent decades such as the James Bay project in Quebec reflect a continuing, if shifting, base of resource extraction.
On the other hand, peripheral provinces once completely dependent on resource extraction have faced significant problems in making any kind of transition from their traditional staples base. The Maritime provinces and Newfoundland have been especially hard hit by the rapid decline of the fishery, and the 1993 closure of the cod fishery. British Columbia, too, is projecting rapid declines in the timber industry and the fishery.[12] This would deem to presage the types of structural shifts identified by Hutton with a transition to a "post-staples economy":