The United States wants Venezuelan oil. Does this reduce Canada’s influence in trade negotiations?

Just hours after the United States announced it had attacked oil-rich Venezuela and captured its president Nicolás Maduro, the wife of a top adviser to US President Donald Trump. issued a stern warning in Canada on social networks.

“The United States doesn’t need anything from Canada,” wrote Katie Miller, whose husband Stephen Miller is Trump’s deputy chief of staff for policy and homeland security adviser. “Free trade is over.”

It’s a familiar refrain from those in Trump’s orbit and the president himself. But that argument has taken on new meaning now that the United States may have access to Venezuela’s resources. incredibly large reserves of heavy crude oil – similar to what is produced in Western Canada.

As Ottawa prepares to review the Canada-United States-Mexico Agreement (CUSMA), are developments in Venezuela harming Canadians’ negotiating position? CBC The house spoke with experts and former officials about the feasibility of increasing Venezuelan oil production and the road ahead.

Can Venezuela replace Canadian oil?

Venezuela’s oil sector and infrastructure have been deteriorating for more than a decade, posing significant risks for U.S. oil companies that might want to re-enter the country, according to RJ Johnston, director of energy policy and natural resources at the University of Calgary.

“If the U.S. government actually creates a partnership with the U.S. oil industry and taxpayers take a lot of risk and provide a lot of capital, that will change the calculus,” Johnston said.

“Left to their own devices, I don’t think these American companies are that eager to set up shop in Venezuela for big projects.”

The American government is pressure oil executives to quickly return to Venezuelaand told those leaders that they will need to invest significant capital to revive the country’s damaged oil industry if they want compensation for assets expropriated by Venezuela two decades ago.

Prime Minister Mark Carney, for his part, said earlier this week he wasn’t worried on the prospect of increased oil production from Venezuela because Canadian oil is cheaper, cleaner and less risky.

“We have a competitive product and we have diversified our markets and that is one of the reasons why we signed the complete [memorandum of understanding] with Alberta,” Carney said in Paris on Tuesday.

Yet Canadian energy stocks was hit after the American incursionjust like Canadian Heavy Oil Price. That’s important for Canada’s economy, Johnston said, especially in Alberta, where falling prices mean lower royalty revenue for its budget.

Trump seeks leverage, says former official

Kate Kalutkiewicz, who served as senior director of international trade at the National Economic Council during Trump’s first term, said she did not think events in Venezuela would change the Canada-U.S. energy dynamic in the short term.

“But it is a sign that President Trump is serious about reducing his reliance on a single trading partner for a particular good or product,” Kalutkiewicz said.

On top of that, Trump prides himself on being “a very good negotiator and he’s always thinking about how to create leverage in any negotiation,” she said.

Fen Osler Hampson, co-chair of the Panel on Canada-U.S. Relations, echoed Kalutkiewicz’s assessment and said events in Venezuela do not directly affect trade negotiations, but it shows that Trump and his team view the Western Hemisphere as their playground.

“We are going to be under pressure on critical mineral supply chains, Arctic resources and energy infrastructure, because the United States clearly views all of these as matters critical to its own national security,” Hampson said.

“We are on track to move from being a sovereign neighbor of the United States to becoming a junior appendage of the resources sector,” he said. “This is clearly the direction the United States is taking. This is the message they sent with their invasion of Venezuela.”

When asked how much leverage Canada could have over the United States in trade negotiations, Kalutkiewicz said Canada is still deeply dependent on the U.S. economy, which could make it difficult to fight back against the president.

“Canada, I think, is going to have to focus a lot on expanding its economic relations with other economies to show the United States that it’s not the only player in the game. Without that, it might struggle to find some leverage in these negotiations,” Kalutkiewicz said.

Hampson argues that Canada can transfer its money to other countries and buy their finished products, such as electric vehicles from China and agricultural products from Mexico.

“As a consumer, as a buyer of American products, we have leverage and we also have options,” Hampson said.

Will CUSMA survive?

Beyond oil, the United States has said it has a number of requirements that Canada must meet to extend CUSMA, and those requirements don’t come cheap.

U.S. Trade Representative Jamieson Greer told Congress last month that Canada needs to strengthen “market access for U.S. dairy products” — a blow to supply management — and that the Canadian government needs to address provincial boycotts of U.S. alcohol.

Greer also said the U.S. would tackle the online streaming law, which made online platforms like Netflix, Spotify and YouTube subject to Canadian broadcasting rules.

The law was passed to force U.S. web giants to contribute financially to the national media ecosystem and make Canadian content easily accessible on their platforms, which have become ubiquitous as traditional television, cable and satellite providers have lost subscribers.

Laura Dawson, executive director of the Future Borders Coalition, said it was “hard to say what kind of concessions will be brought to the table at the eleventh hour, when the horse-trading takes place.”

But Dawson warned that concessions aren’t like a parlor game: “You’re trading people’s livelihoods and interests in your economy.” So you have to do it very carefully. »

Although Dawson thinks it’s unlikely that an entirely new North American trade deal will emerge from these negotiations, she also doesn’t believe that “we’re close to the point where [CUSMA] would be abandoned. »

Kalutkiewicz said some of Trump’s actions — like the exclusions for CUSMA-compliant products in some of his tariffs — show he believes the North American supply chain “is critically important to the economic competitiveness of the United States.”

“Rhetoric aside, I’m very optimistic that the structure of CUSMA, the structure of North American economic relations, remains very strong,” Kalutkiewicz said.