Full-blown B.C. and Alberta trade war unlikely despite pipeline dispute, says economist

The recent trade dispute between B.C. and Alberta could haveserious economic repercussions in the unlikely eventit grows into a full-blown inter-provincial trade war,warns the Business Council of B.C.

"Our two provinces are very, very dependent economically, and the notion of a sort of rupture ... on a major scale is obviously concerning," saidJock Finlayson, executive vice president and chief policy officer ofthe council.

The Business Council of B.C. describes itself as a collaborative, non-partisan organization that compiles research on public policy issues to better inform government decisionmakers and British Columbian business leaders.

Finlaysonsaid his group did a studyon two-way trade between the two provinces in 2017.

The study found the mutual trade of goods and services between B.C. and Alberta generated more than $30 billiona year.

Furthermore, many businesses rely oncross-border investments and the movement of people between the two provinces.

Therecent trade dispute isblocking the wine trade, and according to Statistics Canada, B.C.'s wine exports to Alberta in 2014 made up less than oneper cent of its total exports to that province.

"Wine is a tiny, tiny sliver of B.C.'s total trade with Alberta," saidFinlayson, who stressed the fact that provincial governments have much more control over alcohol trade than other goods.

Provincial boycotts on exports other than liquor aremuch more complicated, he said.

A breakdown in inter-provincial commerce would be disastrous, but is improbable in Finlayson'smind.

"I do not expect to see the rupture of billions and billions of dollars incross-border commerce, which would obviously be very negative," Finlaysonsaid.

"I don't think either government is going to go down that road."

Political posturing

Finlaysonpointed to Alberta'supcoming election next spring, and said the fact that NDPAlberta Premier RachelNotley isbehind in the polls has galvanized her effort to strengthen the province'soil industry.

For that reason, Finlaysonattributedthe heated exchangesbetweenB.C. Premier JohnHorganandNotleyto politicalposturing.

The trade dispute began when B.C.'s government said it waslooking at rules to limit any increase in the import of diluted bitumen until an independent review concluded it was safe a move that coulddelay construction on the federally-approved Kinder Morgan pipeline expansion project.

Notley was quick to retaliate.First, she cancelled talks to buy electricity from B.C. Then, earlier this week, she announced an Alberta ban on B.C. wine imports, effective immediately.

Horgan has shown no sign ofcapitulation following the boycott.

"It's not the government's intention to respond in any way to the provocation," Horgansaid on Wednesday.

Finlayson said the Business Council of B.C. does not support Horgan's stance on the issue.

The council believes he is operating outside his provincial jurisdiction because cross-borderinfrastructure projects, the shipment of goods intended for international trade and protection of B.C.'s coastal marine environment are all under federal jurisdiction, not British Columbia's.

"We think, and we hope the Trudeau government will step forward and take ownership of this matter,"Finlaysonsaid.

"Ottawa has to take the lead here and we will certainly be putting pressure on them to playthat role."

Prime Minister Justin Trudeau and his governmenthave disclosed little information about what their next step might be.

With files from The Early Edition