Myths and Reality
February 26, 2007

Few Atlantic Canadians would argue against the potential benefits of improving trade with our New England neighbours. Given this, the controversy surrounding proposals for an “Atlantica” trade zone spanning Atlantic Canada, southern Quebec and north-eastern New England may come as a surprise.

Concerns about Atlantica are, however, fully justified. The proposed export corridor, championed by the Atlantic Institute for Market Studies (AIMS), would have serious detrimental effects on Atlantic Canada.

The notion that Atlantica is only about enhancing trade between New England and the Atlantic provinces is simply a myth. In a key speech on Atlantica last summer, the president of AIMS dismissed trade within this region as “hardly worth mentioning.” Supporters stress that the project is not about regional trade, “it’s about Asia and the North American heartland.”

The centrepiece of Atlantica is a plan to turn Halifax into a super-port for Asian cargo. According to this strategy, container ships too large to pass through the Panama Canal would sail from Asia to Halifax via the Suez Canal and their goods would then be trucked across the region to markets in the U.S. mid-west.

This scheme is implausible. West coast ports are already increasing their capacity and plans to expand the Panama Canal to accommodate larger ships are underway. The strategy also ignores U.S. national security concerns in the post-9/11 environment. For example, legislation now before the new U.S. Congress would require that 100% of U.S.-bound containers be scanned in foreign ports, imposing extra costs on the port of Halifax.

This transportation corridor would have few economic benefits outside Halifax and could only be realized at great cost to Atlantic Canadians. The corridor highways, built for huge “truck trains” hauling two or more trailers, would absorb public spending that could otherwise be used to support more diversified infrastructure throughout the region. The increased heavy truck traffic would also make the region’s roads less safe and harm the environment. Ironically, such a corridor could turn into a white elephant given future action to curb global warming through more sustainable transportation networks.

Atlantica’s emphasis on a parallel energy export corridor is also problematic. Between 1995 and 2005, Atlantic Canadian energy exports to the U.S. jumped from 24% to 54% of the region’s total exports to the U.S. But this export-driven focus neglects Atlantic Canada’s own energy security needs, the negative environmental effects of accelerated fossil-fuel use, and whether the Canadian public is getting a fair share of revenues from these publicly owned resources. Atlantica supporters give these concerns short shrift and instead promote an unregulated, “free-market” approach to energy exports.

Norway provides an alternative approach that Atlantic Canada should emulate. It has a vibrant offshore energy industry, while garnering an 84% share of revenues for its citizens. Atlantica partisans, by contrast, have been highly critical of the Newfoundland and Labrador government’s recent efforts to negotiate a fairer share of returns for its citizens from future offshore petroleum developments.

The common thread throughout the Atlantica agenda is a fierce commitment to deregulation, whether by loosening road safety rules to allow truck trains or advocating a hands-off approach to the energy sector. As one analyst has pointed out, Atlantica’s chosen theme of “business without borders” has a double meaning: business unimpeded by the international border, but also freed from the boundaries of environmental and social policy regulation.

On its Atlantica web-site, AIMS explicitly targets minimum wage legislation, public services, and unions as “policy distress” factors that thwart the region’s development. For AIMS, in particular, the Atlantica project is a means to promote its unconditional belief that unregulated private markets always benefit society and that the best government is the smallest government.

Fortunately, there are compelling policy alternatives to the deeply-flawed Atlantica agenda. Emulating Norway’s successful energy policies could provide the public revenues needed to deal with the urgent issue of climate change, including resources for a sustainable transportation network. This would move containers from the region’s ports onwards by rail and short-sea-shipping, not by truck trains. Even the six-year old pact between the Atlantic premiers and the New England governors to reduce greenhouse gas emissions offers a far more positive model of cross-border cooperation.

Like its namesake Atlantis?—?he mythical city which according to legend disappeared into the sea?—?he Atlantica proposal will hopefully soon sink out of sight.

Scott Sinclair is senior trade policy researcher with the Canadian Centre for Policy Alternatives. He is the author with John Jacobs of Atlantica: Myths and Reality, available from

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