Oil Thirst From China Adds Fuel To Trade Tussle

The Chinese oil ambitions in Canada, which intensified yesterday when Mr. McCallum met two of China's most powerful oil executives, are a key element in the Liberal government's aggressive push to diversify Canada's energy sales away from its traditional U.S. markets in the aftermath of the softwood-lumber dispute. Despite denials from Ottawa, the government's new strategy of pitching oil to China is widely seen as a pressure tactic against Washington after its refusal to comply with the NAFTA softwood ruling. The Americans are ignoring a ruling by a North American free-trade agreement panel that U.S. tariffs on softwood lumber are illegal under U.S. trade law. The New York Times this week described Ottawa's campaign as "a series of subtle threats" against the administration of President George W. Bush . . . "China is likely to increase its oil imports from Canada by acting as an investor, rather than simply as a customer, Mr. McCallum said. This could include takeover bids and greenfield investments, as well as other forms of investment. "They do not feel limited by how much economically can be sent to China. They could well make investments for sale in third markets. They're also interested in joint ventures or minority holdings or strategic alliances with Canadian companies. They could team up with Canadian companies in joint ventures to enter into production which isn't necessarily destined for China." www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20051014/CHINA14/TPNational [Proofreader's note: this article was edited for spelling and typos on October 15, 2005]

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