CDN NEWS | 
US NEWS 
“The region is extremely well positioned to meet this moment”
The facts underpinning the power of the Alberta Industrial Heartland are pretty compelling.
It is the third largest industrial cluster in the world by geographic area – comprising 582 square kilometres of industrial land. Located northeast of Edmonton, it already has $50 billion in existing capital investment, with another $30 billion in capital investment currently under construction. Once those projects under construction are operational, the total capital investment is expected to reach approximately $80 billion by the early 2030s, placing the Heartland amongst the world’s leading industrial clusters in total investment. Over 40 companies are operating in the region, whose 5 municipal members are the City of Edmonton, the City of Fort Saskatchewan, Lamont County, Strathcona County and Sturgeon County, located northeast of Edmonton. Companies in the Heartland produce fuels, fertilizers, petrochemicals, chemicals, hydrogen, electricity, natural gas liquids, plastics and other value-added products for markets across Canada and around the world.
Its strength lies in the way in which the Heartland brings together industrial facilities, infrastructure, natural resources, transportation networks and skilled labour in a highly integrated cluster, allowing companies to connect easily with existing infrastructure, with suppliers, with customers, and other industrial operators and creating opportunities for new investment and value-added development.
At the Alberta Industrial Heartland Association (AIHA) annual conference last week in Edmonton, speakers from Pembina Pipeline Corporation, Meta, Shell Canada, Dow Chemical, ATCO Energy Systems, and the Chemical Industry Association of Canada, among others, all took to the stage with industry updates, and discussions of economic forecasts and development.
The keynote speaker was Kirsten Hillman, former Canadian Ambassador to the United States from 2019 to 2026. Her tenure as ambassador spanned three U.S. administrations and two Canadian governments. Having a 30-year career as a trade lawyer, policy expert, and negotiator, Ambassador Hillman is one of Canada’s foremost experts on trade, diplomacy, and international affairs.
The History of the Success of NAFTA
Hillman reminded the audience that in the late 1980’s, Canada and the U.S. negotiated a bilateral trade agreement, the Canada-U.S. Free Trade Agreement (CUSFTA. It involved the removal of virtually all the tariffs between the two countries, as negotiated between US President Ronald Reagan and Prime Minister Brian Mulroney.
“It was a controversial agreement at the time,” Hillman said. “Critics were worried about a few things. They were worried that we would become overly reliant on the United States, that there would be important job losses, and that we would have less policy flexibility and sovereignty. But as we all know, the pro-trade voices won and won quite handily.”
The CUSFTA came into force in 1989. It was then modified into the NAFTA when Mexico joined five years later (January 1994), and it was followed later by the renewal, the CUSMA/USMCA under the first Trump administration, of which Hillman said: “wasn’t a perfect state of affairs for everyone”.
She noted that while some Canadian companies became less competitive and certain sectors of the Canadian economy shrunk, overall, for all three countries, it was a massive success in terms of job creation, economic growth, competitiveness with the world, and productivity.
Advantages of Membership in a Club
Hillman sees trade agreements as essentially having two purposes.
They are designed to foster trade and investment among parties by creating a club, by creating an environment where, among the members of the club, trade is tariff-free and flows openly. Therefore, parties are much more likely to do business with members of the club than with people or countries outside of the club that face tariffs or investment restrictions in their jurisdictions.
“So these agreements lower tariff barriers,” Hillman said. “But they also lower investment barriers and foster integration because they foster a lot of partnerships within the club to the disadvantage of those outside the club. Second, they are designed to provide stability over the long term because they’re international treaties. They are designed to remain in place when national governments change, so there is stability between investors and traders. Investors can make long-term investments. Traders can enter into long-term contracts, and they have some confidence that they know what the rules of the road are going to be in four years, five years, to almost 10 years.”
This was true of NAFTA. It was in place for over 20 years, and it did not change substantially. For almost thirty-eight years, those agreements, according to Hillman, achieved exactly what they were designed to achieve: openness, fostering investment and trade, fostering integration, and reliability and predictability.
Supply Chain Integration -The Big Story of Success
Supply chain integration is the big story of the success of the relationship. 70% of what Canada sells into the United States are inputs into U.S. manufacturing. That includes energy products, agricultural inputs, minerals, lumber, etc that are raw materials used in manufacturing processes in the United States.
“We don’t just sell ‘stuff’ to each other like a European or Asian country that sells finished goods. Hillman said. “In our region, we make these together. The example is an auto part that will move across the border up to eight times before it rolls off the assembly line in a finished vehicle.”
The Shifting Landscape -The American “Hamburger”
In Washington, Hillman described a particular depiction of this trade phenomenon. They called it “the North American Hamburger”. The message was that, as a region, the U.S. and Canada were stronger and more competitive because they work together and are integrated. However, that argument is no longer made. The current administration has a reshoring agenda, according to Hillman. The current administration has a “Buy America” agenda and wants to see a banner with a hamburger where every single component comes from the United States of America, and tariffs are the key. The current administration also doesn’t want to recognize the last thirty years of success ”building things together,” according to Hillman, a change that she thinks will be enduring. In addition, this current environment introduces volatility.
“Will future administrations have a different view?” Hillman said. “Maybe, but there’s no guarantee. And quite honestly, once a protectionist trend starts rolling ahead, it’s very hard to get it back to move it backwards because you end up having business interests that are built around that new reality of protection from foreign competition. So, it’s politically difficult to move those things back. It does happen, but it’s politically challenging. Still Hillman says we can look to U.S. business to help make the case for promoting integration. It’s a challenge of how Canada is conceiving of this partnership versus how the United States is conceiving of it and how we will get back to a place where we find a new equilibrium.
“My conclusion is this,” Hillman said. “This region is extremely well positioned to be this moment. It is extremely well positioned not just to survive some of the changes in our most important economic relationship, but actually to thrive and to continue to demonstrate leadership in the face of these changes.”
As Canada looks to attract big capital dollars of foreign direct investment from around the world into Canada – looking for as much as a trillion dollars in investment from large institutional investors over the next five years, more than double the current amount- the Alberta Industrial Heartland is sure to be high on the list of investible areas due to its proximity to well-established infrastructure, industrial facilities, natural resources, transportation networks and skilled labour.
The Alberta Industrial Heartland is indeed a powerhouse for attracting investment to Alberta and will certainly attract interest at this week’s Canada Investment Summit.
Maureen McCall is an energy professional who writes on issues affecting the energy industry.
Share This:
