Does Canada Need an Arctic Trade Policy?

Climate change is affecting the world, with Arctic being a main casualty. Temperature in northern Canada is increasing by an annual average of 2.3 degrees Celsius. This is causing devastating environmental and economic damage across Canada’s Arctic. Permafrost is melting, meaning infrastructure in the north is collapsing; rainfall is increasing, creating higher probability of floods; and sea ice is melting, increasing the water levels. 

Sea ice melting in the Artic is receiving an abundance of international attention. With rapid melting, there will be an increase in shipping activity as well as resource extraction. The Arctic contains 13 percent of the world’s undiscovered oil resources and about 30 percent of undiscovered natural gas resources. With the current environmental trends, more states are eyeing the Arctic as an economic “Mecca.”

Canada’s Arctic Focus

Canada’s focus in the Arctic is promoting cooperation between Canada and Arctic Indigenous peoples, security and defence, sustainable development, and environmental protection. This is done through different avenues such as the Arctic Council, which allows Canada to have an international voice in the Arctic. The Council focuses on many of Canada’s values most notably, the inclusive trade policy

Trade has been an afterthought in the Arctic; with dangerous and undiscovered shipping routes, there is a sense of unpredictability and high risk.

However, with the Arctic ice melting, these afterthoughts are becoming real possibilities. Arctic shipping has already started in Russia; Russian cargo ships are accompanied by an Ice Breaker which guide the cargo ship throughout its route. There are four identified Arctic shipping routesNorthwest Passage (Canada), Northeast Passage, Northern Sea Route (Russia), and the Arctic Bridge Route

Why Does Arctic Shipping Matter?

Currently, most states use the Suez and Panama Canals for shipping products. The introduction of Arctic shipping will reduce reliance on these previous shipping routes. Shipping through the Northwest Passage can decrease Canada’s travel by 7000 kilometers. A ship going through the NWP to Asia would take ~21 days instead of 25 days through the Panama Canal. Arctic shipping routes will save time and money for Arctic states and ultimately provide a competitive edge for Canada. 

What Implications Does Canada Face with Arctic Trade?

The Northwest Passage can provide Canada with an integral shipping route for the Arctic. However, the route itself is a hot topic. Firstly, Canada hasn’t fully mapped out the NWP, making it more difficult for ships to travel through. Secondly, Canadians have always had a strong historic sentiment regarding foreign vessels travelling through the passage (S.S. Manhattan). Thirdly, the Northwest Passage has legal implications. In 1985, Canada established the baseline at the edge of its Arctic archipelago, claiming all the water inside the baseline as internal waters. This claim was contested by the US and European community.

US claims that the NWP is a strait and should be used for international navigation. The US does not acknowledge the territorial baseline claim as a legal form for defining territory, thus it does not believe Canada should have sovereign claim over the NWP. However, Canada contests this claim and has the legal support to do so. Article 8 of the United Nations Convention on the Law on the Sea (UNCLOS) reinforces Canada’s legal claim to use the baseline method to claim internal waters over the NWP. 

Another obstacle obstructing Arctic trade is Canada’s lack of trade infrastructure in the north. This includes ports, railroads, and highways which affect the ability for Canada to export products. Investment is needed to help create new passage-ways. Canada has already started taking action with the Trade and Transportation Corridor Initiative (TTCI) which will contribute $800 million by 2030 for trade infrastructure in Canada’s north with an emphasis in socio-economic development opportunities.

Does Canada Need an Arctic Trade Policy?

Canada must create an Arctic Trade Policy. Establishing roots is key for what is becoming a geopolitical hot topic. Canada faces internal and external pressures, it lacks competitiveness due to its weak research and development, infrastructure, and foreign direct investment; while the United States contests whether the NWP is an international strait or internal Canadian waters. 

This can be resolved with a few solutions. The TTCI is creating new infrastructure avenues to Canada’s north but not establishing Arctic Trade, for example. I propose that Canada work with the United States and in consultation with Arctic Indigenous communities to develop a Comprehensive Arctic Trade Policy Agreement (CATPA). For this to come to fruition, Canada would accept the NWP as an international strait. Creating the joint agreement would allow Canada to have an influx of US foreign investment which could be used to establish new and better infrastructure such as new ports, railways, telecommunication/internet towers, and highways. 

Canada must work in collaboration with Arctic Indigenous communities to implement CATPA.

This is important for a variety of reasons. Indigenous communities have the best understanding of northern territory in Canada, but consultation with Indigenous communities assures the inclusion of underrepresented groups, which is a cornerstone to Canada’s Inclusive Trade Policy. Establishing new infrastructure such as telecommunication and internet towers would also provide stable and reliable services to the northern communities which is long overdue. 

While it is a lofty goal, Arctic trade is possible; however, Canada does not have the financial capabilities to implement this on its own. Canada must acknowledge that the NWP is an international strait, while also partnering with the US to develop a robust trade infrastructure in the Arctic. Ultimately, this will provide Canada with a competitive edge on many other states around the world.


Adrien Chamberland-Mike is an Associate Editor at iAffairs Canada. He is an MA candidate at the Norman Paterson School of International Affairs, where he specializes in diplomacy and foreign policy. He completed his undergraduate degree in Political Studies at the University of Manitoba. His interests include global regions, such as the Arctic, Asia-Pacific, Latin America, and the Caribbean. He has experience working in the federal government at Transport Canada as a Policy Analyst. He has also worked for the Provincial Government of Manitoba as a Policy Developer at Manitoba Health.

Photo Credit: United States Department of State

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