EDITORIAL PAGE — Left out in the cold

Last week’s agreement between the U.S. and Russia over uranium imports into the U.S. is a slap in the face to Canadian producers. It is also a violation of the Canada-U.S. Free Trade Agreement (FTA).

The 10-year deal with Russia will allow that country to ship 6.6 million lb. of uranium to the U.S. this year and next. In succeeding years, lesser amounts will be sold to the U.S. Utilities buying Russian uranium will have to buy an equal amount of U.S.-produced uranium. According to estimates, the agreement blocks off roughly 20% of the American market.

The new plan is an about-face for the Clinton administration, which in 1992 limited Russian uranium sales to the U.S. Apparently, the administration sees the new plan as a way of providing much-needed foreign currency to the Yeltsin government. It will also help reduce the large inventory of weapons-grade, highly enriched uranium in the former Soviet Union. Not coincidentally, it also gives U.S. producers a boost by guaranteeing a higher-than-world price for some of its product.

For Canada, it means uranium exports to the U.S. will drop. According to Ottawa, Canada last year accounted for about 45% of U.S. uranium imports, worth about $390 million.

Our biggest producer, Cameco, supplies roughly 10% of the American market, selling mostly to U.S. utilities. Other producers in this country include Rio Algom and Cogema Resources.

It will probably be three years before Cameco feels the full impact of the deal since many of its contracts are long-term. In recent weeks, however, the company has positioned itself to compete more effectively in the U.S. marketplace through its purchase of an American company that owns a 30% stake in a Nebraska uranium mine. Nevertheless, some estimates project the U.S.-Russia pact could cost Cameco $20 million this year and $60 million in 1995.

This deal flies in the face of the FTA, which states that companies on both sides of the border should be treated equally. With the new deal effectively shutting the door for a portion of Canadian imports, the principle of equal treatment has been undermined.

Had the U.S. honored its FTA commitment, Canadian producers would have been included along with U.S. uranium miners with regard to the pound-for-pound provision in the Russian deal.

Canada must act by using the FTA’s dispute resolution mechanism to right this wrong.