Interior Secretary James G. Watt told a congressional panel yesterday that he was reluctant to deprive Canadians of participation in American mineral leasing as a weapon in an escalating investment and trade battle between Canada and the United States.
Watt, however, promised that he would take a close and "expeditious" look at laws that could deprive Canadians and corporations with Canadian investors of federal leases on U.S. mineral lands.
Rep. John D. Dingell (D-Mich.), chairman of a House Energy and Commerce subcommittee, criticized Watt for moving too slowly on congressional requests to clarify Canadian eligibility for leasing rights in the United States under reciprocal agreements between the two countries.
The controversy over mineral leasing rights grew out of the latest episode in a string of Canadian moves to limit heavy U.S. investment in Canada. Canadian authorities estimate that 66 percent of their energy industry is U.S.-owned. A Canadian national energy policy, approved but not yet implemented, is aimed at reducing outside investment.
The energy policy is only the latest move that has set historically friendly Canadian-American relations somewhat on edge. Canada also has taken steps to reduce its dependence on the American auto industry and cut Canadian advertising in U.S.-owned media published or broadcast in Canada.
Congressional pressures have been building up to respond in kind. The pressures reached a boiling point this spring when Seagram, a Canadian firm, unsuccessfully attempted to take over Conoco Inc., America's ninth largest oil company. That move failed, but Dingell told Watt, "The speed with which such tenders are made and completed and the long-range consequences of the results uinderscore the necessity of a coherent [U.S.] policy" on the mineral-leasing question.
Watt said he did not find the Mineral Lands Leasing Act, under which Canadians could be deprived of American mineral leases, "an ideal foreign policy tool."
Watt told the subcommittee that using the act to punish the Canadians could lead to further retaliation against the $8.6 billion U.S. investment in the Canadian oil industry. He also said the restrictive Canadian program could prove to be "self-defeating" and help the United States by drawing more energy investment into the country.
Dingell, however, was unimpressed and reminded Watt that a congressional move is afoot to place a moratorium on large Canadian purchases of stock in American energy corporations. He said the congressional action was delayed in May at the Interior Department's request, pending a study of mineral-leasing reciprocity.
Rep. Edward J. Markey (D-Mass). warned Watt that "this skirmish over Canada's energy policy can spread into an open trade war" unless the Interior Department moves more quickly on the leasing question.