Provinces sidestep Ottawa to expand business with UAE

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An Ontario cabinet minister is accusing Stephen Harper's Conservatives of hypocrisy in the United Arab Emirates dispute, saying the Tories are being protectionist by refusing UAE carriers more flights into Pearson airport even as they trumpet the benefits of open markets for other sectors such as telecom.

Sandra Pupatello, Ontario's Minister of Economic Development and Trade, made the comments as she embarked on a trade trip in the Gulf region that starts with four days in the UAE - once a staunch ally of Canada's.

She said she's hoping the deepening dispute between the federal government and the United Arab Emirates will not hurt Ontario companies' chances of signing deals or attracting investors.

"I can tell I was horrified as I watched the events as they unfolded because you just hope you didn't invest all this time and energy in building relationship just to have to it dashed," Ms. Pupatello said.

Ms. Pupatello urged the Harper government to repair relations with the UAE, Canada's largest export market in the Middle East, before the fracas harms two-way trade.

Bilateral ties began unraveling last fall after Ottawa refused to meet demands by the Mideast country's carriers for additional landing rights at Toronto's Pearson airport. The UAE responded by kicking Canada's soldiers off a staging base near Dubai used to supply the Afghanistan war - one that Canada used rent-free for nearly a decade.

The UAE escalated the fight by slapping visa requirements on Canadians.

The Harper government has defended its decision to refuse the extra flights requested by UAE carriers by warning that allowing them to fly more often to Canada would have cost "tens of thousands of jobs" here.

Ms. Pupatello said she thinks Air Canada can easily handle the extra competition that would come by allowing UAE carriers more international flights.

"Air Canada is a strong airline," the minister said.

"The CEO repeatedly tells us how strong they are - so it's difficult to understand that adding a flight here and there in the middle of a week for the sake of two additional airlines is going to break Air Canada. I don't' believe that that is the case."

She said the Harper government is being selectively protectionist.

"Depending on the sector, if you're in telecommunications, then the federal government position certainly isn't on protectionism. It's difficult to follow any level of consistency," she said.

"The more planes we have coming from different parts of the world, the more trade we will do with that part of the world."

The Harper government has been pushing to open up the telecom sector to more competition, including allowing a cellular firm with strong Egyptian ties to operate in Canada even though a federal regulator had deemed it insufficiently Canadian-owned and controlled.