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37th PARLIAMENT, 1st SESSION

Standing Committee on Foreign Affairs and International Trade

EVIDENCE

CONTENTS

Thursday, May 9, 2002

0910

The Chair (Ms. Jean Augustine (Etobicoke--Lakeshore, Lib.))

0915

Mr. Michael Hurst (Mayor of the City of Windsor)

0920

0925

The Chair

0930

Mr. Joe Comartin (Windsor--St. Clair, NDP)

Mr. Michael Hurst

The Chair

Mr. John Tofflemire (Commissioner for Traffic Engineering, City of Windsor)

0935

Mr. Joe Comartin

Mr. John Tofflemire

Mr. Comartin

Mr. Michael Hurst

Mr. Joe Comartin

0940

Mr. Michael Hurst

Mr. John Tofflemire

The Chair

Mr. John Tofflemire

The Chair

Mr. Pickard

0945

Mr. Pickard

0950

The Chair

Mr. Michael Hurst

0955

Mr. Jerry Pickard

Mr. Michael Hurst

Mr. John Tofflemire

1000

Mr. Jerry Pickard

The Chair

1005

Mr. Michael Hurst

The Chair

Mr. Michael Hurst

The Chair

Professor Fritz Rieger (Associate Professor of Management, Odette School of Business, University of Windsor)

1010

1015

The Chair

Prof. Fritz Rieger

1020

1025

The Chair

Mr. Comartin

Prof. Fritz Rieger

Mr. Comartin

1030

Prof. Fritz Rieger

Mr. Comartin

Prof. Fritz Rieger

1035

The Chair

Mr. Jerry Pickard

Prof. Fritz Rieger

1040

Mr. Jerry Pickard

The Chair

1045

Prof. Fritz Rieger

The Chair

1050

Prof. Fritz Rieger

The Chair

Ms. Linda Smith (President, Windsor and District Chamber of Commerce)

1055

1100

1105

The Chair

Mr. Alfie Morgan (Member, Windsor and District Chamber of Commerce Board of Directors)

1110

The Chair

Mr. Alfie Morgan

1115

The Chair

Mr. Joe Comartin

The Chair

Mr. Joe Comartin

The Chair

Mr. Joe Comartin

The Chair

Ms. Linda Smith

Mr. Joe Comartin

The Chair

1120

Mr. Jerry Pickard

1125

Mr. Alfie Morgan

Mr. Jerry Pickard

Mr. Alfie Morgan

Ms. Linda Smith

The Chair

Ms. Linda Smith

1130

Mr. Jerry Pickard

Ms. Lori Shaloub (Director of Extrernal Affairs and Public Policy, DaimlerChrylser Canada; Windsor and District Chamber of Commerce)

Mr. Jerry Pickard

1135

Ms. Lori Shaloub

Mr. Jerry Pickard

The Chair

Mr. Jim Drummond (Member, Board of Directors, Windsor and District Chamber of Commerce)

The Chair

CANADA

Standing Committee on Foreign Affairs and International Trade

NUMBER 081

1st SESSION

37th PARLIAMENT

EVIDENCE

Thursday, May 9, 2002

[Recorded by Electronic Apparatus]

¿ (0910)

[English]

The Chair (Ms. Jean Augustine (Etobicoke--Lakeshore, Lib.)) I see a quorum. We'll begin.

This is the meeting of the Standing Committee on Foreign Affairs and International Trade, pursuant to Standing Order 108(2), public hearings on the North American integration and Canada's role in the light of the new security challenges and the study of the agenda of the 2002 G-8 summit.

Let me welcome the witnesses before us. We have the Mayor of the City of Windsor, Mr. Michael Hurst, and accompanying him is the commissioner for traffic engineering, Mr. J.B. Tofflemire. Welcome, gentlemen.

As witnesses to our committee today, we start in Windsor with the continuation of two very important agendas, studying the issues that face Canada in terms of its role in the world and in North America.

We feel it's essential to hear directly from citizens, individuals like yourselves, across the country on key foreign policy challenges, the challenges arising in the context of the upcoming G-8 meeting, and in regard to our relations with our neighbors on the North American continent.

As you know, Canada is president of the G-8 during this year. We'll be hosting the summit at the end of June in Kananaskis, Alberta. In addition to addressing the global economic situation and the international fight against terrorism, Canada is putting particular emphasis on advancing an action plan for Africa, based on the African initiative for a new development partnership.

The committee's hearings, on both the G-8 summit agenda and on how our North American relationships should evolve, are being done concurrently, given time and budget considerations. We've already held hearings in Atlantic Canada and Quebec, as well as Ottawa.

This week, in order to complete a national process, the committee has broken into two parts. We were in Manitoba. We were in Winnipeg, Toronto, and now Windsor. Our other group is in the three westernmost provinces.

In regard to G-8 issues, the committee will be tabling its report by the end of this month, in advance of final preparatory meetings for the summit. In the case of the North American study, all aspects of Canada-U.S., Canada-Mexico, and trilateral ties are open for examination, with a final report envisaged for this fall.

Some of you may have read Professor Clarkson's article in The Globe and Mail that said the committee has prejudged its agenda. I want to make sure I say to you that everything is open for discussion. The committee is in the process of making recommendations. Nothing is prejudged.

Everything we hear from you today is taped and recorded, as you can see from the design of the room, and will be on the committee's website. We'll be making recommendations to government. Your recommendations will be included on the website with those of all the other folks we've heard from. We're ensuring, as we debate with you today, that whatever you've put on the table will be further read and re-read as we write our paper.

We want to welcome you and thank you for taking the time, Mr. Mayor, for joining us this morning. I know the mayor's life is a busy one.

We'll ask you to present for about ten or fifteen minutes, and then be prepared to engage us in some discussion.

¿ (0915)

Mr. Michael Hurst (Mayor of the City of Windsor): Thank you, Madam Chair, members of the committee.

Good morning, and welcome to wonderful Windsor. The weather could be a little better, I agree. The sun will shine in approximately two hours, so I hope you're still in town at that moment in time.

Let me say first of all that our community is grateful for this opportunity to outline our viewpoints and concerns to you. We have long been recognized as the busiest and most vital crossing point on the long border between Canada and the United States of America.

It's been my privilege to be Mayor of the City of Windsor for the past eleven years, and during this time and before it--and certainly this will be the case in the future--there has been one inescapable constant, and that's the pivotal role our community plays in the political business and social interactions between our nation and the United States of America.

I'd like to expand on that general statement and provide you with proof. If our geographic area, the Windsor and Essex County peninsula, were a province of Canada, its gross provincial product would be the fifth highest of all provinces. Our gross domestic product is $25 billion a year, one of the highest GDPs per capita in our nation.

I called the role of this region pivotal, and I didn't just mean as a kind of balance point for Canada and the United States, although it certainly is that too. But on top of the Windsor--Essex economy and its essential linkages with the economy of southeastern Michigan are the provincial and international economies.

All three of these elements combined form what I would describe as a classic example of integration. Some 90% of our exports go the United States, and this vast trade accounts for 40% of all of Canada's wealth. Canada and the United States are each other's best customers. Our two countries have the most extensive and most integrated trade relationship in the entire world.

Of paramount significance to those of us here in the Windsor--Essex region is the fact that fully one-third of all trade between Canada and the United States passes through our communities. In money terms, that's $300 million worth every day, 365 days a year. And this gives us, I think, eminent qualifications to discuss the challenges of handling such an immense amount of commerce as a constant and routine situation.

Over the past one hundred years Windsor has earned--and deserved, I would add--the title of Canada's motor city. I emphasize this because a study this past January by the Automotive Research and Development Centre states that “there is an unprecedented interdependence” between Canada and the United States of America in the automotive business.

In road traffic alone, 12,000 trucks a day cross the border between Windsor and Detroit, and many of these are carrying auto parts and components that are vital to the automotive firms' just-in-time manufacturing and inventory procedures.

It is vital to note that our integrated auto industry sustains fully one out of seven jobs in Canada and one out of six jobs here in the province of Ontario. I don't wish to drown the committee in a tidal wave of statistics, but it cannot be overemphasized that the auto industry is Canada's single largest and most important industry.

Our auto trade is worth $120 billion Canadian a year. Of this, 97% of Canada's automotive exports go to the United States. Here's that word again, “pivotal”. I'm referring to our community as the contact and transfer point, the key link between the Canadian and American sectors of this integrated and now almost seamless industry.

Without other businesses included, our border crossings at Windsor handle about $150 billion worth of trade a year. I say we handle it, but how it's handled is the point I would like to emphasize to you this morning. This immense amount of commerce and goods and value and people is accommodated by road links, an international underwater tunnel, and an international bridge that were built seven decades ago. We also have a railway tunnel that's almost a century old. It was designed even before there were automobiles or an automotive industry at all.

¿ (0920)

The critical fact is that although we are the busiest and most vital cross-border link between Canada and the United States, there has been no new infrastructure here to support the reality of our status since about 1930. Windsor--Essex is trying to cope with 21st century needs using transportation facilities from the Great Depression.

Our enormous volume of goods and people is trying to move efficiently between Canada and the United States, squeezed painfully through the narrow, congested funnel of an overburdened bridge, a two-lane underwater roadway, and a railway tunnel straight out of the age of steam. This situation has crept up on us. It has developed piecemeal. Although we are doing our best to keep things working, it's terribly difficult, to say the least. It's almost as if we'd designed a marvelously efficient economic engine but then attached a clamp right in the middle of its fuel line. It is, Madam Chair, that serious.

The roadway that connects our Highway 401 system to the U.S. interstate system is not a throughway at all. It's Huron Church Road. It was designed as an internal street for the city of Windsor, with homes and businesses, schools and churches, produce stands and parks, all along its four-mile length between Highway 401 and the Ambassador Bridge. Huron Church Road is congested. It is perilous. It is grossly overloaded. And as I think most who use it would agree, it is slow.

The City of Windsor has long urged that there be a direct connection between Highway 401 and Interstate 75 in southern Michigan. As I pointed out, we have 12,000 trucks a day crossing the border here. We believe an entirely new direct road connection between Canada and the United States is essential for the international economy.

As you well know, Canada and the United States have agreed to a 30-point plan for managing the border. We applaud both governments for this initiative. It will be so much easier to implement this necessary program if we have a new border crossing at Windsor and Detroit, the first in more than 70 years.

There is progress to report. The City of Windsor is most pleased that four levels of authority are taking decisive action. The governments of Canada and the United States and the governments of the Province of Ontario and the State of Michigan have agreed to cooperate on a binational environmental assessment process to determine where a new border crossing or crossings should be located. This will provide our economy with what we're looking for--a 100-year solution. We strongly support this rigorous and demanding process. At the same time, we urge that this binational environmental assessment process go ahead with all possible speed, while recognizing its requirements. As you're well aware, alternative suggestions for different types of border crossings are also being made. We look forward to these being analysed in the context of the binational process.

Madam Chair, members of the committee, again, let me say I'm grateful for the opportunity you've afforded to me to put forward the concerns and suggestions of the City of Windsor. You have come to a place where we've been crossing the international border since about 1747. In a sense, our close relationship with our American friends on the north side of the Detroit River--and at this point the United States territory is north of us--is so traditional, it's almost taken for granted...but not quite, since September 11.

We believe that these proceedings today can be a significant step in solidifying a new and even more efficient era for the automobile industry and our commerce and social togetherness. Please accept our gratitude for this forum and for the concern you are showing about a most vital but remediable set of circumstances.

Thank you, Madam Chair and members of the committee.

¿ (0925)

The Chair: Thank you, Mr. Mayor. And thank you for this brief, which summarizes so well the concerns in the area.

I'm sure you know that representatives in this area are forever making sure that the government, our caucus, and those who have responsibility know about the congestion and the situation. It is almost a weekly issue, especially in our caucus forum. I think Jerry can bear me out on this. It is an issue that is continually brought up.

Secondly, I also want you to know that this afternoon we'll take an opportunity, with our researchers and our other experts, to get together with Pat Moran, who has arranged for us to see some of the customs trade partnerships and things that are going on. There will also be a tour of the POE, CIC and CCRA facilities, so we'll have an opportunity to see some things.

Thirdly, a Canada-U.S. parliamentary group--a group of members of Congress and the Senate in the U.S. who meet with senators and parliamentarians--is getting together this weekend, so there will be opportunities again for this discussion.

You have made these points so well, concisely, and clearly to us on something that Jerry and others will be involved in. As I said, the transcript from this will feed into the discussion that's taking place. I thank you for this.

On the way the committee works, we'll go around the table and engage you in comments, questions, or anything the members want to clarify or put on the table. We usually start with the opposition side, so I'll ask Mr. Comartin for comments, questions, or clarification. We want to engage you and get as much information as we can for the record. Thank you.

Mr. Comartin.

¿ (0930)

Mr. Joe Comartin (Windsor--St. Clair, NDP): Thank you, Madam Chair.

First, the announcement on the four levels of government--two on this side and two on the U.S. side--was made last May, and the consultant that was hired was only announced about four weeks ago, not coincidentally, I think, because we were having a byelection in the riding this roadway goes through. You don't have to agree with that.

Have you had any explanation as to why it took eleven months to hire the consultant who's going to be conducting the initial phase of that study? Do you understand the content of the study? Will the city administration or council of Windsor be involved in any way in the initial phase of the planning or study that's going on?

Mr. Michael Hurst: To be very straight with you, we were somewhat disappointed that it took almost a year from the announcement to retain a consultant. I don't know the particular reason why it took that period of time, but most importantly, the consultant has been retained and the process is moving forward. We certainly appreciate that.

We took advantage of almost every opportunity we had to encourage that the process go forward in a very timely way. We certainly made representations to the effect that the process start by retaining the consultant for phase one, and eventually that was done. I see that as a positive thing. The first step in a long, arduous process that must be undertaken before we're in a position to realize an additional border crossing or crossings here in the Windsor--Detroit area. We're happy that has finally started.

The City of Windsor is obviously not the driver of this process. We have been very much involved along the way. We certainly anticipate that our particular concerns and points of view will be factored in as the process unfolds. I guess we could be best described as a very interested party that will be given full opportunity to make submissions, render advice, and be part of the mix, in terms of moving forward to step one in the process.

John Tofflemire has been intimately involved from day one, and perhaps he has more detailed information he can share with us.

The Chair: Mr. Tofflemire.

Mr. John Tofflemire (Commissioner for Traffic Engineering, City of Windsor): Thank you, Madam Chair and Mr. Mayor.

I have already met informally with the consulting group. My staff, as a matter of fact, this morning are busy preparing background data, providing some of the studies that we have already carried out on the subject matter, and I have told them it is priority number one for us.

The issue, though--if I may make a couple of comments on the timeframe, which goes to Mr. Comartin's question--is that this is a problem that has not occurred overnight. It's a result of actual neglect of the planning process over the last 40 or 50 years. Since Highway 401 was constructed, there has been no activity whatsoever on this subject, in relation to the border crossing, that would fit into any planning process.

It is a lengthy planning process. There are no shortcuts around it. We must go through it, and the sooner we get on with it and the sooner we put our energy into completion of this study, the better off we will all be. It is extremely important.

¿ (0935)

Mr. Joe Comartin: As a quick follow-up on that, and then I'd like to go to another point, I don't know if it's an individual or a company that has been retained, but has the consultant given you any sense of how long this initial phase is going to take?

Mr. John Tofflemire: My understanding is that the first phase is in the order of a couple of years, 18 months to two years, but they did indicate that they are actively reviewing ways of expediting the process and that the partnership is interested in advancing the timeframe as much as possible.

Mr. Joe Comartin: With regard to the 30-point plan that's in this memorandum between the federal government on this side and the federal government on the U.S. aside, has there been any consultation with the City of Windsor specifically around the problems we're having at this crucial border-crossing area? Have you been involved with any of those 30 points, providing information or involved in any of the negotiations with preliminary work that had to be done to deal with those issues?

Mr. Michael Hurst: We certainly have been consulted with respect to the 30-point plan. We have been given opportunities to voice our opinion with respect to individual points in the plan.

I must say that Susan Whelan has been very forthcoming in terms of providing us with opportunities for discussion on the plan. She did arrange for me--and I believe Jerry was there as well--to meet with Minister Caplan, which certainly was very much appreciated, and we had an opportunity to feel the seriousness that has been applied to working towards a full implementation of the 30-point plan over time.

There are going to be some steps that need to be taken fairly urgently and others that are going to require some additional work before implementation is there, but generally speaking, Mr. Tofflemire, I think we're content with the degree of interaction that has been undertaken over the last little while. Again, I fully anticipate, based on comments that I heard from Susan Whelan and from Minister Caplan, that we'll be consulted on a continuing basis with respect to how best to go about implementing the component parts of the plan.

Mr. Joe Comartin: We've had in Ottawa an ongoing debate since September 11 over balancing security needs and requirements that flowed out of that incident and the need, from an economic standpoint, to keep the flow of trade going. I'm just throwing this out as to whether you'd like to make any comments as to anything you might see us doing at the federal level to address both issues and try to strike some reasonable balance.

¿ (0940)

Mr. Michael Hurst: First of all, it's a tough balance to strike, and there are no easy answers and there's no magic wand. But it seems to me as though concentrating on what I would describe as the higher-risk traveller or the higher-risk truck is a good way of going at it. There are literally thousands of people who travel across the border on a daily basis who are not high risk or threatening by any stretch of the imagination. There is, I believe, adequate technology in the marketplace today that has been available for a period of time that could certainly assist in having those lower-risk travellers pass across the border in a fairly easy manner, thereby allowing us to focus in or concentrate upon the higher-risk traveller, for lack of a better term. And again in making the assessment as to whether or not the individual or the truckload passes, there is technology available in the marketplace that certainly could render a good positive assistance.

You have to strike the balance, but the balance is a difficult one. And we have to look to technology perhaps more than has been the case historically. It's going to take the investment of a few dollars to introduce that technology, but every indication we have would indicate there's lots of talk about what some are describing as the smart border. And implied in that, of course, is a more aggressive use and a more aggressive investment in technology to assist us to make that determination between the lower-risk and the higher-risk traveller.

Did you have something to add, John?

Mr. John Tofflemire: To emphasize the point that the mayor has made, the problem here in this area is that with regard to this balance between free flow of trade and security issues, the whole system's at capacity, so that anything you do to impact on the delay will have a far greater impact on reducing the free flow of trade than it would in other locations. So the balance here is far more critical than at any other border crossing. The result of that is solutions in the shorter term must be technologically driven.

We would certainly encourage that. The reason is that you require space and infrastructure. For example, in order to reverse customs inspection, you need space, access roads, whole other areas of activity that are not currently in the system. That has immediate and significant traffic impacts. So you're definitely into the environmental assessment process and you're into this timeframe of the planning process no matter what you do.

If you are looking for things that you can do to improve the situation in the short term, you're going to have to look at technology, at pre-clearance systems, at new ways of managing international trade that don't get you into that need for immediate and I might say expensive infrastructure. Certainly I believe that the technological direction of this issue is the direction for long-term benefits as well. There's a synergy there. If you put your emphasis into that general area, it will pay benefits for the next century, rather than infrastructure-related solutions that will be more difficult in the short term and have a shorter shelf life.

The Chair: Thank you.

Mr. John Tofflemire: I have a whole bunch more, but I....

The Chair: We will go to Mr. Pickard and then come back to you.

Mr. Pickard.

Mr. Jerry Pickard (Chatham--Kent Essex, Lib.): Thank you very much, Madam Chair.

Mr. Mayor, I want to congratulate you for an excellent presentation again. I think that makes several times. When Minister Pettigrew was here, you put forth a very clear view of the municipality and where things should be at the bridge. I believe the same was true under Ministers Caplan and Gray. The immigration committee was here and we looked at very similar issues. So I've had several opportunities to hear how well you express those ideas and I think that's very positive.

The fact is, I look at the Ambassador Bridge and our crossing here in Windsor as being much like a fluid flow system. We can look at a body and say things are going along well, but suddenly there is a blockage just before the heart and a bypass is needed. That's really where we're at in the flow of goods and services at this point.

It's been a growing, very positive industry in the auto sector, in manufacturing, in border crossings, in transportation, in the flow of goods and people, and in tourism. All of these have had a major effect, and the business climate here in Windsor is very much dependent upon its relationship with Michigan, Ohio, and surrounding U.S. states.

When I stop and think about the problem itself, I think there are two levels we have to look at. You have touched on those somewhat. One is short term: we have to look at what can be done in the short term. And two, we have to look at the long term. Mind you, as you and everyone else knows, there are several suggestions out there. There are different groups proposing different ideas for long-term solutions.

I guess now, since we do have an arresting factor in the flow of goods--just-in-time delivery and immediacy--we have to move to some changes. Pre-clearances are the most important way to go, in my view. Ford, Chrysler, and General Motors have all made many recommendations about facilitating that just-in-time delivery, in order to get that engine from the Windsor engine plant to Detroit within an hour. It is extremely important.

Pre-clearance appears to be very important--not only for goods but also for people. If we look at them, possibly over time, I think many of the suggestions have been that pre-clearance will speed up this just-in-time system and the flow of people going back and forth. As a casualty, there may be a slowdown for those who don't have pre-clearance. They may have to wait a little longer to get across, but that's a small wait in comparison to the needs of businesses in both our economies to move as they should.

Other suggestions have been made. We're looking at technology at the border crossings. Our committee will be very interested to see how quickly staff at the border crossings can pull up licence plates, identify cars, and do the types of things that are being done through customs and immigration.

When I had the opportunity to travel across western Canada I saw what was happening there. When I came into Windsor, I quickly realized that more traffic flows across the Ambassador Bridge and the tunnel here than flows throughout western Canada. We have to be vigilant about the need to make sure that Huron Line Road is not a parking lot but a viable road. Yet we need other facilities to bring Highway 401 to the major U.S. highways, and I fully agree with that.

That long-range plan is one of the problems I have. A second structure across the river is possible, as are plazas away from the bridge or in the bridge structure, which John mentioned. These are very important to make sure that pre-inspections can be done properly and goods can flow across the border.

¿ (0945)

There's another issue that I think is critical, and I'd like your views on it. The backups I see on the Canadian side for people travelling to the American side are often much longer than the delays for people travelling the other way. There have been suggestions that we need to work on our American counterparts to make sure their customs and immigration side allows goods and services to flow more readily. Just a month ago I was on Huron Line looking at the situation. There were again backups down the road for four kilometres. From time to time, in heavy seasons, we get these kinds of backups.

Have you seen an improvement, or does it appear that...? In the last month or so I guess I've been concerned that we've regressed on that side of it. I think we need some support and a push from this committee, from parliamentarians visiting our Washington counterparts, and from our ministers to at least attempt to get these goods flowing as quickly back and forth over the borders as we can.

I would also like you to give me your views on what's happening on the Canadian side. Are we supplying enough officers and facilities to transfer goods into Canada, as we should? If you feel we're not doing that, I think we need to go back and talk to our counterparts.

¿ (0950)

The Chair: Mr. Mayor.

Mr. Michael Hurst: A number of months ago we joined forces with the City of Detroit, members of the Michigan Senate, and congresspeople in an effort to persuade the U.S. government.

Jerry, for a long, long number of years there has been neglect of the importance and significance of the northern border. Over the last number of years, if one did an analysis, it would become clear that when they were talking about border issues in the United States, they weren't talking about the northern border at all. They were talking about the border between the United States and Mexico. Consequently, I think a lot of people lost sight of the critical importance of the northern border in the context of the U.S. national economy. So when any allocations were made by the federal government on the U.S. side, 99% of the allocation flowed south.

In the context of post-September 11, we were given an opportunity to join forces in an effort to persuade the decision-makers at the federal level in the United States that the days of neglecting the northern border, in their interests, had to be over. Consequently, we were then able to be part of getting some legislation passed allowing for a more generous allocation to the northern border, in terms of customs and immigration, INS, and security-related issues, and so on.

The end result is there have recently been some additional dollars, which have been used to retain additional personnel on the front lines on the U.S. side. I guess the question is going to be whether or not these dollars continue to flow over time. Hopefully, of course, they will continue to flow. Are the numbers there yet? Personally, I don't believe so. There are still some very, very significant issues there with respect to committed dollars, to allow the right number of personnel to be available on a daily basis on the U.S. side.

John Tofflemire will speak to the fact that our system is at capacity. If there is anything out there delaying the ability to process individuals in a timely manner, it is going to have a significant backup effect on the entire system. So if they're not able to process individuals in a fairly timely way on the U.S. side, the impact of this compounds as one comes back over the Ambassador Bridge, to Huron Church Road and into the Highway 401 system, and so on.

On the Canadian side, we had similar but not as significant issues a couple of years ago. We brought them to the attention of the federal government. I must say, the federal government responded better than we anticipated it would. So I think on the Canadian side we're okay, but we still struggle on the U.S. side.

If I could, Madam Chair, I'd like Mr. Tofflemire to speak about the fact that our system is at capacity and to explain in a little more detail about the impacts.

If one of the big trucks blows a tire on the Ambassador Bridge, the consequences are rather incredible and long-lasting. It creates congestion on city streets, congestion on Huron Church Road, and congestion on the 401 system. The list really goes on and on. We get phone calls from constituents, residents, and small-business owners along Huron Church Road.

I can tell you as well, Madam Chair, we get phone calls from representatives of the big three. The big three, of course, are into a just-in-time manufacturing and delivery process. It's of grave concern to them.

It's of grave concern to all of us, of course, because we want our Canadian automotive industry to operate, and operate exceedingly well. It's in not only the economic interest of Windsor and Essex County, but certainly in the economic interest of the province. We would say, from our perspective, it is in the interest of the national economy as well.

It was long-winded, but I think I answered each of your questions.

¿ (0955)

Mr. Jerry Pickard: It's great.

Could I ask for one more comment, Your Worship? I know you've been listening very carefully to the business community and to the corporate entities here in Windsor about the comments on the flow of goods across the border. Obviously, when we had several miles of backup at the bridge we were together in meetings. Much of the business community and the corporate interests voiced very strong concerns. Would you help the committee by going over some of the concerns the corporations brought out? I think they're critical for this committee to carry back in the minutes.

Mr. Michael Hurst: It gets back to the fact that the Canadian and U.S. automotive industries are one. They've become so integrated over time, in my opinion, from this perspective, it is one integrated industry. Of course we are in a very competitive environment of Canada versus the United States in terms of having the decision-makers invest in our respective countries to promote the ability to compete, and compete very well, in the global automotive industry.

Understanding how closely integrated we are, and on the other hand understanding we are in a very competitive position, industry is coming forward. They are saying, I think on an urgent basis, that measures must be put in place to address the difficulty we're having in terms of getting, from the Canadian perspective, product to market. Really, it's what it's all about. The product built here in Canada is product that, in the main, goes to the U.S. marketplace. We provided some statistics in support of the statement in our presentation this morning.

In terms of particulars, I'm going to ask John to speak to it in more detail.

You made the point earlier that we have to view this in the shorter term and the longer term. I couldn't agree more. One of the reasons we agree with such statements is because we are hearing from our manufacturers that the situation is urgent. There must be corrective action undertaken in a timely way if we are going to continue to be in a position to provide the economic benefit the healthy automotive industry in Canada provides, not only to places like Windsor and Essex County, but really across the province of Ontario and across our country.

Maybe you could speak to some of the additional concerns, John, that were expressed by the manufacturers.

Mr. John Tofflemire: Thank you, Mr. Mayor.

Mr. Pickard, you've raised an extremely important distinction on the difference between the shorter-term issues and longer-term issues. The committee does need to emphasize the distinction.

I mentioned earlier one of the short-term solutions or some of the short-term benefits of the technological reviews and new technology as applied to the security systems and clearance issues and so on.

The other significant component of the short-term solution has been staffing and funding issues. One of the first responses on the U.S. side to the events of September 11 was to increase funding for staffing at these border points. They had to make budget reallocations in the short term, and those will need to be carried forward if they plan to maintain the existing security protocol. Certainly to some extent that has been successful. We don't see the 20-kilometre-long queues any more.

The important point, again, is that the entire system is at capacity, so these short-term funding reallocations will have to be sustained in perpetuity in order to even stay where we are. It does not matter to the vehicles in the queue; they don't know whether they're approaching a scaffolding for a temporary maintenance issue, where they're down to a single lane on the bridge, or a vehicle maintenance problem. We've had the same thing occur because there was a special on at the duty-free store and the trucks were backed up because the parking lot was overflowing. You don't know when you're two kilometres back what the reason is. All of these different components of this entire system are at capacity. For any reason--bad weather, perhaps--we can get these types of backups.

I do want to make a point, because quite frequently there is reference to the Huron Church Road and the congestion and such. The traffic does not back up because of a capacity constraint on Huron Church Road. It backs up from the bridge back. If there were a capacity problem on Huron Church Road, the backup would be say from the traffic signal at Tecumseh Road or at Grand Marris or wherever. It doesn't happen that way. It happens because of these various capacity constraints at the bridge.

I would suggest that one of the most common and most significant is in fact the U.S. customs protocol. But they have to do what they have to do, and they have reacted in a substantial way to try to provide additional resources. But in the long term, that's not going to cut it. In the long term, we need additional border-crossing capacity with direct access, controlled access, to Highway 401.

À (1000)

Mr. Jerry Pickard: Perhaps I could raise another point or two. From what I've heard from the business community, it is clear that after September 11 some types of business volumes have decreased 30%, 40%, 50% in this community. A lot of that may seem irrelevant, but when we start to nail down what that kind of loss is.... Take a restaurant, for instance. Many people in Michigan come to Windsor to meet with officials and sit in a restaurant and have dinner and discuss issues. If you have to take four hours crossing that bridge, or two hours crossing that bridge, your face-to-face business meetings suddenly end and you finish up on the telephone, which is a bad business climate.

The good business climate between corporations was so interrupted here in Windsor, between suppliers and assemblers, between all kinds of elements, it was basically a separation of the good flow and good will between corporations that I think needs to be taken into account. It's not just the flow of goods. It's the communication. It's the eye-to-eye contact. It's the sitting down and meeting appropriately.

When the mayor talked about a seamless border, it's absolutely necessary and cannot be an impediment to business. That's what it is today. Until we get that flow back to the best possible level and improve that flow in the next few years, it's going to be a major problem for business.

It's not just the flow of goods but a lot of other factors involved that I wanted to mention, because I see on a very large scale what our future business hopes will be and how they can function. If we can't function on that seamless border issue, then we do face a scary scenario. Maybe corporations will side on one side or the other, or business offices will side on one side or the other, and we might lose a lot of our capacity.

The Chair: Mr. Mayor, I think he said it well for you.

À (1005)

Mr. Michael Hurst: He said it extremely well, and with some passion. Well done. Thank you.

The Chair: While we're talking, Mr. Pickard, and thinking of the G-8 and the flow of people and the threats that could possibly be in light of September 11 and post-September 11, and as you bring before us the issue of capacity and how the system is at capacity level, if there were any further strain on the system, I wonder what could possibly be some of the repercussions. But again it's something that is still very hard at this point in time for us even to contemplate, let alone planning for whatever eventuality.

The G-8 is part of the study. Part of the work we're doing is focusing on the G-8. One of the items on the G-8 agenda of course is global security, the issue of terrorism. All of the points that were raised here today in terms of free flow and quick pre-clearance, the immediacy of issues, etc., are all issues, I would imagine, that those who are planning the conference at this point in time would have in mind.

When you speak to us about overload, about congestion, about the need for new infrastructure, the point that we have not done anything much since the 1930s in terms of our roadway, I think those are very crucial and important issues that we have to deal with as we work with our partners across the way.

I think that September 11 has given us that opportunity, as you've said, Mr. Mayor, to focus on the north and the northern border and to work in some collaborative fashion to ensure that the U.S.'s as well as our needs are met so that we can not only ensure, as Mr. Pickard is saying, face-to-face interaction but also the free flow of goods.

So I think that our being here today, hearing from you and having you put those important items on our agenda and as part of the recommendations we need to make.... I want to end by thanking you for the time, and for having Mr. Tofflemire accompany you. I'm cognizant of the time, and the University of Windsor is waiting behind you. I'll say thank you, and thanks for the hospitality extended. Everything has been just fine for us, but do something about the weather.

Mr. Michael Hurst: We certainly will. Thank you, Madam Chair, and thank you, members.

The Chair: Thank you.

We'll continue with more hearings. From the University of Windsor, we have Professor Fritz Rieger.

Professor, welcome to our committee. As I said, we aren't thin on the ground but we are scattered in many directions, appearing in the west as well as in this part of the country.

Yesterday we had before us witnessess from York University and the University of Toronto, so we've been hearing from academics like yourself from across the country. We're very concerned about and are focusing on the G-8 and G-8 issues, and we are very pleased to have you join us this morning, Professor. Thank you.

Professor Fritz Rieger (Associate Professor of Management, Odette School of Business, University of Windsor): Thank you very much, Madam Chair. Thank you for this opportunity to address the committee.

My name is Fritz Rieger. I'm an associate professor of management at the Odette School of Business at the University of Windsor.

My expertise in this area is limited. I do, however, teach in the area of global strategic management at the MBA level, and I've done some research in the past on state-owned enterprises in Europe, Latin America, and Asia. But I'm still quite limited here, so I'm speaking as a layperson.

I'd like to address the G-8 action plan for Africa, some of the governance issues that surround the G-8 meeting, and also governance of international financial institutions. Finally, I will make a few observations about border security here and close with a word about a conference we held some years ago, one that seems poignant now in light of the developments at the globalization level.

I'm going to preface my remarks just by mentioning a statement of principles and personal beliefs that inform my responses to the questions that were presented in the briefing papers. I'm going to try to address some of those questions, particularly on the plan for Africa and as well on governance issues.

The first point I wanted to make overall is a concern for Canadian leadership in reducing poverty in the G-8 context. That is what is behind my remarks today, but the first statement I would like to make concerns globalization.

I'm going to quote two authors today, Thomas Friedman, a well-known, popular author on globalization, and Joseph Nye, the dean of the Kennedy School of Government at Harvard University, both of whom I have some skepticism about. I quote these very well-known and high-profile individuals with some trepidation.

I think Friedman, who is very well known for his book The Lexus and the Olive Tree, hit it exactly right when he said that in fact the processes of globalization are just about out of the control of any government or even of any multilateral organization and that we have to understand that. There is no one really in charge of globalization any more. When we held the conference I was referring to before some dozen years ago, it wasn't like that. There was a great deal of skepticism about the process of globalization, as it was early on, but it has just happened so dramatically in the last few years that there's almost no denying it.

Countries throughout the world really have to either adapt quickly to these globalizing forces or drop out. For many poor countries, especially those in Africa, there's really little choice. They're simply cast aside with virtually no opportunity to adapt and reap the benefits of globalization.

Friedman also notes that many countries' unease about globalization is rooted in a justifiable fear of their ability to compete technologically. But beyond that it is rooted in culture, and not just in anti-capitalism and an anti-western bias or anti-Americanism but in unease about modernization. He argues that communications technology and the Internet have on the positive side empowered and emancipated individuals in the west. One consequence of that is that it supports the individualistic thrust of those societies, but by the same token that's very challenging for more traditional societies that are more group-oriented. So there's a sharp cultural issue that has to be divided.

À (1010)

I mention in the text here that there are really four different ways countries can approach globalization. There are those who desire to participate and have the ability to adapt to it--that is, those who are ready. There are those who desire to adapt but are not ready. A third group would be those that could readily adapt but choose not to, possibly because of these cultural threats--we can see a lot of this in the Mideast region now, certainly--and those who neither desire nor are ready to adapt.

Each one of these classifications requires a different approach. Some in the no-interest category, for example, may be those who desire to participate in the global economy but had an early failure at it and now have retreated. An example I cite often is Malaysia, where they were full participants for a while and then they've taken some very regressive steps along the way.

A second perspective I want to mention--and I do this with saying that I really have no direct evidence, but I have a suspicion, because my academic area is organization theory--is that the international financial institutions probably need a revolutionary approach to change. In the documentation the spirit of G-8 is very much evolutionary. These institutions are highly professional. I have an immense amount of respect for the aid people working in the World Bank and those concerned with aid in the International Monetary Fund and the other regional development banks. But here I'm working from the general principle that the more professional an organization is--and you can see this in universities as another example--the more embedded traditional approaches to problems can get. The only way you can really make progress is to shake that up. It's not likely that shake-up will come from inside. But when you have some 7,000 professionals working in the World Bank, and all extremely qualified with high degrees of experience and all, you wonder exactly how can we start to rethink the whole issue of aid. Perhaps that should be on the agenda, especially since Canada has such a unique role in the G-8.

Another area that I'll mention briefly is there is a need for coordination between G-8 members, the governmental institutions, and the non-governmentals, as well as the multinational corporations. It's an area that didn't seem to me was explored very much in the background readings or the preparations for the G-8, but it's something that should probably be put on the agenda, in my opinion, later on.

Finally, my last bias, before I get to the questions, concerns the need for focus and something that in business they call strategic intent. What I am advising here--or at least would like to propose rather than advise--for the Canadian delegation to the G-8 is that it narrow its focus on what it wants to do in the area of poverty reduction very carefully, so that it accomplishes these goals rather than try to do so many things. As you can imagine, other states do maintain so many different goals at one time. To the degree that you can narrow the goals and discipline yourself to accomplish certain things, the opportunity--the terrible situation in Africa, but by the same token the great opportunity--to make progress is there.

Please let me know when I've gone over time. I've gone through this list, and it has been a continuing effort at revision and rethinking them, so I'm not quite sure how long it will take to go through everything.

À (1015)

The Chair: You have another five minutes.

Prof. Fritz Rieger: Five minutes. So let me hit then on some quick highlights. I'm just a wordy person.

In terms of the G-8 goals for the action plan for Africa, therefore, I think the first goals should be an overarching and immediate goal of poverty reduction, which becomes the touchstone criterion here--that above everything else, poverty reduction is most important.

Beyond that is the prioritizing of goals. I've shifted a bit among some of the things that were given in the briefing paper. I've demoted the notion of debt reduction down to third place and market access, even though it usually leads the top of the list. The thinking here is what we would like to do is have countries in fact concentrate on risk reduction to make them more attractive to lenders and to possibly other investors and along with that to strengthen the community as really first and foremost things.

There are other important priorities that were mentioned, especially for Africa, regarding communicable diseases and communications technology, and those are almost in a separate class. They have very high priority too. But I think overall, in a global sense, reduction of risk is important.

The second issue that has to be dealt with--and I'll just pass over this very quickly--especially from a governance perspective, is reduction in corruption. How do you do that? I'll rush to the punchline for that one.

Punitive actions and conditionality, which are discussed at length in many papers, run into a lot of difficulty. I am proposing here something of a different form of conditionality in terms of influencing and trying to reduce corruption in recipient countries, because it's such a key issue.

One proposal is to use something of an incentive system, as opposed to a disincentive system. Experiment, for example, with credits for accomplishing goals along the lines that the magazineThe Economist suggests for pollution credits, as well. But here, have it on an individual basis with the heads of state or the persons in charge in these countries, and have them rewarded for good works, rather than having only an auditing kind of function to try to control the corruption there.

I'm going to pass through most of the other things and come to the end, so I can mention two things.

First, the sixth question under the plan for Africa concerned getting popular support for an action plan for Africa. It seems to me that this is such an attractive program it's one that Canada really should try to develop grassroots support for. Here is something the country can rally around--a large investment already of $500 million by Canada to put toward this. Not that their money should be used for these purposes, but there's enough of a thrust here to develop some popular support through teaching, through school involvement, through saturating the local market and therefore emphasizing Canada's leadership role in both the G-8 and the G-20 with regard to this, as well as in coordination with NGOs and CIDA.

And CIDA's focus on women and children is particularly important, though I didn't really intend to speak on the issue of women. As a member of the faculty, we've seen a fair number of women MBAs coming as international students over the last years. Many opt to stay in Canada, but some return to their countries, and we've been able to keep in touch with them and watch their progress through the virtue of e-mail.

It seems the professionalization of women, especially in the mid-level countries, is particularly important. It's an area we can also perhaps promote within Canada, bringing women here to do advanced degrees with the intention of their returning to their home country.

I think I am just about out of time. I said I'd mention something on security, just to endorse what had been mentioned earlier in terms of border security. But also, one thing I've run into in conversations with American managers of Canadian branch plants in the auto and related manufacturing industries is that many of them are here reluctantly. You know, there was a decision as to where to locate a plant, and Windsor or this area came up a winner for a variety of economic reasons. But many within these companies are looking for an excuse to leave or an excuse not to further invest, so border issues give more ammunition there.

À (1020)

I think it goes beyond the inefficiencies of the economic analysis. It becomes an emotional issue now in the post-9/11 period. If you also have big delays, annoyances at the border, and some mess-up, where dumping duties are being imposed because the paperwork wasn't done right or whatever, you start to see a whole bunch of arguments for not investing here.

Thank you very much. I'd be glad to address some other things if there's time during the question period. Thank you for your attention. It's really appreciated.

À (1025)

The Chair: Thank you very much, Professor Rieger. I think it's important for us to focus on the issues you've outlined in your paper.

We heard, by the way, from Professor Joseph Nye. He appeared before our committee in Ottawa. We took advantage of the opportunity provided to spend some time with him and to do a thorough examination, especially of some of his two recent documents or books. Our research people took the benefit of his appearance to pursue some of his thinking on the topic.

I notice you mentioned this. Later on, I might have an opportunity to ask you something closer to the question you posed on how the G-8 should manage governments. Maybe we'll come back to it.

I'll go now to my colleague, Mr. Comartin, and see what questions or comments he'd like to pursue with you.

Mr. Joe Comartin: I'd like to pursue, Dr. Rieger, the last point you raised. I must say I've had a somewhat similar experience and have been picking up some of this. I want to be clear on the point you're making.

If I understand you, you're saying there are certain mid-level and senior-level management people in this area, primarily in the auto industry, who, in spite of an economic analysis saying it's logical to put the production here, have another motivation.

Is the other motivation a patriotic one, or simply that they miss their hometowns and want to go back? I'd like you to tell me if you can see it. Is there a difference between a general patriotism to the U.S. and wanting it there because they're Americans, or do they only want it back in the U.S. because they happen to be from Detroit or some place in Wisconsin?

Prof. Fritz Rieger: I can't say definitely. I suspect it has something to do with patriotism, probably pre-9/11 patriotism, where there is a general sense that they may have been more comfortable there. I can think of two specific instances, one with the people from Ford and another with the people from National Steel and the DMN operation here. They both expressed concerns, although they didn't elaborate on them.

On the National Steel issue, I mentioned dumping. It turned out there was an unplanned dumping duty placed on steel that was brought over and then re-exported back to the U.S. I was speaking to a vice-president of the company at the time and he was livid. He never wanted the program here. He was very sorry it had come to Windsor in the first place, etc.

In terms of Ford and some dealings there, there was some skepticism that things could have been done closer to Cleveland, Romeo, or wherever the other engine plants are.

I assume it was more general patriotism at the time, because the economic and quality benefits were a bit overwhelming. There were so many reasons to invest in southern Ontario. I think they may be a little embarrassed by it. The issue of quality during the period of the early 1990s was very clear. There was better quality work being done here, with fewer mistakes and less rework.

Mr. Joe Comartin: I'd like to switch gears for a minute. On the whole question of governance and, specifically in Africa, the corruption issue, could you expand on it? For a foreign country like Canada, how far do we go when insisting on clear administration as opposed to corrupt practices?

Let me just pose the question in the light of trying to also encourage, as much as we can, the development of full-blown democracies on that continent. How do we balance off the harsh measures dictated by a foreign country such as Canada against trying to, at the same time, develop democracy?

À (1030)

Prof. Fritz Rieger: To begin with, I think there are two ways we can approach this. One is by regarding Canada as an entity in itself, perhaps in its aid programs and such; the other is by viewing any G-8 member as a stakeholder in the international institutions. It's really the international institutions that have to carry out any kind of program here. That is what I had in mind.

In one of the excellent papers that was provided--and I would have to look through them to get the exact author's name--on governance, the approach was to look at Canada as one of the stakeholders of the IMF, and World Bank, and other development banks, with the idea that governance would go through these.

Just to anecdotally tell you something, we're always happy when our students do well. I've kept in touch with one of our graduates who happened to be a Chinese international student studying here, who finished in Windsor this year and then went on to the University of Alberta to do a PhD. I was corresponding through e-mail about this conference today. When she came to the governance issue, she said, “Oh, that's principal agent problems”--talking in the vocabulary of a first-year PhD student, and it was very good. “But,” she added, “of course the only way you can deal with principal agency problems is through binding contracts”, that in fact what you really have to do is devise formal contracts. At least that's what the literature would tell us here as a first step.

I was going a bit beyond that by suggesting an incentive system, as opposed to a disincentive system of conditionality. It's interesting that Professor Nye also.... It's not clear to me that it is a principal agent problem. That takes the point of view that the government in the recipient country is an agent of the international organization. But that is the position that in fact Nye has taken. He calls these governments agents in a program of poverty reduction that is being headed by the western country or the international organization.

Very stringent controls are important. I think the democratization of the process and transparency is also important. To some extent you have an Enron issue here as well. What can we learn from control here, and opening up the doors as much as possible? Perhaps you just have to have some sort of motivation for a society to cooperate.

I suppose also you could look at corrupt governments along the scale of corruption: those that are endemically corrupt and are going to be very difficult to deal with; those that are occasionally and opportunistically corrupt; and then even a softer definition of what constitutes corruption. Some attention to the ones that are keeping honest people honest should be a little easier than trying to revolutionize a country that has been long known for corruption.

Mr. Joe Comartin: I'll just pursue the incentive suggestion you've made. Do you have any examples of it, any case studies where it has been attempted and been successful?

Prof. Fritz Rieger: No, I don't. I imagine there are some, and I really haven't pursued it enough.

I would envision it working somewhat the way a bonus system would work in a corporation, that there would be extra incentives for delivering the goods. You would be looking at performance, so performance measures would be monitored.

If the performance goals were achieved and you audited those very carefully, and there was an improvement, say, on test scores, or reading was at the third-grade level as opposed to kindergarten level--something along those lines--there would then be some credits and actually some rewards, both in terms of...maybe the psychic rewards are as important as any monetary rewards.

I realize this is a pretty radical thing. Once you start to talk about side payments, it sounds like you're doing something that's corrupt. But in fact if they're institutionalized and they're fair and transparent, then you can argue it's a lot better than under the table.

À (1035)

The Chair: Thank you.

Mr. Pickard.

Mr. Jerry Pickard: Thank you very much, Madam Chairman.

Professor Rieger, thank you very much for appearing before the committee. It's a topic I'm not as well versed in as I would like to be. Clearly, some of the comments that have been made are scary, in my view. We talk about the share of trade that Africa has: they have 10% of population among trading nations, but 1.5% is their share of trade. And that's gone down; it's halved since 1980. So they're losing ground, not gaining ground, and losing ground very substantially and very rapidly.

Personal safety is a major issue. I saw a special last night on refugee camps and what was happening to the safety of children and women. It was horrendous: rape and problems with starvation, all kinds of things happening, and I guess we can attribute it to corruption. But we have a country that has vast problems that need to be dealt with.

Certainly I give credit to the Prime Minister for suggesting that $500 million within our budget will head toward aid in Africa. As well, we're looking at trying to answer at Kananaskis some of the problems that have been raised with the new partnership for Africa. But I think we have to have an almost coordinated effort between nations, from the International Monetary Fund, among NGOs, almost on every front. It's going to require a coordinated single-minded effort. At the same time, it almost seems that if we do that, we take away the independence of a nation for at least a period of time in order to move them in the right direction.

From a global point of view, do you believe that outside forces setting directions and moving an agenda that would be somewhat evolving from outside going in is the direction to take? And how then do we develop that cause and that interest and that improvement inside Africa itself, and inside those nations which may have corruption, may have good people as well--and I think we have to look at that--and convince people inside a very difficult setting that there is hope and there are ways to reach the future in a more positive way?

Prof. Fritz Rieger: First, in an attempt to make an answer here, I think without having experienced Africa in a substantive way it's kind of guesswork on my part. I'm just working from some general principles here of how you might approach a problem like this.

I would never want to say that you want to give up democratic processes in order to achieve something, even though I know that in emergencies sometimes we have to. I think that's not only an excuse, it's kind of the easier way of dealing with things. So I think it's essential that the dignity of the country has to be maintained. And I believe very much that there's no country in the world that's more sensitive to that than Canada, so it's the natural country to do that.

There were some excellent questions. As a matter of fact, I chose to speak about Africa, and one of the reasons was that the questions on the African section were so good that they evoked response.

One of the questions was whether we should start out dealing with the easiest or most promising countries, as opposed to spreading out to all countries. I say that's kind of a non-question, because you have to do both. But you have to understand the reason you're doing both. You want to start out with those you can influence and that have a higher promise of achievement, because you want to build up a track record of achievement. You can't just take on the most difficult cases. You have to have some successes. As success builds on success, hopefully it will induce recipient countries, countries in need of help, to be willing partners in the process and to accept help offered in that way. I think the previous successes may go some way in inducing others to participate, as opposed to being coerced into participating.

Beyond that, I don't know. Every country is different. Africa is particularly interesting. My connections with Africa are mostly from colleagues from Africa who are doing work there and just an appreciation of it having the best potential.

I'll say one thing here. Recently I was the beneficiary of development bank largesse, and I conducted a two-week seminar in Sri Lanka with a colleague. That experience raised a lot of questions for me about how projects are allocated. I think we did a very credible job as representatives of the university, but there are still questions. Why was our project chosen? Was it the best one? Is it just a competitive marketplace, and whoever has a reasonable project and is there at the right time will get to do it?

These issues of what kind of aid and what kinds of projects are chosen are particularly important. It's an enormous job for these development agencies to deal with, as I understand it.

À (1040)

Mr. Jerry Pickard: In a nutshell, then, what I hear you saying is we deal with all countries but we have to set our priorities. We have to look for those potential successes we may have in the short term as examples for other countries to move to. We have to look at the strength of democracy in various countries at whatever level they are and try to focus on that strength. Generally, we would be setting up a pattern that would emulate success, and others could follow those kinds of directions. Kananaskis has a difficult task, in my opinion, and it's not going to be easy to coordinate what can be done in order to move a positive agenda in Africa. But it does make sense to move on a priority basis and try to set images that would be good ones for other countries to follow.

Prof. Fritz Rieger: Yes.

The Chair: I just want to remind us that the New Partnership for Africa's Development plan that's on the table is one where the Africans themselves, the leaders of the various countries, especially the ones where there is some good governance and that are attempting to move their nations forward, such as South Africa, Nigeria, Algeria, and a few others, which are part of what are called the initiating states for NEPAD, have looked at other plans and visionary documents and have come up with something that speaks to the spirit of what they call the renaissance of Africa. They put on the table for the G-8 meeting in Genoa and for this G-8 meeting as well--with the leadership of Mr. Chrétien--issues around governance, market access, conflict resolution, health, and education. All of those items are on the agenda, and we're in the process of putting forward an action plan to the G-8.

So we're hearing from our colleagues and from Canadians about items we hope will make their way into the action plan for the leaders, to somehow put before the African leadership to say “These are the ways in which we, as G-8 countries, can assist you”. I think the Africans themselves are quite clear as to what they want, and how they see themselves moving ahead.

I was going to ask you about a peer review process, because I think my colleague is aiming at this. The Africans themselves are saying, “We want to be able to assess each other. We want to be able to group our countries, or to encourage, or to put in incentives or disincentives to move our nations forward. But we're saying that you, the G-8 countries, have to make room for us, whether it's in market access for our goods, or what not.”

So it's important that we, as Canadians, understand that the Africans know where they want to go at this point in time. But we hear from the NGO community that they need to be part of the process, and to understand what this NEPAD paper is about, and what it's saying, and how the leaders are moving.

Professor, they spoke a good deal to us yesterday about the conditionality around the IMF and World Bank, which they feel have brought African economies into the position they presently are in. Whatever discussions take place, we're hoping those items around conditionality would be a focus.

À (1045)

Prof. Fritz Rieger: Yes, certainly.

If I may go to what you said about NEPAD, in the first place, it seems to me this is just a marvellous step forward and an opportunity. One of the papers supplied or made available was an analysis of the beginnings of NEPAD. It mentioned that a distinction should be made between regional and country issues, and that NEPAD should work on the regional level, which of course is wise. That also allows for some room for the other programs that work on a country level to be done in conjunction with a sort of regional overview from NEPAD.

Conditionality, of course, seems to have caused great, great problems in terms of debt reduction and macro-economic requirements. I think there has to be.... It's something that's almost beyond control.

If I could get back to some of the things Mr. Pickard mentioned, I think focusing is exceptionally important. That's been the theme here. I also think Canada and other aid nations need to prioritize in terms of what does the most good, as another criterion. What benefits most of the people?

Among other things, the possibility of success is a big factor, but it also has to be balanced out with where the crying needs are. The possibility of success is important because, with patience, it will help to build continuing programs. But by the same token, the principle of where does the crying need have to come from.... I guess NEPAD's role in identifying where those crying needs are is going to be exceptionally important and useful.

The Chair: Thank you very much, professor, for coming in this morning and presenting us with a paper and also your work International Management Research: Looking to the Future. I'm sure we'll find that document useful.

À (1050)

Prof. Fritz Rieger: If I may, I'll just mention why I brought that along. That book has been out some years now, but one of the chapters, by Henry Mintzberg from McGill, gave a very skeptical view of the meaning of globalization. It was not only skeptical, it provoked questions, and I think that is something we should always be doing. Even though it was done some years ago, looking at that one chapter may be the single thing that's most pertinent to this in the book. It may give you some ideas about ways we should think about globalization.

Thank you so much for allowing me to speak before you.

The Chair: Thank you, Professor, and have a good day.

I will now call to the table Linda Smith, president of the Windsor and District Chamber of Commerce; Professor Alfie Morgan, member of the board of directors and professor at the University of Windsor; Mr. Jim Drummond, also a member of the board and a senior environmental specialist; and Lori Shalhoub, director of external affairs and public policy, DaimlerChrysler Canada. Welcome.

Thank you for waiting, and thank you for being with us. We do appreciate the presence of the chamber. As we go across the country we've been hearing from other chambers as they officially give us their regional perspectives. We recognize that the membership is thin on the ground, but I think you have the best and the brightest.

You will have some time to present and some for questions.

Ms. Linda Smith (President, Windsor and District Chamber of Commerce): Madam Chair and members of the committee, good morning and welcome to Windsor and Essex County. My name is Linda Smith. I am the president of the Windsor and District Chamber of Commerce. With me today is Dr. Alfie Morgan, professor of business administration, Odette School of Business, University of Windsor, and chamber of commerce board member. As well, we have Jim Drummond, who is senior environmental specialist with Golder Associates Ltd. and a chamber of commerce board member.

We are pleased that Lorraine has come up with us as a reference. We understood that there would be engaging questions after the presentation, and she is here as a resource. She is the director of external affairs and public policy, DaimlerChrysler Canada. Also, DaimlerChrysler Canada is our largest chamber member here at the Windsor and District Chamber of Commerce.

The Windsor and District Chamber of Commerce represents 1,400 business members, who collectively employ over 80,000 people here in the Windsor and Essex County area. We are grateful for the opportunity to address your committee on border management and the Canada-United States economic relationship. Dr. Morgan will speak to the latter.

It is a well-known and important fact that the Government of Canada has made trade facilitation and national security paramount issues. The formalization of these responsibilities in the office of the Deputy Prime Minister, along with the budgetary announcements and the smart border declaration, a 30-point action plan, set the stage for the immediate implementation of necessary and numerous initiatives in many regions of the country.

Canada is one of the great exporting nations of the world. Our very economic foundation is built on trade and exporting high-value, high-quality products. We in the Windsor region understand this very well. The Windsor region is Canada's automotive capital. The Canadian DaimlerChrysler headquarters is located in Windsor. DaimlerChrysler, along with Ford and General Motors, have invested more than $6 billion in our region since 1991.

Windsor is the machinery, tool, die, and mould capital of Canada. Windsor--Essex is home to 20% of all tool and die makers and 50% of industrial mould makers. The Windsor--Essex and Chatham--Kent region is Canada's bread basket, with Leamington serving as the greenhouse capital of North America. The greenhouse vegetable crop value last year surpassed the $300 million mark. As you know, most of these agricultural products are exported.

I'll provide some quick economic facts. Eighty-seven percent of Canada's exports are sent to the United States, and 25% of U.S. exports are sent to Canada. Forty percent of the Canadian GDP is dependent on export sales. Thus, one-third of Canada's economy depends solely on sales to the U.S. Two-way trade between Canada and the U.S. under NAFTA has grown 11% per year since 1993. All told, more than $1.5 billion of goods cross the Canada-U.S. border each day, 70% by truck. The auto industry relies on the smooth flow of parts for its just-in-time delivery schedule, representing about $500 million.

Canada's number one trading partner is southeast Michigan, $103,524,570 combined import-export in 2000. More than 40% of all Canada-U.S. trade crosses Michigan-Ontario borders. Forty percent of the truck traffic crosses the Ambassador Bridge alone. Windsor-Detroit is the busiest border crossing between Canada and the U.S., and as such, Windsor and Essex County businesses must be involved in ensuring the transfer of goods through the crossings.

It is important to emphasize that the border management crisis was many years in the making. The tragic events of September 11 only exacerbated a situation that has long been ignored or relegated to the back burner. Windsor--Essex became the canary in the mine. Longstanding shortages of bridge, tunnel, and plaza capacity to meet growing demands have been ignored by government. Infrastructure improvements have been demanded for years. There has been chronic underfunding of customs and immigration resources, both people and technology, especially on the U.S. side.

In the U.S., INS--Justice--and Customs--Treasury--share responsibility for primary and secondary inspection, and alternate manning primary auto booths. Historically, INS has had the biggest staffing problem. Pre-September 11, the Canada-U.S. border had 900 primary inspectors--no change since 1980. The Mexican border staff has doubled from 1991 to 1998. JFK Airport alone has 500 customs and INS inspectors. The Detroit port of entry had only 15% of the required number of INS agents.

America's northern border, which is 4,000 miles long, has 1,773 customs personnel. The southern border, which is 2,000 miles long, has 8,300.

The border is still fragile. Today our truck traffic is back to normal, but passenger/vehicular traffic is still down 20%, more on weekends. The border crossings are dependent on police volunteers--the National Guard, which is funded temporarily and on short renewal. Overtime caps for customs and INS, which were initially waived, have come back. The U.S. is not close to opening all booths at peak times of the day. It takes nine to 12 months to recruit and train U.S. customs and INS inspectors, and hundreds are now being lost to the sky marshal program.

For safety reasons, the decision by the Bridge and Tunnel Operators Association to restrict traffic flow to avoid having vehicles sit on the bridge or in tunnels has created new delays and causes local traffic jams on Windsor and Detroit streets. Border delays cost trucking companies $50 to $70 per hour. These costs are passed on to shippers when delays persist. The cost to shut down an average auto assembly plant is roughly $1.5 million per hour in lost revenue.

Our borders are already crowded. Annual vehicle traffic crossing at Windsor-Detroit at the Ambassador Bridge is 13 million vehicles, including 3.4 million trucks. This is the busiest commercial crossing in North America.

À (1055)

The Detroit-Windsor tunnel has nine million vehicles, making it the busiest passenger crossing in the country. Detroit River rail tunnel moved 446,000 rail cars in 2000. In 1999, over nine million tourists visited Windsor region; 7.9 million of those were American, and of those, 7.5 million were day-trippers.

Canada-U.S. border crossings, especially Windsor-Detroit, have always been plagued with problems of inadequate staffing, poor border management practices, and lack of funding for new technology to expedite the flow of goods and people. Post-9/11 we have all the same problems as before, but in addition we have the threat to bridge, tunnel, and plaza security and the burden of stricter new inspection procedures. The Detroit-Windsor tunnel, for example, anticipates the need to either double its existing plaza or seek an alternative facility for toll and inspection activities.

The existing infrastructure--one road bridge, one road tunnel, and one rail tunnel--is inefficient, poorly designed, and inadequate for future needs. Border crossings are in fact a system made up of several critical elements--access roads and intersections, toll booths, roadway, primary and secondary inspections for cars and trucks, egress roads, and intersections. Capacity and efficiency are based on the weakest elements. This system is like a kink in a garden hose: it doesn't matter where the kink is; it has the same effect on the overall flow.

The model long-term border-crossing system must assure each element has similar capacity. At pre-9/11 growth rates, primary and secondary inspections are the key constraint today and determine the extent of delays in overall capacity. Capacity problems and delays are an issue related to peak-hour travel levels and not average daily or annual volumes.

Primary capacity depends on primary processing time and the number of open customs inspection booths. Secondary capacity is a function of customs processing time, diversion rates, and parking capacity. For Windsor-Detroit at normal peaks, volumes exceed U.S. primary capacity by one to two times, even if all booths are open, which they are not. At normal peaks U.S. secondary is exceeded with 30% diversion, 45-minute processing, and 1% of vehicles inspected. Adding more staff alone will not solve the capacity problem.

Significant security processing time will only reduce capacity further. A major problem with frequent travel programs is that current plazas are too small and that vehicles sit in general backups until the last minute or two before reaching the booth. There are options. Existing crossing primary and secondary capacity could be increased by inspecting off-site where there is more room and by having a monitored secure roadway. U.S. Customs has opposed this historically. Canada already does this for secondary truck inspection in Windsor. The U.S. does it currently for secondary truck inspection at the tunnel.

Consider adding to this joint facilities of inspection in order to enhance security of infrastructure. There are at least three private sector companies proposing solutions to the long-term border capacity problem: Mich-Can bridge proposal for west Windsor, possible twinning of the existing Ambassador Bridge, and the CP and Borealis super-tunnel proposal to convert the existing rail tunnel for use by trucks and build a new rail tunnel. All suggest some degree of dedicated truck route to connect the Highway 401 and Interstate 75 system.

The long-term future of our border crossings will be studied by a binational partnership involving the American, Canadian, Ontario, and Michigan governments. This study is to confirm the need for additional capacity at the border crossing, scope the range of border crossing and transportation connection alternatives, assess the feasibility of alternatives from transportation, environmental, and socio-economic perspectives, and identify the type and general location of the recommended alternative. Last month the contract was let for the first stage of the six-stage planning and environmental process.

These are decisions our communities will live with for the next fifty years. They are environmentally sensitive and politically controversial. It is important that government take the lead in determining which plan is best.

Á (1100)

To quote the Detroit Free Press, “It's up to government to ensure that what's chosen is determined by the broadest public interest, not whoever manages to get a shovel into the ground first“.

To quote an NBEST northern border management task force letter to the President and the Prime Minister, “Our mutual national security depends on our economic security, and our economic security depends on how well our borders function”.

The uncertainty of delay can pose real problems for business and our economy. Long-term investment decisions and sourcing of contracts will be influenced by the degree of reliability in cross-border movement of goods and people.

There are costs associated with continued delay and uncertainty. On goods, the costs are less cross-border specialization and reduced productivity; potential increases in inventory levels and reduced flexibility; trucking company delay costs at preferred crossings; and costs from rerouting traffic to alternative crossings. On travelers, the costs are less cross-border shopping and recreation travel; less access to specialized labour from the other side; and delay costs for those repeat travelers.

This uncertainty over border delays is not just a Windsor issue; it represents a threat to the entire national economy. Auto manufacturers and suppliers are waiting to see how efforts such as the smart border declaration and other initiatives play out before redirecting investment or sourcing strategies. The growing interdependence of the Canadian and U.S. auto industries could be jeopardized by our failure to deliver dependable crossing times.

Decisions are being made now on border management issues that will impact the future of the Canadian economy. We have a unique opportunity to act on border issues that have hampered us for years. There is the powerful combination of political will on both sides of the border, public support, and funding available.

Before I turn the podium over to Dr. Morgan, I would like to add that there is some background information in your files, specifically the Detroit Fee Press article quoted and some other information.

I would now like to invite Dr. Morgan to address the Canadian-U.S. economic relationship.

Á (1105)

The Chair: Thank you.

I just want to say that the mayor was here this morning, and many of the points you have made were also made by him quite firmly and strongly, and were supported by my colleagues, who are very conversant with the issue. I brought everyone's attention to the fact that we will be going to the border a little later to meet with some folks, so we can see the impact of your presentations.

Secondly, our colleagues will be meeting with their American counterparts--senators and congresspeople--to talk about the issues and have full and thorough discussions. Hopefully everything will be part of the recommendations that will be coming out of the committee.

Everything we say here is recorded and will be part of our website and the workings of the committee. Hopefully, we'll be able to make sure your recommendations and the discussions we have with you will be part of the process and response to the border issues.

Dr. Morgan.

Mr. Alfie Morgan (Member, Windsor and District Chamber of Commerce Board of Directors): Thank you, Madam Chair.

I won't go over the material you went through this morning with the mayor and Ms. Smith. I'm really delighted that you are cognizant of how critical the situation is in Windsor. I'm also delighted to see that Mr. Pickard and Mr. Comartin are on the committee, so I think we're going to be very well represented when the final report comes out.

You have heard the details of the current situation: the facts on the ground, as they stand. I'm going to address the broader issue of Canada-U.S. economic relations, and more specifically, the future of this relationship.

As things happened, the FTA and NAFTA opened up a lot of opportunities for Canadian businesses. As a result, many of these businesses started taking a North American-wide view of their marketplace and started acting on that. The result of these actions is we now have deep integration and dependence on this North American view.

In a way, through their action it would seem that a vision is suggesting itself, and this is a vision of one North American market leading to one North American economy. God knows what the political ramifications of this will be, and I'm delighted that we have to talk about this subject this morning. In essence, the issue we have to deal with is where the future of this integration is heading. We need a vision. I think that's the main issue we have here: we need a vision or a strategy. Are we in agreement for one American market, one North American economy?

In approaching this issue, there are some choices. Some of the models for this relationship have been outlined in the briefing papers. I'm not going to go over them, because you know them already. But in talking with the business community here, and I speak more as synthesizing the views of the business community than as stating my own personal views, it would seem that a two-pronged approach is needed for attacking this issue.

In the short term, most business people in this area--and I'm sure the rest of Ontario and Canada--would agree that we need to deepen NAFTA. That would seem to be the most appropriate short-term action.

By deepening it, I mean working together with the U.S. to straighten out the trade irritants we have. The trade irritants stem from the fact that although we were trying to be one common North American market, the partners in NAFTA retained their authority to act as independent nations. While they are being pushed to become interpendent, they still maintain those powers of independence. The Americans, for example, could apply the anti-dumping rules or whatever other non-tariff barriers at their pleasure. Something has to be done about creating this commonality, or at least reducing this independence for the three nations, so they may become that one market or live up to the vision of NAFTA--if there was a vision for NAFTA.

In the short term, of course, as I am suggesting, the deepening of NAFTA will be the appropriate solution. Certainly the smart border declaration is a great step towards deepening NAFTA, and I am delighted to see it is happening here. I think by the time those 30 points are implemented, we're going to be already halfway into that solution. If we can reach a little bit further to harmonize our standards, to harmonize our procedures so that they'll be predictable for business people and therefore the movement of trade will be predictable as well, I think that would be great.

In the longer term, perhaps we should be aiming at a customs union. A customs union is not a panacea. It will not solve all the problems, because again the three nations still would like to maintain their independence and retain their unilateral power to introduce elements into the trade equation. However, a customs union would at least go a long way to reduce the trade irritants. It would open up the flow of goods a little more. Maybe we could push a bit further to facilitate the movement of people as well. It would be a good platform, something to take into the future, whether we will be going for a true, genuine “one market, one economy” or not.

I'm going to stop at this point, because I'm sure I'm going to be having a lot of questions. I would be delighted to take them at this point. I want to give a chance to my colleagues to air their views as well.

Á (1110)

The Chair: Thank you.

Yesterday we were in Toronto, and we were very engaged with this vision and the issues around NAFTA: the deepening of NAFTA, the contrast between NAFTA and the WTO rules, and the support from some areas for the view that the rules in WTO are so much clearer and fairer, etc. So thank you, Dr. Morgan; you're on the track of other individuals who have come before us.

Mr. Alfie Morgan: I'm sorry that I did not mention this. I think we have a great opportunity here to sort of steer the relationship our way. My fear is, if we leave it to be events-driven, God knows where we'll end up. If we have a vision and a strategy that will help us more or less steer the relationship our way--given of course the relative size of the U.S., and so on and so forth, but we'll have enough leverage to steer and influence the relationship--let's take advantage of that now, rather than later.

Á (1115)

The Chair: Thank you.

Ms. Smith?

Mr. Comartin, then. Have you any questions or comments?

Mr. Joe Comartin: Thank you, Madam Chair.

Let me thank the Chamber of Commerce for coming. I want to make a specific point to acknowledge that they didn't toot their own horn when they were here, but after September 11 the chamber on this side of the border joined with the chamber in Detroit and did some really tremendous background work on the border-crossing issues, which helped me, quite frankly, raise several issues in the House.

You were a good source of information for that. So I want to acknowledge that. And again, I appreciate what you've done today, because I think you've compiled some really appropriate figures and got them down to quite manageable levels for the committee.

Dr. Morgan, I have to leave, but I really was looking forward to having an extensive discussion with you, because I think my vision and yours would be different. I agree with you that we need that vision, given where we're at with NAFTA and some of the problems, in forestry, agriculture, and now auto. How we use our trade agreements is becoming really crucial to our economy, and particularly here in Windsor with regard to the auto industry.

So having made those comments, Madam Chair, I have one question and then I'm going to have to go. I've already spoken to Ms. Smith about this, but let me give you a bit of background.

We have an additional problem here that has not been highlighted so far today, around the tourism issue. We've had a practice in this area of allowing people--it has been almost exclusively boaters--to move back and forth across the border if they obtain a form called an I-68. It has historically allowed them to move across the border in their boats. All they had to do, once they had the form, was to call in and acknowledge to customs that they were in the other country--specifically, in the U.S.--and that was generally all that was done. Sometimes customs would come down and check them out, but normally all they had to do was call in.

Again, just for the record, we have the busiest waterway in the world in the Detroit River. It's not just commercial traffic. Obviously it's fairly extensively private craft.

The Chair: Did you say “in the world”?

Mr. Joe Comartin: In the world. That's not a particularly well-known fact, but it is a fact.

The Chair: In the world?

Mr. Joe Comartin: In the world. The Detroit River has more boats in its waterway than anyplace in the world. That's a fact.

What has been happening since September 11--and we haven't seen it, obviously, because we got into the fall, when boats were being put away, and they haven't come back out because of some of the inclement weather we've had--is that getting those I-68s has now become much more of a problem. In fact, there was a story floated last week that they were now beginning to look at taking fingerprints as another factor of identification.

I know from talking to Ms. Smith that they're not sure at this point just where we're at with it. I've been getting a fair amount of concern expressed from boaters, actually on both sides of the border.

What Ms. Smith has indicated to me is that they'll pursue this and provide us with some additional information, and we'd like that to go into the record once it's received.

Having said all that, I don't know if Ms. Smith wants to say anything, but I am going to have to leave.

The Chair: We'll excuse you, and we appreciate the fact that you were able to spend such time on this. Thank you very much, Mr. Comartin. Have a good day.

Ms. Smith, do you want to comment on the I-68?

Ms. Linda Smith: I just want to confirm exactly our discussion. We would be happy to. In fact, it has only been in probably the last five or six days that this issue has been brought up at the chamber as well, because of the seasonal nature. So we will get back to you as soon as we can with that information. We'll coordinate it through Mr. Comartin's office, as well as the chair.

Mr. Joe Comartin: If I could just add to that, Madam Chair, the Canadian consulate in Detroit has been very helpful on this particular issue. They have been monitoring for me what's going on. I haven't spoken to them in the last ten days, but you may want to speak to them to get an update.

The Chair: We may be speaking to them this afternoon. Who knows? But if anything could be communicated for our researchers in terms of responses to what came around the table, we'd appreciate hearing from you. Thank you.

Mr. Pickard, do you have any comments or questions?

Á (1120)

Mr. Jerry Pickard: First, I want to congratulate the chamber for its presentation. Ms. Smith, you've done a great job at outlining some of the strategic economic importance of our region, and that is so important. I think the Canadian government must do everything it can to make sure that is fostered and grows exponentially. Our potential here is for a great growth.

As I look at it, the North American Free Trade Agreement is so important to Windsor, Detroit, Canada, the United States, Ontario, Michigan. They benefit tremendously. The removal of basically all tariffs on auto parts and the removal of tariffs on assembled vehicles flowing back and forth between Canada and the United States has made that seamless support very critical. At the same time, we know that by the end of next year we'll see an end to any tariffs from vehicles flowing from Mexico. Again, vehicles and parts are going to make it possible for those assemblers here in Windsor to source parts anywhere and move a further dynamic circle, as far as I'm concerned, in doing business in North America.

Dr. Morgan, what you've pointed out is critical. I believe the Canadian government has worked to put in place the vehicles that will support our auto industry, our suppliers, and all who are involved in the auto industry. I've seen very positive moves on behalf of the Canadian government as well, and I think it's critical to point out here that by the year 2005 our corporate tax levels will be 5% better in this country than in the United States. It's important to point out the moves that our government has made, and I believe in particular areas, to make sure the auto industry as well as the manufacturing industry thrives and progresses here.

At the same time, we have to congratulate companies like DaimlerChrysler for their huge investment. I believe it was $460 million to retool one plant here next year. If we look at Honda, Toyota, General Motors, Ford, they've all made major commitments to Ontario in growth. From my viewpoint, we have to set a very clear policy making this country the place to operate and making this country the best country to operate in financially, technologically, a good labour force, and in all other factors.

I think our partnership--the federal government, provincial government, municipal governments, and people like yourselves in the private sector--bring together the expertise that's required to move forward and move forward very rapidly. I know your input has been constant over the years. I have met you and your counterparts on several occasions in order to better understand the needs.

Right now, I have a lot of concern about one of the questions you brought up, Linda, and that is the cap the Americans have placed upon their overtime at the border. You, more than anyone else in the chamber, would certainly realize what that may mean.

After September 11 U.S. Customs removed a cap that said all customs people could work any amount of overtime they required in order to service the border crossing. Just about two or three weeks ago, I believe it was, they changed their policy.

That change of policy creates a major obstacle for everyone here. I believe this committee, and our colleagues who are in communication with American colleagues, must really emphasize that putting the cap back into place is going to cause a tremendous obstacle for all of us.

What they have done is to to say that since September 11, the cap will be placed back on. But not only that, they're also going to take all of the overtime that was accumulated by the officers here, and build that into the system. So they can accumulate no more, and will work it off.

It means we're going to have less rather than more service at the border from this point forward. That's one of the reasons, I believe, we saw four-mile backups in the last few weeks.

It has to do with an inefficient system, which has now changed direction because of a policy in Washington. It is important that we communicate at that level, and make sure people understand we are being hamstrung by that cap problem. I bring that forward, because this probably is the most critical flow problem we have immediately, or which needs to be dealt with immediately.

Maybe you could comment on that for us, Linda or Alfie.

Á (1125)

Mr. Alfie Morgan: I couldn't agree with you more. This is a very critical thing. At a time when we need more human power, they're reducing human power by eliminating the opportunity for people to work longer hours. They say it takes them eight to nine months to train someone and launch them into place. Yet they wouldn't take the short-term measure to alleviate the problem.

Just to reiterate and build on what you said, Governor Blanchard, who was the previous U.S. ambassador to Canada, is now running again for the Governor of Michigan. On the radio he was saying the Canadian government had done all it could, that it was eager to accommodate the American demands and comply with them, and the fault is mainly with the American policy-makers in Washington. In fact, he said he was going to go to Washington and give these people a hard time.

I don't want to restate what he said, but he really wanted to make them aware, in the clearest of ways, that they have no excuse to leave the situation the way it is. The Canadians have done all they can, and more. It is now the turn for the Americans to do more. This is why we need to go to Washington, and just start a strong lobbying campaign to change the mindsets there. That's absolutely right.

Mr. Jerry Pickard: The chamber may be able to work with your American counterparts, who you've brought into a really great relationship. That may help them put pressure on American politicians in Michigan as well.

Mr. Alfie Morgan: We will. We're having a joint board meeting May 14.

You can be sure we will make this point. We're going to ask for their influence, to help us in this regard.

Ms. Linda Smith: If you noticed in the presentation, there was a lot of U.S. content. It was intentionally done.

Before and since September 11, we've had an excellent relationship with the Detroit Regional Chamber of Commerce. I really need to applaud their efforts. They have over twenty full-time staff working on this, and have provided excellent leadership on this issue.

We've been able to polarize the business community on both sides immediately. Just days following September 11, we met in many such similar forums.

The group NBEST--Northern Border Economic Security Task Force--was quickly formed. The chamber is a member of it. Every major business community, as a stakeholder, is also a member of it. I have one copy of their latest document to George Bush and Jean Chrétien. I can leave it with you today, or I could forward their latest work to you at a later date.

The Chair: If you can leave it with us....

We have a window of opportunity here for an all-party vote in the House of Commons and Senate. Individual members of Parliament, who are meeting with colleagues from the U.S. Congress and Senate, could then take this issue of the cap, and other issues, as an agenda item.

Ms. Linda Smith: I also encourage the group today in your tour, when you're in the trenches--that's the bridge and the tunnel--to engage in this exact type of dialogue, because they've been doing their utmost. It's been named by the Detroit chamber as a temporary patch. That's why in our presentation we tried to look at the short-, mid-, and long-range infrastructure and future border-crossing needs.

And thank you for bringing that up, because that is a critical piece of the process, or the “kink in the hose”, as we call it.

Á (1130)

Mr. Jerry Pickard: I have found some of the longer-range proposals very interesting, and certainly there has been some innovative thinking on behalf of different organizations to look at the longer-range issue of moving that seamless border in a much better direction.

You're very right. The analogy of a kink in a hose is a great analogy, and one that certainly needs to be emphasized. Solutions aren't quick.

I'm coming back to DaimlerChrysler, looking at your organization as one that is well serviced here in Windsor and does so much business in the U.S. and Canada that any small vibration in that process of just-in-time delivery creates major difficulties for you and emphasizes the costs. I've heard at different times where people from your corporation have made it very clear that it is a tremendous difficulty for your operations when those slowdowns occur.

Possibly you could help and just elaborate a bit on what Linda pointed out. I think she did a great job in talking about trucker slowdowns, $50 and $60 an hour, and plant closures getting into a million dollars a day. What that means is if you have to wait for an engine for an hour and a half or you have to wait for a part for two hours, your plant doesn't function.

Ms. Lori Shaloub (Director of Extrernal Affairs and Public Policy, DaimlerChrylser Canada; Windsor and District Chamber of Commerce): Thank you, Mr. Pickard. You make excellent points. In fact, because of our integration and our interdependence with the United States we rely on just-in-time delivery; it's critical to our process. As Linda pointed out, for every hour that's lost in the auto assembly plant we're looking at $1.5 million of lost revenue.

This is particularly true in the Windsor area now that we are launching the Pacifica, which is a new vehicle. We will be engaging in flexible line manufacturing at the Windsor assembly plant, whereby we'll be producing two vehicles in the same plant. To the extent that we're producing two vehicles in the same plant, just-in-time delivery is even that much more critical, because we don't have the extra space or storage within the plant to store that many parts. In fact, I'm told that shortly after September 11 we would not have been able to operate as late as a few hours after that event if the delay had been that much longer.

Of course, shortages, production losses, and revenue losses are critical, not only to our organization in the United States, but as this kind of information also gets back to our parent organization in Germany, they're very critical to our total business.

We as DaimlerChrysler Canada are always interested in participating in pilot projects. We've been engaged quite extensively in the customs self-assessment program, which has been quite good for our organization in the C-TPAT program. We continuously provide input where we can to support the initiatives of the government, and we too applaud what the government has done since September 11.

Mr. Jerry Pickard: Thank you very much.

There's just one other area I would like to touch upon with respect to the auto industry. There are some who claim that we're a group in peril, one that's not doing well. From all the information that I have.... This comes from the Minister of Industry. He suggests, from consultations with the major auto companies, that Canada has a very good advantage in North America. We're talking about wages, high-quality workers, low interest rates, taxation, energy costs, and all the issues where we really have a major advantage over Michigan, the southern states, or anywhere else. We're very competitive.

Has the government taken time to listen to your concerns, to try to deal with the issues to develop your concerns into an action plan and move that forward? I think that's critical for us to know as well.

Á (1135)

Ms. Lori Shaloub: That's a very important point.

If I may, the Canadian Vehicle Manufacturers' Association, of which we are a part, has recently put together a policy paper called the “Automotive Strategy Policy for Canada and Ontario”. In that paper, we identify a number of important issues.

Competition in marketplaces is extremely important to Canada, because more and more we are seeing that decisions relating to investment and production are being made on a global basis. It's no longer competition between just Canada and the United States; it's global. And it's very important that the federal, provincial, and municipal governments recognize this fact. The competition is getting more severe as time progresses.

As you may know, the provincial government, through Minister Flaherty's office, has recently announced an automotive round-table that will take place later in May to discuss some of the important issues affecting the automotive industry. What is key is our ability to preserve our investment in Canada and enhance it wherever possible.

So we will be moving forward in discussions with both the provincial and federal governments, and we are hopeful the government will be keen to listen to our concerns. It's imperative that we move now so we can protect what we have, enhance it as we move forward, and position ourselves to be competitive over the next 10 to 15 or 20 years.

Mr. Jerry Pickard: I think it's important for this committee to realize as well that one corporation, DaimlerChrysler, has invested over $1.5 billion in technology here in Windsor alone in the last ten years. So it's pretty significant to the business here.

The Chair: Thank you.

Mr. Drummond, we don't want to leave the environment out of this discussion. We heard about the environmental assessment that needs to be done if we are to move on some infrastructure in the area. Do you have any comments?

Mr. Jim Drummond (Member, Board of Directors, Windsor and District Chamber of Commerce): My only comment is that the environmental assessment process should be done for both long-term and short-term solutions. All I would like to urge this committee to do is ensure the review process is expedited.

In a former life I was a reviewer, and I know these documents can get lost in the process. So when environmental assessments are being done, ensure there are deadlines for the reviewers to answer to so the process moves forward smoothly. Otherwise, there'll be another kink in the hose, as Mr. Pickard said.

Thank you.

The Chair: Thank you.

I want to take the opportunity to thank you for being with us. I know you're under time constraints, and it's past the time on our agenda. We appreciate the fact that you were able to stay and dialogue with us. We want to commend you for the work you do. I also want you to know that you have excellent representatives from this area who are constantly bringing to the table the issues that face us.

It's not just Windsor. I was in Shanghai a long time ago, and they kept referring to Shanghai as the head of the dragon. And as the head weaves, so goes the rest of the body. I think we can use that analogy here, that we have a dragon's head, and it's important for the rest of the economy, the rest of the country, the rest of the province, to recognize this. We also heard a good deal about the neglect, how significant this northern border is, and how much work we need to do in order to bring about awareness.

We thank you for participating here and bringing the issues to the table. They'll be given due consideration as we write our report, which we hope to have ready by the fall. The report for the G-8 is going to be completed before the beginning of June, because there's a ministerial meeting--the action plan that has to be put on the table for the G-8--and the report has a very strict timeline for getting fed into the process.

On the vision for North America, you opened this up, Dr. Morgan, because it is a very important piece. We went to Washington. We went to Mexico City. We've been pursuing it with questions--not prejudging, but asking the questions around what is important if we are to think of ourselves in a continental and North American...if there's a vision for a North American community.

So we thank you.

This brings our committee meeting to a close. We are adjourned.