Welcome, members, to the third meeting of the Special Committee on the Economic Relationship between Canada and the United States.
Pursuant to the motion adopted by the House on February 16, 2021, the special committee is meeting to discuss the economic relationship between Canada and the United States. Given the timelines adopted in the House motion, the focus today will be on Line 5.
To ensure an orderly meeting, I would encourage all participants to mute their microphones when they are not speaking, and address all comments to the chair.
Interpretation is available through the globe icon at the bottom of your screen. Please note that screen captures or photographs are not permitted.
I would now like to welcome our witnesses from Natural Resources Canada: The Honourable Seamus O'Regan, Minister of Natural Resources; Jean-François Tremblay, deputy minister; Glenn Hargrove, assistant deputy minister, strategic petroleum policy and investment office; Mollie Johnson, assistant deputy minister, low carbon energy sector; Jeff Labonté, assistant deputy minister, lands and minerals sector and Beth MacNeil, assistant deputy minister, Canadian forest service.
Minister, welcome. It's a pleasure to have you at the committee today, and we're looking forward to your remarks. I know you're here for only one hour, and we will continue with your officials when you leave after one hour.
Minister, the floor is yours.
It's a pleasure to be joining you all at this committee from the island of Newfoundland, which is the ancestral homeland of the Mi'kmaq and Beothuk peoples, and one of Canada's oil-producing provinces.
The Canada-U.S relationship is like no other. The strength of it has withstood challenges and turbulence, particularly over the past four years.
Make no mistake, though, the U.S. needs Canada. President Biden has emphasized rebuilding and strengthening our bilateral relationship, focusing on our common mission of net-zero carbon emissions by 2050; building a low-emissions energy future that leaves no energy worker and no energy-producing region behind.
It's why the first meeting with a foreign leader was with our , and why we had a high-level summit.
I attended that meeting. My colleagues and our counterparts agreed to follow a road map for renewal, designed to strengthen this relationship; to rebuild our economies while leaving no one behind; and to lead the world in addressing the climate crisis.
Our energy and natural resource sectors are central to that road map. There are no two other countries with such highly integrated energy sectors as ours, with 70 pipelines and nearly three dozen transmission lines crossing the border. There is over $100 billion in energy trade every year and over two million barrels of oil per day. The United States is our single-largest customer.
Now, let me be very clear. We're very disappointed with the President's decision to revoke Keystone XL's permit. We are very unhappy with the decision and we've told the Americans that directly and clearly. The U.S. will still need Canadian heavy crude, and that does not change with President Biden's decision.
Four years ago, in Houston, the said, “Nothing is more essential to the U.S. economy than access to a secure, reliable source of energy. Canada is that source.” It was true then and it remains true today, which brings me to Enbridge's Line 5.
It is a critical energy and economic link. It is vital to Canada's energy security, and to America's. Thousands of jobs, on both sides of the border, depend on it. Thousands of homes, on both sides of the border, depend on it for heating.
We take threats to our energy security very seriously. We raised Line 5 directly with the President and members of his cabinet during our meetings last week. I can assure members of this committee that we are looking at all our options. A shutdown of Line 5 would have profound consequences in Canada and in the United States.
Yesterday, I met with my counterpart, Secretary Granholm, who, I might add, has a link to Newfoundland. In fact, her mother grew up just down the street. I raised Line 5 with her. I raised it as a matter of energy security. I raised it to her as a former governor of Michigan. She understands how critical Line 5 is to that state and to the United States.
I understand Ambassador Hillman will be speaking to this committee later today. Let me take this opportunity to thank her, Detroit Consul General Joe Comartin, the team at the Canadian embassy in Washington, and all our diplomats who defend Canada’s interests every day in Washington, Detroit and Lansing.
There are challenges in this bilateral relationship, involving such things as softwood lumber. Duties imposed are unwarranted; they are unfair; they hurt our workers and they hurt our industry on both sides of the border. We raised that with the President last week.
I believe the windshield is larger than the rear-view mirror because there is more alignment in this relationship now than there ever has been before, not only in terms of the goals of the Government of Canada but also in terms of the goals of the governments of Alberta and Saskatchewan too.
There are opportunities to make this relationship even stronger, and it’s a relationship that is bigger than one project or one piece of energy infrastructure.
Yesterday, with Secretary Granholm, we spoke at length about some of the opportunities that we have to deepen our collaboration and advance transformational technologies like critical minerals and carbon capture. The U.S. wants to work with us on critical minerals because we have 13 of the 35 minerals that they deem essential, and we want to ensure resilient supply chains that prevent Chinese dominance. They want to work closely with us on CCUS, speaking with a unified voice and seeing it as an opportunity to have oil and gas workers lead decarbonization efforts.
The road map for a renewed U.S.-Canada partnership presents us with a plan to protect our highly integrated energy infrastructure like Line 5 and to maintain the security and resiliency of supply chains, like Canadian crude heading southbound.
It is a plan to renew and strengthen existing bilateral agreements on critical minerals and to advance nature-based climate solutions, to harmonize standards and regulations, to increase competitiveness, and to provide an even playing field for our companies.
It's about people. It's about workers and ensuring that no worker is left behind, and ensuring that no energy-producing region or province like mine is left behind. We will need the ingenuity, determination and hard work of our energy workers in our energy-producing provinces to build our low-emissions energy future.
Mr. Chair, as I said at the outset, this is the single most important bilateral relationship for Canada. We've got to get this relationship right, and I should say that we got it right with an unpredictable president over the past four years. We will get it right and make it even stronger with a predictable one for the next four, to the benefit of workers in Alberta, Saskatchewan, Newfoundland and Labrador and right across Canada.
I’m joined here today by my officials: Jean-Francois Tremblay, deputy minister; Mollie Johnson, assistant deputy minister, low carbon energy sector; Glenn Hargrove, assistant deputy minister, strategic petroleum policy and investment office; Jeff Labonté, assistant deputy minister, lands and minerals sector; and Beth MacNeil, assistant deputy minister, Canadian forest service.
We welcome your questions.
Thank you, Mr. Minister, for agreeing to participate here today.
I wanted to start with how we talk about how we're getting the relationship right. The irritants have continued here, and I'd say they're more than irritants when they affect tens of thousands of jobs. We have Keystone XL, Line 5, softwood lumber, buy American and vaccine distribution, to name a few. There are obviously a number of challenges that remain, regardless of the change of administration in Washington.
I wanted to talk first about Keystone. I have a statement here from Canada's Building Trades Unions, who say they “are dismayed by the decision made by the Biden Administration to rescind the permit for Keystone XL—a project creating more than 15,000 high-paying union jobs across Canada and the United States”.
We've heard from organized labour unions on both sides of the border that are extremely disappointed in this decision, and I think they were extremely disappointed, as we were, to hear the this weekend on Meet the Press on Sunday. When he was asked by the host, “Does this mean you're done asking for...are you going to stop advocating for it here?” and “Do you feel as if the Keystone pipeline is now dead?”, the Prime Minister replied, “I think it's fairly clear that the U.S. administration has made its decision on that, and we're much more interested in ensuring that we're moving forward in ways that are good for both of our countries.”
I think he made it fairly clear that he's done fighting for Keystone. Given that the decision was made based on the U.S. position on Keystone XL, the essentially said that fight is over.
There's now a decision that has been made by the Governor of Michigan, who is extremely close to President Biden, was considered for being his running mate and was a key cog in the wheel in the electoral college to ensure that President Biden is the president. She is very close to him. Why would the nearly 30,000 workers in Sarnia, southern Ontario and Quebec who are affected by this have any confidence that your government would fight for Line 5 jobs when Keystone XL jobs were written off as being a decision that the U.S. administration had made and were no longer worth fighting for?
With regard to Keystone XL, from the moment the President was elected, our governments, the governments of Alberta and Canada, started working hand-in-glove together. I, Alberta's envoy in Washington, James Rajotte, and Minister Sonya Savage, the Minister of Energy for the Government of Alberta, started meeting at least once a week, sometimes more than that, in order to make sure we had our ground game right.
We knew the President had made a significant campaign promise, and I think most members of this committee can understand that when you make a major campaign promise, it has weight. Certainly, it seemed to for the President. However, we fought the battle because we believed in Keystone. We believed, as the had said to the Premier of Alberta, that the Keystone XL project of 2015 and the Keystone XL project of 2020-21 are very different.
I was very proud to advocate for Keystone XL. TC Energy had done everything right, to my mind. It had an operational net-zero pipeline that was using renewables at their pumping stations, wind and solar. It was working with unions on both sides of the border, working with native Americans and working with first nations on our side of the border. It had ticked all the boxes. We found out on the morning of the inauguration that the President would be rescinding the permit on the day of his inauguration. I found out very early here in Newfoundland, and I had to inform my colleagues, the ministers of energy of Alberta and Saskatchewan, of the fact. Those weren't easy conversations, because we had put a lot of work into it.
I also raised that exact point, in almost exactly the same way I worded it to this committee, to Secretary Granholm yesterday when she and I met. Her first international call was to me, in keeping with what the President's cabinet has been doing, reaching out to Canadian counterparts. I also made it clear that Line 5 was seen in that same light.
As I said in my opening remarks, there is a tremendous amount that is aligned, not only between the Government of Canada and the Biden administration but also, I believe—and I've said this to Ministers Eyre and Savage—with provincial governments as well. We need to work together—
Indeed, we had some small talk at the beginning because her mother is from St. John's, was born on Newtown Road, which is down the road, and is a parishioner at a church just at the end of my street. Those are good things. I think I put it to her that if you're half Newfoundlander, it means you're a very practical person.
We had a good first meeting, I would say. I wish it had happened earlier, because we're all eager to get to work, but of course, she was confirmed by the U.S. Senate only last week. As I said, I raised Line 5 and I raised Keystone and I expressed our disappointment with that decision. I expressed our serious concerns about threats to our energy security. But this relationship is much bigger than just those two issues, with the 70 pipelines that criss-cross the border as well as the three dozen transmission lines.
Secretary Granholm brings a lot of enthusiasm to the file. I believe we will work very well together to the benefit of workers and to the benefit of our natural resource sectors.
There is significant alignment, as I said, not only with the goals of the Government of Canada but also with the goals of the governments of Alberta and Saskatchewan on things like critical minerals and on CCUS. I had a conversation yesterday morning with Minister Savage and Minister Nally of the Government of Alberta to discuss CCUS and my raising of that with Secretary Granholm and how important that is to North America.
I more or less paraphrased things I noticed Secretary Granholm saying long before she was a nominee—that there's a threefold mission: to have net-zero emissions by 2050, lowering emissions wherever and whenever we can; to have an economy that continues to grow and prosper, which is pivotal; and to have no one left behind, no energy-producing region, like mine, and no energy workers left behind. That's what we're working on for the benefit of workers on both sides of the border.
Let me be very clear with the honourable member. While I'm not aware of a formal strategy, or a formal impact, that has been done—I'm just being very clear with you—since this most recent development with the State of Michigan, we have a very good handle on what the impact would be, because we know how important Line 5 is now, so we know what the lack of Line 5 would be.
That's why, first and foremost, the most important plan for us is to prevent that shutdown. That's what we're working on every day. It's a full-court press at the political and diplomatic levels. This is an existing and operating pipeline. It does not represent an increase in production. It delivers a much-needed product for the United States, and it has done so for 65 years. It's integral to their energy security, just as it is to ours.
Let me be very clear. The U.S. needs the product. They rely on it. Michigan relies on it to heat its homes. Sixty-five per cent of its propane needs are in the upper peninsula and 55% statewide—from Line 5. It's a lifeline for refineries in Toledo, Ohio, and also for the petrochemical industry in Quebec, for the two refineries that are directed by Line 5 and Line 9, which are in Lévis, just outside Montreal. It's also a lifeline, as I said, for refineries in Ohio and at least two in Toledo. Ohio's would have to close in the event of a shutdown, due to insufficient supply.
This is a product that will still head southbound, but without Line 5, that means it will be on rail, on truck and on ship, all of which are less reliable. With regard to oil by rail and the tragedy of Lac-Mégantic in 2013, it's far less safe.
I think one of the important distinctions for New Democrats between the debate around Line 5 and debates that have been had and are ongoing around the Trans Ex pipeline and Keystone XL is that, first of all, Line 5 is an existing piece of infrastructure. It's not a new build, and it doesn't depend on increasing production per day and the rate of extraction in order to bring economic benefit to Canada.
The other piece, of course, is that Line 5 supports value-added jobs, so that it's not just a question of rip-and-ship or taking raw natural resources and shipping them somewhere else for the value-added work to be done.
Those are important things.
You mentioned in your opening statement how proud you are of the work you did advocating for Keystone XL, which is one of those projects that depends upon an increased rate of extraction in order to be viable.
I'm wondering if you, as the Minister of Natural Resources who is playing an important role in Canada's energy strategy, could share with the committee what Canada's current greenhouse gas emissions are and what they have to be in order for Canada to meet its commitments under the Paris accord by 2030.
First of all, I'm very glad the honourable member talked about the distinction that exists and what makes Line 5 very different, in that it is operational. In fact, with Secretary Granholm, it is something that I brought up with her. There is broad support along the political spectrum for this project, and I think that is something that she took to heart.
I understand where the honourable member is going, because to some people it does appear contradictory that we would be I think the most ambitious government in Canada's history on combatting climate change, yet I am very proud of the oil and gas industry and very proud of the people who work in it.
I've discussed this with several people, but I was discussing this with the Alberta building trades just this morning, and these are the people we will need in order to lower emissions. These are the people who managed to find a way to extract oil from sand and make us the fourth-biggest producer of oil and gas in the world. That takes an awful lot of ingenuity, determination and hard work.
I can tell you that I am probably living in one of the few provinces that is increasing flights. One flight was just added, I believe, between Deer Lake and Toronto. That is for all the workers who travel every single day and every week from my province to Alberta and Saskatchewan to do their shifts and to do their work in the oil and gas industry in those two provinces, as well as the oil and gas industry here.
Retaining those workers, keeping those workers, is absolutely my top priority, because they are the ones who will lower emissions and they are the ones who are going to revolutionize the energy sector in this country. They are ones who are going to help us lead the world, and they are the ones who are going to help us to lower emissions and to achieve our Paris targets.
Thank you very much, Mr. Chair.
Welcome, Minister. It's a pleasure to see you again.
I just have to say that I agree that the Canada-U.S. relationship is like no other. Of course, I'd be remiss if I didn't highlight the people of Gander and how they hosted thousands of stranded passengers after 9/11. I think that clearly demonstrates that relationship. I have to bring that up, of course.
I want to follow up on some of my colleagues' questions. There was an article in La Presse, back on February 13, titled
“The pipeline that Quebec forgot.”
They talk a lot about Line 5. It's almost as if Quebeckers don't realize the importance of Line 5...and that in 2015 the reversal with Line 9B to get crude to Quebec refineries. In the article, the journalist mentions that in the event Line 5 were to close down:
“And if it is decommissioned, Quebec will resume purchasing its supplies from abroad.”
He also goes on to say the following:
“In Montreal, Suncor should reactivate the old oil pipeline from Maine. Trucks and trains could do the rest of the work.”
You alluded a little bit to this—the impact of the closure of Line 5. Is it possible that we will end up having to import oil from other countries rather than getting it from Alberta and Saskatchewan because of that closure? We want to rely on our own oil and gas industry. Is is also possible that we will have a lot more oil and gas being transported by rail? You mentioned Lac-Mégantic, which is still very much in Quebec's footprint, in our minds and our hearts.
Could you perhaps elaborate on whether it is, in fact, a possibility that the closure of Line 5 will have a major impact not only in terms of the safety of transport of oil but also in terms of where we get our oil?
There are contingency plans that are created, but it is very important for me to say that I am very confident in the continued operation of Line 5. The continued operation of Line 5 is non-negotiable.
If you look at what the impact could be were it not operational, which is why the stakes are high, I would make the argument that product would get to market, but it is how it would get to market.... It would be by truck, with a jammed-up Highway 401. It would be by rail and possibly by ship as well. It would get to market. It would not be anywhere nearly as safe as Line 5 has proven to be over many decades. That has stood the test of time.
It's also important to mention, too, that Enbridge is looking at significant investments of around $100 million in order to make sure that, at the Straits of Mackinac, the pipeline is deeper beneath the lake-bed and is encased in concrete, to make sure that nothing happens in the Great Lakes.
It has been proven over the course of time by the U.S. Government's transportation department. It has an agency that looks after these things—hazardous materials and shipments. It has rendered it safe. Everybody has rendered it safe, and the permitting for the improvement to Line 5 continues. That permitting is by the State of Michigan.
I am very hopeful...more than that. I shouldn't say “hopeful”. Hope has nothing to do with it. I am confident that the state and Enbridge are going to come to an agreement. I feel even more confident with the recent court decision to make sure that they have a mediator and that the mediator is chosen within the month.
Yes, I did. I spoke with her yesterday morning in the first international call she made, which is in keeping with what all of the President's cabinet ministers have been doing, and which is a refreshing change.
I should mention that I had a very good relationship with her predecessor, Dan Brouillette, through some fairly turbulent times last year. I checked just a few moments ago, and Brent oil is sitting at $66 right now, and Western Canadian Select is at $52. It was at negative $35 this time 11 months ago. Through some troublesome times last year, turbulent times for our energy sectors, he was a very steady hand at the wheel and had a clear understanding of how integrated our markets are.
To Secretary Granholm's credit, as the governor of Michigan, she also had a very clear eye on how integrated our markets are, and not just in energy, pipelines, hydro power, propane and Line 5. I should also mention that she was a very steady hand at the wheel during the recession of 2008-09, which, you will recall, hit our automotive sectors on both sides of the border quite dramatically. She was the governor of Michigan at the time and is keenly aware of how many times an auto part crosses our border—and a car, as it's built—and of the importance of making sure that we get our border strategy correct. It is within that frame of mind that she views Line 5, and therefore I am very confident that she wants a constructive relationship.
I think there's a tremendous amount of growth we could see in clean growth, clean energy, for instance in looking at smart grids, and in looking at energy efficiency. We're investing over a billion dollars in energy efficiency alone, and I am a big believer in it.
I grew up in Labrador in a town called Happy Valley-Goose Bay, and it was isolated at the time. When the federal government announced big programs, they never seemed to affect my community. What I love about, for instance, retrofits, which is something my counterpart in the United States is looking at as well, is that they affect where you live; they affect where you work. In other words, the jobs are created in your community. The International Energy Agency, whose meetings I now attend fairly regularly, has identified energy efficiency and home retrofits, for instance, and commercial retrofits, as being the world's hidden fuel. Those could get us anywhere from 30% to 40% towards our Paris targets. These are small things, but done en masse across this country, they can help us meet those targets.
We're willing to look at anything, really, that seems like a good idea to help us lower emissions and protect our workers. We've put $9.4 million towards tidal energy in Nova Scotia. We're putting money towards geothermal energy in Alberta. We have $15-million worth of solar farms in Alberta. We're building solar farms in Prince Edward Island. In the throne speech, we committed to working on the Atlantic Loop, which in effect would get the Maritimes off coal.
All of these things will help us lower emissions. All of these things will create jobs.
That would be me, Mr. Chair.
Thank you very much.
I would like to start by exploring where and what the Americans have said and acted on to date.
They have been very clear in the messaging to us around self-sufficiency and the repatriation of jobs, be that from the national security tariffs we saw on steel and aluminum to the tax reforms that incentivized American companies, to repatriating jobs to the U.S., to signalizing that they want to modernize trade rules so that taxpayer dollars can spur domestic investment to climate change, where, obviously, we've seen the cancellation of Keystone XL, and now the controversy over the situation with Line 5.
The message is serious. The opposition to Line 5—and to decommission it, not just to suspend the underwater portion—has been increasing since 2015, and now we have a looming deadline of May 2021, which is just around the corner.
What possible outcome and what probability do we have of being able to turn this around before May?
Thank you. I would be very happy to.
I think it is really important that we use this opportunity to really underline the impacts on the U.S., because it really isn't that all the risk is being taken on by the U.S. and all the benefits will go to Canada. That's not the situation at all. Americans face a lot of risk with the potential shutdown of this pipeline.
Michigan has the highest propane consumption in the U.S. The feedstocks from Line 5 that are refined in Ontario produce 65% of the propane for Michigan's upper peninsula and 55% of Michigan's state-wide propane needs. We have seen recently the potential impacts on those supplies to Michiganders.
Line 5 also supplies essential feedstock for the production of jet fuel for the Detroit airport. It feeds refineries in Michigan, Ohio, and Pennsylvania, which are dependent on the line for their operations. For example, there are two refineries in Toledo, Ohio, that would be at risk in the event of a Line 5 shutdown. We're talking about billions of dollars in annual economic output.
From an environmental perspective—this was raised—it would require approximately 2,100 tanker trucks per day leaving Superior and heading east across Michigan, and roughly 800 railcars travelling on Michigan's rails to support the light oil and natural gas liquids that Line 5 moves each day.
So this is not a Canada-versus-U.S. issue; Americans would really benefit from the line's continued operation.
We're looking at all the tools we have in the tool kit. It's true.
I think the best solution remains an agreement between Enbridge and the state. One thing that is interesting is that we never heard the governor saying that she doesn't want the pipeline. She wants a pipeline with a tunnel, and Enbridge wants to build a tunnel. The issue is when the tunnel is going to be in place versus when all this is going to be fixed. I think there's maybe a timing issue or a sequencing issue, but there should be at some point an agreement on this.
On the treaty, I know, as was said, that you met with people from GAC. International treaties are really under the responsibilities of GAC, so I will be very careful. I'm not a lawyer, as opposed to some of you, so I would not go too far in terms of interpreting what the treaty of 1977 said. As you know, the treaty was signed in the context of a potential pipeline from the north. It hasn't been built, but this treaty actually has some measures that are supposed to guarantee the transit of pipelines that are going to Canada from the U.S., as well as from the U.S. to Canada.
We are looking at the treaty, of course, like we're looking at all the other tools we have. To be honest, the question will be, which one do we need to use?
I think the threat should nevertheless be taken seriously. When the governor of a U.S. state says she wants to shut down a pipeline, you have to take it seriously. We also find ourselves with three cases before the courts. So it's serious.
It's very difficult to assess job losses because the supply chain has flexibility, as you and others have pointed out. So certainly some people are going to try to catch up, either by train, by ship or by other means. At the same time, the supply chain has its limits and it's not necessarily safer than an oil pipeline, as was mentioned earlier.
The case of Line 5 should not be seen as a simple matter of jobs. It is a question of energy security. These are families and businesses that could be deprived of energy. As was mentioned, propane is used extensively for heating in Michigan. Not having access to heating in the winter is pretty serious.
To get back to a comment that was made, in the United States, this issue is often presented as just an economic argument that benefits Canada and does not really benefit the United States. In fact, it's more a question of energy supply for a North American population.
I don't have such an analysis. I think it's too early for us to have all the details around this.
I will remind people that even in the context of softwood lumber, for example, our exportations are very high these days, despite, as you know, the duties from the U.S.
On our relationship with the U.S., we were talking about energy, and our exportations over there in energy goods are probably above $92 billion per year. We're quite successful at getting our product into the U.S. most of the time, in large part. We have irritants with them on buy America and other issues, but we find solutions, too, when we have a predictable partner. I think that's the way we need to approach that relationship. It's not going to change from administration to administration. The U.S. will always have those views of buy America, and some Canadians also have those views.
I think what we need to demonstrate to our partners is that we both benefit from the integration. It's not that jobs produced in Canada are lost in the U.S. It's that jobs produced on both sides actually create more jobs on both sides. That's the way it has been working with the auto sector, for example, and that's the way it works on energy.
Thank you, Mr. Sarai. It's nice to see you again.
I would maybe deflect a bit, given that the advocacy efforts are led by Global Affairs and those officials have spoken, and we know the ambassador will be speaking with you as well.
Maybe I could speak to the tunnel issue, if that's okay. Certainly, you're right, Mr. Sarai. It is that segment of 4.5 miles in the strait that's at issue. I'd just like to underline that Enbridge is working toward the tunnel, which would move that segment of the pipeline underneath the strait, the riverbed, and that's about a four-year process. They're working on the permitting. That permitting would go until about the end of this year or so, and then, of course, it's a fairly involved construction process, so that's about a three-year process.
Certainly, we're looking for a solution that would allow for the continued safe operation of the pipeline in the interim, and we support the plan for the tunnel going forward.
Our policy in this regard is to encourage the production of cleaner fuel. I'm talking about the decarbonization of fuel. It's not black and white, and you can't say that some are good and some are not. We judge them on the basis of carbon intensity.
We're lucky in Canada because we have the ability to do that. We have so many natural resources that we can make hydrogen in a variety of ways. We can actually make hydrogen from natural gas. We can combine that with carbon sequestration, and we can achieve virtually carbon-neutral emissions. So there are opportunities both for strictly green hydrogen produced, for example, by hydroelectricity, and for hydrogen produced by other energy sources. We are not closed to that.
Some will even say that we can make hydrogen that will reduce greenhouse gases by using biomass, for example. By calculating carbon sequestration, there may have been biomass. After that, we can use carbon sequestration for the production as such.
So we are not closed to the various ways of making hydrogen. Our goal is really to promote the production of increasingly green fuels.
It is not just Canada that is taking this position, many other countries are doing the same. That doesn't stop us from talking about green hydrogen, hydrogen that isn't green, or blue hydrogen, but we have to understand that our goal is much more about how far we can go in decarbonizing the fuel.
Thank you very much, Mr. Chair.
Thank you so much to the witnesses.
I guess the first thing I would say is that I listened very intently to Minister O'Regan. We certainly appreciate the fact that he did come to our committee today. He spoke of the 140 million gallons of crude going through Line 5 daily. Then he spoke about 2,100 trucks and 800 railcars to bring such across. He said that the road to net zero goes straight through our borders. He went on to say that the supply chains will adjust themselves.
It really concerns me. In my fantastic riding of Essex we rely very heavily on our automotive industry, on our supply chain, as the minister spoke to, and on our manufacturing and those types of things. I really found it ironic when he said that the road to net zero goes through our borders. Well, the truth of the matter is, Mr. Chair, that it does go through our borders. When we can't move people across our borders, that's equally a major issue.
It just speaks specifically to Line 5. If we don't have petroleum coming across to Canada and going back to the States and servicing...then we don't have an auto industry; we've lost the manufacturing industry; and we're not putting food on the table.
I'm a really no-nonsense kind of guy. My question, specifically, is who do we need to contact in the U.S. to get this done once and for all? Is there a specific person? Is there a specific agency? What can we do? What can this committee do to create magic to really get this resolved? Without that, we are going to be losing. We've already lost, by the way, friends, many fantastic manufacturing jobs and businesses. People don't know where to go. We can move product but we cannot move people across the border. Who do we have to get to as fast as we possibly can to get that job done?
Welcome, Ambassador Hillman. I really appreciate your taking the time and spending this time with us.
Before I introduce you, I need to do some housekeeping.
Welcome back, members. For the benefit of our new panel, I will outline the procedures. To ensure an orderly meeting, I would encourage all participants to mute their microphones when they are not speaking and to address all comments through the chair. Interpretation is available through the globe icon at the bottom of your screen. Please note that screen captures or photos are not permitted.
Thank you very much, Ambassador Hillman, for joining us today. I don't think you will remember, but I spent some time with you three years ago when I visited the embassy as a member of the foreign affairs committee. I was very impressed by the professionalism of the staff and all of the colleagues you have there, and by the way in which they conducted relations with one of our most significant partners and allies.
I want to welcome you. Thank you very much for taking the time.
I understand you have some opening comments. The floor is yours for five minutes.
Thank you very much, Mr. Chairman.
Hello, everybody. Good afternoon.
I'd just like to say that in my time in Washington, I've seen first-hand the strength of the Canada-U.S. relationship in general and our economic relationship in particular.
About $2.7 billion worth of goods and services cross our shared border every day. Roughly three-quarters of Canada's exports go to the United States. Moreover, Canada is the number one customer for more than 30 American states. In fact, the United States sells more goods to Canada than it sells to China, Japan and the United Kingdom combined.
But we don't just sell to each other. We make things together, from auto parts and components that cross the border multiple time in the production of a final vehicle, to the animals that are born on one side of the border, raised on the other and travel back again for slaughter or food processing.
Also, of course, COVID has brought to light another very important example. Canada is a top supplier to the U.S. of critical PPE and PPE inputs, including for masks, gowns and ventilators, and Canada is a main market for U.S. exports of PPE and PPE inputs, including cleaning compounds and soaps, needles and syringes.
Simply put, as President Biden said last Tuesday, the U.S. has no better friend than Canada, and there's no country in the world that wants the U.S. to succeed more than Canada does. Our prosperity and also our security are fundamentally linked in an enduring way.
The breadth, depth and significance of the relationship was clear when the and the President met last week—virtually. It was the President's first bilateral meeting with a foreign counterpart since taking office. The leaders released a road map that outlines dozens of concrete commitments for Canada and U.S. collaboration in the coming years.
Of course, for both our countries, the top priority is to end the COVID-19 pandemic. The leaders agreed to strengthen collaboration in that regard, and they agreed to take a coordinated approach, based on science and public health, when considering when to begin easing border restrictions.
They discussed their shared vision for an economic recovery that creates good-paying and secure jobs in both countries and ensures that the benefits of economic growth are shared more widely. The pandemic has not affected everyone equally, and that's true on both sides of the border, so they also announced a joint initiative to help small and medium-sized enterprises recover, with a focus on supporting women-owned and minority/indigenous-owned businesses.
The President and the spoke of the importance of our deeply interconnected and mutually beneficial economic relationship. The reality is that economic recovery in Canada and in the U.S. will be faster, stronger and more enduring if we move forward together. That's why the President and the Prime Minister launched a new strategy to strengthen Canada-U.S. supply chains, and that's why they recognized the important benefits of the bilateral energy relationship and its infrastructure.
In terms of climate change, there are opportunities to work together internationally, but also at home, where we can align policies and approaches to create jobs, while tackling carbon emissions. To that end, the leaders agreed to create the necessary supply chains to make Canada and the United States global leaders in battery development and production.
Given the focus of this committee, I'm highlighting the economic elements of the road map, but the leaders also made very concrete plans to extend co-operation on continental defence, cybersecurity, cross-border crime and the Arctic. They discussed ways to align our approaches on China, including how we deal with China's coercive and unfair economic practices, national security challenges and human rights abuses. They discussed the arbitrary detention of Michael Kovrig and Michael Spavor, and the President committed to work for their release.
Canada's relationship with the U.S. is strong. It's interdependent, and it's multi-faceted. It's precisely because of this interdependence that decisions on one side of the border are often very impactful on the other, so while we work together on these many shared goals, Canada must also be vigilant in advancing our priorities and standing up for our interests clearly and strongly.
We learned from our experience in negotiating the new NAFTA that a team Canada approach is constructive and effective. Working towards the same goals and consistently presenting compelling facts to our U.S. counterparts in the administration, Congress and all levels of government has proven to be successful.
I'd like to conclude by saying that this is a very exciting time in the Canada-U.S. relationship. There are many opportunities for Canada in the years ahead in working with the Biden administration, and I think we're very well placed to seize them.
Thank you. I'll be happy to answer your questions.
Maybe I can just start by saying that for a year now I've had discussions about every two weeks, sometimes a little bit more often, with the Department of Homeland Security regarding the Canada-U.S. border. Those discussions are around our policy objectives with respect to the border and what restrictions we feel we need to put in place in order to achieve those policy objectives.
Since the outset, the joint objective that we set with the United States was to minimize and in fact stop non-essential travel but to allow essential business travel to continue. It was a monumental decision, as everybody knows. It was unprecedented, but ultimately as we looked at the data, and as we checked in with each other every couple of weeks, it was clear that that measure was doing what it was designed to do, because truck travel in your neighbourhood and across the country was down by maybe 5% or maybe 7% or maybe 2% or maybe not at all, depending on the week. The actual release of goods into Canada and into the United States, again, was down very little, sometimes not at all. However, the numbers of the rest of the travellers overall at the land border were down, depending on the week, between 80% and 90%.
That seemed to be very important, and it has, I think, proven to be very important in controlling the spread in our communities.
Thank you very much for that. I'll go on to my next question.
You mentioned that the team Canada approach was working. The truth of the matter is, at least in my area, it's just not working, because we are losing business to the United States and Mexico hand over fist because our owners, who are putting food on the tables of Canadian families, are not working because they're being quarantined. I have spent hours and weeks on the phone with these owners, and I've heard, “You know what? I'm just going to pick up stock, and I'm moving to the States. I'm bringing business to the States. I'm outta here. I'm gone because I can't afford to send my employees across the border anymore.”
What should we be doing to make sure that we can get to the very cusp of the problem and move that forward? If we indeed are going to open up the border, we'd better do it sooner than later, because just next week Windsor-Essex will be losing business—not small pieces, but huge manufacturing, well-paying jobs.
Do you have any thoughts on who I can grab the phone to call?
I'm happy to answer that question.
First, as I answer your question, I would like to say this. From our perspective here at the embassy and obviously from the government's perspective, Enbridge's Line 5 is a crucial piece of energy infrastructure for Canada, but also for the United States. That is a core and principal message that we're giving. We are underlining the fact that a shutdown of the pipeline would have severe impacts for Alberta, Saskatchewan, Ontario and Quebec, of course, but also for Michigan and Ohio.
We have a pipeline here that has been operating safely since 1953, so that's the context in which we have those discussions. We support, full-throatedly and very actively, the continued safe operation of that pipeline. We also, of course, have to underline with our friends from Michigan that we are equally committed to protecting the Great Lakes. They're an important resource for both countries.
We know that Enbridge is committed to those goals as well. I talk with the company very often, and so does my team. They have been seeking to address the concerns of Michigan Governor Whitmer and her predecessor, who also had concerns with the line. Those discussions have broken down. I know that you've heard from a lot of witnesses on this topic over the last week. There's a lot of litigation ongoing in that regard.
Ultimately, I think the solution to this will come about through diplomatic and advocacy means, but it will also come about through negotiations between the company and the governor of the territory through which it's going. It's going to be a combination of all of us working together to find a solution. The company has been mandated by the court to seek mediation with the state in order to see if they can work through some of the differences that they have with respect to this project. For our part—
I'm sorry. Do you want me to stop?
I'm probably taking up your three minutes. I apologize for that. I'd like to get this out on the table, and then all the rest of you can ask me all sorts of follow-up questions.
For our part—the government—we have been advocating for Line 5 continuously, non-stop, since 2017. The issue of this pipeline has been relevant in Michigan for several years, and before this governor, so we have been very active in the region. Our consul general, Joe Comartin, and his predecessor have been very active in the region in making sure that everybody understands the importance of this line for Michiganders and for the United States.
We have made several on-the-record, written comments in support of Line 5 and the proposed tunnel project by Enbridge. We participate in a federal-provincial working group that coordinates advocacy around the project in Michigan, in adjoining states and at the federal level.
It was, of course, raised in the 's discussion with President Biden last week. It was raised by the minister, , with his counterpart. It was raised by the Prime Minister with the U.S. Secretary of State. I've raised it with Governor Whitmer several times, and with her predecessor at least a couple of times. It has been active, detailed advocacy for several years now.
Thank you for the time.
First, the buy America policies that favour the purchase of American goods exist at the federal and state levels. At the federal level, some policies may apply in Canada and some may not. The policies that don't apply to us are the requirements of the Buy American Act. So if you hear about the requirements of the Buy American Act, they don't apply to Canada. We have WTO exemptions for those types of policies.
The buy America policies pertain to the money sent by the United States federal government to the states to fund projects, especially infrastructure projects. Right now, the policies apply to purchases of iron, steel and certain manufactured goods.
These programs exist, and we must live with them.
The question is whether the Biden administration will strengthen these programs and whether it will add more goods to the list.
I don't think that this will happen on a state-by-state basis. I think that they'll add certain goods instead. It's important to note that there are many things that we don't know. It will really depend on how they implement the policy.
For example, the executive order passed about a month ago doesn't affect us at all. We must study it. We must understand the details in order to determine how and if we'll be affected. If we were affected—I may be answering another question—we would have a number of good arguments for why it shouldn't apply to Canada.
First, I would say that one of the things that we have learned—that Canada has learned, the U.S. has learned, and I think many of our allies and partners have learned—through this COVID crisis is that we need a certain amount of additional self-reliance when it comes to critical supply chains. Whether those are health supply chains such as PPE, food supply chains, energy supply chains, or national security supply chains, there's a certain degree to which.... That's where critical minerals come in, because there are also important military applications in some of those products. There is a need for us to be sure that we have the systems in place to be able to rely on those supply chains when the going gets tough. On some level, that means doing more ourselves, and on some level, that means doing more with allies who we know are going to have our back when the chips are down.
In my view, and in my experience over this past year, even though the previous administration was very challenging for us in a number of ways that we all know, when it came down to really working through some urgent needs around, for example, PPE at the beginning of the crisis, the existence of those supply chains and their interdependence became really obvious. It was demonstrated to us and to our American friends that we had each other's backs, if you will, to continue my phrase, when the chips were down. This is going to be an important policy consideration for our government and the American government going forward, also for the Europeans, our NATO allies and others. It's going to be important, as we reflect on the lessons learned from this past year that we have gone through and what's coming next.
In terms of aligning our trade policy with the United States, I think I would flip that on its head. I think I would say that we see with the Biden administration an administration that is now willing to align its trade policy with ours. The previous administration did not respect international treaties that we had entered into and did not respect international dispute settlement. It used tools that were not designed at all for regular trade disputes, in order to bring trade consequences to its closest partners. I think the previous administration was misaligned. I think that the Biden administration is very much aligned with the way that we see rules-based, organized, open international trade operating.
Oh, I didn't answer your TPP—
Thank you very much, Mr. Chair. I'll be sharing my time with Ms. Bendayan.
Ambassador Hillman, it's great to see you. Having been to law school with you, I hope you don't mind if I ask you a couple of legal questions.
Basically, the first report from this committee is about Line 5. I understand that this is a private dispute between Enbridge and the State of Michigan and that we're looking for a diplomatic resolution in every direction. I totally understand that, but I'd like to just ask, is it the opinion of the Government of Canada that the PHMSA, the federal government's Department of Transportation, has the authority to overrule the State of Michigan's decision to end the easement? That's number one.
Number two, is it our opinion that the legislature of the State of Michigan has the ability to overrule the decision of the executive of the State of Michigan if the Senate and the reps of Michigan vote that way?
Number three, if none of that happens, does the Government of Canada believe that, either through bilateral agreements with the United States or international treaties that we're parties to, we have the ability, as Canada, to be a party to stop Michigan from ending the easement?
Thank you, Mr. Housefather. I know you've been asking all of the witnesses these legal questions, and I fear I may give you an equal amount of dissatisfaction in my answers.
These are all important questions. I'm not denying that.
On the first question, I have no real comment on that.
With respect to the revocation of the easement, my understanding is, it wasn't an executive order. It was done according to the terms of the easement itself. I don't know and we don't know on that particular act—and there are discussions and analyses, I would assume, being undertaken—whether that is subject to some sort of intervention by the state legislature. I'm sure they are looking into that question themselves, because the state legislature in Michigan is supportive, by and large, of Line 5, as I'm sure all of you know.
Those are important questions in what's becoming quite a complex and tangled set of litigation. Our consul in Detroit is in touch regularly with the legislature to discuss this issue with members of the legislature, as well as with the governor's office and her people. He'll probably be the person who would come to understand what the legislature's position is more quickly than anyone. We'll watch that. Obviously, that's an issue that is internal to that state and their political apparatus.
With respect to the Government of Canada and what we may or may not do from a legal perspective in, as I say, these different legal cases that are under way, we're assessing that. That's the honest answer. We are looking at that. We're assessing it. We will close no door, and we will make the decision that we think is going to have the best chance of ensuring this issue is solved and that we are assured that Line 5 will continue.
Thank you, Ambassador, for being with us tonight.
I want to take the opportunity to clarify a couple of things on the record since Canadians are listening to us. Of course, as you mentioned earlier, Canada does have an exemption from buy American under WTO treaties.
Buy America, which has been the subject of some discussion tonight and which will be the subject of our next debate, is an issue. I would like to clarify, because my colleague, I think, raised an infrastructure bill that doesn't exist yet. I would just like to point out that there is discussion of an infrastructure bill in the United States but there is nothing yet on the table.
Second, from where I sit as parliamentary secretary to the Minister of International Trade, working with Minister , I can say that we certainly have not taken our foot off the gas. We continue to press our counterparts on this issue, and I imagine it's the same for you.
Ambassador, can you please let us know if your foot is still very much on the gas on this issue?
I will just say that there are a lot of gas pedals, so it is absolutely, 100%. Again, not to be a broken record about this, but we are in a general way, and have been for many months, reaching out here in Washington—as are, obviously colleagues in Ottawa—to the new administration, to Congress, to the business community, and to labour leaders, all of whom are supportive of our view that in an economic recovery, especially the one we've just experienced with supply chain challenges, we need to be doubling down on our integration and our mutual support for each other. We have allies across all sorts of different constituencies here in the United States, and we are working those phones all the time.
That is one thing. It has been raised in every ministerial contact that has taken place so far. Even in portfolios where there is maybe less obvious inclination, it is a core priority for Canada, and therefore it is raised.
I think the work will continue, because the infrastructure bill, as you rightly point out, isn't in place yet, but we have had incredibly candid conversations right up to the very top about this particular policy and what it potentially could mean and the challenges that it could pose for both of our countries—not just for us but for them as well. I think those voices are being heard.
I would like to point out one thing. The speed with which this administration reached out to us to start talking to us was incredible. I had the honour of attending the inauguration, and for those of you who have been here, you'll know that the embassy is just down the street from the Capitol, and I hope the rest of you will be able to come once this is behind us. Before I was even back in my office, senior members of the White House were phoning to make contact and talk about what Canada's core priorities were. In that discussion our energy relationship, energy infrastructure, buy American, softwood lumber— all of those issues—were raised on day one of this administration.
Thank you, Ms. Bendayan. That ends our rounds of questions.
I hope, Ambassador, you will indulge me for one short question. I know it's been a long day. It's a practical question and it's a philosophical question. My colleague, Mr. Housefather, raised the practicality of the issue of the debate that's happening within Michigan in terms of who actually regulates the pipeline, whether it is the Department of Natural Resources or the Pipeline and Hazardous Materials Safety Administration. That's one aspect we can't really comment on.
The other aspect is whether the federal engagement is at the executive level or the ministerial level. We also know that we have very close business links, so I'm sure there are a lot of business ties.
I also say this because I was a student in the United States for three years, in Boston. I also appreciate the people-to-people ties. When we were negotiating NAFTA, when we took that whole-of-government approach, we included civil society, business, culture and obviously the diplomatic and government step.
What are we doing to encourage the closeness, especially with the new administration, especially given the fact that a lot of us have friends and relatives in the United States? Is there a place for civil society going forward?
Yes, I think there always is.
Something that's been pretty obvious to me since I've been here is that the Canada-U.S. relationship is broad. There are literally millions of interactions between Canadians and Americans every day, from business to families to academics to—in other times—tourists. There's [Technical difficulty—Editor]. The ability of someone like me to do my job, or people like you to do your job as it relates to Canada-U.S. affairs, rests on the shoulders of those millions of interactions, because it's those interactions that create that sort of fibre and create the understanding of our two countries and the importance of one to the other.
Something that I think has been very interesting to me over the last couple of several weeks since this administration has come in—and I think you can see it if you look at that road map— is that in our discussions with the Americans we operate far less like we would operate with any other country. In other words, it's not fundamentally a discussion of foreign relations when we're talking to each other, because the things that really matter to us in our relationship with the Americans are much more domestic issues.
As we've been talking about today, they are issues like energy infrastructure; supply chains; borders; people wanting to move back and forth; aligning our climate policies and regulations; aligning our transportation regulations; and, making sure that when we're making large infrastructure spends, we're sharing them with each other. These are much more focused, and I haven't even gone into law enforcement. That's a whole other area where we and our law enforcement agencies work together every single day.
On our relationship, I think it was Condoleezza Rice, if I'm not mistaken, who said that in Canada and the U.S., we talk about condo issues. It's like we share a condo together, and the things we work on together have to do with the fact that we live in the same space. Most of the time, that's great, and sometimes it's not, when they don't shovel their walk or when they don't fix a leaky roof, or we don't. Sometimes it's good. Sometimes it's more challenging. It's a relationship of a very different nature than most relationships with foreign governments, and it's because of all of the people-to-people ties.