Notices of Meeting include information about the subject matter to be examined by the committee and date, time and place of the meeting, as well as a list of any witnesses scheduled to appear. The Evidence is the edited and revised transcript of what is said before a committee. The Minutes of Proceedings are the official record of the business conducted by the committee at a sitting.
Welcome, members, to the seventh 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, the special committee is meeting to discuss the economic relationship between Canada and the United States.
In addition to the minister, we have from the Department of Foreign Affairs, Trade and Development, Steve Verheul, assistant deputy minister, trade policy and negotiations; Arun Alexander, director general, North America trade policy bureau; Doug Forsyth, director general, market access; and Eric Walsh, director general, North America strategy bureau. I thank the witnesses for agreeing to spend this time with us to enlighten us on this very important topic.
Minister, you have five minutes for your opening statement for us. I want to thank you again for sharing your time with us and the floor is yours.
Chair Saini, honourable members, thank you for the opportunity to appear before the committee to speak about the long-standing, unique and mutually beneficial trade relationship between Canada and the United States. As many of you know, back in February our government held its first bilateral meeting with the Biden administration, where we launched the road map for a renewed U.S.-Canada partnership, which lays out an ambitious plan for going forward together to address the pandemic and to build back better.
Just last week I had my first meeting with Ambassador Katherine Tai, the newly confirmed U.S. trade representative. We discussed our countries' close relationship and agreed on the importance of keeping our integrated supply chains open and resilient.
Our ongoing engagement with the new administration offers us the opportunity to strengthen our trade relationship.
This includes working together on implementation of the new NAFTA and engaging constructively on trade issues, such as U.S. tariffs on Canadian softwood lumber and solar products, and buy American provisions.
Canada and the United States have a trading relationship like no other two countries in the world. Every day, $2.7 billion worth of goods and services cross our borders. Canada is the top destination for U.S. exports and 32 states count Canada as their top customer.
Our cross-border trade is critical to workers, to businesses, and to families and communities on both sides of the border, providing stability and good jobs to Americans and Canadians alike. It is a testament to our relationship that as of January 2021, Canadian exports to the United States have surpassed their pre-pandemic levels. That's a good sign for the economic recovery from the COVID-19 pandemic. Our integrated supply chain means that Canada is able to easily export its cutting-edge products into markets in the United States.
Let me give you an example. IPEX is an Ontario-based company that is bringing its innovative, made-in-Canada environmental solution to the U.S. infrastructure industry by recycling vinyl in its products and making sustainable earthquake-resistant water main pipes.
I can tell you unequivocally that Canada and the U.S. are committed to growing our already close relationship—which is made even easier with the new and modernized NAFTA—and supporting both countries in a strong economic recovery from this pandemic.
I would also like to spend a little time on buy American and buy America. The terms “buy American” and “buy America” are often used interchangeably and mistakenly. Buy American requirements mandate that all American federal government departments purchase only U.S. goods. The U.S. Trade Agreements Act of 1979 waives buy American requirements for countries that are party to the WTO Agreement on Government Procurement and other U.S. free trade agreements. As Canada is party to the GPA, buy American requirements are waived for Canadian companies.
Buy America requirements, on the other hand, are different. Buy America requirements vary between the departments and agencies, but in general they are applied to iron, steel and manufactured goods used in infrastructure projects and in most cases require 100% U.S. content.
Here I understand the concerns of Canadian businesses that export and trade with the United States, but let me be clear: We will always stand up for Canadian businesses and workers, and we will continue working as one team Canada to ensure stability and prosperity for our industries. Also, as I mentioned earlier, I raised this directly with both President Biden and the U.S. trade representative, Ambassador Tai. We are committed to working together to reinforce our deeply integrated production of goods and services and mutually beneficial economic relationship, and to avoid negative impacts on jobs or businesses.
With respect to softwood lumber, there is no doubt that it is an important industry to the Canadian economy and to our trade relationship with the United States. Let me begin by stating unequivocally that the duties imposed by the U.S. on Canadian softwood lumber are unwarranted and unfair. They hurt workers and industry on both sides of the border.
Canada continues to strongly believe that a negotiated agreement with the U.S. is in both countries' best interests.
Again, I raised this directly with both President Biden and Ambassador Tai, and I will continue to actively engage with key elected officials on this issue. We're taking a team Canada approach, working hand in hand with the softwood lumber industry and provincial and territorial partners on all fronts to ensure Canada and the United States can come to a conclusion on this matter.
Let me conclude by saying that our government is absolutely committed to standing up for our workers and businesses and finding opportunities to strengthen our relationship with the United States.
Thank you very much, Minister. We certainly appreciate your time. We all know that time is very precious, so thank you for that.
Minister, my riding is the riding of Essex. It's down by the busiest international border in all of North America, next to Windsor. I appreciate the fact that the government says it will always stand up for Canadian workers and businesses, but, Minister, there's a major issue here with regard to trade. The trade starts at the border. The trade doesn't necessarily mean the trade of goods going back and forth. The trade is actually the people who go with the goods.
Windsor-Essex is hemorrhaging business to the U.S. and to Mexico, specifically in the manufacturing sector but also in our small business sector. What's happening, Minister, is very simple. Law-abiding, legal visa holders who go back and forth across the border are being told to quarantine for 14 days or face very hefty fines, along with their employees and their customers who come and literally spend two hours on a shop floor right here in my backyard to approve a product. I have met with so many advanced manufacturers. We really need to deem our business owners, our employees and our customers an essential service, just like the Province of Ontario already has.
Having spent quite some time in your neck of the woods, I understand how important the trade relationship is between Canada and the U.S., particularly from the vantage point of where you are. It really is very much about people. It's about those businesses, and it's about how they are able to work together.
We are in a global pandemic. We have, throughout this period of a year, been able to keep the borders open in, I believe, a very successful way. We have groceries on our shelves. We have medical supplies and critical goods and equipment crossing both borders. In that respect, I believe this long border is and continues to be a success.
We do acknowledge it is the effort of all of us, Canada and the U.S., and certainly here in a whole-of-government approach, my colleagues Minister Blair and the health minister, to work together to make sure that we are truly maintaining that balance. What is that balance? That balance is keeping Canadians healthy and safe and—
Thank you, Minister. I'm sorry. I don't have very much time.
We have groceries on shelves, thank goodness. What we don't have is new contracts coming to Canada. We are losing these new contracts because we can't get the customers over here for two hours.
Minister, e-petition 3297 was tabled with the Clerk. It is now up on the House of Commons website for signatures as of last Monday. Are you aware of this e-petition? Basically, it calls for this: to deem business owners, their employees and their customers an essential service, just as the Province of Ontario has.
I'm looking forward to taking a look at that petition, now that you have raised it with me. I would say our top priority is to fight this pandemic and keep Canadians safe. Essential services and goods are moving across the border. We are absolutely balancing that—the commerce between the two countries—and keeping Canadians safe.
There is a light at the end of the tunnel with vaccines, for sure, and as I said earlier, our trade numbers have resumed to pre-pandemic levels between Canada and the United States. We are going to keep doing this, but we must keep Canadians safe from COVID-19. We have introduced a lot of—
I'm sorry to cut you off, Minister. I truly apologize, but it's not often that I get an opportunity to speak to a minister.
So, Minister, I guess I am asking this: Will you commit to bringing this issue forward to Minister Blair, as well as to your U.S. colleagues? All they're asking for, and what I know is absolutely vital to our economic recovery, is to give clear and concise direction to the CBSA and to PHAC to deem these workers essential, just like our truck drivers. It's the exact same thing.
Literally, there is great food on the grocery shelves, Minister, but it's not hitting the tables of Canadians, because people are losing their jobs. Would you commit to this, please?
I commit to working as hard as I can to make sure we fight COVID-19 and continue to do what we need to do to keep Canadians safe. We are going to do that. We are going to help small businesses get through this, to bridge them to the other side of COVID-19. The health of Canadians and the economy and the economic recovery are absolutely connected.
That is our commitment as a government. We are keeping Canadians safe, supporting businesses—all businesses, including small businesses—helping our businesses continue to export and continue to find opportunities and customers in the international marketplace like the U.S. All that work continues. All of this is in an effort to get us on that road to recovery, one that is stronger because Canadians are healthy and safe.
Minister Ng, it's a pleasure to see you. Thank you for the extraordinary work that you and your parliamentary secretary have been doing on this file.
I will share some time with Ms. Bendayan.
I wanted to give you the opportunity to clarify for Canadians exactly what we're talking about here. As you said in your opening statement, there's the 1933 Buy American Act; there's the 1983 buy America act, and then there's President Biden's recent executive order. Then, there are all the different places Canada is exempt from “buy American”, whether through the GPA or the USMCA.
Could you talk to the committee and to Canadians about exactly what the biggest concern is about the President's recent executive order that would change things under either “buy American” or “buy America”, and how you are working with your colleagues to handle that?
I want to thank the honourable member. It's very good to see you. It's too bad I'm not able to see you and everyone in person, but I hope that will come soon enough.
As I said in my opening remarks, “buy American” refers to an act that the American administration enacted, and because Canada is a party to the WTO's GPA—the government procurement provisions—we are exempt from “buy American”.
“Buy America” may apply to greater American content, and it is here that I have, for sure, heard from Canadian and American businesses and workers on both sides of the border, because they understand the value of open procurement markets. In fact, any restrictions on that will actually have a negative impact.
Our supply chains are so integrated and we work so closely together. In fact, we build together and we innovate together. I just want to assure the committee that if there is any expansion into greater content requirements, we are going to actively work on that to defend and to ensure that there is no impact on our critical supply chains and Canadian businesses and Canadian workers.
I just have one more question before I turn it over to Ms. Bendayan.
I know you've been working closely with employers groups and unions on both sides of the border in order to ensure that Canada's perspective is heard loudly and clearly in Washington and in the different states applying the executive order.
Can you talk about the collegiality of that relationship and how that's working out?
I think that everyone here will have experienced the strong team Canada approach that we have taken for the last five years. Today is no different. I think that we need to continue this very strong approach around team Canada, working with interlocutors with the USTR, but also with other legislators in the U.S.
Our ambassador is working hard at this, as are my cabinet colleagues. I would invite all of you to also work together with us so that we can advocate with this strong team Canada approach, engaging U.S. stakeholders, decision-makers at all levels of government, the workers and civil society.
We'll demonstrate our value. The integration of how close we are and how close our economies are, these are the stories that I am able to share. This is the case that I get to make and that we all get to make to our interlocutors in the U.S. but also to Canadian businesses and American businesses that operate in Canada.
We want to be sure that we are keeping these integrated supply chains and these relationships open in such a way, because it is not only beneficial to Canada—of course it is—but it also serves as a benefit to American workers and American businesses as well.
We are both committed, both countries, to building back better, to this road map between Canada and the U.S., and we have ambitions to also tackle climate change together. There's a lot of great Canadian input into the American infrastructure industry.
These are the opportunities, and I would encourage a strong, continued, team Canada approach in this advocacy.
Just picking up, Minister, on that advocacy, I had the opportunity to speak to many members of the Canadian American Business Council, as well as others. There does seem to be real organization on the ground, just as there was when we were negotiating the new NAFTA, to ensure that our American friends and counterparts understand the importance of this for both our countries.
In light of the fact that, just yesterday, President Biden made an announcement regarding the $2-trillion infrastructure plan that he is looking to roll out, I wondered if you could perhaps speak to Canadians and to this committee about the importance of moving forward, but also that we do have some time to get this done.
It is my understanding that there is no bill currently on the floor. Also if we look back to recent history, in 2010, the last time we were able, as a country, to gain an exemption from buy America, that was done after the bill was introduced in a separate agreement.
Perhaps you can give us a little bit of context regarding the strategy going forward.
Let me start by saying that our government will always stand up for our Canadian workers and our businesses.
If there is an effort to expand or to introduce new domestic content requirements, of course we will absolutely work to ensure that this is not applied to Canada or affect Canadian supply chains. Whether it be the Prime Minister, the Deputy Prime Minister or me, through our interactions with the President, the vice-president and the USTR, we emphasize that workers in the U.S. and Canada benefit from our integrated, secure and resilient supply chain and that strengthening this trade relationship is really important to avoid any unintended consequences that may arise from any buy America policy.
However, I would say that we have a lot in common. Building back better and building back the green economy are really important. I would be remiss if I didn't talk about how green our steel production is. We are a global leader. Canadian aluminum producers have the lowest carbon footprint in the world and are innovating. Our transportation sector and the inputs into transportation or forestry, concrete and cement are all inputs that are made together between Canada and the U.S., and they go into those supply chains.
We fully will be making the case that working together, building together, will help us tackle climate change, and it will help us build back better in a way that creates jobs for the middle class in America and in Canada.
I'd like to thank you, Madam Minister, for being with us today.
I'd like to make a connection or parallel with what we could also do here. So I'm going to take you somewhere else.
You talked about the Buy American Act and Buy America provisions. In the U.S., there's also the Small Business Act, which allows between 23% and 40% of American public purchasing to be reserved for domestic SMEs, or American SMEs, of course.
To counter this type of measure, couldn't the government adopt a similar policy here?
Thank you very much for that question, dear colleague.
It's always great to see you again.
The work that we do [Technical difficulty—Editor] for sure.... For me, as the minister responsible for small business and international trade, simply put, I help businesses start up, scale up and access new markets every single day. I put in the entire tools of not only the federal government but our work with partners to create more opportunities for Canadian businesses.
I'm very pleased that in our newly negotiated NAFTA there are provisions that actually have a chapter, which we're excited to work on, particularly for small and medium-sized businesses. Remember, 99% of our businesses are SMEs here. Only 12% export today, so you can see the opportunities to export. In the new relationship with the U.S., Canada and Mexico, there is a dedicated chapter for small and medium-sized businesses that provides us access to this market, and we've done that with all of the progressive agreements that we've negotiated as a government.
It goes without saying that we often have privileged access to government procurement and government contracts from partner countries, when there are trade agreements, of course. In this case, the fact remains that the Small Business Act also exists.
I'll come back to my question. In the Canadian context, couldn't we use this model to adopt a similar law or order to give priority to Canadian and Quebec SMEs?
At present, the Minister of Public Services and Procurement and I work together in a whole-of-government approach. There's a function here that is doing a lot of work to provide greater opportunities for our small and medium-sized businesses to have access to the business we offer, I suppose, as government, but in addition to that I, of course, lead both the Black entrepreneurship strategy, as well as the women's entrepreneurship strategy. This is about being able to also, again, create more opportunities and build that infrastructure in those ecosystems to help our Canadian businesses get a leg up to pursue opportunities and to be successful in those opportunities.
For me, as the trade minister, I have what I call the “trade tool kit”, a trade tool kit that puts EDC, BDC, the trade commissioner service, Invest in Canada and the Canadian Commercial Corporation together in a way such that I focus our energies to help our small and medium-sized businesses get access to those businesses, not the least of which is the trade accelerator program that we've put together, which has helped literally many businesses to grow and to grow into those export markets. That work is a top commitment of mine. I've been doing that from day one as the Minister of Small Business to help them get access and to get the capacity and to build.
In fact, right now, I'm on a virtual trade mission to France. I have 300 companies in France doing work, building relationships and business-to-business opportunities and finding investment attraction. That's on top of some of the other virtual trade missions, which I would love to talk more about, but I feel that I should let you ask the next question.
We work as team Canada. Team Canada must include our provincial and territorial partners, businesses and workers.
When we think about Quebec, who cannot think about the aluminum producers? The lowest carbon footprint in the world and the world's first carbon-free aluminum smelting technology is being commercialized in Saguenay-Lac-Saint-Jean in a joint venture between the U.S.-based Alcoa and Rio Tinto. If adopted, this technology could reduce annual carbon emissions by approximately seven million tonnes, which is equivalent to removing 1.8 million Canadian autos from the road. This is the kind of innovation here in Canada—in Quebec certainly. There is also the use of decarbonized cement made by a company out of Nova Scotia, CarbonCure, in building Amazon's headquarters in the U.S. There are a lot of synergies that way.
That said, absolutely, we must work with our colleagues, the provinces and territories, and industry as well.
[Technical difficulty—Editor] it doesn't seem very long ago that you were before us at the natural resources committee, where we talked a lot about softwood lumber, so I won't go down that road.
I represent the riding of South Okanagan—West Kootenay, a border riding, where I have five border crossings in my riding and a couple just outside, on the very edges, so cross-border trade is hugely important. As Mrs. Romanado reminded me in the chatter before we started the meeting, “You have wine”. It is a huge part of the economy here. We grow the best grapes and make the best wine in Canada. Wine is, I think, a $6-billion industry in the country, but it has faced a number of international trade disputes over the past few years, and one in particular resulted in Canada's saying that it would get rid of the excise tax exemptions for most small Canadian wineries by 2022. That is going to have a huge impact on many small Canadian wineries, including most of the wineries in my riding, for instance. Wine Growers Canada has asked that a trade legal replacement for this exemption be introduced to support the industry, much like other countries around the world, including Australia and the United States, support their industries.
Can you let us know if such a program will be included in the upcoming budget?
You're right. It feels like I've seen many colleagues at the different committees I've been to of late, but it's wonderful.
I've been to your riding, and it's wonderful out there. I think what I will do is leave it to the Minister of Finance to share the budget with all of you when she tables it. So, why don't I leave it there?
I can assure you that we absolutely recognize the tremendous value of the wine industry and the contribution of that sector, which is world-renowned, to our reputation as world-class agricultural producers, particularly in wine, as I say. On this issue, I continue to work very closely with the industry, and also with provinces [Technical difficulty—Editor] so that we have the right mechanisms in place to continue to support not only the viability, but also the opportunities that continue for the Canadian wine industry, both domestically and in its exports abroad.
You mentioned the domestic part. You're also the minister for small business, as I understand it. I'm wondering if you could expand on any efforts your government has been making to eliminate the interprovincial trade barriers for wine and beer makers. This is perhaps an even bigger problem.
On that, my neighbouring MP, Dan Albas, has a private member's bill that would allow Canada Post to ship beer and wine between provinces. I'm wondering what your government's thought is on that bill.
Around interprovincial trade, I know that my colleagues, both Minister LeBlanc as well as Minister Champagne, are working very actively on that. We understand the value of removing those barriers in the interests of our Canadian businesses and, you're absolutely right, small businesses. As we do with virtually all of our work, we are working whole-of-government so that we are pointing our capabilities to the Canadian end of the business that are the recipients of this. We are working very hard on the interprovincial movement of goods.
In the meantime, I continue to help our Canadian companies find those markets and pursue greater export into the many markets that are afforded by so many of the trade agreements we have today. It's nice to be in the position, especially as I meet with my G7 colleagues, to be the only one around the table who has an agreement with all of them.
All of this is to say that we need to keep doing the work to help them export and to create opportunities for them to also take advantage of the domestic market.
I have time for just one quick question, Minister. I can't resist getting back into forestry. I won't mention softwood lumber, but as you know, from your previous life on [Technical difficulty—Editor] I'm a big proponent of mass timber, engineered wood and these products that can be shipped to the United States without the problematic tariffs of softwood lumber. I'm wondering if you can comment on whether those products will be affected by any of the two or three buy America programs we've heard about.
Of course, we continue to work with the United States on any provisions that might increase American content. In that, as I said earlier, we will work to make sure that Canada isn't affected, or our supply chains. I do think, around softwood lumber, that lumber prices are high. That is causing harm to both workers and the sector. I think we need to keep pushing hard and to work on a negotiated settlement here.
I think both of us, both countries, are also committed to affordable housing. It's in everyone's interest to ensure that affordable housing is also increasingly more affordable to build as well. We will need to keep working together with our American partners on this front.
Canadians are coming to me saying that they're quite concerned that perhaps we're not taking this shift in the American position seriously enough. It looks like the Americans have been very clear on the direction they're taking. President Biden signed the executive order, right when he came in, around buy America. The road map that was just outlined focused on modernizing trade rules, including those related to procurement, to ensure that countries could use their own taxpayer dollars to spur domestic investment.
All the signalling is around domestic manufacturing capability in the U.S. and self-sufficiency, starting with these large infrastructure projects. Now we hear that an additional $2.3 trillion will be spent on infrastructure, going way beyond roads and bridges to investments in manufacturing and the expansion of broadband.
Can you give us a comprehensive list of all of the infrastructure elements that Canada cannot bid on as a result of this executive buy America order?
We're going to keep working with the Americans. The American administration has also said that it fully intends to respect trade agreements and trade rules. If there is an effort to expand or introduce new domestic content requirements, we will absolutely work to ensure that those do not apply to Canada or affect Canadian supply chains. We're going to do this with the strong team Canada approach that we have been taking. I would encourage all of us here to work together. I think all of us are here to work for our Canadian company workers—
Minister, we haven't been successful in the past, such as in preventing KXL from being cancelled and preventing buy America from going into effect. Other witnesses, including the ambassador, have said that were probably not going to be able to change this legislation to make us exempt. Could you give us some idea of why you think we will be able to prevent further measures taken by the U.S. from affecting Canada?
On Buy America, as I said, if there are efforts to expand or introduce new domestic content requirements, we will absolutely work to make sure that these do not apply to Canada or affect the Canadian supply chains.
I think I'm not going to take lessons from the Conservatives, who asked us to capitulate in the negotiation of NAFTA. I think what I'm going to do is work in a team Canada approach, as we have done and demonstrated over the last five years, to stand up for Canadian interests. We successfully had steel and aluminum tariffs removed. We are working with the American administration. My colleagues and I at all levels are working, including the ambassador. We are going to work very hard to stand up for Canadian interests, just as we have done the last five years. I will be doing that today and every day going forward.
Minister, you'll be pleased to know I have no CORE questions for you today.
I don't know whether to direct this question to you or to Mr. Verheul, who is deeply involved in the negotiations of NAFTA 2.0. What puzzles me in all of these buy America or buy American or executive orders, etc., is that by and large the law provides that a treaty prevails over everything. NAFTA 2.0 prevails in all matters pertaining to trade. Therefore, I don't quite get what the president's authority, or Congress' authority for that matter, is to override a trade treaty.
Again, I don't know if the second, or really the flip, side of the question should be directed to you or Mr. Verheul, but if the Prime Minister did exactly the same thing as the President has done, and issued an executive order, or if Parliament passed a buy Canada or buy Canadian legislation, would that stand up in any kind of trade dispute?
I'll leave it there and ask either one of you to respond.
No, no—always. As colleagues, of course, it's always about working towards solutions, so I'm totally okay with all of that.
With respect to the question, I guess the way I would respond is this. I had an opportunity, of course, to raise this issue with the new U.S. trade representative, Ambassador Tai. The administration is one that will be respectful of trade agreements, whether it is the new CUSMA between the U.S., Mexico and Canada, but it also will be a proponent for multilateral rules-based trade. I share that because it would be our expectation that the U.S. will continue and follow through with that.
I think that what the work we are doing here in using a team Canada approach really is about—at many levels and through many interlocutors, including businesses and workers—is to demonstrate and make the case about how integrated our supply chain is. In relying on the Canada-U.S. supply chain, whether it's infrastructure, energy or rolling stock sectors, we really are able to make the case on that road map to Canada in the U.S., because whether it's construction materials that are sourced from Canada and are typically lower-carbon materials, or our energy and our electrical systems, which are among the cleanest in the world, or Canadian manufacturers that manufacture highly efficiently and generally emit less carbon, and these Canada-U.S. supply chains are so integrated—
I'm not disputing that the Canada-U.S. supply chains are integrated and that we have terrific companies, etc. What I would like to know is what is our legal position when, on the face of it, the Government of the United States of America breaches a recently negotiated treaty that Mr. Verheul and many of his colleagues were intimately involved in. Whether it's President Biden, who I like a great deal, as do many of us, as opposed to the predecessor, I just don't understand how he gets to say what he gets to say and that ends up being where we're at. I'd be curious as to what our legal position is.
Well, our position is that we are working with the U.S. administration to ensure that as they are implementing any provision there is no unintended consequence that will occur and will affect the U.S.-Canada supply chain.
I know that you're going to have Steve here in the next session—I think he's here for an hour and the officials are here for the next hour—so I guess he could take the legal question now or he could take the legal question in the next session. It's up to you.
Just yesterday, President Biden promoted the first part of his infrastructure plan, the first part being $2 trillion of a total of $4 trillion over 10 years. The plan states that all contracts would go to U.S. companies and benefit U.S. workers.
As part of this infrastructure plan, do you think there will be new U.S. content requirements? If so, to which products would they apply?
The announcement was an announcement, so I'm saying to my colleagues here, as well as to Canadians, that if there is an effort to expand or introduce new domestic content requirements, we will absolutely work to ensure that they do not apply to Canada or they don't affect Canadian supply chains. When we're talking about American infrastructure, in many of the meetings we're having with American stakeholders, as well as Canadian and American businesses, we make the point that whether it's a waste-water project, for example, as happened last time.... A waste-water project gets initiated in the U.S. There are water filters that are made here in Canada, made by General Electric in Canada. Delays were caused as a result of some of those content requirements, or they were going to be spending a lot of money on transit. Many American manufacturers are actually part of this supply chain in Canada.
We're going to continue to share these many examples, because it's American companies that are also talking to me and American workers who are talking to us. I think the effectiveness of a team Canada approach, and a strong one, will hold us well. We want to be sure that it isn't affecting Canadian supply chains, because it also can affect American workers and businesses as well. This is why I think it's really important to make sure that we are sharing what that integration is and to remind our American friends and colleagues that Canada is also the top customer for 32 states. We want to make sure that we are building back better in this relationship so that it really benefits Canadian workers and Canadian businesses that also [Technical difficulty—Editor] U.S. businesses as well.
I have a company in my riding, Frankia Fertilizers, that develops and export organic fertilizers to the United States. They obviously have to compete with American companies there. They interact with federal agencies on both sides of the border, and with state agencies. One of the big stumbling blocks they face is the time it takes to get a new product registered with both the CFIA and the Canadian intellectual property office. The CFIA takes 465 working days to respond, while the performance target for the Canadian intellectual property office for trademarks is 22-plus months. That compares with just a few weeks or months for American regulators that they deal with.
The people at Frankia Fertilizers are not objecting to these regulations around testing and registration. They simply feel that these regulations should come with enough funding support so that their applications can be dealt with in a reasonable time frame.
Can you commit to getting more resources to these Canadian agencies so that Canadian companies aren't at such a disadvantage?
That's a really important question, particularly for me. The core of my mandate is about helping Canadian businesses grow domestically but also in exporting and making sure that regulations and the alignment of such, and the speed of such, support our businesses in that work. That trade facilitation is what my department and I have been working very seriously on.
I'll give you an example. The recent CanExport funding that we have put out is $75,000 worth of funding. We've changed it in the course of this pandemic precisely to address what you just talked about, which is some additional funding so that the companies will get that to deal with any barriers that might have come up to trade facilitation during the pandemic. It would also help them directly with IP support as well. That's one example. It is something that we are actively working on. We have to make sure that we are working in this horizontal way to support our businesses.
In my neck of the woods here, Washington state is now offering vaccines to 16-year-olds. We've heard cases of the United States actually offering vaccines to zoo animals. We're still at people in their seventies and eighties booking appointments well into the future. We're into more lockdowns here now because, quite frankly, we're so far behind the eight ball when it comes to vaccines.
I was very disappointed to hear that there was no plan to address the border issue. I would argue we can't simply wait to catch up on vaccines, then. We talk repeatedly about integrated supply chains, but that includes more than just the groceries. As my friend Mr. Lewis said, it includes people. It includes technicians, sales people, managers. As we fall further and further behind on vaccines, we lose more and more business to the U.S., which is able to operate and open more rapidly than us.
I'll ask again what Mr. Lewis asked. Is there a plan? Are there metrics in place? Are you in active negotiations to come up with a way for us to stem the flow of jobs to the United States while we catch up on vaccinations, on which we are so far behind the United States right now?
Let me start where you ended, with respect to vaccines. I just want to assure you, and Canadians, that we are on track to get 43 million vaccines by the end of June, and nothing is more important to us than working urgently to have vaccines in the arms of Canadians. Of course, I am working in a whole-of-government approach with my colleagues to be sure that the very careful balance of fighting COVID-19 here is done, while at the same time, working to support businesses on that road to recovery.
We've also taken some creative approaches to helping businesses grow and get into the international markets, using opportunities like virtual trade missions, literally around the world. We've done several throughout this pandemic and businesses are benefiting—
Thank you, Minister. I have such a limited time, and I was asking about the border.
I will go back. You keep talking about this team Canada approach. Quite frankly, I think the approach this government has taken has failed us on Keystone XL, it's failed us on softwood lumber and it's failing on Line 5. I'm just wondering why.
If we do the same things over and over again, I think we're living in a fantasy land if we think [Technical difficulty—Editor] haven't worked in the past, simply because there is a new administration in Washington. This administration has been very clear, as Ms. Alleslev said, about what its priorities are. When it made that known to us previously on the Keystone XL pipeline, the Prime Minister said that it was a campaign commitment the President made and he's going to keep it.
He has also made a campaign commitment on buy America, so what makes you think that we are going to be successful this time around, when on Keystone XL, Line 5 and softwood lumber, the government has failed to get the agreements and the results that Canadians expect them to get on those files?
Let me start with softwood lumber. We absolutely are going to stand up for Canadian businesses. We believe that the way forward is a negotiated agreement. I raised this issue with both the President as well as the new U.S. trade representative.
The cost of lumber is such that it is driving up housing prices, and it's harming both the sector and its workers. I am keen to continue this work with the new administration, and we'll press for a negotiated agreement around softwood lumber.
Around buy America, as I said, if there are efforts to expand or introduce new domestic content requirements, we will absolutely work to ensure that they do not apply to Canada, and they do not apply to and affect Canadian supply chains.
In my interaction, as well as that of our government, we have agreed that we are going to work together to make sure that there aren't unintended consequences to our supply chains. This is work that continues. We have successfully worked in a team Canada approach with many interlocutors from business to labour to government officials.
I do that work, along with my colleagues, but I would also invite all of us, as parliamentarians, to take that team Canada approach. Let's work together to make sure that we are advancing this important economic and bilateral relationship to the benefit of our businesses and our people.
I just wanted to reflect on the last member of Parliament's question with respect to Line 5. We are on meeting number seven, and the six previous meetings of this committee have been dedicated to Line 5 and to studying it. In no way have we heard that this was not a very active file. At every level we are engaging with our American counterparts to prevent the closure of Line 5. I just wanted to reiterate the position of Canada and the federal government in that regard.
Minister, my riding of Longueuil—Charles-LeMoyne is approximately 45 minutes from the Saint-Bernard-de-Lacolle border. In fact, in 2015 the then mayor of Longueuil signed an agreement with the mayor of Plattsburgh to increase collaboration with respect to transport, which is a major industry in my riding, and aerospace. Aerospace is a huge industry in my riding. In the agglomeration of Longueuil, 80% of the businesses that export actually sell to the United States. The agreement and relationship between Quebec and the United States is incredibly intertwined. As you know, hydroelectricity is one of the main exports from Quebec to the United States, especially along the eastern seaboard.
Given the road map for renewed U.S. partnerships, the discussions about zero-emission vehicles, and conversations about clean electricity transmission, I wanted to give you an opportunity to reflect on some of the opportunities you see going forward for Canada and the United States in these areas of clean tech.
You're absolutely right; Canada has made a commitment to net zero by 2050, and signed on and made a commitment to achieving the Paris Agreement. Our commitment is a shared one with the United States on tackling climate change. The opportunities for Canada in building back better on this road map between Canada and the U.S. are abundant, particularly in the area of fighting climate change. You're absolutely right; we have the cleanest energy and electric systems, many of them in Quebec.
Canadian manufacturers are highly efficient. I can point out a few examples of what we are already doing in clean tech. There are many, but one that comes to mind—I keep speaking about them, only because I met them just the other day—is CarbonCure. This a Canadian company that in building, in the use of cement, is decarbonizing. It's a green input into construction projects in the U.S., but when you look at cars or buses or trains or trolleys or ferry boats or vehicles, that's Canada's rolling stock. We have expertise here around green transportation. We are an input into the American transit system.
Look at a company like New Flyer and their electric buses. They're building buses and parts in Alabama, Minnesota, New York and Canada. Canada ranks number four around the lithium battery supply chain. We have one of the lowest carbon footprints for this battery production. The U.S. is making a commitment for an entire infrastructure around e-vehicles.
So there are many inputs, from forestry to aluminum to steel to construction to wood. These are the integration between Canada and the U.S. We're already building together. We're innovating together. There's the Canadian technology accelerator, for which we have presence in Boston and San Francisco and New York. These are opportunities where we are going to work together. We're going to keep working together, because it's going to benefit Canadian workers and Canadian businesses. It's going to benefit American workers and American businesses. And guess what? We're going to fight climate change together.
Thank you so much, Minister Ng, for taking the time. I know you're very busy, as we all are. Thank you very much for taking the time and giving us your perspective on this very important issue that's coming forward.
I understand that the officials will be here for the next hour. We can go right into questions, as they don't have any opening statements.
I'll start off with Mr. Verheul. I think we're following each other around; we've been meeting so much over the last two months, whether it's trade committee or now this committee. We should just maybe rent an apartment together or something, I would say. I appreciate your being here again today with your colleagues.
Mr. Verheul, the situation I'm really concerned about with buy America is the unintended consequences of it, plus the other things we're hearing. What I mean by that is we see a scenario where a U.S. company makes the exact same widget as a Canadian company, but because it's American-based it gets to take advantage of buy America and create a very healthy balance sheet. That same U.S. company goes in and competes with the Canadian company in Canada and around the world.
Is there anything in our trade agreements that allows us to say to that company in the U.S., “No, you've been subsidized unfairly through buy America, so you can't now dump products into Canada”?
What I was basically saying, Mr. Verheul, is that you see companies in the U.S. that take advantage of buy America, and that props up their balance sheets to such a degree that they're just so much stronger than a Canadian company that makes the exact same widget.
Is there anything in our trade agreements that says, “You took advantage of buy America; you were unfairly subsidized; you can't just dump product into Canada or anywhere else around the world”? Is there anything in our trade agreements or the WTO that would prevent that?
Certainly, if the U.S. is using buy America programs to produce products at non-competitive prices and trying to provide those products in the Canadian market, we have recourse for that.
Under the government procurement agreement we have at the WTO, while we are exempted under buy American as I think you have heard, the U.S. has carved out protection for buy America, so there's no direct way we can [Technical difficulty—Editor].
With respect to buy American, we have an exemption under the government procurement agreement at the WTO. With buy America the U.S. has never made any commitments at the government procurement agreement to capture those kinds of programs, so it is within its rights to use those programs.
Just to finish off here, in response to your question, Randy, if the U.S. is using those projects to then produce products that would be exported to Canada, we have recourse if those products are being unfairly subsidized or dumped in our market.
It would be similar to a scenario where the U.S. would be subsidizing not only the company but also the R and D of that company, and giving it an unfair advantage versus competitors in Canada that wouldn't have that wallet in their back pocket.
Yes. When it comes to research and development, that's a bit more open. You can certainly spend on research and development if it's not tied directly to a specific product. If it's more general research and development, then there's no real restriction on that. It would depend on the extent to which the U.S. is applying this directly to products that would be potentially exported to Canada.
Yes, I think the difference this time around is that we've had a number of conversations with the Biden administration since they came into office. There's an openness and a willingness to discuss what kind of potential impact some of these policies could have on Canada, and a willingness to try to ensure that there's not the kind of negative implications we might have seen in the past. I think that's an important consideration. We have an open door for that kind of dialogue and that gives us the window to make the arguments we need to make about how we're both far better off if we maintain our integrated economy.
I guess it's fair to say, then, in the contracts that the U.S. government, the federal government, would have with the state level or municipal level, it would be stipulated in those contracts then that, wait a minute, Canada has to be exempted because it's federal dollars being utilized for that infrastructure project, even though it's maybe being administered at the municipal level or the state level. Is that fair to say?
That would be our argument, that if the U.S. is going to provide those funds to state-level governments and lower, in order to have the best kind of outcome, we should not have a result where there are restrictions on Canadian input into those projects. That's what we'd be looking at.
Strictly speaking, at least from a government procurement obligation point of view, there are no restrictions on those federal funds that are handed down to states and municipalities in the U.S..
I won't go into the legal aspects. I think many of my colleagues have already asked what the legal ramifications are. Others have asked how our conversations with the Americans have been going and about the dialogue between two governments and two executive branches.
Mr. Verheul, you can probably direct this to whomever. What is the percentage of American companies that procure in Canada? What's the GDP, or how much of Canadian procurement is American?
Where I'm going, I'll lead you to that, too, so you can answer it in one answer. If in fact our discussions of a friendly nature currently being worked on with the U.S. do not coincide with a “buy North America” attitude, or “buy Canadian and American”, what is the percentage of goods being procured by the Canadian government that could be at risk for Americans to lose? Do we have a number like that?
I'll turn to one of my colleagues to see if he has a number offhand, but I would say that our procurement system is quite different from that of the U.S. We have an open procurement system. We don't have a lot of restrictions because we've been looking more for value for money. We have provided, in particular, clear procurement opportunities to the European Union under CETA, for example, and that is at a greater level than what the U.S. has in our market.
We do have different treatments, but by and large our procurement market is open. The U.S., as our closest neighbour and market, does participate in those markets on an ongoing basis.
I don't know, Doug, whether you have anything you want to add to that.
No I don't, Steve. The only thing I would say to add to that is that, as you noted, the procurement market is a little bit opaque in terms of exact numbers—what we have at the federal, provincial and municipal levels—so we'd have to dig around a bit to see exactly what kind of information we have that we could provide to the committee.
I would like that. If you could provide that to the committee that would be very informative. I think it would be good for the Americans to know what could be potentially at risk for them if they put protectionist measures such as buy America in the U.S., which would prohibit Canadian goods. Regarding the reciprocal treatment, if we had to choose that—not saying we would—they would know which of their industries and how many of their industries would be affected. Hopefully, it never reaches that level. We all know that.
My second question is along those lines. You recently just renegotiated CUSMA, NAFTA 3.0 if you want to call it that. What provisions do you think CUSMA has to protect our bilateral trade with the U.S. and any restrictions the Biden government might impose with buy America? Do you think CUSMA protects us in that regard, even though that may be a route that may be longer to proceed with? Does it protect us?
When we did the negotiations on the government procurement issues with the U.S. and the new NAFTA, the U.S. was making us very unattractive offers for how we could conclude an agreement on market access under government procurement. We do have some rules under government procurement, but most of what we have in terms of protection in that area is through the WTO agreement on government procurement. Through that, we do have [Technical difficulty—Editor] and we do have good access to any kind of federal-level U.S. procurement through the WTO.
Under CUSMA, we have much more limited avenues we could pursue on the procurement side. It's more at the WTO that we would pursue those.
In your talks with your counterparts in the U.S., do you see this buy American as a provision more to protect against global imports off the continental imports or is it intended purely for American only and to exclude Canadian interests? In other words, are we kind of victim to a government agenda or government policy to protect the flooding of products coming, say, from China, Asia or other parts?
We have no indication from the U.S. side that we are the target at all. I think the target is overseas. I think there is a considerable degree of concern about China and some other countries outside North America that are exporting to the U.S.
As I said earlier on, the U.S. has made it very clear that it wants to enter into discussions with us on trying to avoid any kind of negative implications on our integrated economy between Canada and the U.S. because that serves both of us. I think that the U.S. recognizes the damages it could incur in its own market if it were to introduce artificial barriers that would disrupt that integrated economy.
Quickly on softwood lumber, do you think trade commissioner services might be able to assist our current forestry sector to diversify in markets outside the U.S. even though it is enjoying a healthy price and therefore decent margins despite the tariffs? Can more be done so that the lumber industry is not susceptible to only one buyer, the U.S.?
Absolutely. We're putting quite a bit of effort into doing exactly that, diversifying our market. We have opportunities into the European Union. We have opportunities into Japan and many other countries around the world. I think it certainly serves us well to start to diversify our market, when it comes to softwood lumber, away from the U.S., to some degree at least, because we've had this long experience of having difficulties with the U.S. in this market.
Mr. Verheul, as we know, the Fixing America's Surface Transportation Act, or the FAST Act, which governs U.S. government spending on transportation, expires in September. Do you think it will be renewed?
If it isn't, will another similar bill be introduced?
I'm going to ask the counter question right now: if there is a renewal of the law or a new bill, are the Buy America provisions or the Buy American Act likely to apply to this issue?
I would be surprised if buy America and buy American were caught up in a lot of those kinds of discussions. I think that the U.S. has made it clear that it wants to continue to pursue those policies of buy America and buy American and will make every effort to protect those.
I think that what we can do most effectively on our side is continue and enhance our discussions with the U.S. about how Canada could be treated within those kinds of policies, rather than through any more formal kind of negotiation or arrangement.
Yes, what we saw in the infrastructure plan announced yesterday by the Biden administration was that there are no real details about how they would factor in buy America. It certainly reaffirmed that they would intend to have the buy America approach apply, but there are no details, no specifics associated with that, so that gives us a window to continue our efforts with the U.S. to emphasize that, if we work together on this, if we continue with our integrated economy, then we can actually provide benefits to the U.S.
There are fewer efficiencies that are going to be put at threat if we maintain the integrated economy. We can help them with their environmental objectives by the kinds of products we produce, so there is a lot of value to continuing to allow us to participate in those kinds of programs.
The U.S. has made it clear, or at least President Biden has made it clear, that they are looking at potentially expanding the coverage of buy America in this infrastructure package. As of now, there are no details, as I said, in the package announced yesterday. This is going to have to go through the congressional process so it may change in many different ways. Eventually they will have to specify what the requirements would be, but we do anticipate that we're going to have to make the argument that further products that could be considered should still allow for Canadian participation in those types of supply.
Yes, provinces and territories are being closely consulted as this goes along. We have had regular calls with them already. Clearly, they have a very large stake in all of this, so we will be involving them very closely at every stage of this process.
Under the previous American president, during that time, there was a lot of concern in Canada from industries and manufacturers that were energy-intensive and trade-exposed about facing competition in the United States from companies that didn't have to factor in things like carbon pricing. I and others suggested that we perhaps should have considered border adjustments to try to level the playing field there. Now we have President Biden talking about levying border adjustments similar to that.
I'm just wondering what the present situation is between Canada and the United States, or what Canada is considering along the lines of possible border adjustments to try to level the playing field with countries that don't have the climate action that our government is putting forward, the carbon pricing that our companies are facing, so that we can fight climate change and remain competitive on the world stage.
We are doing a lot of work on that front. We're doing a lot of analysis, along with other departments, on carbon border adjustment, trying to figure out exactly how that might work and what its implications could be. The European Union is also well advanced in looking at carbon border adjustments.
I think the challenge we have is that while we've indicated to the U.S. that we have an interest in this issue, and they have responded by saying they want to engage with us to discuss this further, they are further behind than we are and the European Union in looking at this issue. They're also in a different place when it comes to what they've done domestically with respect to carbon pricing. Therefore, I don't think that we'll see a definitive view from the U.S. for a little while until they get their internal thinking sorted out, but we are very much eager to work with them in exploring these issues, along with others.
Okay, I'll move to an entirely different topic. As I was saying before, my riding has five different border crossings, and one relatively small but very hard-hit sector during the pandemic from the border closures has been the duty-free stores. These stores relied entirely on traffic across the border, and that traffic has essentially stopped. I think the duty-free store nearest me in Osoyoos has suffered a 99% drop in trade.
The duty-free stores were asking for some sector-specific supports and I'm just wondering if the government had considered that, and what it might be able to provide.
I'm afraid I'm not in a position to give you any kind of clear response on that. I'm not involved in those particular discussions about potential assistance because of the border closure. I apologize for that, but that's not my responsibility.
I don't know if anybody else [Technical difficulty—Editor].
There's another issue that many of my constituents, especially businesses, are facing. Because we're so close to the border, many businesses have U.S. Postal Service boxes—any number of them in my riding—where they order American goods to be sent so they can make their products, but these people have had no access to the postal boxes for a year now and are facing orders from the U.S. Postal Service that it's going to destroy the products.
Is there any relief for these people who can't go across the border just a kilometre or two or three or four to pick up these materials so that they're not entirely wasted? As I say, they've been waiting a year now for this.
I think certainly the whole arrangement that we have with respect to the restrictions that have been placed on movement back and forth across the border between Canada and the U.S. is under continual review. We are certainly aware that we have extended that restriction on a regular basis, but again, I'm afraid the issue you describe is not something that I deal with directly myself. I can certainly get in contact with others who are more engaged in that and see if we can get you an answer.
Could you comment very briefly on the question I asked Minister Ng about the forest products that we are shipping to the United States, the building materials, that aren't facing softwood lumber tariffs, things like engineered wood and mass timber.
How do they rank in these buy America restrictions?
Again, at this point, the U.S. has simply not indicated what exactly they're going to apply in terms of Buy America restrictions when they get to that. We do see the potential for timber of various types to be potentially captured by the new requirements, but at this point we do not know and the U.S. has not specified how broadly they're going to apply these requirements. That's something we'll be watching very closely.
We don't at this point. We know, as you say, that traditionally buy America approaches have included iron, steel and manufactured products. We have heard some suggestions that this could be expanded to cover construction materials such as cement, aggregate, asphalt and potentially other products. Again, though, the package that was announced yesterday has none of these specifics, so we're going to have to wait to see how this evolves as it starts to move through Congress to determine what kind of coverage the U.S. may be considering.
We probably would not at this stage, because although this is a plan that has been announced by President Biden, it has to go through the legislative process in the U.S. We anticipate that many changes will be made, but particularly with respect to the buy America provisions, there is very little in what was announced yesterday. It does not provide specifics, so we're going to have to wait and see how that comes out.
At this point we're not looking at assigning specific values. We are talking to all the industry representatives that are associated both with what has been covered in the past as well as what could be potentially covered in the future. We are seeking information from private sector representatives, companies and organizations to make sure we have a clear handle on what the potential concern could be, so that we are well positioned for that.
Canadians need to plan. Businesses need to plan, so we kind of have to have an idea, and I'm sure, to negotiate, you need to have some kind of rough order of magnitude of just what the size and scope is.
Would you be able to share that rough order of magnitude with Canadians?
I'm afraid we simply don't have that yet. As I mentioned, we have too many unknown variables right now. We don't know how extensive the U.S. coverage will be. We've started talking, and have been for a while, to the relevant potentially affected sectors in Canada. We're getting information coming in from them. We're also working with other departments, so we're fully engaged on this, but at this point I'm afraid it's premature to give you any kind of number.
It's not really subject to the plan though. We know how much iron was sold to Americans in the past for these types of infrastructure projects, do we not? Therefore we could extrapolate based on a.... We're not talking exact, but we're talking a ballpark here. We know the categories and we know what has been procured in the past, so is that not enough information to start looking at a rough order of magnitude?
It's certainly enough to start looking. We have never seen a U.S. infrastructure package of this magnitude in the past, so that's one consideration that's going to be a complication.
We don't know exactly what it is going to be applied to. We have an outline with the plan announced yesterday, but that will change over time. The nature of the projects involved, the extent to which there may be buy America restrictions.... These are all, unfortunately, still unknowns at this point. We are still trying to gather as much information as broadly as we can, so that we're prepared to address whatever scale the end result might be.
Thank you, Mr. Chair, and thank you to all of our witnesses.
It's a pleasure to see you, as always, Mr. Verheul.
To pick up on this important point that Ms. Alleslev raised, I must say that I'm a bit perplexed by even the question. Yesterday, what was announced was a $2-trillion plan by President Biden, but we still have no bill. There's still no list of projects and so there is still nothing to quantify.
Yes, absolutely. Moreover, it's not only that we don't know a lot of the quantification of all of that, but also that we fully expect that what was announced yesterday will change because of the legislative process in the U.S. Then, when it comes to the buy American provisions in particular, there was no specificity in the announcement yesterday. We will have to wait to see exactly what they intend to do.
If we look at recent history on buy American.... For example, when we looked at the experience under the American recovery act that was passed in February 2009, I believe that Canada's agreement with the United States for limited exemptions at the time from buy American under that act came into force one year later in February 2010. An entire year passed from the moment the bill came into effect to the time we received our exemptions.
Is there anything you'd like to comment on about our experience in that regard and what we might look toward in this particular instance?
I think, in light of the experience we had during that infrastructure package, we should be very clear that our window is quite small. We need to get in very early. We need to lay the groundwork and start having those discussions with the U.S and start ensuring that Canadian interests are protected right from the beginning.
The difficulty, as you mentioned, with that previous case was that by the time we had an agreement negotiated, a significant proportion of the funds had already been spent and we missed out on that. We don't want to have that happen again.
Just to clarify a point made earlier by Mr. Strahl, he made an analogy between the United States' position on buy American and its position on Keystone XL, stating that Keystone and buy American were campaign commitments. I was just on the Biden campaign website to be sure and there was no specific campaign commitment to buy American like there was for Keystone XL. I wonder if you see these two situations as quite different.
I do see them as quite different mainly because, while I think the Biden administration has come out early and said they were supporters of buy American, and making jobs in America and providing significant help to economic recovery, there are really no concrete specifics associated with that. So, unlike the Keystone situation, which was a very specific issue and the message was very specific, here, yes, they would like to pursue policies that are going to pay for Americans, as any country would, but all of the details behind that are still to be developed. That's where our opportunity lies, to be able to talk to the U.S., which has indicated a willingness to talk to us about this, about how we can design this in a way that would benefit both of us and not come at our expense.
Perhaps, Mr. Verheul, we can just touch on the order of magnitude of this plan that President Biden announced yesterday. We are talking about a $2-trillion infrastructure plan. In your view, in dealing with the United States, do you feel that it would even be necessary for the United States to reach out to other countries such as Canada for raw materials and other resources to fulfill something as large as a $2-trillion infrastructure plan?
Yes, I would say, given the scale of this initiative, the U.S. will have difficulty in a number of sectors in fulfilling the requirements within the U.S. It would be impossible. Therefore, I think that not only do we have the advantage of being right next door and sharing a lot of values that the U.S. is looking to pursue in this infrastructure package, particularly when it comes to climate change and environment, but also that many of our products can help the U.S. meet its environmental goals, because our aluminum, our steel and many other products are produced in a much more environmentally friendly way than they are in the U.S. That gives us an advantage. The fact that the U.S. won't have sufficient availability of some of these products domestically also gives us that advantage.
We need to get all of these messages into the U.S. early and often to ensure that we will be part of these projects, and not sitting outside watching.
Mr. Verheul, you often tell us, and rightly so, of course, that you can't comment on a number of things right off the bat because these laws have to be passed, refined, worked on and studied by the various chambers in the United States, of course. That said, you say that you're already active in discussions with the provinces and the industry. I imagine that's the case with discussions with U.S. government officials as well.
You may also be asked what your mandate is, however, what is your objective in this regard?
What would be a win for Canada for you, should there be discussions with the U.S.?
With respect to this infrastructure project, I would say that what we're really looking to achieve is Canadian products being treated the same as U.S. products under this at the end of the day. If we preserve our integrated market, the supply chains that we have established, it will be a better result for the U.S. as well as us.
It would mean that the U.S. could be more efficient and more environmentally friendly. It would not have the kinds of difficulties that would be created from a competitiveness standpoint, if they were to carve us out. It's really a matter of getting Canada included in all of the elements of the infrastructure package as that integrated market.
Ultimately, then, there would be no discrimination between Canadian and U.S. capital, investors, and products. If I understand correctly, that would be the ideal objective for you. I guess you're setting the bar there, but we may come to a solution and a compromise between the two.
Realistically, do you think this objective can be achieved, or do you think we'll come in somewhat below the ideal instead?
In contrast to some of the past discussions we've had with the U.S. on these issues, they have acknowledged that what they are trying to do could cause disruptions in supply chains, and they've indicated that they want to avoid these kinds of outcomes. We've had direct conversations with them at virtually all levels, and they've indicated an openness to talking to us about coming up with results that would not cause disruptions in that integrated market, those integrated supply chains.
At the end of the day, I think it's recognized that it would not only serve us better but also serve the U.S. better if they don't impose artificial barriers. If they don't, it would lead to a better result economically and environmentally for them. I think it would serve both of us very well if we continued with the kind of integrated market that we have established over a long period of time.
My apologies in advance if this is a fairly specific question, but it's of great importance to my riding. I mentioned wine before, but the other big product that has really affected the local economy here for more than a century is tree fruits—apples, cherries, apricots, peaches, etc.
Over the past few decades, British Columbia's fruit production, concentrated in my riding and the rest of the Okanagan Valley, has really been hit by increasing American production. We happen to live across the border from the biggest producers of tree fruits in the world in Washington state, and the real increase in Washington state's production has come because of water from the Columbia River, specifically the irrigation projects driven by the building of the Grand Coulee Dam back in the 1930s, aided by the Columbia River treaty in the 1960s, which guaranteed certain amounts of water to the United States.
Now we are renegotiating that treaty, the Columbia River treaty. It expires in 2024, and I'm wondering if there's anyone here who can comment on the Canadian proposals that would limit any access to specific quantities of water for American agriculture. Right now in the present treaty, that is not included, and the local fruit growers are concerned that they will lose even more in a renegotiated treaty.
Also, what access do they have to redress if, as they felt last year, American products are being dumped north across the border and they just can't compete at 12 cents a pound for apples, for instance?
Yes, there are certain remedies that we do have available if product is being dumped from the U.S. into our markets, but with respect to some of the issues around the Columbia River treaty, I might ask Eric Walsh who is here as another witness if he has anything he can add on that particular issue. I'm not as familiar with it.
Just as a note, Mr. Cannings, the negotiations are indeed under way. We have exchanged initial proposals with the United States, but we haven't yet engaged with the new administration on this file, so we're still waiting to see what their proposals might be.
It is something that we're working on very closely with the affected communities in British Columbia as well, and they are always on our minds as we move forward with this.
Thank you, Mr. Chair, and thank you very much to the witnesses. It's good to see you again, Mr. Verheul.
I've been talking an awful lot about the border issue, but I'm going to switch gears here a little bit because one of the last things you said, sir, was with regard to the supply chain and how integrated our borders are. I'll be bold here and say that nobody understands that more than me, because the Windsor Chrysler assembly plant has now been shut down for a month. I've got thousands of workers sitting at home twiddling their thumbs because we can't get sensors to put on our vehicles. I very much understand when you speak specifically about the integration of Canada and the U.S.—I'm right there with you.
Even more than that, I would even say this. Today is April Fools' Day, and unfortunately it's not an April Fools' joke that the carbon tax has been increased again. I would suggest that our businesses are once again less competitive with both the U.S. and Mexico.
Sir, we keep hearing about integrated markets and integrated supply chains. Is the government tracking the number of jobs and the value of the GDP we're losing because of the government's inability to negotiate essential workers being able to safely cross the border?
Unfortunately, I'm not directly involved in that aspect of the work, so I don't know the extent to which that kind of analysis might be going on. As I did mention earlier, there's a continual examination going on about what we should be considering as essential workers and essential travel back and forth across the border, because we do have restrictions on the most significant commercial border in the world. That's a complex process that is continually being re-examined.
I apologize that I don't have any more specific details I can offer you.
That's okay. No apology is needed. Thank you very much.
I can tell you that this is a very significant issue, and the problem is only going to get worse. It's becoming very much exacerbated not only in my riding but right across Canada, as we continue to lose, hemorrhage jobs, manufacturing jobs—very good and highly paid jobs—with businesses losing contracts hand over fist because they cannot secure contracts due to the border issue.
I'm wondering, sir, have you had any communication with your U.S. colleagues about how we can move forward with this? Has there been any discussion at all?
I do know that there has been a considerable amount of discussion on this. I have not been directly engaged in that myself, but we have a been hearing from the U.S. side many representations making very similar expressions of concern that operations on the U.S. side are struggling because of the restrictions we have in place.
Obviously none of us would want to have these restrictions in place, but obviously because of COVID some of this has become necessary. It's a question of how we can ensure that this is going to cause the least possible disruption to business activity going back and forth across the border, but that's a very complex issue to try to get exactly right, which is why—
I guess I'm going to simplify it this much. For our commercial truck drivers—and thank you very much to them for keeping commerce flowing back and forth across our borders—it's about this simple. If there's no commerce to go back and forth across the border, be it manufacturing parts and sensors so that Windsor's Chrysler automotive assembly plant doesn't have to get shut down, if there's none of that commerce, I suppose this is a non-starter, a dead issue. However, this is not a dead issue. This is about the economy.
What exactly is happening? What's being done, perhaps behind the scenes, to ensure that we have the flow of the people and to ensure we have the manufacturing that continues to drive our economy?
Thanks very much, Mr. Chair. I know you wanted to pop in a question, so I will share my time with you, sir.
I also wanted to come back to some of what Mr. Lewis was saying. I don't see some of this as a border issue. I see some of this as a global supply issue, where there are shortages in components worldwide, including, for example, in semiconductors. It's not a question of the border being closed. It's a question of a worldwide supply shortage during COVID.
I'd like to turn it around, Mr. Verheul. You have a lot more experience in this area than I do, and I want to go back and get into your knowledge of history here. I would actually see the $2-trillion American expenditure on infrastructure as an opportunity, as opposed to a liability. Could you see it also that way, sir?
A lot of what we're talking about potentially losing, we never really had in terms of ability to get into the U.S. market, because the U.S. wasn't spending these huge amounts of money on infrastructure, correct? This is one of the biggest spends in the last 10 years. Would that be correct?
We should be looking at how Canadians can get in there and compete with Americans for these opportunities and figure out how to lobby Congress to make sure that when legislation is actually adopted, Canada is given whatever wide exemptions are possible under the law. We should not wait until a year after the law is adopted. Based on what you explained to us before, we should do so because otherwise expenditures will already have been made, in large part, under the bill. Is that essentially correct, sir?
We do want to get in early, which is why we're working closely with the U.S. administration now. We're working closely with the U.S. Congress, U.S. business allies, U.S. union allies and, across the board, different levels of government. Now is the time for us to be doing a full-court press on this.
Mr. Verheul, if our committee is going to be part of the full-court press—and the minister invited our committee to help in the team Canada approach—what U.S. congressional committees should our chair approach in order for us to speak directly to our U.S. counterparts? Would it be, for example, the transport committee? Would it be the infrastructure committee? Or would it be the appropriations committee?
Well, this bill, as we see it now—I mean, it's not yet a bill—once it does enter the U.S. Congress, we do expect that this is going to be assigned to a fairly wide range of different committees within the U.S. Congress, both in the House and on the Senate side. We can certainly keep you informed about how that structure will unfold, because I think we'll be wanting to talk to a number of different committees and a number of different representatives.
Thank you very much, and again, thank you to the officials for being here.
Mr. Verheul, I have a two-part question.
If you could, please highlight the impact of buy America. I know that we will be impacted, to whatever extent, and as for internationally, I have a feeling that our international allies and trade partners will also be impacted, I believe. Have there been any discussions or can you provide any commentary on how they are approaching this situation?
Well, I think there's certainly wide concern, because if the U.S. does proceed as it's planning, with a $2-trillion infrastructure package, that's a lot of economic opportunity. I think it's recognized that Canada is potentially affected by this more than most others because of our economic relationship with the U.S. Mexico is certainly concerned about this. The European Union and others are also concerned about this.
But I think what many countries are very clear about is that the U.S. is within its international rights to pursue this kind of approach, which is why our emphasis is on the relationships we have with the administration, with Congress and with our allies in the U.S. and to convince them that they're better off if Canada is part of this picture. They're better off economically, from a perspective of competitiveness and from an environmental perspective. They're far better off if Canadian inputs are treated as U.S. inputs would be treated under this bill.
To reiterate Mr. Housefather's point, I hope you will keep us in the loop as the bill makes its way through Congress as to what committees we should be engaging with or just for us to know where the file is at.
That brings our afternoon to a close. I want to thank all the members for their time today, and especially the officials. It's a Thursday before a long weekend, so I'm sure you want to get back to be with your families. Thank you very much for again enlightening us and giving us some sort of framework of what we should be looking at going forward.
I wish everybody a happy Easter. I'll see you next week.