Economic Relationship between Canada and the United States Committee on April 22nd, 2021

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Savard-Tremblay.

Mr. Green, you have six minutes, please.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you very much, Mr. Chair.

I had to negotiate with our critic who is normally on this committee, Daniel Blaikie...and, of course, my Hamilton steel caucus made Scott Duvall to be before us here today for my number one priority, which is steel.

Mr. Neumann, you will know the locals here, Ron Wells and Gary Howe and others. I had an opportunity to reach out to them to talk about this.

Before I get to that, I want to share with you a comment that I picked up from some earlier testimony by Ms. Greenwood from the Canadian American Business Council, who suggested that Canada is not the target, except on maybe steel.

To open it up, I'm thinking about the way in which Bain Capital took Hamilton Specialty Bar to bankruptcy, the way in which the U.S. Steel restructuring affected our workers.

I want to ask, through you, Mr. Chair, to Mr. Neumann, to what extent and how are the the American Recovery and Reinvestment Act and the buy American provisions both similar and different from the buy American provisions that may currently limit Canada's access to some of these contracts as it relates to steel?

[Ken Neumann]

I'm not sure I quite understand. What prevents us...? Because right now—

[Matthew Green, NDP, Hamilton Centre, ON]

I'll restate the question, maybe in a clearer way.

When I'm talking to Ron and he's talking about the way in which the hot band coils are coming back and forth between the States and Canada...can you maybe express to the committee how we even know what would be Canadian made versus American made when it comes to these products that are being used for American procurement? Are we protected by that, or are we already kind of de facto carved out...?

I understand that U.S. Steel right now is producing a lot. Dofasco is producing a lot.

I'm wondering whether you want to comment on how these restrictions are affecting us.

[Ken Neumann]

I think this boils down to the long-standing relationship.... The fact is, as I said earlier in my testimony, sometimes you will have a slab that could be produced in Hamilton or Lake Erie that could cross the border four or five times before it turns into a final product.

There's this long-standing relationship between Canada and the United States. That's why I don't see Canada as being the target. The fact is, why would you punish your best neighbour? You're a stone's throw away from one another. If you look at the trading relationship we've had over the years, we have exposed a lot of those things, when the U.S. was targeting as a national security threat.... Canada, by far, is not the problem.

You're correct. When those trucks are coming across the border, you wouldn't know where that ingot was poured or the slab was poured, and that's the purpose of the integrated market.

I said before, many of us have crossed those borders and seen those trucks going back and forth. I don't see that as the threat. I see that we have an opportunity, and we should strike at it.

[Matthew Green, NDP, Hamilton Centre, ON]

With that being understood, and acknowledging the fluid way in which our steel travels back and forth, I asked the previous witnesses for testimony around whether or not they thought it made sense to have a more formal carve-out for steel, to be explicit in this friendship and this long-standing relationship, and to perhaps ensure within legislation or within the caveats of our agreement that our Canadian steel workers are duly protected, because we know there could be opportunities for our Canadian plants to be used as a bit of a flow-through for American products.

What would you like to see as a response to potential American protectionism?

[Ken Neumann]

First of all, someone mentioned—maybe Mr. Strickland or Mr. Diaz—about China. We have not been able to put a good handle on dumped steel. You have a country such as China that produces in excess of a billion tonnes. They use capacity of roughly 800 million tonnes, and with the rest, they look for a home. They are not going to keep it in their scrapyard. They are going to look for it to go someplace else.

North America is in a spot. We have not been able to deal with the massive dumping that's taking place by the cheaters. Many countries are not playing by the rules. They have terrible standards.

The carbon footprint is one of the biggest problems that we've had. Look at Canada, at all the steel mills we used to have in Hamilton, those others, and the number of employees who are working there today. If you look at the amount of steel that Canada produces today going back to 2014, we're losing. We're continuing to slowly diminish the amount of steel we get to produce. That's just wrong.

The fact is, we have invested.... We have companies to invest. We have highly skilled people. To me, it's just a no-brainer. You have the politicians who haven't figured out the fact of how you deal with countries that are just dumping and not playing by the rules. You can't compete.

Sometimes politicians have to take a look in the mirror. Why is it that the Gordie Howe bridge initially was destined to be built with Chinese steel? We were involved in that. I think at the time Gary Doer was ambassador. We finally got them to change it to have North American steel. Why is it that we still have bridges being built in Montreal and B.C. and the steel comes from China? Someone has to explain to me how that makes sense.

If you look at the carbon footprint, and what they just announced today in regard to greening the environment, of course, that's important. We all agree with that. On the other hand, they will go ahead and have ships come from China, which has a high carbon footprint...but that's for another topic. I just get wound up on this stuff. Sorry.

[Matthew Green, NDP, Hamilton Centre, ON]

No, I appreciate it. I share your passion with it.

Thank you for the time, Mr. Chair.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Green.

We will go now to Mr. Lewis for five minutes, please.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Chair.

And I share your passion as well, sir, very much.

Mr. Chair, through you, I guess to the entire panel, it goes like this. I'm the ultimate thinker going forward, but at the end of the day, the Windsor assembly plant has been shut down for three or four weeks now, and it will be shut down for another two to three weeks. Why? Because we have no chips to put into bumpers. Why? Because no chips are built on Canadian or U.S. soil. Why? Because they're all built overseas. So if we're going to truly find a resolution to this true relationship, it has to start, it has to end right here on North American soil. Of course, we have to make it more affordable, but we need it. Our workers are sitting at home, our businesses are hemorrhaging jobs to everywhere else but us—“us” being Canada and the United States.

Mr. Dias, would it not be smart to start to produce more of those types of manufacturing, those very intricate pieces for our cars, be they EVs or not? And I do understand. I'm very proud to be the Conservative caucus chair. And I know 121 EVs are coming, I believe down river as well. Mr. Dias, as you know, in Michigan, GM is going to start building EV pickup trucks. But if there are no bumpers to get there, no chips to put in, what are we going to do?

Is it not important that we have every aspect of the manufacturing done right here in Canada?

[Jerry Dias]

There's no question. You've taken a proper position, not only on manufacturing, but also on a variety of other pieces in the food chain. Think about the pandemic. Talk about a nation that was completely unprepared. We couldn't even keep our own citizens safe. We had no way of providing vaccines. We couldn't even provide masks or gowns because, as a nation, successive governments have always believed in the theory of when you can buy it cheaper, it's best. So we've outsourced our safety, and frankly, we've outsourced so much of how we can maintain manufacturing in this country. So you're right: The assembly plants are down in North America because of the lack of computer chips. But we have lacked an industrial strategy, frankly, for generations. We're the only nation in the world that's so rich in natural resources and raw materials and has never had a strategy to put Canadians to work based on such a strategy.

Today's discussion—and you're right—is how do we do things differently? How do we learn from, frankly, the U.S. implementing a buy American strategy? Do we talk about a buy Canadian strategy? If we're going to have $100-billion-a-year worth of Canadian procurement, why in the heck wouldn't we have a strategy that says we're going to use the $100 billion to put Canadians to work?

These are the types of discussions we have to have. We can't have governments with a complete free enterprise mindset that says Canadian workers have to drop their wages to be competitive, like somehow we can be competitive with Mexican workers. So we're going to have to have a real, straightforward, aggressive conversation on mobilization, and on the needs of a nation, and what that means.

[Chris Lewis, Conservative, Essex, ON]

Thank you, sir.

Mr. Chair, how much time do I have, please?

[The Chair, Liberal, Raj Saini]

You have 45 seconds.

[Chris Lewis, Conservative, Essex, ON]

Thank you very much. I'll go very quickly.

Obviously, automotive assembly would be tier 1. I do know that tier 2s and tier 3s are struggling enormously at the border. They are taking it on the chin something fierce, because there's no clear and concise direction. If we cannot get bumpers across the border, as an example, there'll be no cars to assemble, quite frankly.

Mr. Dias, could you comment on the importance of getting our manufacturers back and forth, safely of course, across the border?

[Jerry Dias]

You're right, and there are two pieces to this conversation.

There's the free flow of parts across the border. On the automotive industry, you're right, and Ken talked about it with the steel industry. There are parts that cross the border five or six times before they get assembled in a vehicle, so that can't change. That's one part of the conversation.

The other part of the conversation, of course, is about procurement. We're never going to have an auto industry here in Canada in which we are going to supply all of the parts, but we need to make sure that the bulky commodities are built close to the assembly plant. We can't lose that.

You're right. We have to make sure that the technology, the manufacturing capability and the assembly are within the Canada-U.S. region in order to make sure that our assembly plants are running. You're right: we can't allow the off-loading of the guts of the vehicle.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Chair.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Lewis.

We'll go now to Mr. Housefather for five minutes, please.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thank you, Mr. Chair.

Mr. Strickland, Mr. Dias, Mr. DiCaro, Mr. Neumann and Ms. Gingrich, thank you for being here. I really do appreciate it.

Mr. Dias, I'm very interested in talking to you in a second about purchasing, but before we do that, I have a question about buy America for Mr. Neumann and Mr. Strickland.

I was listening to a lot of what you said, and I completely agree that we're very much aligned with the Biden administration. We have in common a lot of values and environmental and labour standards, etc., and we have allies in Congress on those issues in terms of finding a way, I think, to work with the Americans to look at what we do well and where we can find common ground to create that type of North American framework.

As you mentioned in terms of the Trump administration, Trump won in 2016 by convincing a lot of people in labour, a lot of blue-collar people, that free trade with Canada and the world was bad. Instead of trying to correct that impression, it seems to me that the Biden administration and a lot of politicians in the U.S. seem to believe that it's better to just go along and reinforce that theory and to just show that they're even better than Trump at buy American. I looked at the statements of the AFL-CIO and the Teamsters, which saluted Biden when he went ahead with the buy America policies.

Could you just give me an idea of what you're finding when you're talking to your American counterparts in your unions as to what they're seeing on the floor of Congress, and whether or not they really believe that there is a way to educate the American lawmakers so that we actually would get such an exemption? Or should we turn toward a Canadian strategy, as Mr. Dias was suggesting? I know that's a long-winded question, but if you could just speak to that, I'd like to know.

[Ken Neumann]

In my view, as I said and as you know, we released a statement from both me and the international president. I know that the president, Thomas Conway, is very much connected with the Biden administration. I know that we've talked to the person who has now become the person who looks after the infrastructure, and we've been having ongoing discussions.

Look, there are some asks that they have. One of the things I can share with you that the Americans are concerned about is in regard to how Canada deals with the circumvention—are we protecting our borders? The fact is, what they're afraid of is that you're going to have a whole bunch of...that Canada is going to become a source for a dumping ground, and that then somehow gets transshipments and it gets over.... Those are things that we need to deal with, and I can confide to you that, with our president, we've raised this with the Canadian government, and I think the Canadian government is going to pay some attention.

The point they all understand, from the information we're getting back, is that they all recognize that Canada is not the problem. If you look at the amount of lumber, steel and aluminum, they need those products. The fact is, when you go to the point that was made at the beginning, this is about the green.... You have the President and you have the Canadian government today, and if you look at the most recent announcement on raising the bar in regard to the environment, that's where society is heading, and we have an opportunity to strike. My confidence is that, look, workers in the United States understand that Canada is not the problem. Sure, there are politics and there's going to be protectionism and that sort of stuff. We probably have that as well.

That's how I see it. Canadian workers are not the problem.

[Anthony Housefather, Liberal, Mount Royal, QC]

I think we all agree on that. The question is, how do the Americans perceive it?

Mr. Strickland, do you have anything you want to add on that?

[Sean Strickland]

Sure, Mr. Housefather. Thank you very much for the question.

It's fair to say that our offices in the U.S. have the ear of some influential members of Congress and influential members of the Senate. I think the dynamic here, not to oversimplify it, is that sometimes good politics doesn't make good public policy. You're all politicians. You get how that works. Unfortunately, that's the nature of the beast. We're dealing with a dynamic where much of the American public believes that buy America is a good economic policy, and that's going to help get members re-elected in the mid-terms and so on.

We can have these conversations, and we can have reasonable conversations with elected officials on both sides of the border, but sometimes that's tempered by politics. That's the reality of what we have to try to cut through. I've given you numerous examples of how buy America and buy American policies are not good for construction—and we've shared this with our counterparts in the U.S. for construction—but sometimes that gets trumped by politics.

[Anthony Housefather, Liberal, Mount Royal, QC]

I totally agree.

Mr. Chair, do I have a minute left?

[The Chair, Liberal, Raj Saini]

No. You have 10 seconds left.

[Anthony Housefather, Liberal, Mount Royal, QC]

Oh.

Mr. Dias, I would like to talk to you about the procurement strategy. Maybe we can do it offline. I'm sorry about that.

[Jerry Dias]

No problem.