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

[Mark Agnew]

I know my CUSMA chapters by name, not by number, so you're actually going to have to remind me which one that is, unfortunately.

[John Nater, Conservative, Perth—Wellington, ON]

I'm sorry about that. It's relating to procurement.

[Mark Agnew]

My personal advice would be that right now we don't really have the time and the luxury for a renegotiation of the CUSMA. What we should instead be going to the Americans with is a list of other things that we're helping them on and the reasons we're a valued partner rather than trying to reopen the deal that we just finished.

[Maryscott Greenwood]

If you want me to address that, I'll give you a southern colloquialism. Should you reopen CUSMA? “Heck no”. We don't have the ability to get it through this Congress, and you risk coming out with something that is much worse than what you have now.

I totally agree with Mr. Agnew that you just have to negotiate better deals along the way. You don't want to change the rules of the road now, because you won't get what you want. You won't get it done and you won't get what you want, and it could be worse for Canada.

[John Nater, Conservative, Perth—Wellington, ON]

Worse for Canada is certainly not an outcome that any of us wants.

Ms. Greenwood, in your opening comments, you gave some examples of where Canada and the United States do business back and forth across the border. I'm curious as to whether you've had any thoughts about the state level, which individual states we should be focusing on in terms of our lobbying efforts, in terms of then having the states lobby their federal government, beyond what's already been mentioned?

[Maryscott Greenwood]

I hate to say this, but they are all important, because Canada is the first or second commercial partner of every single one of the U.S. states, and they are all important for different reasons. If you look at Alaska and Florida, they're pretty influential when it comes to the cruise industry. If you look at a state like Kentucky, it has bourbon, which people kind of like. Then you look at Tennessee and their water coolers.

Every state is important, and luckily Canada has a network of consulates across the United States, which have regional responsibilities, and it also has these provincial offices. We've mentioned the Quebec office. We haven't mentioned the Ontario and Alberta offices, which work really hard every day with states, their counterparts.

The answer is all of them. If I had to pick one or two top of mind right now, for reasons this committee knows well, I would say Michigan and Illinois are pretty important, but those are for some other infrastructure reasons.

[John Nater, Conservative, Perth—Wellington, ON]

Looking forward, in the next 18 months or so until the next set of midterms in the United States—it seems as though they are constantly in that cycle—what do you see as the biggest risk to Canada in the time between now and that next set of midterms in dealing with this current Congress at the border?

[Maryscott Greenwood]

That's a great question. There is a risk that you won't get the exemptions you need while you have a group of people who are willing to do business and that you go into a period of uncertainty with Congress.

It's so evenly divided in the United States Senate that you don't know post-2022 who your dance partner is going to be, so you want to get as much done as you can now and get it sort of entrenched so that you can withstand whatever the next election is.

[John Nater, Conservative, Perth—Wellington, ON]

That's great. Thank you.

That's all I have for questions at this point. Thank you.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Nater.

We will now end this round with Ms. Bendayan.

Go ahead, please, for five minutes.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much, Mr. Chair.

Thank you to the witnesses. It's always wonderful to have you at committee, and thank you for spending your Thursday night with us.

I want to come back to something that was mentioned at the very beginning by several witnesses. We were talking a little bit about the 2009 stimulus spending in the United States. We heard testimony early on in this study that the exemption Canada received in that context came in 2010 and that it came at a time that was actually too late for a lot of Canadian companies to bid on many of the contracts we would have been interested in.

My question for you, Ms. Greenwood, is given that we are still at the fairly early stages of the Biden administration's announced plan and, as you mentioned, there are several hurdles still to be crossed and changes that are likely going to be made, just keeping in mind our previous experience, how long do you think we have?

You mentioned as well that the Office of Management and Budget may be understaffed at the moment. Do you think that is something that's going to persist for a while? Is that going to be something we should also keep in mind when thinking about timelines?

[Maryscott Greenwood]

Thank you very much. It's good to see you.

I think you have sort of between now and the end of this calendar year to get organized, but you can engage with governors now, right? Governors and mayors will be making their own procurement decisions. Identifying key projects that Canadian businesses want to be part of is something that I think you can lay the groundwork for with governors and mayors while the feds get staffed up. You can do that immediately.

[Rachel Bendayan, Liberal, Outremont, QC]

Okay.

You also mentioned earlier in testimony the example of New Jersey, I believe, which already did pass legislation at the state level. Is there anything, based on your experience with that situation or others, that we can learn from in terms of your conversations?

[Maryscott Greenwood]

I have a self-interested answer, which is that it would have been good if we could have ramped up the North American rebound digital campaign to get tens of thousands of people in New Jersey to write to their state legislature and say, “Hey, we're going to lose money and our competitive advantage if we box out Canada.”

During USMCA, we had a digital effort targeting Democratic members of Congress to try to help get it across the goal line.

I think engaging in smart campaigns with real American voters who talk to their officials is a key part of it.

[Rachel Bendayan, Liberal, Outremont, QC]

I'm turning to both you and Mr. Agnew. What role do you see for Canadian business and Canadian industry? Can that type of mobilization on this side of the border at this time be effective through the North American rebound campaign or other campaigns?

[Mark Agnew]

I think so. Canadian businesses have very good contacts down in the United States, be it suppliers, vendors or whoever it is. We have contacts with the U.S. chamber and others.

I think it's about mobilizing those folks to understand why it's in their self-interest to be advocates for us, because—let's be honest—they certainly carry more weight in D.C. than a Canadian-based organization would.

[Rachel Bendayan, Liberal, Outremont, QC]

Ms. Greenwood might want to jump in, and before that, let me ask, being very practical and given the timeline we just heard—which appears to me to be quite short—practically speaking, how do we get that done?

Do you believe that industry and the business community are looking for the government to organize a group or is this something the private sector can organize itself through associations like yours, Ms. Greenwood?

[Maryscott Greenwood]

I think the answer is both. Government tends to have convening power; if you're present for something, you can get business leaders to show up. The hard part of this, though, because businesses in the U.S. have their hair on fire about other things all the time, is making sure this rises to the top.

Buy local preferences are really important because they make things more expensive, but are they more important than the corporate tax rate or some other sorts of labour mobility or labour force issues? That's part of the difficulty. I think you have to convey the conversations and get people to remind each other of how this is coming, it's challenging and we ought to address it now.

[Rachel Bendayan, Liberal, Outremont, QC]

Mr. Chair, if I have a few seconds, I'd just like to clarify this. Over the course of this meeting there was talk interchangeably of “buy America” and “buy American”. I just wanted to put on the record that Canada is largely exempted from buy American. Buy America is really where the crux of the matter is, and it is the topic of this study.

[The Chair, Liberal, Raj Saini]

Thank you very much, Ms. Bendayan.

Thank you very much again, Ms. Greenwood and Mr. Agnew, for coming to our committee and sharing your thoughts and advice with us. I'm sure it will really help in our deliberations as we go forward. Thank you again on behalf of the committee.

[Maryscott Greenwood]

I'm happy to be the warm-up act for Jerry Dias, as usual.

[The Chair, Liberal, Raj Saini]

I will ask us to suspend for a few moments while we onboard the next panellists.

[The Chair, Liberal, Raj Saini]

Welcome back, members of the committee.

I would like to now introduce our next panellists. From Canada's Buildings Trade Unions, we have Sean Strickland, executive director; from Unifor, Jerry Dias, national president, and Angelo DiCaro, director of research; from the United Steelworkers, Ken Neumann, national director for Canada, national office, and Meg Gingrich, assistant to the national director.

Mr. Strickland, it's good to see you again. Welcome back to the committee. I'll turn the floor over to you for five minutes, please.

[Sean Strickland, Executive Director, Canada's Building Trades Unions]

Thank you, Mr. Chairman.

It's very nice to see you, and members of the committee as well. Thanks very much for everything you do for Canada, and particularly for the important work of this committee.

My name is Sean Strickland. I'm the executive director of Canada's Building Trades Unions, the Canadian arm of North America's Building Trades Unions, an organization composed of 14 international unions and over three million workers. We work closely with our Washington office to coordinate and support issues that affect our members on both sides of the border.

Today, I will talk about the impact of buy America policies on skilled trades workers in Canada and the U.S. and share with the committee two recommendations: number one, that the Government of Canada demonstrate to the U.S. the importance of having barrier-free trade with Canada; and, number two, that it advocate for the creation of a bilateral or North American procurement policy that will permanently address buy America policies.

In the recent road map for a renewed U.S.-Canada partnership, President Biden and Prime Minister Trudeau launched a strategy to strengthen Canada-U.S. supply chain security and agreed to reinforce our deeply interconnected and mutually beneficial economic relationship, but since then—as we all know—President Biden has committed to a buy American policy.

These protectionist measures aren't new. They have existed since 1933 and were recently toughened by former President Trump. President Biden is aiming to increase protectionist procurement requirements even further. He's planning to make it harder for foreign companies, including Canadian ones, to receive waivers to the rules, by creating a made-in-America director position in the White House to centralize control. These waivers in the past gave exemptions to Canadian manufacturers, suppliers and contractors when bidding on American contracts.

While these measures aim to protect jobs, policies like this can result in project delays in the construction industry because of our intertwined supply chain. I'll give you two examples.

A small example is from Bettendorf, Iowa. Prohibiting the use of Canadian imports could double the $427,000 cost of an elevator construction. Certain traction elevator components, guide rails and additional components required to make the structure compliant with the Americans with Disabilities Act are manufactured only in Canada. The city spent six months analyzing alternatives and found no known elevator manufacturers in the U.S.A. that produced the required parts. Without a buy America waiver—which has yet to be granted—the city will either have to custom build the components, doubling the cost, or disassociate from the federal grant.

A larger example is that of the private developer of a proposed high-speed rail line from the outskirts of Los Angeles to Las Vegas, worth approximately $5 billion, which blamed buy America compliance for blocking its plans. The company sought low-cost financing through the federal railroad rehabilitation and improvement financing program, which subjected it to buy America policies. The Secretary of Transportation suspended consideration of the loan request because the sponsors were having difficulties satisfying the buy America requirements.

At a time when we're facing economic uncertainty due to the pandemic, we need to strengthen supply chains between our two countries, not impede them.

According to a GAO report, U.S. suppliers win more than 10% of Canadian federal government contracts, worth roughly $1 billion, whereas Canadian suppliers win about 0.2% of U.S. federal contracts, worth about $600 million. In terms of dollar value, the Canadian government awards contracts to U.S. suppliers that are worth more by many orders of magnitude than are those awarded to any other country.

In the Canada-U.S. road map, our leaders committed to increase climate ambitions and to coordinate cooperation to meet the Paris Agreement and net-zero objectives.

When we talk about the procurement of construction materials, Canadian building and construction materials are some of the greenest in the world. Relying on Canada-U.S. supply chains reduces emissions associated with transportation. Our energy and electricity systems are amongst the cleanest in the world. Our manufacturers are highly efficient and generally emit less carbon pollution than do similar production facilities in most foreign markets. Canada is a leader in producing low-carbon steel. Our aluminum producers have the lowest carbon footprint in the world. We're a leader in developing and deploying cutting-edge cement technology that reduces emissions. All of this will help Canada and the U.S. meet climate goals.

What we need is the development of a longer-term strategic solution to the issue and recognition that the integration of the U.S.-Canada supply chain is also a green supply chain. What we need is a buy North American strategy to protect Canadian and American jobs.

Workers shouldn't have to pay the costs of their livelihood every time there's a change in administration. Industry needs policy continuity to grow and create jobs for Canadian workers. Cities and towns need to address aging infrastructure rather than combing through difficult changes and procurement policies following an election cycle. We need a long-term buy North American policy that protects workers in both of our countries.

Thank you for your time, Mr. Chairman. I look forward to the discussion and questions from the committee.

[The Chair, Liberal, Raj Saini]

Thank you so much, Mr. Strickland.

Now I'll turn the floor over to Mr. Dias and Mr. DiCaro, for a total of five minutes, please.