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

[Jerry Dias, National President, Unifor]

Thank you very much.

Good evening, honourable Chair and members of the committee. My name is Jerry Dias, and I'm the national president of Unifor. I represent over 315,000 working people across the country in nearly every industrial sector. I'm joined by Unifor's national research director, Angelo DiCaro.

I was glad to learn back in February that this special committee was struck. Our union has had a front-row seat to Canada-U.S. relations over the past four years. I can only characterize it as bizarre and unstable, and, frankly, I think I'm being diplomatic when I say it that way. The newly introduced Biden administration brings hope for a more constructive working relationships for Canada. So far, signs are good.

The President's desire to lead on climate policy, to speak forcefully about the rights of workers, trade unions, and holding law-breaking employers to account is impressive. His commitment to racial justice and equality, fair taxation, social infrastructure and good jobs is timely, and frankly needed. In our view, at least on paper, this administration aligns with the type of forward-looking economy that Unifor members want to see and with what was evident in this week's budget.

Nothing guarantees a stable relationship, but what we've seen so far suggests that we're off on the right foot. February's joint Canada-U.S. road map is a product of that. It was a signal of constructive relations that has not been seen in years.

How we nurture this policy alignment is important. Tough conversations regarding buy American rules attached to the multi-trillion dollar American jobs plan and American families plan are bound to happen.

Let's think strategically. buy American rules are not a surprise. They've existed for nearly 100 years. Tightening rules was a key plank in the Biden-Harris election campaign. It's a policy space that the U.S. has managed to preserve, despite trade deals. This is unlike Canada, which ceded much of this ground at the WTO and in CETA.

There's no denying that buy American rules pose challenges to export-dependent workplaces in Canada. In 2018, for instance, President Trump ratcheted up U.S. content rules for federally funded transit purchases from 60% to 70%. That move resulted in the direct layoff of dozens of Unifor members at our New Flyer assembly plant in Winnipeg. Meanwhile, that same year, Canada procured $1 billion in transit goods through Via Rail. Canadian content requirements were intentionally omitted. This resulted in assembly work being performed at a U.S. factory.

Buy American is a problem. Some of what Biden floated has me concerned, no doubt, but boy, we do a good job of making things even worse for ourselves.

The question is, what do we do? Asking the White House for blanket exemption to buy American, even if it's the best outcome, is frankly not realistic. Steve Verheul said as much to the committee.

What matters is how we identify those points of alignment and emphasize the mutual benefit, in areas such as sustainability, high labour standards, critical supply chains and fair and balanced trade. Building a resilient and sustainable EV supply chain, for instance, without Canada is nearly impossible. I believe that there are opportunities to explore a modern EV auto pact.

Attaching low-carbon requirements to procurement fits the U.S. sustainability agenda. Crafting a low-carbon, buy clean procurement strategy between our two countries is advantageous for sectors with a low greenhouse gas footprint, like Canadian forestry and aluminum.

Bringing creative ideas to the White House, we will argue, is critical, and so is building close relations with the new centralized oversight body for Made in America.

Regardless of any waivers or exemptions that Canada might secure, government must take action on its own accord. This week, we witnessed the historic budget delivering more than $100 billion in stimulus spending. As this is debated in a minority Parliament, why not attach it to a national program for sustainable local procurement in Canada? Why not have a national policy for high labour standards in purchasing contracts, or a requirement that a portion of spending be earmarked for indigenous communities or economically depressed regions?

Our recovery strategy cannot rest simply on Canadian business securing public contracts from a foreign country. I’m certainly not a fan of Canadians getting shut out of work, but I’m also not a fan of sitting back helplessly while there are tools in our toolbox.

I appreciate the committee’s invitation to this hearing and your work on behalf of the country.

I look forward to your questions.

Thank you.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Dias.

Finally, Mr. Neumann and Ms. Gingrich, you have the floor for a total of five minutes, please.

[Ken Neumann, National Director for Canada, National Office, United Steelworkers]

Thank you, Mr. Chair.

I would like to begin by thanking you, the clerk, committee staff, the interpreters and all the committee members for the opportunity to make a submission and join you here today.

As you said, my name is Ken Neumann. I'm the national director for the United Steelworkers in Canada. The United Steelworkers union represents 225,000 members active in Canada and another 600,000 members in the United States. Our members are employed in industries in virtually every economic sector, including those directly dependent on North American trade.

Because of our binational structure, we have a unique understanding of the importance of ensuring strong, integrated American markets. In the United States, things are moving quickly. President Biden’s March 31 announcement of the American jobs plan, including a commitment to invest $2 trillion in transit systems, homes and buildings and water infrastructure, could have serious implications for Canada. This is especially true, as it is widely expected that the upcoming infrastructure bill will expand buy American provisions to cover more products and sub-federal infrastructure projects that receive federal funding.

Infrastructure projects rely on products such as steel, aluminum and wood products, many of which are currently produced in Canada. We must move quickly to ensure that Canada is not left out of these plans. As our Steelworkers International President Tom Conway recently said while applauding President Biden’s overall initiatives, “Canada is not the problem facing U.S. manufacturing and workers. Co-operation between Canada and U.S. will build on our long-standing and productive trading relationship”. So how productive is that relationship?

As you may know, the Canadian aluminum and steel industries alone ship $16 billion worth of products to the United States every year. That is 90% of all Canadian steel exports and two-thirds of total aluminum revenue. Over 38,000 Canadians are directly employed in these industries and over 140,000 more jobs are connected to them indirectly. Canada’s forest sector employs over 200,000 workers directly, and the U.S. is our top destination, accounting for about 75% of our softwood lumber exports alone. Our supply chains are already heavily integrated. In the auto sector, for instance, what starts out as a steel slab may cross the border five or six times for processing before it ends up in its final form. For the strong economic relationship between the two countries to continue, we have to secure an across-the-board exemption from the buy American legislation; we need a binational procurement strategy that emphasizes the use of high-quality, environmentally friendly products made in North America; and we need to finally get a solution to the decades-long softwood lumber dispute.

During the previous U.S. administration, the United Steelworkers stood strong against the section 232 tariffs on Canadian steel and our aluminum. A decade ago, we worked with the Obama administration to create a North American strategy that benefited workers on both sides of the border. Now, as part of a plan to continue building on our relationship, we are advocating for a North American buy clean strategy that would prioritize consideration of the environmental impact of materials used in public construction projects. A recent buy clean report prepared by Blue Green Canada, an alliance of labour and environmental organizations founded by the Steelworkers, demonstrates that steel, aluminum, cement and wood products produced in Canada have some of the lowest carbon emissions in the entire world. These relatively low environmental impacts fit the stated goals of President Biden and our Canadian government and would protect and create jobs.

Canada’s timber products do represent an opportunity for reduced carbon impact, but before the U.S. and Canada can work together in the forestry sector, we have to see a long-term deal that addresses the softwood lumber dispute once and for all. As it stands, thousands of workers face layoffs every time the United States reimposes softwood lumber tariffs. While the NAFTA dispute resolution system made its way into CUSMA, an overall resolution to the softwood dispute was not part of the negotiations.

The severity of the problem is currently masked by sky-high lumber prices. We need to find a solution before prices drop again and workers end up paying the price. If Canada approaches the situation strategically, the United Steelworkers believe there is an opportunity for Canadian workers to benefit from President Biden's massive infrastructure, environment and job investment.

To that end, we will continue to work both in Canada and the United States to promote a clean-energy North American manufacturing sector. We cannot let this opportunity pass us by.

Thank you again. I also look forward to your questions.

[The Chair, Liberal, Raj Saini]

Thank you so much, Mr. Neumann.

We will now proceed with our first round.

Mr. Strahl, you have the floor for six minutes, please.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thank you very much, Chair.

Thank you to everyone for being here to present to us today.

It's good to see many of you who were also a part of our Line 5 discussion. I think we certainly saw the value of organized labour standing up for the over 20,000 jobs that this dispute puts at risk. We certainly appreciated your input.

In the case of Mr. Strickland, certainly, your organization was standing up for Keystone workers, etc., who were impacted by the decision of the U.S. administration. It's good to see you fighting for Canadian projects and Canadian workers and, indeed, in that case, for workers on both sides of the border. That's what I want to talk to you about, Mr. Strickland.

You mentioned at the beginning the international nature of some of these organized labour organizations. Have you had discussions with your counterparts in the U.S. about how you can work together to advocate for workers who will be negatively impacted on both sides of the border? What does that strategy look like? We heard in the previous panel about the need to maybe make the case for Canada to U.S. lawmakers that it's often better for projects to use Canadian materials that are made by Canadian workers.

Maybe you can share with us some of that cross-border work or co-operation that your organization participates in every day.

[Sean Strickland]

We certainly are working with our counterparts in Washington, D.C. I'll be interested to hear what Ken has to say, because his is also an international union.

I can also add that the Canadian embassy has been very active on this file as well and has reached out to the leadership, the Canadian directors of the building trades. We are facilitating discussions with the Canadian directors and also with the general presidents of our 14 affiliated unions that are based in D.C.

Part of the challenge we have is having to communicate the importance of this issue and the impacts it could have on Canadian workers. We have to work to highlight numerous examples of projects, and we're continuing to work on it, using the support of our staff in Washington, D.C. Without bringing it to their attention, it's not really on their radar.

I gave examples in my opening address of projects—an elevator in Iowa and a large LRT project in Vegas and California—but there are numerous other examples: bridge bearings and housing in Cleveland, Ohio, and water filters for waste water treatment plants. We have a list of 15 waste water treatment plants in major metropolitan areas in the United States of America that have slowdowns because of previous buy American policies.

Part of our challenge is really about educating externally—and also internally—how important this is to Canadian workers, and our leadership in the U.S. is supporting us in these deliberations.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Great. I will go to Mr. Neumann for this next question. Maybe he wants to touch on that one as well in terms of working with your international partners.

You mentioned a number of times an integrated clean energy or clean manufacturing strategy. We spoke in the previous panel about a carbon border adjustment tax and touched on it briefly, whereby there would be a way to determine whether or not goods manufactured in other countries—specifically China—should be subject to an adjustment tax based on the input they have to put into producing their steel and aluminum, for instance. Have the Steelworkers thought about that? Do they have a position on that?

Would any of that apply, do you think, to maybe taking on the real target of buy America through other means, rather than a catch-all approach that catches in that same net the cleaner produced goods like our steel and aluminum?

[Ken Neumann]

Thank you very much for that question. You hit the nail on the head.

We've been calling for that with this government. We've laid it out several times that there should be a carbon border adjustment because Canada—you heard in my testimony—has some of the cleanest steel and aluminum there is. The fact is it would prevent some of the dumping that takes place and some of the stuff that comes from offshore, so we fully endorse the fact that there should be a carbon border adjustment.

With respect to Mr. Strickland's comments, our union has been in the forefront. I think there's been a bit of a reset in the relationship between Canada and the United States. If you look, under the former administration it was fairly cloudy for us for a long time when we were seen as a security threat and when they brought in the steel and aluminum tariffs. We happened to be in the U.S. at the time when our international executive board that day put out a resolution saying that Canada was the furthest thing from a national security threat, and that still is the case today.

I see an opportunity here because we do have a reset. You have the President of the United States and the Prime Minister of Canada, who I think have a similar vision when it comes to the prospect of the green, environmental side of things. Our union is working on both sides of the border. We're working with the Canadian government, the embassy, our lobbying office in Washington and the embassy there as well. We're reaching out to our allies, because, as President Conway says, Canada and the United States have a long-standing relationship in regard to trade. Why would you want to punish your best neighbour?

All of us, I'm sure, have crossed borders and seen the trucks lined up for miles and miles. They're not running empty. They're running with products being made in each other's country, being produced by workers whom we represent on this side of the border, or the other side, and that's what trade's all about. Canada and the United States have a long-standing history so I think there's an opportunity that we should not miss, and I'm sure that all of us are going to be working as hard as possible to make sure that we overcome the buy American because...also remember that the American market is 10 times larger than Canada's. We're small compared with the.... I look at it as the big elephant and the mouse. That's what it really boils down to. We're working as hard as we possibly can.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Strahl.

We will now go to Mr. Sarai for six minutes, please.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you to the witnesses. It's great to have many of you back again. I always like reminding myself that I'm the son of a United Steelworkers employee and my brother's a Unifor employee. I've got B.C. trade schools, colleges and training institutes in my riding. I have a great affiliation with all of you. I'm thankful for having you on.

I think you shouldn't use the analogy of the elephant and the mouse because you're pretty mighty and that elephant gets scared of you when you put your heads together. I'm very happy to hear that you're getting a lot of co-operation from the Canadian embassy and the government in helping that. This is the time we need you as well, to use your brothers and sisters down south, to help address some of these punitive ideas that are going around.

Mr. Dias, in 2009, in the 2009 recovery act, we saw the U.S. administration implement stringent buy American provisions. What was labour's reaction then in Canada and the U.S.? How can we use that, maybe, to deal with this current situation?

[Jerry Dias]

Coming out of 2009, we had the Obama administration at that time in the U.S. and it was the recovery act. This isn't new to us by the way. The whole issue of buy American provisions is not new; we've been dealing with this historically for generations, frankly.

In Canada, we fought for exemptions and I think we got exemptions in about 37 states that allowed Canada to bid on their procurement, but ultimately what Canada gave up at that time was the opportunity for U.S companies to bid on all of the federal and provincial procurement opportunities. At that time, there was a debate in Canada about whether or not we gave up too much.

If you really look at the history of this, what I'm concerned about is that we keep this in the proper context. If I go back even five or six years ago, to 2015, of the 500,000 contracts that were awarded to companies outside the U.S., Canada secured about 4% of those, or about $700 million worth, which in the overall scheme of things is two-fifths of nothing. We have never really been huge in winning U.S. contracts.

The other side of it, and I don't mean to go off, but, look, we should expect this. Biden-Harris ran on this. I think the Biden administration is going to make sure they wrestle back the whole argument from Trump, because he got elected on the whole story of pointing to the boarded-up auto assembly plants in Ohio and saying this is a result of poor trade deals. I think the Biden administration is going to do everything they can to wrestle back the narrative that they're standing up for American workers. I think we've got a hell of a job in front of us.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you.

Mr. Strickland, do you think the American labour unions will push for a Canadian exemption, based on some of the comments all three of you have made about sustainable...or our labour practices, the level of integration we have? Based on that, do you think your American counterparts you work with will support us on this?

[Sean Strickland]

Our brothers and sisters and the leadership of North America's Building Trades Unions are aligned with supporting Canadian workers. To that extent, they certainly are supportive of our initiatives.

I do think that in terms of a longer-term strategy, we need to leverage this green procurement. Mr. Neumann talked about it, and I talked about it. Jerry also talked about the supply chain for batteries, for example. I think the Biden administration this week made more commitments to greening the American economy. We have the industry to help support that. When you consider in particular the massive investment in infrastructure that the Biden government is planning to make, I think we have an opportunity to find ways to circumnavigate this buy American through leveraging green procurement. I think there's a real opportunity there. I think in those areas we might be able to get some exemptions and buy North American.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you.

Chair, do I have time?

[The Chair, Liberal, Raj Saini]

You have one minute.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Mr. Neumann, the Biden administration has indicated its preference for worker-centric economic and trade policy, as Mr. Strickland has said.

Do you agree that the messaging against the expansion of buy American should be focused on labour?

[Ken Neumann]

We do. I know where our union stands. I listen to what Mr. Strickland says.

I think that workers in the U.S. understand that Canada is not the problem.

I get Jerry's point that every government wants to look at its citizens. Of course. Canada would do the same whatever the case may be. We're talking about the situation here of your best neighbour that you could every imagine and having the integrated trading market that we've had for years. I said we that had to reset the relationship because we had a few cloudy days when it came to the aluminum and steel and the tariffs, not once but twice.

I'm somewhat more optimistic about the fact that we have an opportunity. I think on the environmental thing, Meg at some point can talk about it because she's also the president of Blue Green Canada. They just put together a big announcement today. As you know, Biden has put together this big project responding to buy clean. I think that's an avenue we should be pushing as hard as we possibly can.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Sarai.

Mr. Savard-Tremblay, you now have the floor for six minutes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Chair.

All these comments on green procurement are very exciting.

Could we get an exemption under the U.S. green procurement program? Even when the product in question is not green, it can be produced in a greener way, as in the case of aluminum. Aluminum itself is not a green product, but Quebec's aluminum is much greener than China's. Could we slip through the net that way? We are asking ourselves this question more and more. I have asked a number of witnesses at this committee about it. I think we could have a valuable collaboration.

But in order to succeed in negotiations with the United States, we have to take a strong position. For that strong position, you have to prepare a counter-move. So I'm going to throw an idea out to all the witnesses and I would like to know what they think.

Should we start by signing a similar order that puts our businesses first? The Small Business Act in the U.S. gives preference to small and medium-sized businesses when contracts are awarded. Should we start with that, in the hope of forcing countries to sit at the same table?

[Ken Neumann]

Who is the question for? I'm not sure.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

As I said, my question is for all the witnesses. So anyone who wants to answer it is welcome to do so.

[Sean Strickland]

I could take a shot at the beginning. Maybe you can repeat the second part of the question.

Certainly in terms of the aluminum production that you refer to, and the steel production, cement production, our electricity-generation capacity and how clean that all is, you can look at our supply chain and how close we are to the United States of America. There are also the transportation greenhouse emissions between Canada and the U.S. compared with bringing materials offshore. We have an opportunity to leverage this green procurement of infrastructure and the manufacturing of American goods, and I think that might be the sweet spot. I would agree with you, and I think the Canadian embassy and others are working on that.

There are all kinds of examples. In terms of lithium battery supply, we're the fourth-largest lithium battery supply manufacturer in the world and the greenest. There are all kinds of aspects of Canadian industry that are greener and provide better alternatives to production in the United States, and they should be exempt from buy America policies.

[Jerry Dias]

Sean is right. The key piece for us is where we find the sweet spot with the U.S. Where do we find the areas of commonality? We're talking about Canada being a leader in low-carbon building materials, and Sean is right, whether we're talking about cement, timber, aluminum and steel. Canada's electricity is probably about 82% emissions-free. If we're talking to the U.S. about commonality, then the elimination of greenhouse gases, and manufacturing with a green footprint are the areas of commonality where we can have the discussions.

You also raised the importing of goods built by anything but green technology, for lack of a better choice of words, so I'll talk about China. Does Canada now invoke a tariff on high-carbon products coming into Canada? We should talk about that. Obviously it will create a political discussion with China, but I argue that we should not be afraid to have those discussions. The focus of any strategy we have coming out of this should be, first, finding the areas of commonality and, second, moving forward.

Sean raised the issue of electric vehicles, and we spent a lot of time talking about that. I've personally spent a lot of time negotiating investments with the Detroit three—probably about six billion dollars' worth in Canada over the last few months. We know the heart of an electric vehicle is the battery. Cobalt, magnesium, nickel and aluminum are the key pieces, so we should be using them as the footprint of our strategy. That's another area of commonality with the United States: It's spending a lot of time talking about greening the auto industry. I think we need to start concentrating on the pieces we have in common and see where we can go from there.

[Ken Neumann]

Meg, did you want to take this?

[Meg Gingrich, Assistant to the National Director, United Steelworkers]

Sure. I think what the others have said is essentially correct, and it's our position as well. The fact that our products are much greener than those made in other parts of the world is a real point of leverage and an argument we can use to try to get exemptions. The Biden administration has been pretty clear at tying its trade policy with its climate goals and labour goals, so I think there is a real opportunity there. In fact, today there was an announcement between the two countries—Canada and the U.S.—on greening government initiatives that looks exactly to some of these things. We look to procurement, both federal procurement and government procurement broadly, as a way of ensuring that we're using cleaner products in both Canada and the U.S. That's exactly where we should be targeting and using our leverage in this type of thing.