Economic Relationship between Canada and the United States Committee on April 29th, 2021

[John McKay, Liberal, Scarborough—Guildwood, ON]

Okay. I remembered your story. Hilarious.

[Veso Sobot]

That's right.

We have a plant at 807 Pharmacy, in Scarborough, right by Eglinton and Victoria Park. We've had that plant since 1953.

Yes, you were wonderful when we had that conversation.

In fact, what happened—it was at Camp Pendleton—was they exhumed our fittings. They stopped the project for a month. They spent hundreds of thousands of dollars in delays, replaced our fittings with fittings that were made in the United States and that were identical to ours. All the while we were covered under NAFTA. They didn't have the right to do that and shouldn't have done that. In the end, that was a compelling story the prime minister shared with the president. That's one of the reasons why I think we got the exemption, because it didn't make sense. It was hurting the Americans, it was hurting us, and no one was winning in the whole process.

What's our plan B? Unfortunately, it's to build more plants in the United States. Buy America.... I'm a Canadian. I love Canada. Our founders loved Canada. They escaped from Estonia. They ran from the Russians. I would prefer we make those investments in Canada, I really would, and I hope we can. I think we can. If Harper and Obama could come to an agreement, I'm sure Trudeau and Biden can.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I must admit, after playing hooky on House duty last night, I'm maybe not quite as convinced. He was pretty strong.

Mr. Allan, you have also set up a plan B, which is putting more factories into the U.S. I'm assuming that's a considerable investment. How far advanced are you in that planning, if in fact this scenario turns out to be as grim as we think it might be?

[Travis Allan]

Thank you for the question.

We're pretty advanced. We've undertaken an RFI process and gone through the whole process of asking different states how committed they are to electrification and analyzing all the different cost factors that influenced that decision.

Honestly, the decision to build the factory in the U.S. is also partially about showing that we are committed to the U.S. market, and we want to be part of helping that economy as well benefit from the opportunities with electrification.

For us, the really big distinction is whether we can do this in an efficient way like the auto sector does, which is an integrated continental manufacturing structure where maybe you produce one product line in the U.S. and continue to produce most here in Canada. Can we do that in a way that's good for consumers and good for our economy, or do we have to do it in a way that's duplicative, raises costs, has double product lines built in Canada and the United States and basically raises costs for everyone? That is the number one concern, I would say, on our radar right now.

Number two, I think Mr. Sobot's story is just such a great concrete illustration of the wild things that happen when you have a protectionist system like this, which is just so open to misinterpretation or misapplication by different levels of government that are interpreting it. That's another thing we're very concerned about.

[The Chair, Liberal, Raj Saini]

Mr. McKay, you have 20 seconds.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I'll just say that, Mr. Sobot, you and I should have another breakfast. It's the kind of story that sticks in your mind.

The logic of what the Americans propose doing to canola, to your industry or to Mr. Allan's doesn't make any sense whatsoever, but we are where we are.

[Veso Sobot]

It would be an honour to have breakfast with you again. You just name the place and time.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Okay. If we get the exemption, you buy. If we don't get the exemption—

[Veso Sobot]

It's a deal.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. McKay.

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

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

Thank you, Mr. Chair.

I want to acknowledge all the witnesses and my colleagues.

Mr. Allan, I greatly appreciate AddÉnergie's contribution to transportation electrification, an issue close to my heart.

Normally, my constituency hosts a very large electric vehicle show, which is always a great success. I imagine that AddÉnergie has already participated in it. I hope to see you at the next show in person and, although it seems strange to say at this time, shake your hand.

You're promoting some form of exemption for Canadian-made clean technology products destined for the American market, which could lead to a green technology agreement.

If we compare the two countries, how does American expertise in electrification and green technology measure up to Canada's expertise?

This would give us an overview for tenders and government contracts.

Which of the two countries might be more successful?

[Travis Allan]

Thank you.

I am so excited to get out of my Haliburton living room and get out to a real EV auto show again. I really look forward to that.

We have some very strong competition in the United States, and I would never mislead you about that. There are some great companies, and I am proud to say that Canada and Quebec have managed to also field an absolute world leader in this area. We don't win them all, but we win a lot of the competitions, and that is exactly it. We want to be able to compete fairly. We think we can win. We think our technology is as good, and frankly, we're really excited to be able to compete—the challenge being getting to compete, of course.

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

Would you say that the electrification and green technology expertise of both countries is the same or are there niches, if you can call them that?

[Travis Allan]

I think Canada has been a real early leader, particularly around charging stations, around medium- and heavy-duty electrification. We have some excellent companies in that regard.

One of the things that we are concerned about for the United States is that if they're trying to hit these 2030 targets without having access to Canadian production, it's going to be very hard for them to meet those targets. I think that's a real risk.

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

Why are you saying that it would be very difficult for them?

Is there a lack of expertise or companies?

[Travis Allan]

Their domestic manufacturing is more limited than in Canada. I think a number of the companies in the space are going to have to deal with the same supply chain issues that I mentioned before in trying to figure out how to meet buy American rules. I do think there will be some challenges meeting their targets because of that.

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

What's the nature of most companies involved in this field in the United States?

We know that, in Canada, the companies are mostly small and medium-sized enterprises, many of which are in Quebec.

In the United States, are the companies multinational corporations or SMEs?

[Travis Allan]

In the United States there is a combination of large global players, both from domestic players in the charging space, largely based out of California, and also some medium-duty growing companies. Then there are increasingly large European and also Chinese manufacturers that are starting to sell into the market, and in some cases, they are also starting to build plants in the United States.

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

I gather that, since some Chinese giants would also like to access these large government contracts, we can assume that you aren't advocating for the elimination of the Buy American Act, but rather for a Buy American Act that favours Canada's position. A multi-faceted openness could simply give the Chinese giants a better chance.

[Travis Allan]

I think that's an excellent way of putting it. Given the history of trade agreements between our two countries and the fact that Americans are accessing 9% of Canadian government procurements, compared to a much smaller amount by Canadians, I think it is very reasonable for the United States to carve out Canada as a special ally in this case.

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

Perfect. Thank you.

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

[The Chair, Liberal, Raj Saini]

You have 30 seconds left.

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

I'll give my remaining 30 seconds to the next speaker.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Savard-Tremblay.

Mr. Cannings, welcome to the committee.

You have six minutes.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

Thanks to all the witnesses here today.

Again, it's been a very interesting time already. I really learned a lot. I especially enjoyed the story about hula hoops, which I will try to use in some form in the future.

Mr. Carey, I don't want to make you think we've forgotten all about canola. I usually sit on the natural resources committee. We're talking about clean fuels, including biodiesel. You mentioned biodiesel. I'm just wondering, Mr. Carey, if you could tell us how much of the canola production in Canada that's exported goes to biodiesel or the proportion that is used for biodiesel right now within Canada.