Economic Relationship between Canada and the United States Committee on March 2nd, 2021

[Leona Alleslev, Conservative, Aurora—Oak Ridges—Richmond Hill, ON]

But in order to understand our economic future, we'll need to have some conversations about what those criteria are, so I'll look forward to any information that you might get on that topic in the future.

Before we leave that, could I talk quickly about the strategy to strengthen supply chain security? Could you give us some insight into how you define supply chain security and, therefore, what some of the key elements would be around that strategy?

[The Chair, Liberal, Raj Saini]

Give a 15-second answer, please. It's just about your time.

[Steve Verheul]

I'm sorry, Michael. Did you want to take that?

[Michael Grant]

It's over to you, Steve.

[Steve Verheul]

Okay.

Well, when it comes to supply chain security, we are having ongoing discussions with the U.S., because I think both of us are concerned about the kinds of disruptions we saw, particularly in the earlier stages of the pandemic, and we want to make sure that doesn't happen again.

We're having discussions about how we can make sure that our supply chains are going to be more secure, how we can ensure that our own integrated markets can perform a lot of those functions, and how maybe we can expand that even further so that we can have full confidence in each other in terms of having secure supply chains. It's really about looking at where you're getting your supply from—and we are certainly a secure supplier—and looking at countries where you may not have that same level of comfort and seeing whether there are other options. Those are the kinds of issues that we're looking at now.

[The Chair, Liberal, Raj Saini]

Thank you, Ms. Alleslev.

Mr. Sarai, you have five minutes, please.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you, Chair.

Thank you to the witnesses. I want to commend you for always coming out to these trade-related committees and giving your well-thought-out answers and insights into what's happening.

I agree with what Mr. Grant said, and Mr. Verheul as well, which is that we don't want to antagonize our neighbours to the south and that, hopefully, we'll work out a diplomatic or a negotiated solution. There are provisions, I believe, under ISDS. We still have three years under USMCA and other protective measures under our trade agreements so that we can protect such arrangements.

My curiosity, when it comes to Line 5, is whether the Governor of Michigan is more concerned with just that one particular area, the Straits of Mackinac component. I understand there's a permit that the state has given for tunnels underneath to have it more protected there. Is her attitude on this that if that is done, she's okay? Is she forcing this decision to get the replacement in place—and if that is done in a satisfactory manner, she doesn't have an objection to the line overall—or is her objection to the complete line and fossil fuels in general?

[Michael Grant]

Thank you very much for the question.

Far be it from me to speak on behalf of the Governor of Michigan, but from our assessment, the concern is over the Line 5 that passes under the Straits of Mackinac. There has been a process under way to get approvals for the tunnel that would eventually replace this line, with essentially building the tunnel and then putting a new pipeline underneath. That process is proceeding.

As I understand it, Enbridge estimates that in the best-case scenario, that would only come online in 2024, hence the concern over a disruption between the ceasing of Line 5 and when that comes online.

That's our understanding of it, and yes, there are various provisions that we could turn to. As I've said, we are looking at all options, and we will ensure that all options that are needed are employed in order to find a resolution to this issue.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you.

My next question would be predominantly in terms of buy America federal procurement and infrastructure projects. What is the dollar figure that is at risk for Canadians and Canadian businesses that are already doing procurement or infrastructure building in the U.S.? What's the risk we're facing, so we can quantify it and know how much energy to put into this?

[Michael Grant]

Go ahead, Steve.

[Steve Verheul]

It's very difficult to actually quantify that risk. I think, with the initial executive order that President Biden announced, we are largely exempt from the provisions related to buy American, under that provision, so we're not too concerned about that, or at least not as concerned.

What we're more concerned about is the upcoming infrastructure bill that the administration is working on, which could include up to two trillion dollars' worth of infrastructure spending, much of which would go down to state governments and municipal governments. We do not have a waiver with respect to those kinds of products. Unless we get this right or unless we get some kind of special considerations or exemptions or waivers, we would lose the opportunity to be able to compete on projects under that infrastructure bill, which obviously is quite large.

However, we are focused on talking to the U.S. about this. They've indicated that there's an open door to consult on potential implications. They recognize the integrated market and the kind of disruption they could cause by insisting on buying American across the board, so we're going to be taking a very detailed look at all of this to ensure that our interests can be covered off under this infrastructure bill once it's approved in the U.S.

[The Chair, Liberal, Raj Saini]

You have 15 seconds, Mr. Sarai. You have time for a quick question.

[Randeep Sarai, Liberal, Surrey Centre, BC]

They may be able to do something in terms of content or quantity, just as with cars, if a percentage is American-built. Obviously, the material—concrete, steel, etc.—would mostly be from the United States, but if Canada can get an exemption so that we're probably providing more services in that regard, is that something we're looking at?

[Steve Verheul]

It is. We do think that.... Well, we will be certainly making the case that the U.S. doesn't produce enough steel or aluminum on its own. There are issues around concrete. There are issues around transportation infrastructure and waste-water management and all those kinds of issues where Canada supplies a lot of important elements to the U.S. We will be looking to try to work something out that works in both of our interests and maintains the integrated market in those areas.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Sarai.

Mr. Savard-Tremblay, you have two and a half minutes.

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

Thank you.

Since the presentation touched on the issue of vaccines, I want us to take a step further in terms of the agreements with the United States on this matter.

The last time I checked, most of the doses weren't coming from the United States. Have we made any progress on that front? Have there been any developments?

[Michael Grant]

Thank you for your question. I'm not an expert on this matter. However, I believe that we have a contract with an American company for the purchase of 20 million doses. I don't have the exact details of when and how things will proceed.

I believe that there aren't any issues with the contract. So far, there haven't been any issues with the vaccines that come from other countries and that go through the United States either.

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

The previous American administration passed an executive order that gave Americans priority access to vaccinations. Unless I'm mistaken, the order is still in effect.

Do you know whether any steps have been taken in this area, at least for instances when it's harder to obtain supplies from Europe or other countries?

[Michael Grant]

During last week's meetings, our two countries agreed on the importance of protecting our populations. We'll continue to do so. For now, this includes vaccine procurement. The contract is between the Government of Canada and a private company.

We'll continue to monitor the situation. We must make sure that Canadians have access to the vaccines.

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

You said that the agreement is between the Government of Canada and an American company. If you're saying that you don't have the expertise to answer my question, I completely respect that. That's fine. You said that, despite the American order, there wouldn't be any issues with the delivery of the 20 million doses.

Is that right?

[The Chair, Liberal, Raj Saini]

Could we have a very short answer?

[Michael Grant]

I can say that both governments agree that our two populations need vaccine protection. At this point, we don't see any issues with the contract between Canada and the American company.

Since this issue is very significant, we'll continue the dialogue with the American authorities.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Savard-Tremblay.

Mr. Blaikie is next.

Go ahead for two and a half minutes, please.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

When we talk about supply chain resiliency, particularly for things like medical equipment and services, I'm wondering what the nature of the discussion is. One of the things we saw early on in the pandemic was interference by the States with the provision of some PPE, which was cause for concern. I don't know that there is anything you can do to completely eliminate that concern, except to have, as part of your strategy, the production of certain necessary items like that in your own country.

I am wondering about the extent to which we are talking about having supply chains within North America. Are we actually talking about sitting down at the table to have a strategy to ensure that a sufficient amount of those things is actually being produced in Canada, as part of a strategy to ensure that we have adequate supply on the continent but each partner is actually producing some of what's needed? That way we will not just be talking about hoping to have another agreement that we can have faith in and then seeing what happens when a crisis occurs, as we've already seen. We've seen how that can go sideways.

I am wondering if we're actually talking about having a plan, particularly for certain types of goods, as we've seen recently, so that we're not just hoping that things will go well when a crisis occurs, but we actually have a mutually agreeable plan to ensure that countries are able to look out for their own interests as well and aren't simply reliant on manufacturing capability outside their own borders.

Could you speak a little bit to the nature of the discussion and the extent to which that's part of it?