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

[The Chair, Liberal, Raj Saini]

Welcome, colleagues, to our second meeting of the Special Committee on the Economic Relationship between Canada and the United States.

This is our second meeting, but our first meeting with witnesses, so I'm really excited to have the officials here with us today.

I'm not sure who is speaking, but whoever it is, you now have the floor for five minutes.

[Michael Grant, Assistant Deputy Minister, Americas, Department of Foreign Affairs, Trade and Development]

Thank you very much, Mr. Chair.

My name is Michael Grant. I'm the assistant deputy minister of the Americas. I'll be giving the opening remarks. I'm joined by my colleague Steve Verheul, the assistant deputy minister for trade policy.

I would like to begin by acknowledging that I'm speaking to you today from the traditional unceded territory of the Algonquin people.

As members of this special committee will already know, Canada and the United States have long enjoyed a special relationship. Our two countries enjoy the largest trading relationship in the world. We defend and protect North America together. We are stewards of our shared environment. We stand on the world stage to respond to pressing global challenges together.

Mr. Chair, these are not merely words. We’ve just committed to revitalizing and expanding our ties with the United States in order to realize our relationship’s full potential.

Last week, the Prime Minister and President Joe Biden announced the roadmap for a renewed United States-Canada partnership. It's a blueprint for an ambitious and whole-of-government effort against the COVID-19 pandemic and in support of our mutual prosperity. It creates a partnership on climate change; advances global health security; bolsters co-operation on defence and security; and reaffirms a shared commitment to diversity, equity and justice.

The government has quickly started implementing the roadmap through virtual meetings and calls between our two countries. In addition to phone calls and the meeting between Prime Minister Trudeau, the president and the Deputy Prime Minister, we saw Minister Garneau, Minister Wilkinson and Minister Alghabra speak with their counterparts last week. We expect more discussions in the coming weeks.

Allow me, Mr. Chair, to briefly touch on a few priority themes in the Canada-U.S. relationship.

Foremost, our leaders have agreed that both countries' fundamental priority is to end the global pandemic. The spread of COVID-19 has caused upheaval in both Canada and the United States.

Consider last March. Canada and the United States arrived at a far-reaching agreement to limit discretionary and recreational travel across the border, an understanding that has been extended by mutual agreement. This collaboration set the tone for subsequent co-operation, including in getting our citizens home, ensuring continued operation of our supply chains, and assisting each other in the production and procurement of medical supplies and other essential goods.

Our work together in managing the flow of goods amid the pandemic is just one facet of the deeply interconnected economic relationship between Canada and the United States. This enduring trade relationship has been a model of success for the world for many years, starting with the Canada-U.S. FTA in 1989, continuing with NAFTA in 1994 and culminating today in the Canada-U.S.-Mexico Agreement, or CUSMA.

Of course, we have more work to do, guided by the new road map. For example, Canada and the United States will build a strategy to strengthen supply chain security and will also accelerate joint initiatives to support the recovery of small and medium-sized enterprises.

The government also recognizes the critical role that energy plays in our trading relationship. Canada is the United States' number one foreign supplier of all forms of energy, including crude oil, natural gas, hydroelectricity and uranium. The secure and affordable energy is sustainably produced. Energy underpins our exports. It supports the economy, jobs and competitiveness on both sides of the border. It provides energy security and resiliency to North America.

In the new roadmap, our two countries have recognized this. We've also agreed on the importance of our highly integrated energy infrastructure. Completing new and expanded energy infrastructure will fuel our economies and provide clean and renewable energy.

Supporting Line 5's continued operation remains a top priority, now and in the future, through Enbridge's tunnel project. We work tirelessly, through Canada's diplomatic network in the United States, to promote and strengthen the energy relationship and support projects like Line 5.

Energy security is just one important factor in our region's overall safety and security. Canada and the United States collaborate closely on defence, both at home and abroad. Collective security is a shared responsibility. Canadians and Americans have depended on each other for decades. Looking ahead, we will be expanding our co-operation on continental defence and in the Arctic, including by modernizing the North American Aerospace Defense Command and launching an expanded U.S.-Canada Arctic dialogue.

A further element that unites us is our shared natural environment. Canada and the U.S. share many waterways that mark or cross our shared border, from the Great Lakes to rivers such as the mighty St. Lawrence. Moving forward under the new road map, we will do more, such as launching a high-level climate ministerial to increase our climate ambitions aligned to the Paris Agreement and net-zero objectives while holding polluters accountable for their actions.

In launching the new roadmap for a renewed United States-Canada partnership, our leaders said it best in their joint statement: “the partnership between the United States and Canada endures because we invest in each other's success.”

Canada welcomes the roadmap as a way to revitalize and expand its ties with the United States as we continue to work closely as partners, friends, allies and neighbours.

Thank you.

[The Chair, Liberal, Raj Saini]

Thank you very much, Mr. Grant. I appreciate your opening comments.

We will now start with the first round of questions.

Mr. Hoback, you have six minutes, please.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Thank you, Mr. Grant. It's nice to see Mr. Verheul here also. This is a great topic, and I'm glad to be part of this committee. I think there are lots of great things we can do.

Mr. Verheul will probably agree with me that one thing we learned in the last negotiations was that this relationship with the U.S. is one that we have to keep fostering. We have to keep renewing it and keep working on it all the time. We can't take anything for granted. Of course, one of the things we're looking at here is this proposal for a U.S.-Canada road map on renewal.

In regard to that, Mr. Grant, what was the process in developing this road map? What did you go through? Whom did you consult with? Who was involved in this process as you put it together?

[Michael Grant]

In terms of constructing the road map, there were contacts between various departments, as well as between the National Security Council in the United States and the Privy Council Office on our side, as well as the Prime Minister's Office and the White House. It was a collective effort. It's tough to say who held the pen. It was coordinated centrally by the PCO and PMO, with input from many departments, and it was the same on the U.S. side.

[Randy Hoback, Conservative, Prince Albert, SK]

So no consultation was done outside of government in regard to the acceptance of this road map.

[Michael Grant]

In terms of getting to the announcement of the road map, I think it was mostly done internally amongst officials and with our American friends. However, it's there for everyone to see and will certainly be part of the engagement with all Canadians as we move forward.

[Randy Hoback, Conservative, Prince Albert, SK]

Let me move on to Line 5, which has serious consequences here in Canada, in Sarnia and of course out in western Canada. Is there anything in our international agreements going back to 1977, the treaty between Canada and the U.S. concerning pipelines, that makes sure the State of Michigan can't unilaterally shut down this pipeline?

[Michael Grant]

Right now the federal government is working very closely with Enbridge, mostly through mobilizing our diplomatic network in the United States, to engage the State of Michigan as well as other states that have a vested interest in Line 5. We are also looking at all of our options that are available, including the 1977 treaty. We're doing so in close collaboration with Enbridge. We also have a vibrant discussion going on with provinces, as it is in everyone's interest that we see this resolved as expeditiously as possible.

[Randy Hoback, Conservative, Prince Albert, SK]

I'm concerned, because if one state is allowed to do this to Line 5, what's preventing another sector being at the mercy of a state that is doing that to their sector? Let's say that for cattlemen in North Dakota, suddenly North Dakota says, “We don't want Canadian cattle.” Does that mean they can unilaterally do that?

I'm just curious. Under CUSMA, did we put any measures in place to even enhance the 1977 agreement? What are those options you're looking at in regard to ensuring that we do everything we can to protect our interests?

[Michael Grant]

I think Steve might want to come in on the question regarding CUSMA, but in terms of looking at all our options, it's exactly that. As you may know, there are processes in state court in Michigan, as well as in federal court. We do see this as a state-to-state issue between the Government of Canada and the Government of the United States.

This issue was raised in the recent meetings last week to ensure that the United States realizes the importance of Line 5 to Canada, and we'll continue to look at all possible options going forward.

Steve, did you want to comment on the CUSMA aspect?

[Steve Verheul, Chief Trade Negotiator and Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development]

Sure. Thank you.

Yes, certainly we do have provisions in CUSMA that could come into play on these issues, particularly in relation to investment obligations, but as I think Michael has pointed out, this is not really the route we want to go right now. I don't think we want to enter a long dispute that's going to take a very long time to resolve, along with a potential result that may not bring us what we want.

Our focus at the moment is to try to advocate very strongly to put pressure on the U.S. government and others to ensure that this doesn't actually come into play. That's our focus for the moment.

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Grant, in your road map, you talked about energy infrastructure and putting in place new energy infrastructure. Of course, we've seen things like Keystone being shut down in the U.S., so what does this new infrastructure look like? Who's involved with it and what's the intent behind it?

[Michael Grant]

Thank you very much for the question.

First and foremost, it's also about protecting existing infrastructure, and Line 5 is a prime example of it.

In terms of new infrastructure, I can say that Canada is a significant exporter of hydroelectricity to the United States, and there are many opportunities in hydroelectricity to expand that export. As we look at ensuring our collective energy security, as well as looking at our efforts to collectively protect the environment and combat climate change, hydroelectricity provides an excellent example going forward.

[Randy Hoback, Conservative, Prince Albert, SK]

Then when we look—

[The Chair, Liberal, Raj Saini]

Mr. Hoback, I'm sorry. Your time is up. Hopefully, we can pick it up after.

[Randy Hoback, Conservative, Prince Albert, SK]

Thanks, Chair.

Thanks, witnesses.

[The Chair, Liberal, Raj Saini]

Next up is Ms. Bendayan for six minutes, please.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much, Mr. Chair.

Thank you to our officials who are appearing as witnesses today. It's always a pleasure to see you again, Mr. Verheul and Mr. Grant.

I might start with you, Mr. Grant. I have read that in November 2020 Premier Kenney said that the death of Line 5 would be “devastating” and that anybody who wants to cut off Alberta oil and gas exports would be “brain-dead”. One week later, Governor Whitmer took legal action to shut down Line 5.

In your experience—your obviously extensive experience and expertise in Canada-U.S. relations—was a statement like that by Premier Kenney helpful?

[Michael Grant]

Thank you very much for the question.

All I'll say is that I think this is important for the United States, the various actors, whether at the state level or at the federal level, and again, multiple states, because while this has a direct impact on Michigan, Ohio and New York would also be implicated. I think it's important that Canadian views be very well known. As I recall, Governor Whitmer had campaigned on this particular issue, so while the particular action maybe came as a bit of a surprise in terms of when it came out, I don't think we were terribly surprised that she was going to take action in that regard.

I think it's important going forward that Canada—the federal government and the provincial governments, and certainly the private sector and others—continue to make our voice heard and known among all of the decision-makers and influence-makers in the United States.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you.

I would certainly agree that it is useful to engage in constructive dialogue and make our position known. I guess to that end, and picking up on what Mr. Hoback was mentioning earlier, the two of us sit on the international trade committee, and we worked very hard to ensure the ratification of CUSMA. In CUSMA there was a team Canada approach, a very thoughtful and strategic engagement of the United States on many different levels. Obviously, we are dealing with something on a smaller scale with respect to one state in particular.

Perhaps you or Mr. Verheul can expand a little bit on the engagement strategy, through different layers of government, between Canada and the United States in order to make sure that Canada's position is well known and that we are making every effort in order to engage the United States on Line 5.

[Michael Grant]

Thank you very much for the question.

I mentioned that last week in the high-level meetings Line 5 was raised, as was Canada's concern regarding the intent of the State of Michigan and the fact that we will vigorously defend the ability of Enbridge to continue to operate that line.

Our engagement in the U.S. is really multi-faceted. I mentioned our diplomatic offices. Of course, we have the embassy in Washington, but our consulates general in Detroit and New York are quite active in engaging, first and foremost, sitting governments but also legislators as well as those key industries and companies that rely as much as we do in Canada on those resources that are brought by Line 5. Some of those stakeholders we engage with include labour, which has a very important voice. There would be significant disruption in the United States on this. Collectively, we need to continue to make sure that message is heard.

I mentioned earlier that at the officials' level we have a regular dialogue with provinces to ensure that they have an understanding of our approach, and also to ensure that, again, we're all on the same page in terms of our engagement, because I believe that's necessary.

[Rachel Bendayan, Liberal, Outremont, QC]

Mr. Chair, perhaps I have time for one more question.

I of course followed very closely the lengthy bilateral of last week between President Biden and our Prime Minister, as I'm sure you did as well.

Given your experience, can you speak a little bit to the uniqueness of that meeting and the synergies between our two countries with this new administration? I do feel as though it was quite a groundbreaking meeting, a real reset of our relationship.

Perhaps I can let you elaborate.

[Michael Grant]

Thank you very much.

I would agree. Even though it was virtual, I think it was a rather unique meeting—not just a single meeting but a set of meetings. As we have seen American secretaries get confirmed, it has been very interesting that virtually across the board the first person they are speaking to after being confirmed is their Canadian counterpart. I think this goes to the importance of the relationship, not only that we see but also that the Biden administration does.

Coming out of the meeting between leaders, what the road map kicks off is a very significant to-do list for both governments. While it's focused in certain areas, it covers a lot of what we do together. There is probably more alignment between Canada and the United States than there has been in several years. I would also argue that the shared ambition level probably hasn't been this high in a few years.

From an official perspective of working on Canada-U.S., it's quite an exciting time, and we look forward to the work to come.

[The Chair, Liberal, Raj Saini]

I'm sorry, Ms. Bendayan, but your time is done.

Mr. Savard-Tremblay, you have six minutes to ask your questions.