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

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

Good afternoon. I want to acknowledge all my colleagues, as well as the witnesses, whom I thank for their presentations.

At the start of this dispute, some individuals, in particular those with ties to the affected companies, argued that the State of Michigan's move would violate the 1977 agreement between the Government of Canada and the Government of the United States of America concerning transit pipelines.

Do you agree with this view?

[Michael Grant]

Thank you for your question. As I said, we're looking at all the options, including the 1977 agreement, for changing the situation. We really want the State of Michigan and Enbridge to find a solution, without going to court or going through another process.

That said, we're well aware that we have other options, including the 1977 agreement.

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

I want to know whether the agreement would prevent the State of Michigan from making its moves. In your opinion, how likely is the State of Michigan to succeed in its efforts?

[Michael Grant]

Thank you for your question.

It depends on several things. That said, our priority is to find an amicable solution with Michigan and Enbridge. As I said, we'll use all the available tools to accomplish this. If we need to use the 1977 agreement, we'll do so. However, for now, we're working with the company, the provinces and the officers in the United States to find a solution.

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

The odds that the State of Michigan will at least be able to shut down the line are fairly slim, basically.

Nevertheless, the company has been slow to fix some leaks in its infrastructure. In a number of cases, these leaks end up directly in the waterways. Shouldn't the measures focus on this area?

[Michael Grant]

Thank you for your question.

We see this situation as an issue between the two federal governments of the United States and Canada. Of course, we want an amicable solution between the State of Michigan and Enbridge. However, we can see that there's already a dialogue with the federal government of the United States. As I said, we also have the option of using the agreement if necessary.

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

Thank you. I understand that. This strictly concerns the relationship between the two countries and the agreement that must be adhered to. That said, in terms of Enbridge, certain flaws haven't been fixed.

How can the federal government have any real leverage, in this case, if the company is slow to fix certain flaws?

[Michael Grant]

Thank you again for your question.

I may not have all the answers. I think that this is a very specific issue. I don't have an answer for you. However, I can check with my colleagues and, if possible, give you an answer later.

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

I wonder whether another witness could answer my last question.

Since that doesn't seem to be the case, I'll ask another one.

Given that Michigan is unlikely to succeed in shutting down the line, I wonder whether the company should fix some of the flaws. What's the urgency right now, given that the odds of the line actually being shut down are slim?

[Michael Grant]

If I understand your question correctly, the governor of Michigan set a deadline for the use of Line 5.

There are processes in the court of the State of Michigan and in the federal court of the United States. We believe that these processes will take place despite the deadline. The situation is urgent, but we believe that we have time to find an amicable solution.

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

Thank you, Mr. Grant.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Savard-Tremblay.

Mr. Blaikie, you have six minutes, please.

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

Thank you very much.

With respect to Line 5, there are at least two important ways in which this issue is different from issues like the Keystone XL pipeline, for instance, or the Trans Mountain pipeline. One of those differences, in the view of the NDP, is that we're talking about a project that is existing infrastructure. It's not predicated upon increasing the rate of extraction or the amount of barrels per day. It's what we're already doing.

The second important distinction is that this is the pipeline that's part and parcel of Canadians being able to do value-added work, which they're unfortunately often not able to do. We've seen a significant reduction in refining and upgrading within Canada over the last 20 or 30 years.

As we look to this project and as we look to what will be an era of better co-operation, hopefully, between Canada and the U.S. on the climate change front, what do you think are some of the ways in which Canada, in the context of a larger North American energy strategy, can be advocating to have those kinds of value-added jobs so that Canada isn't simply the supplier of raw resource to the United States, where the upgrading and refining occurs? What are the opportunities for Canada to ensure that we're doing value-added work here and getting the benefit of the employment that comes with that secondary kind of work?

[Michael Grant]

Steve might want to come in on this later.

I would just note, although it's not specific to your question, that on Line 5, this isn't about increasing; it's about maintaining. We are also quite concerned—which is part of our advocacy with influence-makers and officials in the United States—about the implication of transporting that quantity of resources via other means, such as rail or truck, and the obvious risks involved there.

In terms of an integrated North American or bilateral energy market, it's exactly the point you're getting to in terms of the importance of ensuring that Canadian companies are taking advantage of both the front end and the back end. We talked about hydroelectricity, but there are renewables as well. Canadian companies have a lot to offer the United States in terms of their desire to develop this market. We see tremendous potential for Canadians in doing so. At the same time, with a more significant, more secure and climate-friendly energy supply down the road, this will also improve the attractiveness of investment in Canada and continue to build our ties outside of North America.

Steve, did you want to come in?

[Steve Verheul]

No, I think you really captured it, Michael. The Line 5 issue is really about maintaining that particular avenue, as you mentioned.

We do have a number of efforts under way to try to make sure that the new opening we have with the U.S. administration gives us the possibility of putting in more value added on the Canadian side when it comes to some of these resources that we're selling around the world. I think that's something we're focused on quite intently in terms of trying to maximize our benefits on that front.

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

When we look at the question of buy America, I think everybody around this table would share a sense of disappointment that we don't have a blanket exemption to buy America. I know many of us were hoping to see that come out of the last rounds of negotiations in CUSMA, for instance.

I'm wondering, given that we talk about partnership on climate change and the extent to which the North American economy is integrated, if we're not able to secure a blanket exemption from buy America policies. In particular, with climate-friendly initiatives—whether it's electric bus manufacturing in Canada or other kinds of industries and products Canada has to offer that would contribute to this united front in the battle against climate change—do you see those as being an avenue for securing certain types of exemptions from buy America by way of climate, if we're not able to do it across the board? Has there been any discussion along those lines to date?

[Steve Verheul]

Michael, I'll go ahead on this, if that's okay.

Yes, certainly with respect to buy America, I think our getting a complete exemption from the buy America provisions is something that's not likely to be politically possible in the U.S. We are taking an approach through which we're trying to focus on specific areas of interest, specific areas on which we can work with the U.S., and start to develop areas where we can put a lot of value added.

When it comes to buy America, we're looking at key sectors. We're looking at where our key objectives are. When it comes to the whole issue of climate-friendly processes or products, that's a major focus we're looking at. That's, I think, where we can very easily align with the U.S. to demonstrate that those markets, like many others, are very integrated, and that we can produce a lot of those types of goods and services together. We're much more reliable suppliers to each other than, potentially, other countries might be. That is a major focus at this point.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Blaikie. That ends round one.

We will now begin the second round, with Ms. Alleslev for five minutes.

Go ahead, please.

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

Thank you very much.

Thank you to our witnesses for such an important conversation.

I'd like to start with some of the thoughts around COVID and the comments you made around its being a priority on the to-do list. Up until now, we've had a co-operative agreement between the U.S. and Canada on the production and procurement of critical medical supplies. I'm wondering whether the conversation has begun around how we might secure some of the vaccines that are currently being produced in the U.S. Could you share the progress on that conversation?

[Michael Grant]

Thank you very much for the question. I'll take a crack. Then if Steve wants to come in, that's fine.

Just to go back to the road map and the discussions last week, I think what you see is a pretty comprehensive engagement on all things COVID. That includes ministers and officials from a slew of departments, whether on the health side or the border side, just really ramping up their engagement.

When it comes to vaccines, to my understanding we have an agreement with a company for the provision of 20 million doses of vaccines from the United States. As it stands, we're looking forward to those deliveries. We have not seen anything to indicate that there would be any disruption to that.

Steve, do you want to come in?

[Steve Verheul]

I will, only to add that certainly, as you've described, Michael, on the vaccine side there's work going on.

The issue that I'm more focused on and that some of our teams are more focused on is how we make sure we're in the same space as the U.S. when it comes to what we're both going to be doing on COVID recovery and the economic issues related to that—the whole issue of building back better, which also draws in the environmental and climate change issues that have been mentioned before. The integrated economy and resilient supply chains are the kinds of issues we're focusing on. Obviously, vaccines are a priority, but there's much more we're doing with the U.S. in relation to COVID and its implications.

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

Perhaps you could share some of the terms and conditions. What will the criteria be in terms of your conversations with the U.S. about when and how the border will open up?

[Steve Verheul]

Well, we have not set a specific point in time for when the border will open up. As you know, the border is open for essential services now, so we are having trade going back and forth to a very significant degree. What's being restricted is people coming back and forth across for more personal reasons or visits or vacations and that kind of thing.

We're focused on making sure that the economic trade that goes back and forth between Canada and the U.S. is preserved—and it has been preserved—but we're still restricting the travel for other reasons, and we intend to continue to do that.

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

My question, sir, was around the criteria and conditions, because there are businesses in my riding indicating that there still are challenges, significant challenges, in getting across the border. It is impacting their ability to do business and their economic security and viability.

Canada needs the border to open up, not at the risk of any kind of health safety, so we recognize there's no time, but the real question is, what are the conversations and what are the criteria that we'll use? How will we know when we might be able to...? What kinds of things need to be in place, be they numbers of vaccines or numbers of infections? Give us an idea so that we can start to understand what those criteria and milestones need to be in the conversations you're having with the U.S.

[Steve Verheul]

Well, that's certainly something that's beyond where I work. I'm focused more on the economic side of things and am not involved in those kinds of issues. I know that when there are issues related to companies or businesses that are trying to get back and forth across the border, there are processes in place to try to ensure that we are allowing that trade to continue.

When we'll get back to normal and all of those other kinds of issues are more up to the health authorities, and certainly more up to other people who are more directly involved in those issues than I am.