Economic Relationship between Canada and the United States Committee on March 4th, 2021

[Jean-François Tremblay]

Yes. That's why I said that, in the future, there will still be demand for gas and oil, but that the demand will be stringent. People are looking for the cleanest possible oil and gas. Investors increasingly want to make sure that they're investing in companies that follow these rules. We must be leaders in this area, because it will help us ensure access to markets.

We're increasingly seeing these changes in international markets. That's why we need an American ally that shares the same environmental and energy decarbonization goals. We can carry out this transformation together with our biggest customer.

I spent some more time this week with representatives of the oil industry. Our discussions focused on these specific topics. We're talking about energy decarbonization and carbon sequestration. We're wondering how to make our oil more attractive to people by ensuring that it reflects their desired values.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you, Mr. Tremblay.

[The Chair, Liberal, Raj Saini]

Thank you, Ms. Bendayan.

I appreciate the conversation.

I want to thank the officials for taking the time and answering all the questions in a fulsome and comprehensive way. I really appreciate that. Thank you very much for your time and for spending this time with us.

I will suspend for a few moments while we bring on Ambassador Hillman.

[The Chair, Liberal, Raj Saini]

Welcome, Ambassador Hillman. I really appreciate your taking the time and spending this time with us.

Before I introduce you, I need to do some housekeeping.

Welcome back, members. For the benefit of our new panel, I will outline the procedures. To ensure an orderly meeting, I would encourage all participants to mute their microphones when they are not speaking and to address all comments through the chair. Interpretation is available through the globe icon at the bottom of your screen. Please note that screen captures or photos are not permitted.

Thank you very much, Ambassador Hillman, for joining us today. I don't think you will remember, but I spent some time with you three years ago when I visited the embassy as a member of the foreign affairs committee. I was very impressed by the professionalism of the staff and all of the colleagues you have there, and by the way in which they conducted relations with one of our most significant partners and allies.

I want to welcome you. Thank you very much for taking the time.

I understand you have some opening comments. The floor is yours for five minutes.

[Her Excellency Kirsten Hillman, Ambassador of Canada to the United States]

Thank you very much, Mr. Chairman.

Hello, everybody. Good afternoon.

I'd just like to say that in my time in Washington, I've seen first-hand the strength of the Canada-U.S. relationship in general and our economic relationship in particular.

About $2.7 billion worth of goods and services cross our shared border every day. Roughly three-quarters of Canada's exports go to the United States. Moreover, Canada is the number one customer for more than 30 American states. In fact, the United States sells more goods to Canada than it sells to China, Japan and the United Kingdom combined.

But we don't just sell to each other. We make things together, from auto parts and components that cross the border multiple time in the production of a final vehicle, to the animals that are born on one side of the border, raised on the other and travel back again for slaughter or food processing.

Also, of course, COVID has brought to light another very important example. Canada is a top supplier to the U.S. of critical PPE and PPE inputs, including for masks, gowns and ventilators, and Canada is a main market for U.S. exports of PPE and PPE inputs, including cleaning compounds and soaps, needles and syringes.

Simply put, as President Biden said last Tuesday, the U.S. has no better friend than Canada, and there's no country in the world that wants the U.S. to succeed more than Canada does. Our prosperity and also our security are fundamentally linked in an enduring way.

The breadth, depth and significance of the relationship was clear when the Prime Minister and the President met last week—virtually. It was the President's first bilateral meeting with a foreign counterpart since taking office. The leaders released a road map that outlines dozens of concrete commitments for Canada and U.S. collaboration in the coming years.

Of course, for both our countries, the top priority is to end the COVID-19 pandemic. The leaders agreed to strengthen collaboration in that regard, and they agreed to take a coordinated approach, based on science and public health, when considering when to begin easing border restrictions.

They discussed their shared vision for an economic recovery that creates good-paying and secure jobs in both countries and ensures that the benefits of economic growth are shared more widely. The pandemic has not affected everyone equally, and that's true on both sides of the border, so they also announced a joint initiative to help small and medium-sized enterprises recover, with a focus on supporting women-owned and minority/indigenous-owned businesses.

The President and the Prime Minister spoke of the importance of our deeply interconnected and mutually beneficial economic relationship. The reality is that economic recovery in Canada and in the U.S. will be faster, stronger and more enduring if we move forward together. That's why the President and the Prime Minister launched a new strategy to strengthen Canada-U.S. supply chains, and that's why they recognized the important benefits of the bilateral energy relationship and its infrastructure.

In terms of climate change, there are opportunities to work together internationally, but also at home, where we can align policies and approaches to create jobs, while tackling carbon emissions. To that end, the leaders agreed to create the necessary supply chains to make Canada and the United States global leaders in battery development and production.

Given the focus of this committee, I'm highlighting the economic elements of the road map, but the leaders also made very concrete plans to extend co-operation on continental defence, cybersecurity, cross-border crime and the Arctic. They discussed ways to align our approaches on China, including how we deal with China's coercive and unfair economic practices, national security challenges and human rights abuses. They discussed the arbitrary detention of Michael Kovrig and Michael Spavor, and the President committed to work for their release.

Canada's relationship with the U.S. is strong. It's interdependent, and it's multi-faceted. It's precisely because of this interdependence that decisions on one side of the border are often very impactful on the other, so while we work together on these many shared goals, Canada must also be vigilant in advancing our priorities and standing up for our interests clearly and strongly.

We learned from our experience in negotiating the new NAFTA that a team Canada approach is constructive and effective. Working towards the same goals and consistently presenting compelling facts to our U.S. counterparts in the administration, Congress and all levels of government has proven to be successful.

I'd like to conclude by saying that this is a very exciting time in the Canada-U.S. relationship. There are many opportunities for Canada in the years ahead in working with the Biden administration, and I think we're very well placed to seize them.

Thank you. I'll be happy to answer your questions.

[The Chair, Liberal, Raj Saini]

Thank you, Ambassador Hillman.

We'll go to MP Lewis for the first six-minute round.

[Chris Lewis, Conservative, Essex, ON]

Thank you so very much, and thank you for your very awesome words. I was listening very intently on that front as well, so thank you for that.

You did mention a couple of things that I kind of keyed in on. You spoke first about the government being so concerned with ensuring that small and medium-sized businesses recover, and then you also spoke about supply chains that work together. You also spoke to the fact that Canada and the U.S. have a big impact on each other.

I'll be honest with you. Down here in my riding of Essex, very near Windsor, the busiest international border, I will suggest that we're really struggling. We're struggling dearly. Canadian business owners, who have every right in the world to cross—they have their visas—are having problems coming back into our country. They have to quarantine for 14 days and they literally cannot run their businesses.

If we are indeed going to have the border open and we are indeed going to take care of both countries, including small and medium-sized businesses, have there been discussions as to how we can come up with a solution so people don't have to be afraid to cross the border and then be quarantined for 14 days?

[Kirsten Hillman]

Maybe I can just start by saying that for a year now I've had discussions about every two weeks, sometimes a little bit more often, with the Department of Homeland Security regarding the Canada-U.S. border. Those discussions are around our policy objectives with respect to the border and what restrictions we feel we need to put in place in order to achieve those policy objectives.

Since the outset, the joint objective that we set with the United States was to minimize and in fact stop non-essential travel but to allow essential business travel to continue. It was a monumental decision, as everybody knows. It was unprecedented, but ultimately as we looked at the data, and as we checked in with each other every couple of weeks, it was clear that that measure was doing what it was designed to do, because truck travel in your neighbourhood and across the country was down by maybe 5% or maybe 7% or maybe 2% or maybe not at all, depending on the week. The actual release of goods into Canada and into the United States, again, was down very little, sometimes not at all. However, the numbers of the rest of the travellers overall at the land border were down, depending on the week, between 80% and 90%.

That seemed to be very important, and it has, I think, proven to be very important in controlling the spread in our communities.

[Chris Lewis, Conservative, Essex, ON]

Thank you very much for that. I'll go on to my next question.

You mentioned that the team Canada approach was working. The truth of the matter is, at least in my area, it's just not working, because we are losing business to the United States and Mexico hand over fist because our owners, who are putting food on the tables of Canadian families, are not working because they're being quarantined. I have spent hours and weeks on the phone with these owners, and I've heard, “You know what? I'm just going to pick up stock, and I'm moving to the States. I'm bringing business to the States. I'm outta here. I'm gone because I can't afford to send my employees across the border anymore.”

What should we be doing to make sure that we can get to the very cusp of the problem and move that forward? If we indeed are going to open up the border, we'd better do it sooner than later, because just next week Windsor-Essex will be losing business—not small pieces, but huge manufacturing, well-paying jobs.

Do you have any thoughts on who I can grab the phone to call?

[Kirsten Hillman]

I think those decisions with respect to the Canadian border and the way we're managing the Canadian border of course are happening in Ottawa with our border services and CBSA and Public Safety and health officials. We have said since the beginning that we'll make those decisions as a government, based on science and the advice of experts.

President Biden is saying exactly the same thing. When we met with him last week, he said, with respect to the opening of the border, that those decisions will be made based on the facts on the ground, how the virus is progressing, and what the scientists and the experts are saying. We're very much aligned in that respect.

I think we're going to see a very common sense of purpose with the administration moving forward. Of course, we would like to get things back to normal as soon as possible, but ultimately that's not going to be possible until we control the virus in both countries.

[The Chair, Liberal, Raj Saini]

Mr. Lewis, you have 20 seconds.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Chair. I appreciate it. I won't ask a question. I will respect the chair's time.

I would suggest that if there's some way you can get a phone number for President Biden, I would be very willing to talk to him to protect jobs and Canadian families.

Thank you very much for your time. I really appreciate it. It's been an honour.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Lewis, for your intervention.

The next six minutes go to Mr. Sarai.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you, Chair. I'll be splitting my time with Mr. McKay. I'll go for three minutes if you can time me, Chair.

Ambassador, I want to thank you for coming. As we understand, you're here at a very good time. I think relations between the two countries couldn't be better in terms of a lot of the synergies that both governments share, but at the same time, we have several key issues: buy America, Line 5, Keystone XL and softwood lumber. These are four big issues that are challenging us right now, and there may be others. For me, the big one I see right now is Line 5, and the ongoing one close to my heart is softwood lumber.

As to Line 5, we were told by GAC officials that resolving this dispute with the State of Michigan will be through diplomatic means, which is usually how most of our resolutions come about with the Americans. How has the embassy been involved in this conversation around Line 5 with the Governor of Michigan and other state levels?

[Kirsten Hillman]

I'm happy to answer that question.

First, as I answer your question, I would like to say this. From our perspective here at the embassy and obviously from the government's perspective, Enbridge's Line 5 is a crucial piece of energy infrastructure for Canada, but also for the United States. That is a core and principal message that we're giving. We are underlining the fact that a shutdown of the pipeline would have severe impacts for Alberta, Saskatchewan, Ontario and Quebec, of course, but also for Michigan and Ohio.

We have a pipeline here that has been operating safely since 1953, so that's the context in which we have those discussions. We support, full-throatedly and very actively, the continued safe operation of that pipeline. We also, of course, have to underline with our friends from Michigan that we are equally committed to protecting the Great Lakes. They're an important resource for both countries.

We know that Enbridge is committed to those goals as well. I talk with the company very often, and so does my team. They have been seeking to address the concerns of Michigan Governor Whitmer and her predecessor, who also had concerns with the line. Those discussions have broken down. I know that you've heard from a lot of witnesses on this topic over the last week. There's a lot of litigation ongoing in that regard.

Ultimately, I think the solution to this will come about through diplomatic and advocacy means, but it will also come about through negotiations between the company and the governor of the territory through which it's going. It's going to be a combination of all of us working together to find a solution. The company has been mandated by the court to seek mediation with the state in order to see if they can work through some of the differences that they have with respect to this project. For our part—

I'm sorry. Do you want me to stop?

[The Chair, Liberal, Raj Saini]

No, no. Go ahead.

[Kirsten Hillman]

I'm probably taking up your three minutes. I apologize for that. I'd like to get this out on the table, and then all the rest of you can ask me all sorts of follow-up questions.

For our part—the government—we have been advocating for Line 5 continuously, non-stop, since 2017. The issue of this pipeline has been relevant in Michigan for several years, and before this governor, so we have been very active in the region. Our consul general, Joe Comartin, and his predecessor have been very active in the region in making sure that everybody understands the importance of this line for Michiganders and for the United States.

We have made several on-the-record, written comments in support of Line 5 and the proposed tunnel project by Enbridge. We participate in a federal-provincial working group that coordinates advocacy around the project in Michigan, in adjoining states and at the federal level.

It was, of course, raised in the Prime Minister's discussion with President Biden last week. It was raised by the minister, Mr. O'Regan, with his counterpart. It was raised by the Prime Minister with the U.S. Secretary of State. I've raised it with Governor Whitmer several times, and with her predecessor at least a couple of times. It has been active, detailed advocacy for several years now.

Thank you for the time.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Sarai.

We will go to Mr. McKay for about a minute and 30 seconds.

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

Maybe you could wedge me onto some other question at some point or another. I think I got the short end of that stick.

Let me just set the table for the anticipated generosity of the chair. Secretary Tai was recently confirmed by the Senate committee. Possibly she will be the most important secretary we have, and one with whom—I know you know her—we'll have a lot of relationships.

Under the subheading “Rethinking the China strategy” in a recent article, she says some interesting things: that the U.S. needs “a strategic and coherent plan for holding China accountable”, that “China is simultaneously a rival [and] a partner”, that we “can't compete by doing the things China does, so we have to figure out how we can [do things differently]”. She goes on to give several examples, the most significant of which was, “I think the use of forced labour is probably the crudest example of the race to the bottom.”

This is the question I have for you. Is there an active conversation between the Government of Canada and the Government of the United States as to how to align our interests in that sort of discussion?

[The Chair, Liberal, Raj Saini]

I apologize, Ambassador Hillman. You have less than 30 seconds.

[Kirsten Hillman]

The answer is yes. The answer is that the question of forced labour in trade agreements is something we have in our new NAFTA. It is something that exists in the CPTPP. It was an active discussion in the CPTPP, which is an Asia-centric trade agreement, as you may know, and one that's near and dear to my heart.

This is a very active conversation. USTR Tai will be a very interesting counterpart. She is someone I know very well, and she has said that she sees trade policy as a means of achieving important economic ends but also making sure that in achieving those ends we are promoting important values internationally. You've put your finger exactly on one of those things.

Thank you.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. McKay.

Mr. Savard-Tremblay, you have six minutes.

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

Good afternoon, Ambassador Hillman. Thank you for being here today.

If the Biden plan were strictly enforced, what would you suggest as an alternative?

For example, one suggestion concerned piecemeal solutions on a state-by-state basis. Is this a possible approach?

What has been considered so far?

[Kirsten Hillman]

Thank you for your question.

When you refer to the Biden plan, which aspect of the plan are you talking about?

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

I'm talking about protectionism and the Buy American Act.

We know that the Buy American Act isn't really a new law. However, this is about the strict enforcement of the rules already in place.

If the act were strictly and uncompromisingly enforced, what would be plan B?