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

[Kirsten Hillman]

Thank you.

First, the buy America policies that favour the purchase of American goods exist at the federal and state levels. At the federal level, some policies may apply in Canada and some may not. The policies that don't apply to us are the requirements of the Buy American Act. So if you hear about the requirements of the Buy American Act, they don't apply to Canada. We have WTO exemptions for those types of policies.

The buy America policies pertain to the money sent by the United States federal government to the states to fund projects, especially infrastructure projects. Right now, the policies apply to purchases of iron, steel and certain manufactured goods.

These programs exist, and we must live with them.

The question is whether the Biden administration will strengthen these programs and whether it will add more goods to the list.

I don't think that this will happen on a state-by-state basis. I think that they'll add certain goods instead. It's important to note that there are many things that we don't know. It will really depend on how they implement the policy.

For example, the executive order passed about a month ago doesn't affect us at all. We must study it. We must understand the details in order to determine how and if we'll be affected. If we were affected—I may be answering another question—we would have a number of good arguments for why it shouldn't apply to Canada.

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

Can we work more with the states themselves, and not just with the federal government?

[Kirsten Hillman]

Absolutely.

We need to work with everyone. We need to work with unions, the business community, members of Congress, governors and community legislators, because that's where the jobs are. Honestly, buy America policies are mostly policies that, as I said in my opening remarks, ensure that supply chains between Canada and the United States create jobs. This creates many jobs. When supply chains are cut, jobs are lost. We must reach out to these people, in the communities where jobs are at risk, to discuss the implications of the proposed policies.

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

You spoke about the need to work with the governors. As you know, there's currently a dispute with the governor of Michigan.

Is there a strategy to allay the governor of Michigan's fears and anxieties regarding Line 5?

[Kirsten Hillman]

I must say that I'm not an expert on this matter. However, based on everything that I've read, I'm sure that the project is safe. The governor has some concerns about it.

As I said a minute ago, the company, the governor and us, as mediators, must find a solution. These discussions involve both facts and our relationship. We must see what we can do to move the discussion forward.

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

Absolutely.

You said that you aren't an expert in science. That's normal, to each their own field.

Someone must be right. The governor expresses her fears and the company claims that it's safe. Who is telling the truth? There must be a way to decide, to prove, to demonstrate that, from a scientific perspective, one or the other is right.

[Kirsten Hillman]

Indeed. That's why I think that it's a very good idea for the federal government to ask both parties to find a mediator to facilitate these discussions.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Savard-Tremblay.

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

Thank you.

[The Chair, Liberal, Raj Saini]

Next up is Mr. Blaikie for six minutes.

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

Thank you very much.

Thank you, Ambassador, for the time you're spending with us today.

There's been a lot of high-level talk about the opportunities to have a united front against climate change and about some of the economic opportunities that might present themselves as a result of that. I'm wondering if you could give a little more detail in terms of what some of those opportunities are and what Canada is planning to actively pursue with the new Biden administration.

[Kirsten Hillman]

Thanks. That's a good question.

One, I would refer you to the road map that has been recently agreed to. I would say that this road map is incredibly substantive. I've never seen a leaders' statement with more concrete projects articulated in it. I say that truly. I've never seen anything quite like it.

In that, you'll get some very concrete ideas about some of the areas that we see as priorities right away and key opportunities right away. In the United States, vehicle emissions, transportation emissions, are the number one source of greenhouse gas, so there is a very strong effort here. It's a key priority of the Biden administration to work to decarbonize the transportation sector. We all know that certainly with respect to the automotive sector we are deeply integrated with the United States.

We also know that Canada has access to critical minerals that the U.S. is interested in for the purposes of battery technology, which is important for that transportation transformation. We also have some really interesting innovation taking place in a number of provinces around battery technology. That is very important to them. It's a huge opportunity. It's already a highly integrated sector. We have a lot of know-how and knowledge to share. That is very much something they're interested in. So that would be one—

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

If I may, I'm just curious to know.... I mean, when we talk about Canada having those resources, I think Canada also has an interest in doing the value-added work and not creating a situation where we're simply mining raw materials and then sending them to the U.S. for the manufacture of batteries. It's much better to sell finished batteries into the U.S.

Is there any concern about buy America specifically, or the posture of buy America, interfering with the ability to develop that value-added work in Canada and sell finished product into the United States?

[Kirsten Hillman]

No, I don't think so. Actually, I think it's quite the contrary. Our critical minerals action plan that we work on with the United States—we have been for a couple of years now—is a whole supply chain project. It is specifically designed so that all elements of the supply chain exist within our country as well.

It's the same thing for battery technology. It will be an area where we'll incentivize and work towards developing that technology and doing that manufacturing in Canada. I'm sure the U.S. will do it in the United States as well. The goal, and this was discussed last Tuesday, was to make our two countries the leaders, at the forefront, getting out ahead of other blocs of countries that might also be looking to be leaders in this technology and in this manufacturing. So the answer is no, not at all.

There are two other things I would mention. There's the transportation and vehicles sector. The Biden administration will also, in order to meet some of their targets—and they've said this very clearly—have to work to decarbonize their energy sector and their electrical grid. There we have an awful lot to offer as well in our hydro. We have hydro abilities across the country. We have a new project—it's not that new anymore, I guess—between Manitoba and North Dakota, I believe, that came online last year. You're from Manitoba, I think, so you would probably know that.

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

I am indeed.

[Kirsten Hillman]

There you go. There's that, and of course in Quebec and Ontario. These are really, really important projects. They provide a lot of opportunities for us.

The U.S. is very interested in carbon capture. They're very interested in technology around ensuring that there isn't leakage—I'm not sure I'm going to get all these words right—and capping oil and gas productions that are no longer being used to make sure that no leakage is inadvertently coming out in those areas; again, if I get the words wrong, I apologize.

That's also something we have a lot of experience with. We have some really good innovations in Canada around carbon capture in particular, and other technologies. I see a lot of opportunities here.

Frankly, I think we're ahead of the Americans in a lot of really important ways. We should leverage that. We should leverage that to make sure that we are able to continue to be ahead or at least be partners of choice for them as they move in these directions.

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

Right on.

I see that I don't have very much time remaining.

[The Chair, Liberal, Raj Saini]

You have 30 seconds, Mr. Blaikie.

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

I do want to ask this question, so maybe I'll set the stage, and when I get a couple of minutes on the back end of this round, I'll come back to it.

I am curious. We heard from trade committee officials at the last meeting that there's very little chance that Canada would get any kind of blanket exemption for buy America, so I'm wondering how on the climate change front, and in light of some of the partnerships on climate that we may be undertaking with the United States—and I hope we do—we might gain exemptions to the buy America policy on the basis of a North American climate change strategy.

We do have companies like New Flyer here in Winnipeg, for instance, which manufactures electric buses, companies that can do a lot to help states and municipalities in the U.S. lower their carbon footprint. Ensuring that those Canadian products and services can get into the American market may become an important part of their own strategy, so we're looking for opportunities to ensure that buy America isn't getting in the way of a continental strategy to combat climate change.

I'm out of time. I recognize that, Mr. Chair, but—

[The Chair, Liberal, Raj Saini]

You were out of time a long time ago, but I didn't want to ruin your frame of thought. We'll come back to that.

We're now entering the second round. For five minutes, we have Ms. Alleslev.

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

Thank you very much, and thank you, Ambassador, for being here.

I wanted to discuss just quickly the criteria for the border to be opened. We are losing jobs. We do need to open the border as quickly as possible, and we don't want to jeopardize health and safety—absolutely. In order for people to plan, we absolutely need to understand what the American criteria will be for it to open, and also the Canadian criteria. What are the specifics that need to be met in order to be open?

[Kirsten Hillman]

I understand that question, and I understand the need that's driving it. As I said, talking about what's happening at the border is a regular feature of my responsibilities here.

What I have to say to that is that we've been in touch already with the White House, with the COVID committee at the White House, and obviously with the Department of Homeland Security. The border was discussed between the leaders. What's clear is that the Biden administration is going to want to move to that discussion in the same way they're moving through everything they're doing down here on COVID, which is stepwise, carefully, very planned out, listening to their scientists, listening to their experts—

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

Do we have an idea of when we might have that information? It's critical when we can.... They're looking to have their population vaccinated by May. We're six months after that. Obviously, supply chains will resume when we are able to be open. They will be open before us, potentially, and therefore our supply chains may be excluded. When will we know what their criteria are so that we can get there as quickly as possible?

[Kirsten Hillman]

I'm afraid I can't say when we're going to know. I can say that we talk about it all the time.

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

Thank you—