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

[Jean-François Tremblay]

Everything has urgency, so, yes, there is urgency to establish a relationship with the U.S., with the new stable administration. That's why it was so important for the ministers to have the first call with the secretary, and that's what happened. It was important for the two leaders to meet early on and that's what they did.

The United States of America has also demonstrated its interest in working with us and in establishing a structural relationship and a positive relationship.

Yes, it's urgent for us to sit down with them and demonstrate how they benefit as much as we do from the integration of our markets.

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

When I worked in the government here in Manitoba, I worked with a gentleman who had a saying that if everything is urgent, nothing is urgent. I think that's some pertinent advice for you.

[Jean-François Tremblay]

I wish he were right.

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

What I'm hearing is that there is no quantifiable concern about the potential impact of buy America on the Canadian natural resource industry. Is that fair?

[Jean-François Tremblay]

I don't have numbers today to present to you or to share with you; that's true.

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

Thank you very much for that.

I guess this is more of a philosophical question. I was kind of taken aback by the minister's pivot, if you will, to the fact that Canada is a capitalist country and that it therefore wouldn't engage in any kind of industrial planning.

You must look at what other countries do with respect to their natural resources.

I also sit on the trade committee. We've heard about how other countries have industrial plans for various natural resources sectors despite being capitalist countries. Do you think there's an inherent conflict between being a capitalist country and doing industrial planning?

[Jean-François Tremblay]

I think we need to find the right incentive for the market to actually play the role that we expect it will play. If you look at the climate change plan, it's basically what we're trying to do. When you look at the clean fuels, when you're thinking about CCUS in the U.S. and here, you're thinking about how to create the incentive. As well, as government you can use a mix of carrot and stick for the market to adjust, for the market to go in the direction that the future is demanding.

That's not necessarily industrial planning in the old Russian way of doing things, if I may say, but it is—

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

Yes, although nobody was talking about that at committee today. We're just talking about government having a plan for an industry.

One example of an industry for which we don't have a plan, and which I wouldn't expect you to speak to because it's not a natural resource industry, is the airline industry.

For instance, Canada stands apart from our western allies in not having any kind of meaningful strategy for the airline industry, whether we're talking about aerospace manufacturing or passenger air travel. There are no stated objectives. There is no clear policy for how to support the industry. We have a government that, I think, mistakenly thinks that just because it believes in the market, it is discharged of any duty to do any meaningful planning or having a meaningful policy approach to certain industries—and I don't think Canadians are well served by that.

[Jean-François Tremblay]

If I can respond first, on our side, as you have noticed, we have a hydrogen strategy that just was released, which is in some ways a plan for how we will actually capitalize on the potential of hydrogen for the future. We have an action plan for SMR that was also launched in December.

As one of my colleagues mentioned, we are working on a critical minerals plan with provinces. We have been on this for a little while, so actually we do work on plans.

We also work with industry on where we should go, how we can help and how we work together on those issues.

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

I take it that the minister was mistaken then to appeal to capitalism to absolve himself of responsibility for doing any planning.

Thank you very much.

I think that's the end of my time.

[The Chair, Liberal, Raj Saini]

Yes, Mr. Blaikie. Thank you very much. You are right on time.

The next five minutes goes to Mr. Strahl.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thank you very much.

As we look at the Canada-U.S. relationship in relation to natural resources, I think we have to look at the last four years, certainly, due to policy shifts, I would think, from both sides of the border. There was a massive expansion of oil and gas exploration in the United States, to the point where they quickly became a net exporter of oil and gas for the first time. They were no longer as reliant on foreign oil and gas as a result of expansion, specifically in the Permian basin. At the same time, Canada saw a contraction of our energy sector.

Given the new direction of President Biden's administration and a number of signals that he sent, do we anticipate that there will be a contraction in the U.S. oil and gas exploration market that may be beneficial to Canadian oil and gas producers, if they are no longer producing as much? He's talked about a ban on fracking and that sort of thing. Are there opportunities for Canada to be selling our oil and gas into the States more, based on what we're seeing in the early days out of the Biden administration?

[Jean-François Tremblay]

I think so. I think you're right that there's been a significant.... People forget to mention sometimes how big it is. Even 10 or 20 years ago we were talking about the fact that there was not enough oil and gas. Suddenly, we end up in a surplus world where everybody is producing oil and gas. That's a very big shift. Recently, we had a price war between some countries, which affected us tremendously.

When you look at the numbers now, we are actually exporting significantly to the U.S. We were at 3.9 million barrels per day before the pandemic. We were at 3.7 million, I think, in November, so we're basically back to where we were.

Line 3, of course, would increase the capacity to transport oil to the U.S. TMX will do that too. We are a reliable partner for the U.S. If we keep going in terms of decarbonizing our industry, if we keep going with best practices in terms of governance and social acceptance, and if we continue to be a partner like that, there will be a market for us in the U.S. and there will be a market for us in the rest of the world.

In all scenarios of the net-zero economy, a significant portion of oil and gas remains for the next 20 to 30 years. There's no reason why Canada will not be the supplier for this market.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Okay.

I want to go back to a comment you made in response to my colleague Ms. Alleslev, when you said that there is no plan B. I'm hopeful that this might just be confidence that we can succeed in maintaining Line 5 and the tens of thousands of jobs that are attached to it. I remember when there was a significant disruption of propane to Quebec and parts of Ontario through a rail blockade. It quickly became a crisis. There was rationing of propane in certain parts of the country.

Perhaps you can expand on this a little further. Yes, we all want to win this debate. I would say that probably there was similarly no plan B for Keystone XL, and now that's cancelled. I would hope that there is a plan B, that government is actively working to see how we would keep those critical supplies of oil and the products that are created from it, and that we aren't simply hoping that the courts go our way or we can negotiate a settlement or this really isn't about Line 5 but rather about political drama and political intrigue in Michigan.

I just have to say that I hope there is more planning going on behind the scenes. We all want Line 5 to continue to operate, but we sure expect there to be contingency plans in place. I'm hoping you can share a little bit more about what those are.

[The Chair, Liberal, Raj Saini]

I'm sorry, Mr. Strahl. You're out of time unless Monsieur Tremblay can answer in 15 or 20 seconds.

[Jean-François Tremblay]

In 15 or 20 seconds, I will say that we of course have internal collaboration with our different departments—like we did at the time of the barricades—on how we work together in any circumstances. We also have, as I mentioned, regular discussions with provinces, and we also talk to the industry, for sure.

[The Chair, Liberal, Raj Saini]

Thank you very much.

Mr. Sarai, for five minutes, please.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you, Chair.

Thank you to all the officials who are guiding us.

Mr. Tremblay, I want to thank you for your frankness. Sometimes we get officials who are not as frank and as open as you are. I applaud that.

I want to stay more focused on Line 5. I'm more concerned.... I think that perhaps the issue is being made much bigger. If we can stay focused on it, we would be able to better deal with it. The real issue is the short part of the line that goes under a strait. There is an application by the owner of the line to bore a tunnel, encase it in concrete and then have the pipeline go through it, to protect it. It's not the entire line that is at risk.

What are your conversations like with officials in Michigan, as well as the officials federally in the U.S., your counterparts there? How is their optimism for working on a solution for that or perhaps accelerating permits to have that short length built so that we can resolve this issue?

[Jean-François Tremblay]

I would turn to Glenn, who has been in touch on a regular basis, especially with Enbridge, to maybe give us a sense of the current discussions that are happening at the state level.

[Glenn Hargrove]

Thank you, Deputy.

Thank you, Mr. Sarai. It's nice to see you again.

I would maybe deflect a bit, given that the advocacy efforts are led by Global Affairs and those officials have spoken, and we know the ambassador will be speaking with you as well.

Maybe I could speak to the tunnel issue, if that's okay. Certainly, you're right, Mr. Sarai. It is that segment of 4.5 miles in the strait that's at issue. I'd just like to underline that Enbridge is working toward the tunnel, which would move that segment of the pipeline underneath the strait, the riverbed, and that's about a four-year process. They're working on the permitting. That permitting would go until about the end of this year or so, and then, of course, it's a fairly involved construction process, so that's about a three-year process.

Certainly, we're looking for a solution that would allow for the continued safe operation of the pipeline in the interim, and we support the plan for the tunnel going forward.

[Randeep Sarai, Liberal, Surrey Centre, BC]

With regard to your conversations with the executives at Enbridge who are working on that, what is their optimism like, or what is their feeling on getting this resolved, getting a solution and also having an interim solution in terms of monitoring that length of the pipe? I understand that there are divers that regularly check it, and there are other means by which they check it regularly, but what are they doing and how have their dialogue and their correspondence been?

[Glenn Hargrove]

They're very interested, of course, in having a negotiated solution. As the minister and I think the deputy mentioned, the court has directed for mediation between the state and Enbridge. I would also say that Enbridge has indicated publicly that it disagrees with the state's order for a shutdown and does not believe that the state actually has the authority to do so. I'm not a lawyer. I won't comment on that, but that is Enbridge's public position on it.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Mr. Tremblay, we heard from our minister that we have contingency plans in the event that we'd have to, whether we train it or truck it or ship it. That's for our needs, but has Michigan hinted at or stated anything about how they would manage their energy needs if they shut down Line 5?

[Jean-François Tremblay]

It's the supply chain itself that finds its way. The way it works as you have seen—and Mr. Strahl referred to the barricades, for example, in the past and what happened at the time when the rails were struck. The train used different rails to ride to the station.

[Randeep Sarai, Liberal, Surrey Centre, BC]

But I'm sure the governor—