Economic Relationship between Canada and the United States Committee on April 1st, 2021

[The Chair, Liberal, Raj Saini]

Welcome, members, to the seventh meeting of the Special Committee on the Economic Relationship between Canada and the United States. Pursuant to the motion adopted by the House on February 16, the special committee is meeting to discuss the economic relationship between Canada and the United States.

Today we're moving forward in our work and will be starting our examination of buy American procurement policies. To open this topic for us, we are fortunate to have the Minister of Small Business, Export Promotion and International Trade here today.

In addition to the minister, we have from the Department of Foreign Affairs, Trade and Development, Steve Verheul, assistant deputy minister, trade policy and negotiations; Arun Alexander, director general, North America trade policy bureau; Doug Forsyth, director general, market access; and Eric Walsh, director general, North America strategy bureau. I thank the witnesses for agreeing to spend this time with us to enlighten us on this very important topic.

Minister, you have five minutes for your opening statement for us. I want to thank you again for sharing your time with us and the floor is yours.

[Mary Ng, Liberal, Minister of Small Business]

Thank you so much.

Chair Saini, honourable members, thank you for the opportunity to appear before the committee to speak about the long-standing, unique and mutually beneficial trade relationship between Canada and the United States. As many of you know, back in February our government held its first bilateral meeting with the Biden administration, where we launched the road map for a renewed U.S.-Canada partnership, which lays out an ambitious plan for going forward together to address the pandemic and to build back better.

Just last week I had my first meeting with Ambassador Katherine Tai, the newly confirmed U.S. trade representative. We discussed our countries' close relationship and agreed on the importance of keeping our integrated supply chains open and resilient.

Our ongoing engagement with the new administration offers us the opportunity to strengthen our trade relationship.

This includes working together on implementation of the new NAFTA and engaging constructively on trade issues, such as U.S. tariffs on Canadian softwood lumber and solar products, and buy American provisions.

Canada and the United States have a trading relationship like no other two countries in the world. Every day, $2.7 billion worth of goods and services cross our borders. Canada is the top destination for U.S. exports and 32 states count Canada as their top customer.

Our cross-border trade is critical to workers, to businesses, and to families and communities on both sides of the border, providing stability and good jobs to Americans and Canadians alike. It is a testament to our relationship that as of January 2021, Canadian exports to the United States have surpassed their pre-pandemic levels. That's a good sign for the economic recovery from the COVID-19 pandemic. Our integrated supply chain means that Canada is able to easily export its cutting-edge products into markets in the United States.

Let me give you an example. IPEX is an Ontario-based company that is bringing its innovative, made-in-Canada environmental solution to the U.S. infrastructure industry by recycling vinyl in its products and making sustainable earthquake-resistant water main pipes.

I can tell you unequivocally that Canada and the U.S. are committed to growing our already close relationship—which is made even easier with the new and modernized NAFTA—and supporting both countries in a strong economic recovery from this pandemic.

I would also like to spend a little time on buy American and buy America. The terms “buy American” and “buy America” are often used interchangeably and mistakenly. Buy American requirements mandate that all American federal government departments purchase only U.S. goods. The U.S. Trade Agreements Act of 1979 waives buy American requirements for countries that are party to the WTO Agreement on Government Procurement and other U.S. free trade agreements. As Canada is party to the GPA, buy American requirements are waived for Canadian companies.

Buy America requirements, on the other hand, are different. Buy America requirements vary between the departments and agencies, but in general they are applied to iron, steel and manufactured goods used in infrastructure projects and in most cases require 100% U.S. content.

Here I understand the concerns of Canadian businesses that export and trade with the United States, but let me be clear: We will always stand up for Canadian businesses and workers, and we will continue working as one team Canada to ensure stability and prosperity for our industries. Also, as I mentioned earlier, I raised this directly with both President Biden and the U.S. trade representative, Ambassador Tai. We are committed to working together to reinforce our deeply integrated production of goods and services and mutually beneficial economic relationship, and to avoid negative impacts on jobs or businesses.

With respect to softwood lumber, there is no doubt that it is an important industry to the Canadian economy and to our trade relationship with the United States. Let me begin by stating unequivocally that the duties imposed by the U.S. on Canadian softwood lumber are unwarranted and unfair. They hurt workers and industry on both sides of the border.

Canada continues to strongly believe that a negotiated agreement with the U.S. is in both countries' best interests.

Again, I raised this directly with both President Biden and Ambassador Tai, and I will continue to actively engage with key elected officials on this issue. We're taking a team Canada approach, working hand in hand with the softwood lumber industry and provincial and territorial partners on all fronts to ensure Canada and the United States can come to a conclusion on this matter.

Let me conclude by saying that our government is absolutely committed to standing up for our workers and businesses and finding opportunities to strengthen our relationship with the United States.

I look forward to working with my colleagues on all sides of the House to ensure success in Canada-U.S. trade relations in the interest of all Canadians.

With that, Mr. Chair, I'm happy to take questions.

[The Chair, Liberal, Raj Saini]

Thank you very much, Minister, for your opening comments.

We will go straight to questions.

For the first six minutes, to lead us off, we'll go to Mr. Lewis, please.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Chair.

Thank you very much, Minister. We certainly appreciate your time. We all know that time is very precious, so thank you for that.

Minister, my riding is the riding of Essex. It's down by the busiest international border in all of North America, next to Windsor. I appreciate the fact that the government says it will always stand up for Canadian workers and businesses, but, Minister, there's a major issue here with regard to trade. The trade starts at the border. The trade doesn't necessarily mean the trade of goods going back and forth. The trade is actually the people who go with the goods.

Windsor-Essex is hemorrhaging business to the U.S. and to Mexico, specifically in the manufacturing sector but also in our small business sector. What's happening, Minister, is very simple. Law-abiding, legal visa holders who go back and forth across the border are being told to quarantine for 14 days or face very hefty fines, along with their employees and their customers who come and literally spend two hours on a shop floor right here in my backyard to approve a product. I have met with so many advanced manufacturers. We really need to deem our business owners, our employees and our customers an essential service, just like the Province of Ontario already has.

Have you, Minister, had any discussions with either the Minister of Public Safety Bill Blair or your U.S. counterparts to begin to resolve this problem?

[Mary Ng, Liberal, Markham—Thornhill, ON]

Having spent quite some time in your neck of the woods, I understand how important the trade relationship is between Canada and the U.S., particularly from the vantage point of where you are. It really is very much about people. It's about those businesses, and it's about how they are able to work together.

We are in a global pandemic. We have, throughout this period of a year, been able to keep the borders open in, I believe, a very successful way. We have groceries on our shelves. We have medical supplies and critical goods and equipment crossing both borders. In that respect, I believe this long border is and continues to be a success.

We do acknowledge it is the effort of all of us, Canada and the U.S., and certainly here in a whole-of-government approach, my colleagues Minister Blair and the health minister, to work together to make sure that we are truly maintaining that balance. What is that balance? That balance is keeping Canadians healthy and safe and—

[Chris Lewis, Conservative, Essex, ON]

Thank you, Minister. I'm sorry. I don't have very much time.

We have groceries on shelves, thank goodness. What we don't have is new contracts coming to Canada. We are losing these new contracts because we can't get the customers over here for two hours.

Minister, e-petition 3297 was tabled with the Clerk. It is now up on the House of Commons website for signatures as of last Monday. Are you aware of this e-petition? Basically, it calls for this: to deem business owners, their employees and their customers an essential service, just as the Province of Ontario has.

[Mary Ng, Liberal, Markham—Thornhill, ON]

I'm looking forward to taking a look at that petition, now that you have raised it with me. I would say our top priority is to fight this pandemic and keep Canadians safe. Essential services and goods are moving across the border. We are absolutely balancing that—the commerce between the two countries—and keeping Canadians safe.

There is a light at the end of the tunnel with vaccines, for sure, and as I said earlier, our trade numbers have resumed to pre-pandemic levels between Canada and the United States. We are going to keep doing this, but we must keep Canadians safe from COVID-19. We have introduced a lot of—

[Chris Lewis, Conservative, Essex, ON]

Thank you, Minister. I appreciate that.

Mr. Chair, how much time do I have left, please?

[The Chair, Liberal, Raj Saini]

You have about a minute.

[Chris Lewis, Conservative, Essex, ON]

Thank you very much.

I'm sorry to cut you off, Minister. I truly apologize, but it's not often that I get an opportunity to speak to a minister.

So, Minister, I guess I am asking this: Will you commit to bringing this issue forward to Minister Blair, as well as to your U.S. colleagues? All they're asking for, and what I know is absolutely vital to our economic recovery, is to give clear and concise direction to the CBSA and to PHAC to deem these workers essential, just like our truck drivers. It's the exact same thing.

Literally, there is great food on the grocery shelves, Minister, but it's not hitting the tables of Canadians, because people are losing their jobs. Would you commit to this, please?

[Mary Ng, Liberal, Markham—Thornhill, ON]

I commit to working as hard as I can to make sure we fight COVID-19 and continue to do what we need to do to keep Canadians safe. We are going to do that. We are going to help small businesses get through this, to bridge them to the other side of COVID-19. The health of Canadians and the economy and the economic recovery are absolutely connected.

That is our commitment as a government. We are keeping Canadians safe, supporting businesses—all businesses, including small businesses—helping our businesses continue to export and continue to find opportunities and customers in the international marketplace like the U.S. All that work continues. All of this is in an effort to get us on that road to recovery, one that is stronger because Canadians are healthy and safe.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Lewis.

We will now go to Mr. Housefather for six minutes, please.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thank you, Mr. Chair.

Minister Ng, it's a pleasure to see you. Thank you for the extraordinary work that you and your parliamentary secretary have been doing on this file.

I will share some time with Ms. Bendayan.

I wanted to give you the opportunity to clarify for Canadians exactly what we're talking about here. As you said in your opening statement, there's the 1933 Buy American Act; there's the 1983 buy America act, and then there's President Biden's recent executive order. Then, there are all the different places Canada is exempt from “buy American”, whether through the GPA or the USMCA.

Could you talk to the committee and to Canadians about exactly what the biggest concern is about the President's recent executive order that would change things under either “buy American” or “buy America”, and how you are working with your colleagues to handle that?

[Mary Ng, Liberal, Markham—Thornhill, ON]

I want to thank the honourable member. It's very good to see you. It's too bad I'm not able to see you and everyone in person, but I hope that will come soon enough.

As I said in my opening remarks, “buy American” refers to an act that the American administration enacted, and because Canada is a party to the WTO's GPA—the government procurement provisions—we are exempt from “buy American”.

“Buy America” may apply to greater American content, and it is here that I have, for sure, heard from Canadian and American businesses and workers on both sides of the border, because they understand the value of open procurement markets. In fact, any restrictions on that will actually have a negative impact.

Our supply chains are so integrated and we work so closely together. In fact, we build together and we innovate together. I just want to assure the committee that if there is any expansion into greater content requirements, we are going to actively work on that to defend and to ensure that there is no impact on our critical supply chains and Canadian businesses and Canadian workers.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thank you so much, Minister.

I just have one more question before I turn it over to Ms. Bendayan.

I know you've been working closely with employers groups and unions on both sides of the border in order to ensure that Canada's perspective is heard loudly and clearly in Washington and in the different states applying the executive order.

Can you talk about the collegiality of that relationship and how that's working out?

[Mary Ng, Liberal, Markham—Thornhill, ON]

Absolutely.

I think that everyone here will have experienced the strong team Canada approach that we have taken for the last five years. Today is no different. I think that we need to continue this very strong approach around team Canada, working with interlocutors with the USTR, but also with other legislators in the U.S.

Our ambassador is working hard at this, as are my cabinet colleagues. I would invite all of you to also work together with us so that we can advocate with this strong team Canada approach, engaging U.S. stakeholders, decision-makers at all levels of government, the workers and civil society.

We'll demonstrate our value. The integration of how close we are and how close our economies are, these are the stories that I am able to share. This is the case that I get to make and that we all get to make to our interlocutors in the U.S. but also to Canadian businesses and American businesses that operate in Canada.

We want to be sure that we are keeping these integrated supply chains and these relationships open in such a way, because it is not only beneficial to Canada—of course it is—but it also serves as a benefit to American workers and American businesses as well.

We are both committed, both countries, to building back better, to this road map between Canada and the U.S., and we have ambitions to also tackle climate change together. There's a lot of great Canadian input into the American infrastructure industry.

These are the opportunities, and I would encourage a strong, continued, team Canada approach in this advocacy.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thanks so much.

Rachel, I pass it over to you.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you.

Just picking up, Minister, on that advocacy, I had the opportunity to speak to many members of the Canadian American Business Council, as well as others. There does seem to be real organization on the ground, just as there was when we were negotiating the new NAFTA, to ensure that our American friends and counterparts understand the importance of this for both our countries.

In light of the fact that, just yesterday, President Biden made an announcement regarding the $2-trillion infrastructure plan that he is looking to roll out, I wondered if you could perhaps speak to Canadians and to this committee about the importance of moving forward, but also that we do have some time to get this done.

It is my understanding that there is no bill currently on the floor. Also if we look back to recent history, in 2010, the last time we were able, as a country, to gain an exemption from buy America, that was done after the bill was introduced in a separate agreement.

Perhaps you can give us a little bit of context regarding the strategy going forward.

[Mary Ng, Liberal, Markham—Thornhill, ON]

Let me start by saying that our government will always stand up for our Canadian workers and our businesses.

If there is an effort to expand or to introduce new domestic content requirements, of course we will absolutely work to ensure that this is not applied to Canada or affect Canadian supply chains. Whether it be the Prime Minister, the Deputy Prime Minister or me, through our interactions with the President, the vice-president and the USTR, we emphasize that workers in the U.S. and Canada benefit from our integrated, secure and resilient supply chain and that strengthening this trade relationship is really important to avoid any unintended consequences that may arise from any buy America policy.

However, I would say that we have a lot in common. Building back better and building back the green economy are really important. I would be remiss if I didn't talk about how green our steel production is. We are a global leader. Canadian aluminum producers have the lowest carbon footprint in the world and are innovating. Our transportation sector and the inputs into transportation or forestry, concrete and cement are all inputs that are made together between Canada and the U.S., and they go into those supply chains.

We fully will be making the case that working together, building together, will help us tackle climate change, and it will help us build back better in a way that creates jobs for the middle class in America and in Canada.

[The Chair, Liberal, Raj Saini]

Thank you, Ms. Bendayan.

Mr. Savard-Tremblay, you have six minutes.

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

Good afternoon and thank you, Mr. Chair.

Good afternoon to my colleagues.

I'd like to thank you, Madam Minister, for being with us today.

I'd like to make a connection or parallel with what we could also do here. So I'm going to take you somewhere else.

You talked about the Buy American Act and Buy America provisions. In the U.S., there's also the Small Business Act, which allows between 23% and 40% of American public purchasing to be reserved for domestic SMEs, or American SMEs, of course.

To counter this type of measure, couldn't the government adopt a similar policy here?

[Mary Ng, Liberal, Markham—Thornhill, ON]

Thank you very much for that question, dear colleague.

It's always great to see you again.

The work that we do [Technical difficulty—Editor] for sure.... For me, as the minister responsible for small business and international trade, simply put, I help businesses start up, scale up and access new markets every single day. I put in the entire tools of not only the federal government but our work with partners to create more opportunities for Canadian businesses.

I'm very pleased that in our newly negotiated NAFTA there are provisions that actually have a chapter, which we're excited to work on, particularly for small and medium-sized businesses. Remember, 99% of our businesses are SMEs here. Only 12% export today, so you can see the opportunities to export. In the new relationship with the U.S., Canada and Mexico, there is a dedicated chapter for small and medium-sized businesses that provides us access to this market, and we've done that with all of the progressive agreements that we've negotiated as a government.

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

Of course. This type of agreement is often defined by the supply of shares in partner countries' government procurement. In the specific case of

[Mary Ng, Liberal, Markham—Thornhill, ON]

I'm waiting for the interpretation.

Can someone just check the translation, Mr. Chair?

[The Chair, Liberal, Raj Saini]

We're okay.