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

[The Chair, Liberal, Raj Saini]

You have one minute.

[Rachel Bendayan, Liberal, Outremont, QC]

Perhaps, Mr. Verheul, we can just touch on the order of magnitude of this plan that President Biden announced yesterday. We are talking about a $2-trillion infrastructure plan. In your view, in dealing with the United States, do you feel that it would even be necessary for the United States to reach out to other countries such as Canada for raw materials and other resources to fulfill something as large as a $2-trillion infrastructure plan?

[Steve Verheul]

Yes, I would say, given the scale of this initiative, the U.S. will have difficulty in a number of sectors in fulfilling the requirements within the U.S. It would be impossible. Therefore, I think that not only do we have the advantage of being right next door and sharing a lot of values that the U.S. is looking to pursue in this infrastructure package, particularly when it comes to climate change and environment, but also that many of our products can help the U.S. meet its environmental goals, because our aluminum, our steel and many other products are produced in a much more environmentally friendly way than they are in the U.S. That gives us an advantage. The fact that the U.S. won't have sufficient availability of some of these products domestically also gives us that advantage.

We need to get all of these messages into the U.S. early and often to ensure that we will be part of these projects, and not sitting outside watching.

[The Chair, Liberal, Raj Saini]

Thank you, Ms. Bendayan.

Mr. Savard-Tremblay, you have two and a half minutes.

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

Thank you, Mr. Chair.

Mr. Verheul, you often tell us, and rightly so, of course, that you can't comment on a number of things right off the bat because these laws have to be passed, refined, worked on and studied by the various chambers in the United States, of course. That said, you say that you're already active in discussions with the provinces and the industry. I imagine that's the case with discussions with U.S. government officials as well.

You may also be asked what your mandate is, however, what is your objective in this regard?

What would be a win for Canada for you, should there be discussions with the U.S.?

[Steve Verheul]

With respect to this infrastructure project, I would say that what we're really looking to achieve is Canadian products being treated the same as U.S. products under this at the end of the day. If we preserve our integrated market, the supply chains that we have established, it will be a better result for the U.S. as well as us.

It would mean that the U.S. could be more efficient and more environmentally friendly. It would not have the kinds of difficulties that would be created from a competitiveness standpoint, if they were to carve us out. It's really a matter of getting Canada included in all of the elements of the infrastructure package as that integrated market.

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

Ultimately, then, there would be no discrimination between Canadian and U.S. capital, investors, and products. If I understand correctly, that would be the ideal objective for you. I guess you're setting the bar there, but we may come to a solution and a compromise between the two.

Realistically, do you think this objective can be achieved, or do you think we'll come in somewhat below the ideal instead?

[Steve Verheul]

In contrast to some of the past discussions we've had with the U.S. on these issues, they have acknowledged that what they are trying to do could cause disruptions in supply chains, and they've indicated that they want to avoid these kinds of outcomes. We've had direct conversations with them at virtually all levels, and they've indicated an openness to talking to us about coming up with results that would not cause disruptions in that integrated market, those integrated supply chains.

At the end of the day, I think it's recognized that it would not only serve us better but also serve the U.S. better if they don't impose artificial barriers. If they don't, it would lead to a better result economically and environmentally for them. I think it would serve both of us very well if we continued with the kind of integrated market that we have established over a long period of time.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Savard-Tremblay.

Mr. Cannings, you have two and a half minutes.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

My apologies in advance if this is a fairly specific question, but it's of great importance to my riding. I mentioned wine before, but the other big product that has really affected the local economy here for more than a century is tree fruits—apples, cherries, apricots, peaches, etc.

Over the past few decades, British Columbia's fruit production, concentrated in my riding and the rest of the Okanagan Valley, has really been hit by increasing American production. We happen to live across the border from the biggest producers of tree fruits in the world in Washington state, and the real increase in Washington state's production has come because of water from the Columbia River, specifically the irrigation projects driven by the building of the Grand Coulee Dam back in the 1930s, aided by the Columbia River treaty in the 1960s, which guaranteed certain amounts of water to the United States.

Now we are renegotiating that treaty, the Columbia River treaty. It expires in 2024, and I'm wondering if there's anyone here who can comment on the Canadian proposals that would limit any access to specific quantities of water for American agriculture. Right now in the present treaty, that is not included, and the local fruit growers are concerned that they will lose even more in a renegotiated treaty.

Also, what access do they have to redress if, as they felt last year, American products are being dumped north across the border and they just can't compete at 12 cents a pound for apples, for instance?

[Steve Verheul]

Yes, there are certain remedies that we do have available if product is being dumped from the U.S. into our markets, but with respect to some of the issues around the Columbia River treaty, I might ask Eric Walsh who is here as another witness if he has anything he can add on that particular issue. I'm not as familiar with it.

[The Chair, Liberal, Raj Saini]

Make it a short answer, Mr. Walsh.

[Eric Walsh, Director General, North America Bureau, Department of Foreign Affairs, Trade and Development]

Just as a note, Mr. Cannings, the negotiations are indeed under way. We have exchanged initial proposals with the United States, but we haven't yet engaged with the new administration on this file, so we're still waiting to see what their proposals might be.

It is something that we're working on very closely with the affected communities in British Columbia as well, and they are always on our minds as we move forward with this.

[The Chair, Liberal, Raj Saini]

Thank you.

We now go to Mr. Lewis for five minutes, please.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Chair, and thank you very much to the witnesses. It's good to see you again, Mr. Verheul.

I've been talking an awful lot about the border issue, but I'm going to switch gears here a little bit because one of the last things you said, sir, was with regard to the supply chain and how integrated our borders are. I'll be bold here and say that nobody understands that more than me, because the Windsor Chrysler assembly plant has now been shut down for a month. I've got thousands of workers sitting at home twiddling their thumbs because we can't get sensors to put on our vehicles. I very much understand when you speak specifically about the integration of Canada and the U.S.—I'm right there with you.

Even more than that, I would even say this. Today is April Fools' Day, and unfortunately it's not an April Fools' joke that the carbon tax has been increased again. I would suggest that our businesses are once again less competitive with both the U.S. and Mexico.

Sir, we keep hearing about integrated markets and integrated supply chains. Is the government tracking the number of jobs and the value of the GDP we're losing because of the government's inability to negotiate essential workers being able to safely cross the border?

[Steve Verheul]

Unfortunately, I'm not directly involved in that aspect of the work, so I don't know the extent to which that kind of analysis might be going on. As I did mention earlier, there's a continual examination going on about what we should be considering as essential workers and essential travel back and forth across the border, because we do have restrictions on the most significant commercial border in the world. That's a complex process that is continually being re-examined.

I apologize that I don't have any more specific details I can offer you.

[Chris Lewis, Conservative, Essex, ON]

That's okay. No apology is needed. Thank you very much.

I can tell you that this is a very significant issue, and the problem is only going to get worse. It's becoming very much exacerbated not only in my riding but right across Canada, as we continue to lose, hemorrhage jobs, manufacturing jobs—very good and highly paid jobs—with businesses losing contracts hand over fist because they cannot secure contracts due to the border issue.

I'm wondering, sir, have you had any communication with your U.S. colleagues about how we can move forward with this? Has there been any discussion at all?

[Steve Verheul]

I do know that there has been a considerable amount of discussion on this. I have not been directly engaged in that myself, but we have a been hearing from the U.S. side many representations making very similar expressions of concern that operations on the U.S. side are struggling because of the restrictions we have in place.

Obviously none of us would want to have these restrictions in place, but obviously because of COVID some of this has become necessary. It's a question of how we can ensure that this is going to cause the least possible disruption to business activity going back and forth across the border, but that's a very complex issue to try to get exactly right, which is why—

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Verheul.

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

[The Chair, Liberal, Raj Saini]

You have one minute.

[Chris Lewis, Conservative, Essex, ON]

Thank you.

I guess I'm going to simplify it this much. For our commercial truck drivers—and thank you very much to them for keeping commerce flowing back and forth across our borders—it's about this simple. If there's no commerce to go back and forth across the border, be it manufacturing parts and sensors so that Windsor's Chrysler automotive assembly plant doesn't have to get shut down, if there's none of that commerce, I suppose this is a non-starter, a dead issue. However, this is not a dead issue. This is about the economy.

What exactly is happening? What's being done, perhaps behind the scenes, to ensure that we have the flow of the people and to ensure we have the manufacturing that continues to drive our economy?

[The Chair, Liberal, Raj Saini]

We'll have a short answer, Mr. Verheul.

[Steve Verheul]

Well, again, it's not something that I'm directly involved in or responsible for, I'm afraid, but I certainly understand the concern you're expressing.

[Chris Lewis, Conservative, Essex, ON]

Thank you.

[The Chair, Liberal, Raj Saini]

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