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

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

I don't know if anybody else [Technical difficulty—Editor].

There's another issue that many of my constituents, especially businesses, are facing. Because we're so close to the border, many businesses have U.S. Postal Service boxes—any number of them in my riding—where they order American goods to be sent so they can make their products, but these people have had no access to the postal boxes for a year now and are facing orders from the U.S. Postal Service that it's going to destroy the products.

Is there any relief for these people who can't go across the border just a kilometre or two or three or four to pick up these materials so that they're not entirely wasted? As I say, they've been waiting a year now for this.

[Steve Verheul]

I think certainly the whole arrangement that we have with respect to the restrictions that have been placed on movement back and forth across the border between Canada and the U.S. is under continual review. We are certainly aware that we have extended that restriction on a regular basis, but again, I'm afraid the issue you describe is not something that I deal with directly myself. I can certainly get in contact with others who are more engaged in that and see if we can get you an answer.

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

Could you comment very briefly on the question I asked Minister Ng about the forest products that we are shipping to the United States, the building materials, that aren't facing softwood lumber tariffs, things like engineered wood and mass timber.

How do they rank in these buy America restrictions?

[Steve Verheul]

Again, at this point, the U.S. has simply not indicated what exactly they're going to apply in terms of Buy America restrictions when they get to that. We do see the potential for timber of various types to be potentially captured by the new requirements, but at this point we do not know and the U.S. has not specified how broadly they're going to apply these requirements. That's something we'll be watching very closely.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Cannings.

We'll now move to our second round of questions and to Ms. Alleslev, for five minutes, please.

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

Thank you very much, Mr. Chair.

Thank you to our witnesses.

We know that the buy America provisions include iron, steel and manufactured goods. Do we have a comprehensive list of all the items that are subject to or included in buy America?

[Steve Verheul]

We don't at this point. We know, as you say, that traditionally buy America approaches have included iron, steel and manufactured products. We have heard some suggestions that this could be expanded to cover construction materials such as cement, aggregate, asphalt and potentially other products. Again, though, the package that was announced yesterday has none of these specifics, so we're going to have to wait to see how this evolves as it starts to move through Congress to determine what kind of coverage the U.S. may be considering.

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

In the past, would we have had a list?

[Steve Verheul]

We probably would not at this stage, because although this is a plan that has been announced by President Biden, it has to go through the legislative process in the U.S. We anticipate that many changes will be made, but particularly with respect to the buy America provisions, there is very little in what was announced yesterday. It does not provide specifics, so we're going to have to wait and see how that comes out.

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

Are you working on a tentative list and therefore the dollar value impact of that tentative list, so at least we can get some idea of just what the size and scope of this challenge might be?

[Steve Verheul]

At this point we're not looking at assigning specific values. We are talking to all the industry representatives that are associated both with what has been covered in the past as well as what could be potentially covered in the future. We are seeking information from private sector representatives, companies and organizations to make sure we have a clear handle on what the potential concern could be, so that we are well positioned for that.

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

Canadians need to plan. Businesses need to plan, so we kind of have to have an idea, and I'm sure, to negotiate, you need to have some kind of rough order of magnitude of just what the size and scope is.

Would you be able to share that rough order of magnitude with Canadians?

[Steve Verheul]

I'm afraid we simply don't have that yet. As I mentioned, we have too many unknown variables right now. We don't know how extensive the U.S. coverage will be. We've started talking, and have been for a while, to the relevant potentially affected sectors in Canada. We're getting information coming in from them. We're also working with other departments, so we're fully engaged on this, but at this point I'm afraid it's premature to give you any kind of number.

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

Even for the ones we've already defined—iron, steel and some of the manufacturing goods you listed—when do you think you might have a rough order of magnitude of the dollar value?

[Steve Verheul]

That is hard to predict, because although we have the President's plan, this is now going to move through the congressional process. It's going to be changing quite significantly through that process—

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

It's not really subject to the plan though. We know how much iron was sold to Americans in the past for these types of infrastructure projects, do we not? Therefore we could extrapolate based on a.... We're not talking exact, but we're talking a ballpark here. We know the categories and we know what has been procured in the past, so is that not enough information to start looking at a rough order of magnitude?

[Steve Verheul]

It's certainly enough to start looking. We have never seen a U.S. infrastructure package of this magnitude in the past, so that's one consideration that's going to be a complication.

We don't know exactly what it is going to be applied to. We have an outline with the plan announced yesterday, but that will change over time. The nature of the projects involved, the extent to which there may be buy America restrictions.... These are all, unfortunately, still unknowns at this point. We are still trying to gather as much information as broadly as we can, so that we're prepared to address whatever scale the end result might be.

[The Chair, Liberal, Raj Saini]

Thank you, Ms. Alleslev.

Now for the next five minutes, Ms. Bendayan, please.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you, Mr. Chair, and thank you to all of our witnesses.

It's a pleasure to see you, as always, Mr. Verheul.

To pick up on this important point that Ms. Alleslev raised, I must say that I'm a bit perplexed by even the question. Yesterday, what was announced was a $2-trillion plan by President Biden, but we still have no bill. There's still no list of projects and so there is still nothing to quantify.

Would you agree with that, Mr. Verheul?

[Steve Verheul]

Yes, absolutely. Moreover, it's not only that we don't know a lot of the quantification of all of that, but also that we fully expect that what was announced yesterday will change because of the legislative process in the U.S. Then, when it comes to the buy American provisions in particular, there was no specificity in the announcement yesterday. We will have to wait to see exactly what they intend to do.

[Rachel Bendayan, Liberal, Outremont, QC]

If we look at recent history on buy American.... For example, when we looked at the experience under the American recovery act that was passed in February 2009, I believe that Canada's agreement with the United States for limited exemptions at the time from buy American under that act came into force one year later in February 2010. An entire year passed from the moment the bill came into effect to the time we received our exemptions.

Is there anything you'd like to comment on about our experience in that regard and what we might look toward in this particular instance?

[Steve Verheul]

I think, in light of the experience we had during that infrastructure package, we should be very clear that our window is quite small. We need to get in very early. We need to lay the groundwork and start having those discussions with the U.S and start ensuring that Canadian interests are protected right from the beginning.

The difficulty, as you mentioned, with that previous case was that by the time we had an agreement negotiated, a significant proportion of the funds had already been spent and we missed out on that. We don't want to have that happen again.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you. That's very helpful.

Just to clarify a point made earlier by Mr. Strahl, he made an analogy between the United States' position on buy American and its position on Keystone XL, stating that Keystone and buy American were campaign commitments. I was just on the Biden campaign website to be sure and there was no specific campaign commitment to buy American like there was for Keystone XL. I wonder if you see these two situations as quite different.

[Steve Verheul]

I do see them as quite different mainly because, while I think the Biden administration has come out early and said they were supporters of buy American, and making jobs in America and providing significant help to economic recovery, there are really no concrete specifics associated with that. So, unlike the Keystone situation, which was a very specific issue and the message was very specific, here, yes, they would like to pursue policies that are going to pay for Americans, as any country would, but all of the details behind that are still to be developed. That's where our opportunity lies, to be able to talk to the U.S., which has indicated a willingness to talk to us about this, about how we can design this in a way that would benefit both of us and not come at our expense.

[Rachel Bendayan, Liberal, Outremont, QC]

Mr. Chair, with your permission, do I have time for one more question?