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Evidence of meeting #5 for Foreign Affairs and International Development in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was energy.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

André Plourde  Professor, Department of Economics, University of Alberta
Thomas d'Aquino  Chief Executive and President, Canadian Council of Chief Executives
Sam Boutziouvis  Vice-President, Economics and International Trade, Canadian Council of Chief Executives
David Stewart-Patterson  Executive Vice-President, Canadian Council of Chief Executives
Clerk of the Committee  Ms. Angela Crandall

February 25th, 2009 / 4:55 p.m.

David Stewart-Patterson Executive Vice-President, Canadian Council of Chief Executives

Perhaps I could comment on your last question first, concerning border congestion. I think Canadians are as ingenious as anyone else in dealing with problems that way. One of the reasons, for instance, that we have the opportunity to transform Vancouver into a North American gateway from the Pacific, as a transit corridor into the rest of North America, has to do not only with our domestic infrastructure but with the fact that the port of Los Angeles and the other major ports on the U.S. west coast are too crowded. We have the capacity; people will choose to ship through us.

On the other hand, if the Canada-U.S. border gets clogged up, that starts to count against Vancouver as a gateway, and we have to deal with issues on the land border. The fact that we've seen congestion at some of the major land crossings, such as Windsor, has stimulated greater interest in water crossings, for instance, across the Great Lakes and short routes on inland waterways. If we fall down or get clogged up in one area, people are going to look for better solutions. That's a normal and ongoing process.

4:55 p.m.

Conservative

Peter Goldring Conservative Edmonton East, AB

Was there not some initiative for the Atlantic ports to expand the trade on the American seaboard? Did that actually materialize? Is it due to lack of infrastructure funding to expand and move it? The Canadian ports seem to have the capacity for the shipping, but do the American ports have the capacity for the receiving?

4:55 p.m.

Conservative

The Chair Conservative Kevin Sorenson

Thank you, Mr. Goldring.

Mr. Patterson.

4:55 p.m.

Vice-President, Economics and International Trade, Canadian Council of Chief Executives

Sam Boutziouvis

There is a Pacific gateway initiative that has been under way for a couple of years. It has connected the ports of Vancouver and Prince Rupert further north, through the Prairies and into the U.S. Midwest. There's also an Atlantic gateway initiative that is under way to develop and enlarge the port of Halifax. It will bring in container traffic from India, for example, and get them connected by rail through the eastern provinces into Quebec and the other major areas, the United States in particular, and then link in to the rail networks, which will take such cargo into the U.S. Midwest.

So the answer to your question is yes, sir, there are initiatives under way to target infrastructure so the cargo can be linked multi-modally from the ports of Canada--because we'd like to promote port development in Canada--through our rail system, and then as efficiently as possible through the various Canadian and U.S. border points and into the U.S. Midwest.

4:55 p.m.

Conservative

The Chair Conservative Kevin Sorenson

Thank you very much, Mr. Boutziouvis.

Madame Deschamps.

4:55 p.m.

Bloc

Johanne Deschamps Bloc Laurentides—Labelle, QC

I'm sorry, but I've come a little late and I unfortunately missed your statements. So I referred to the document you submitted. Among other things, I have that of Mr. d'Aquino in my hand. On page 4, you say that the global economic crisis makes it important to launch bilateral initiatives and to strengthen relations between Canada and the United States. You refer to three areas. But where does Mexico stand? Should we make it an equally important partner? We put a lot of energy into developing agreements between Canada, the United States and Mexico. I would like to hear what you have to say on that, on the current economic context.

4:55 p.m.

Conservative

The Chair Conservative Kevin Sorenson

Good question, Madame Deschamps. Very good.

4:55 p.m.

Chief Executive and President, Canadian Council of Chief Executives

Thomas d'Aquino

Thank you, madam.

Mr. Chair, I believe some of the previous witnesses may have dealt with the issue of Mexico. Let me just say that 15 or 18 years ago the relations between Canada and Mexico, other than as a place to go and have a good holiday, were virtually non-existent. Our political relationships were almost non-existent. Certainly our commercial and trade and investment relationships were non-existent. When Canada and the United States successfully concluded the free trade agreement, the very first mission to come to Canada, on the part of senior Mexican business leaders, came very quickly, and the Mexicans said to us, “We now have a new President, we have ivy leaguers in the cabinet, and we want to be part of this free trade agreement.” One of my colleagues said, “You mean sometime in the next twenty years”, and the answer was “No, sometime in the next year or two.”

That really was the first manifestation to many of us in Canada that Mexico had really begun a true revolution, what the Mexicans call apertura, the opening up. Here was a country that had a long and tortured history with the United States, a lot of baggage, a cartelized union structure, and oligarchs in their industry. We found it hard to believe that this country, with roughly 40% of its population in dire poverty, would want to be part of the North American Free Trade Agreement.

The result of that was very, very close and rapidly developing relations between us and our Mexican colleagues. We developed deep, deep friendships that went right up to the level of working closely with the last four Presidents. And as you know, with the approval of NAFTA, that model became the first model in the world where a country that was truly a developing country had signed a free trade agreement with two of the richest countries in the world.

We then had NAFTA, and then we had the SPP, and those relationships have continued to develop and deepen. To us, the Mexican relationship, as I mentioned in the paper, is extremely important. I say that because Mexico is a country of roughly 100 million people. It's a country that has a very big footprint on the continent, particularly on the United States. The two-way trade and investment has grown quite exponentially.

We see a lot of potential, going forward. We like the Mexicans. We work well with them. Therefore, in our view, Mexico should be a top priority—along with the United States, the European Union, China, India, and Japan—as a country we have to devote a lot of time to.

Let me conclude by saying we've had little bit of a dispute with some of our close colleagues—some of them, I think, may have appeared before you—who have argued that trilateralism has worked against us, that every time we have to engage in discussions in North America that involve trilateralism, it results in the Canadian-American relationship being somehow dumbed down.

We've had some direct experience with that. There is some truth to it. That is one of the reasons, while we still strongly endorse trilateral cooperation, we are now pushing much more strongly for intensification of bilateral relations with the United States and bilateral relationships with Mexico. We think it's very, very important to do so with Mexico because, frankly, if you look at the growth of trade investment and the growth of political relations between our two countries, you will see that in the next five to ten years Mexico will be a major factor for Canada as well.

5 p.m.

Bloc

Johanne Deschamps Bloc Laurentides—Labelle, QC

In an entirely different connection, I see that your organization will be organizing a summit of Canadian business leaders in Washington on March 23 and 24. What will be on the agenda there? What are your priorities?

5 p.m.

Chief Executive and President, Canadian Council of Chief Executives

Thomas d'Aquino

We're going to talk about a lot of things we've already talked about. First, we'll be talking about the Canadian economy and that of the United States, about the economic crisis and about the importance of very close cooperation between these two countries.

Second, we'll be talking about energy and climate, because they're very, very important.

Third, we'll be talking about trade relations and investment in both countries.

Fourth, we'll be talking about security. We'll talk about national defence, but also about the security of borders between Canada and the United States.

Lastly, we'll talk about the cooperation that must absolutely exist between Canada's political agents—including you—and those of the United States. That's very important in our minds because your presence and your influence in the United States makes it possible to increase Canada's influence in general. Those are the main points that will be on the agenda on March 23 and 24.

5:05 p.m.

Conservative

The Chair Conservative Kevin Sorenson

Thank you, Mr. d'Aquino.

We'll go to Mr. Goldring for a very quick question.

5:05 p.m.

Conservative

Peter Goldring Conservative Edmonton East, AB

Thank you, Mr. Chairman.

To return to the question of our own capacity and sustainability on energy and the problem we had last summer, do we ourselves not have the refinery capacity? Is there a difficulty with the environmental approvals to build a refinery? Is it a conflict with the Americans or some type of trade with them because we send them a lot of crude? What is the status of having our own sustainability on refined products?

5:05 p.m.

Chief Executive and President, Canadian Council of Chief Executives

Thomas d'Aquino

Professor Plourde no doubt has a very good answer for you.

5:05 p.m.

André Plourde

I think you mean energy sustainability in Canada in the sense of continuous supplies being available.

5:05 p.m.

Conservative

Peter Goldring Conservative Edmonton East, AB

What I mean is so we don't have that shortage that hit—-

5:05 p.m.

André Plourde

First of all, it's very different for electricity, natural gas, and oil.

As we found out in August 2003, the grid is very much interconnected. When things go wrong, things go wrong. It's very hard to fix. It could easily be systemic and create a lot of problems.

The natural gas market is a continental market. It's a market that really operates in North America, outside any reference to what's going on in other parts of the world.

5:05 p.m.

Conservative

Peter Goldring Conservative Edmonton East, AB

What about the refineries?

5:05 p.m.

André Plourde

The crude oil market is a world market, but the refined product market is largely a North American one. It is extremely expensive to have inactive capacity that you can just turn up. It's not like electricity; you don't have to meet peak demands at times. So you have a lot of excess capacity to do that.

In terms of refined products, there has been very little new construction of refineries in Canada or the United States. It's just not commercially viable to create more refinery capacity. It's much better to expand what you have, to revamp what you have. What's happened is that the intensity of use of the existing refining capacity has grown a lot in both Canada and the United States. So essentially, when things go wrong—and things happened at a time when the refinery capacity was being switched from the summer run to the winter run, as it turns out, so things happened at the wrong time—there's not a lot you can do to protect yourself that's cost-effective, either from a public policy perspective or a commercial perspective, to meet these kinds of once-in-very-few-times events.

As you know, in Edmonton there have been issues about diesel recently because of refinery problems. These are just the consequences of market arrangements working that way.

5:05 p.m.

Conservative

Peter Goldring Conservative Edmonton East, AB

Thanks. That's all.

5:05 p.m.

Conservative

The Chair Conservative Kevin Sorenson

Thank you.

Mr. Dewar.

5:05 p.m.

NDP

Paul Dewar NDP Ottawa Centre, ON

Thank you.

I want to move from my questions on the environment and energy and where we go from here to some of the processes that had existed. I'll go to Mr. d'Aquino on this.

Some of us are very critical—no news here—about the SPP. I don't get a sense that it's going anywhere. We had Mr. Hart here at the committee recently, who basically said, “So what? It's fine. Don't worry about it.”

The reason that many people were upset was the process. It seems we have a government, in the States at least, that says they want to do things differently. Would you acknowledge that if you're going to talk about shared responsibilities, which is what was purported to be in regulation, it might be a better idea to do it in the light of day?

We didn't have any insight. There was much more debate in this country on free trade because we knew what was on the table. Insofar as explaining the SPP to my constituents is concerned, taking out all the politics—which was plenty on both sides, I admit that—I couldn't tell them anything in terms of what's in there. There was no document to say here's what's in it; let's see if it's something we should accept or not.

Would you acknowledge, though, that the process was problematic?

5:05 p.m.

Conservative

The Chair Conservative Kevin Sorenson

Mr. d'Aquino, I'll ask you to answer it, but I will make reference to your earlier testimony where you mentioned the dark cloud of the SPP. You may want to break through some of that cloud and—

5:10 p.m.

Chief Executive and President, Canadian Council of Chief Executives

Thomas d'Aquino

I think it's really important that we all be very frank with one another.

In my organization in 2003 we launched a major initiative; we called it the North American security and prosperity initiative. We didn't charge any royalties when the three governments in 2005 signed the Security and Prosperity Partnership of North America, but when we put the original idea together, we had a very simple goal in mind.

We saw after 9/11 the great potential threat of what would happen to Canada, to our jobs, our industries, our families, should there be a continuation of terrorist attacks on the United States. It was our view first that a wonderful way to launch the 21st century would be to acknowledge that the economic integration between Canada and the United States was irreversible, in the sense that we had gone so far that we should acknowledge it in one way or another and make it work better—especially make it work to the advantage of Canada—and second, that you will never have a secure North America unless all the constituent parts take security equally seriously.

The biggest problem the Americans had was with Mexico. The southern border of Mexico, as a Mexican President has said, is an open sieve. There are huge problems with “securing North America”, from the point of view of our most southern neighbours.

What we were really trying to do is say that if we just leave it to individual departments—agriculture to agriculture, environment to environment, and trade to trade—we're never going to have a vision here; we're never going to have something that's going to occupy the attention of people in the White House and make them try to fix some of these things.

The whole idea behind SPP was to try to raise this idea and this vision to a bigger level, so that people could begin to get excited about it and say yes, of course, we'll do it. The term “three can talk and two can do” was coined, if you remember, to allow for the differentiation between what Mexico and the U.S. did and what we and the Americans did. But basically we said the border is our top priority.

Second, there are areas of regulation where harmonization would make us more competitive. We acknowledge that the greatest threat to North America—frankly, I never use the word “threat”, but always use the word “challenge”.... The greatest challenge to North America, other than that coming from the terrorists, came from competition, particularly from Asia. How were we going to respond—our auto industries, our financial industries, all of this? And we thought, why not under a major umbrella, where we could capture the attention of two Presidents and a Prime Minister to talk about these things?

The same thing applied in the case of resources. Here we were, the largest foreign suppliers of energy to the United States, and the vast majority of Americans didn't know about it. How could we, to use Professor Plourde's term, get better leverage on that?

And likewise with the idea of a security perimeter, we thought that if we could establish effective perimeters beyond our borders, then we would no longer have nearly so much of a problem with our Canada-U.S. border.

That's basically what was behind it.

Mr. Dewar, you're absolutely right that SPP was a big fog to people, and you're right that it became a subject of frequent attacks by your party, certainly by my friend Maude Barlow and others—

5:10 p.m.

NDP

Paul Dewar NDP Ottawa Centre, ON

In other words, in the past—

5:10 p.m.

Chief Executive and President, Canadian Council of Chief Executives

Thomas d'Aquino

No, but it was. And the SPP—