Foreign Affairs Committee on May 30th, 2017

[The Chair, Liberal, Bob Nault]

Thank you, Ms. Laverdière.

Mr. Sidhu, please.

[Jati Sidhu, Liberal, Mission—Matsqui—Fraser Canyon, BC]

Thank you, Mr. Chair.

Thank you for your remarks this morning.

I'm a member from British Columbia, and I'll be speaking specifically on the port situation there. Things have changed at the government level, but Madam Clark made a call to ban all American thermal coal coming through B.C. ports. The premier thought at that time that it was an appropriate retaliatory measure against the Trump administration, because it's putting levies on softwood lumber.

I'd like to hear your thoughts on this. Do you agree that it was a reasonable and balanced approach to ban coal? I know it's not B.C.'s jurisdiction. I think the port authority is federal. But what do you make of that comment? Is it going anywhere?

[Wendy Zatylny]

Port authorities are agnostic as to the cargo they handle. We are here to support Canadian government trade and economic policies. As a result, we handle whatever is deemed to be desirable and, of course, legal.

I think the comments that were made at the time by the premier point to what I've been talking about all along, which is this notion of symbiosis and interconnectedness. Whether that specific threat were to be acted upon or was simply a way of highlighting the activity that takes place on both sides of the border, the point I made earlier is very true: we are integrated. Valuable cargo from the U.S. goes to Canadian ports and vice versa. A supply chain serves both sides of the border, so if you try to make one unilateral change in one area, you have to be conscious of the impact on the whole picture, because it will have an impact on the whole picture.

What I took from of the premier's comments was her pointing out of that interconnectedness.

[Jati Sidhu, Liberal, Mission—Matsqui—Fraser Canyon, BC]

At the same time, she said that the expansion of ports in British Columbia wouldn't be affected by stopping the thermal coal going to the U.S. Is that true? If you're restricting the traffic but still trying to expand the ports, how does it fit into that puzzle?

[Wendy Zatylny]

Ports, especially the Port of Vancouver where thermal coal goes, which she was referring to, are multi-use ports. They handle a variety of bulk cargoes, as well as container traffic, as well as the cruises I talked about. On the cargo side, if there's a drop in any one type of cargo, the port and its supply chain partners and its business partners would be looking to augment with other types of cargo, whether increased container traffic or increased bulk in other capacities.

[Jati Sidhu, Liberal, Mission—Matsqui—Fraser Canyon, BC]

On a different issue, there's Bill C-23, the agreement on land, rail, and marine transport. As we know, 12 million passengers are pre-cleared before going to the U.S. every year. Do you think the proposed bill would extend the system to other modes of Canadian transportation? Are you familiar with the bill?

[Wendy Zatylny]

I am familiar with it. It's not an area that we've looked at too closely, because most of the pre-clearance we deal with is on the cruise side, and the issue has not evolved that much. The only area that has touched one of my members has been through Toronto, which is also an airport, and they're supportive on the pre-clearance side.

[The Chair, Liberal, Bob Nault]

Thank you, Mr. Sidhu.

We'll go now to Mr. Fragiskatos, please.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much, Chair.

Thank you for being here today.

I read the op-ed you wrote in 2014 in The Globe and Mail and learned a few interesting things. First of all, I didn't realize that 90% of everything we buy travels by ship. That's an extremely interesting point.

You also cite a 2012 World Bank report that said Canada ranks 14th in terms of efficiency of clearance processes as well as trade and transport–related infrastructure. That report, as I said, was put forward in 2012.

Has there been a significant change from that time in terms of where we rank? I'm not asking you to cite the most recent World Bank report. If you know it, great, but in your view, have we improved, and how else can we improve upon that ranking of 14th, if we're still there?

[Wendy Zatylny]

I can cite the report, only because the numbers are so easy. It's a biennial analysis, so in 2014 the World Bank did another analysis, and at that time we had jumped from 14th to 12th.

Again, going to the point I made earlier, the World Bank points out that it's not the absolute ranking that is important for a country, but it's the percentile within which you find yourself. Given that Canada is such a trading nation, by that measure we are punching below our weight. We ought to be among the top 10 of the world's most logistically efficient trading countries.

What they point to in the report.... Again, there is work to be done, some on customs pre-clearance activities, which certainly CBSA has been moving forward on. Then they did point again to infrastructure requirements and infrastructure investment as being another way of vaulting us into that top 10.

[Peter Fragiskatos, Liberal, London North Centre, ON]

A number of commentators have pointed out recently, particularly in the context of the view of and approach to trade that's being seen in the United States, that Canada ought to expand its list of trading partners and move along to achieving free trade agreements with a number of other countries. Certainly we've moved in that direction, concluding an agreement with the EU, but there is now talk of China and India. Vietnam is a very interesting country in terms of the volume of trade between it and Canada. There is also Japan, and many other examples beyond Asia.

As we move down this path—if we do move down it, and I hope we do—could you speak to what would need to be in place from a port authority's perspective, from your organization's perspective, on how to best be ready for that shift in direction?

What do ports need from the Government of Canada? What kind of further supports need to be offered for you to best be ready for a shift in direction toward trading more with various partners and not exclusively, more or less, with the United States?

[Wendy Zatylny]

Well, as the global trading patterns shift and evolve, part of any government policy, any trade policy, is to look at those shifting patterns to see how we can capitalize on them. Concurrent with that is the equipment that actually serves to move all of this stuff around, the 90% of everything that moves around the planet at one point or another.

There are two things that we watch: one is the changing global trading patterns, and the other is simply the size of the ships. We've seen a lot of changes within the global maritime industry. The ships are considerably bigger. The container ships back in the early 1990s were in the 4,000 TEU range. Those are like small feeder ships now for the 22,000 TEU ships that are currently being built. These ships are three times the length of football fields. They have huge drafts. They require much greater landside infrastructure to offload and then process all of that out of the port, get it on to rail or on to road.

I keep talking about infrastructure, but that is a major competitive area for us. As the shipping lines move towards larger ships—larger, deeper, longer—we, as ports, have to have the infrastructure in place: the longer turning basins, the bigger cranes, the bigger landside connections. We also need the data processing capability to be able to manage all of that, to handle the cargo efficiently. That's one area. Again, because we are seeing these ships crossing the oceans, coming in from Asia, from Europe, we have to be able to respond to these bigger ships. Therefore, infrastructure investment is one area.

The other, again, is on the regulatory side, to give the ports financial flexibility, through borrowing, permitting, and letters patent amendment processes, so that they can respond as change within the global maritime sector speeds up.

[Peter Fragiskatos, Liberal, London North Centre, ON]

I asked the question because, as you pointed out, 90% of what we buy travels via ship. If there's going to be a greater volume of trade, then obviously we have to be prepared to deal with that.

Thank you very much.

[The Chair, Liberal, Bob Nault]

Thank you, Mr. Fragiskatos.

Mr. Genuis, please.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you, Mr. Chair.

Thank you, again, to the witnesses.

I thought your testimony was very interesting. It was a good reminder. You talked about a kind of circuit connection, the interconnection of the markets for different goods, which on its face might not seem in any way related.

I wonder if you can talk specifically about what might be some of the less noted consequences of the softwood lumber tariffs that the U.S. government has imposed. Are there ripple effects in other markets as a result of these tariffs?

[Wendy Zatylny]

That's an excellent question, and to be honest it's not one we have looked at very closely. It's something I'm afraid I'd have to go back to the membership on and get back to you.

I can speculate in terms of cargo movement, and certainly the government has talked about opening up other markets for lumber products which would then be flowing through the Canadian ports, whether through bulk ships or in containers. We'd see an increase in cargo flow if we do open up those markets, but that's about all we can say right now.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Okay, fair enough. Even that's obviously contingent upon the opening up of other markets.

If you have subsequent information that you are able to send to the committee in the context of written submissions later on, I think it would be appreciated, .

I'd like to ask a little about energy exports through our ports. The government has legislation before Parliament now that would, in a legislative way, formalize what had previously been policy for this government to not allow the exports of energy products out of northern British Columbia. That happens, of course, in the context—speaking of the Canada-U.S. relationship—where there are oil tankers coming from Alaska in that same area, the same waters. It's just that the jobs associated with the exports of that are American jobs, not Canadian jobs.

What is the situation with the Kitimat port, the opportunities that might exist there with energy export opportunities that might be lost with this legislation, and perhaps opportunities for energy export to the United States that will be missed as a result of this or that could be made up in some other way?

[Wendy Zatylny]

Kitimat is not a port authority, but if I'm not mistaken in my geography, Kitimat is now within both the tanker exclusion zone and the oil spill prevention zone. We look at it from the point of view of the port authorities, which simply means that any of the petroleum product that is available that would have gone out through Kitimat will go out to Vancouver. Again we're agnostic on what cargo is handled. We are here to support the government's policy priorities. That said, the port authorities in all cases have been getting ready and are working with their various terminal partners to be able to plan for and go for that increased capacity should it come.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Speaking of the interconnections among different products, do you know if the expansion of energy exports enhances the circuit that somehow facilitates importation of other products, or are there impacts of other products expanding our energy export capacity out of, say, Vancouver, since that's obviously within your jurisdiction?

[Wendy Zatylny]

The same kind of back-haul system that I talked about has not evolved in the Great Lakes, because the carriers of the products are unique. But I think there is a lot of potential to be looking at the export. Capturing the technology and the knowledge as well around the new fuels such as LNG gives us great potential to expand in a whole area that we haven't been before to serve a global market.

[The Chair, Liberal, Bob Nault]

I think we'll have to wrap it up there. I want to thank Ms. Zatylny for her presentation on behalf of the port authorities. I think we forget sometimes the importance of our ports. Some of us don't. I come from the railway industry. So shipment of grain to and from Thunder Bay and other ports has always been on our mind.

One of the things that our committee is looking at is obviously the future of our infrastructure, and ports are a very big part of that. I think that's what some of our colleagues were alluding to. If there are studies and analyses done of the direction we will have to take as a country vis-à-vis shipments and ports and the regulatory structure necessary to be competitive, we would very much appreciate your sending them to us to be part of our study.

[Wendy Zatylny]

It would be our pleasure, absolutely.

[The Chair, Liberal, Bob Nault]

Thank you very much.

Colleagues, we're going to take a quick break and then come back for five minutes' worth of committee business, hopefully. Doing so will allow us not to sit on Thursday.

Take a break for a couple of minutes, and then we'll come right back at it.

[Proceedings continue in camera]