Foreign Affairs Committee on Nov. 20th, 2023

[Jacob Irving]

I would agree, and I do think we're about to see that in action with the commissioning of the largest private infrastructure project in the history of Canada on the west coast from LNG Canada, which will be taking western natural gas and sending it to Asian markets.

I think that one of the interesting effects of natural gas is the slow development toward an internationalization of that commodity. Usually the prices are very regional and they reflect local supply and demand. As natural gas starts being shipped around the world, you might start seeing more of an international, global price on it, similar to what you see with oil.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

What policies and regulatory measures could the Canadian government take to facilitate greater exports of Canadian LNG?

[Jacob Irving]

Unfortunately, I don't have recommendations in that regard. That's probably an area where you might want to talk to the Canadian Gas Association.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Let me ask you another question, then. According to StatsCan, Canadian energy exports increased last year, driven by an 8% increase in natural gas. The agency added that, in 2022, the United States increased exports of LNG to Europe and increased its imports of Canadian natural gas to compensate.

Would it not be better for Canada to directly export its own LNG, taking advantage of the higher margins that LNG has vis-à-vis natural gas via pipeline to the United States?

[Jacob Irving]

It's a good question. I think that once LNG Canada is up and operational, we will have a lot more information and data on that, but you are correct. You talk about international co-operation in energy, and Canada and the United States are more interconnected than almost any other countries in the world. There are 70 pipelines and 35 electricity interties. We have been able to shore up North American reserves, allowing North America to send liquefied natural gas to Europe, which, I think, has been very advantageous in the conflict we're seeing.

[The Chair, Liberal, Ali Ehsassi]

Thank you for that.

We now go to MP Oliphant.

You have four minutes.

[Rob Oliphant, Liberal, Don Valley West, ON]

Thanks, Mr. Chair.

I want to begin by thanking you and the clerk for getting us out of the basement. I do think it makes a difference. I do think that was a problem, and I want to thank our witnesses who were not able to connect last time for continuing. I think we will take responsibility for that.

I want to go to Professor Clapp.

I'll put you in a difficult position. I'm listening to all the testimony on this area of food, and I'm trying to discern Canada's role. I want you to help me a little bit with priorities. I know we want everything—everybody always wants everything—but I'm trying to look at what Canada's role would be. I'm looking at delivery of food, increasing production in Canada and getting food out of our country and into places where they need food and can have it at affordable prices.

There's money, dollars for developing countries to buy food. We need to increase that, obviously, but that's also a cost.

Concerning long-term development, you have been talking about it in terms of yields, in terms of sustainable production and in terms of having countries be able to create their own food supply chains, particularly in Africa but not only in Africa.

Then there are diplomacy and multilateral activity, working on all the ways in which countries, particularly the developing world, do the exchange of ideas, laws, sanctions, promotions and engagement at that diplomatic level.

There are four areas. There are probably more, but in my head right now there are four areas. Can you help me a little bit with where you think this committee should be pushing government on our priorities in the area of food security? I'm sorry for the hard question. I know you will say “everything”.

[Jennifer Clapp]

It's a difficult question, and there's certainly a lot on the table with respect to the question.

In terms of what needs to be done, we have to think short-term and also long-term. Immediately dealing with the crisis of food insecurity, it's important for Canada to support efforts towards debt relief. We know that the debt problem is quite dire at the moment in most food import-dependent developing countries, and it's set to get worse. Canada can support international efforts to relieve debt, because we don't want countries having to choose between feeding their populations and paying foreign debts. That's something that can be done, but it can be done alongside other measures, such as providing humanitarian assistance.

I would caution against Canada trying to break into, for example, wheat export markets in new regions like sub-Saharan Africa, because the kind of wheat that Russia and Ukraine have been selling to sub-Saharan Africa is a different quality of wheat than what Canada produces. It has lower protein content, and it's significantly cheaper. I don't think Canada is going to be able to think about breaking into those markets, necessarily. It's better to provide to global markets generally, which can provide liquidity in those markets, which can help reduce prices. I think that's what is necessary for those countries depending on food imports and the continued provision of humanitarian assistance.

All of those things can be done immediately, but I don't think those immediate steps necessarily preclude taking the longer-term steps towards thinking more strategically and carefully about what we need to do to transition to more sustainable forms of agriculture. I think we need to have that conversation in Canada but also throughout...the assistance that Canada provides internationally.

I don't know if I answered your question completely, but I appreciate it, and I don't want to take up too much more of your time.

[Rob Oliphant, Liberal, Don Valley West, ON]

It would be a staged response.

Thank you.

[The Chair, Liberal, Ali Ehsassi]

Thank you, Mr. Oliphant.

We now go to Mr. Bergeron.

You have two minutes.

[Stéphane Bergeron, Bloc, Montarville, QC]

Thank you, Mr. Chair.

I'm going to pick up where I left off earlier.

Mr. Wood, you rightly pointed out that not everyone on the planet has enough to eat or consumes the same number of calories on a daily basis. Ms. Clapp was part of an expert panel on food systems that released a report in March 2023. The report concludes that “never again should countries have to choose between repaying debts and ensuring people are fed.”

Do you agree with that statement by the expert panel Ms. Clapp was on? It seems to suggest that the difficult financial situations of some developing countries is partly to blame for the food insecurity problems in those countries.

[Dr. Geoffrey Wood]

There are two key points on this.

The first is a regulatory point. The world does need to regulate vulture funds better. Actually, I did a book on hedge funds quite recently, and one of the issues was vulture funds. Until those are regulated, there's a structural problem.

The other point about it is that some countries are not going to be viable as places to live, and this is about more than food production. Some parts of countries are not going to be viable as places to live. Again, this transcends food production. Nobody has ever moved a megacity, but if you speak to climatographers, they'll say that you may have to move Delhi; you may have to move Beijing, and you may even have to move LA. Of course, once you have those kinds of big movements of people, even within countries, that changes fundamentally the basis of food production, and it challenges the basis of food supply, so there are big, structural things.

There are two things to take away. The first is the regulation of vulture funds, in terms of debt, particularly in the age of high interest rates. The second is what to plan for the future about some countries not being viable anymore and some megacities not being viable anymore.

[The Chair, Liberal, Ali Ehsassi]

Thank you very much.

We now go to Ms. McPherson.

You have the final questions, with two minutes.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you very much.

I have one quick comment I want to make. We talk about food insecurity and the need to invest in food security. I think Mr. Beasley, the past head of the World Food Programme, said it best when he said that you have the opportunity to pay now or to pay 1,000 times more down the road. It's something that I would like to reiterate.

Ms. Ackermann, I would like to ask you a question.

You spoke about the need to rebuild Ukraine. I was in Ukraine in March and I spoke to members of the government, who were very eager to rebuild. You speak about the need to rebuild in a green and sustainable way and how important that is for Ukrainians. From my perspective, it would be a mistake to rebuild using old technologies that are not forward-looking.

Could you take a moment to tell us a little bit more about that, please?

[Anna Ackermann]

Thank you for the question.

That is absolutely the case. As I said, Ukrainians want to build back better. We are already designing a system. We also have many questions about how transparent the process will be and how well it will be made. Anybody can now go to the website called dream.gov.ua, where all the reconstruction projects will be stored in one place. It's accessible to everyone, so anybody can see, at any moment, from a community launching the project until the end, what it looks like, who is implementing it and what the final result is.

The construction and building standards Ukraine has at the moment are okay. Of course, if we're building for the next generations.... This is something I was mentioning. For renewable energy, autonomous housing and so on, we don't yet have the examples to follow. We have the EU standards, which we need to implement in the coming years. It will be a big job now, of course, as Ukraine is following the path of integration into the EU. This is somewhere we need support. Think about any passive building, for example. The building does not consume energy thanks to renewables and so on, but we don't have a single example, yet, in Ukraine, of such a building.

If we want to build for the future, we need to be thinking together. We already have some great co-operation happening with some big, general plans being developed at the moment. For example, the southern region of Mykolayiv is working with Denmark on rebuilding the region and the city, which was heavily destroyed. Many public buildings were destroyed. They are rethinking the city. How do they rebuild it? How do they change the concept of what the city actually is? This is what we need, of course. Not all of the cities in Ukraine were destroyed. Many are still there. We have to be thinking about things like energy efficiency and so on.

One last thing is this: We have to be thinking about the new economy for Ukraine. This is why I mentioned the concept of the green economy, so Ukraine does not get stuck in things we have been producing already for many years or decades. It's to make sure we are moving forward. As to what that actually means, I don't think we have the clarity yet. This is why we need to have these conversations. International partners should also be able to contribute to making sure we understand what Ukraine could be producing—for us and for the world.

The reconstruction will be a big-scale project for everyone. This is also where we can get hands-on and see how this work development could fit in this new green economy.

[The Chair, Liberal, Ali Ehsassi]

I'm afraid we're out of time, Ms. Ackermann.

Thank you very much.

That concludes our first panel of witnesses.

Allow me to thank all of you for your insights, expertise and time. Let me once again apologize to Professor Wood, Professor Clapp and Ms. Ackermann for having had some challenges in the past. We're grateful that you went out of your way and made the effort to share your expertise with us today. Thank you very much.

I'll remind the members that we're going to require four or five minutes to get the second lineup of witnesses.

Thank you.

[The Chair, Liberal, Ali Ehsassi]

Welcome back, everyone.

We will resume our meeting and the study of the situation at the Russia-Ukraine border and implications for peace and security.

I would like to welcome our witnesses. We're very grateful to have Mr. Trevor Kennedy, who's here with us in person. Mr. Kennedy is the vice-president of trade and international policy at the Business Council of Canada. Virtually, we're grateful to have Mr. Normand Mousseau, who is the scientific director of the Trottier Energy Institute and a professor at Université de Montréal. As well, we have Mr. Sylvain Charlebois, who is the director of the agri-food analytics lab and a professor at Dalhousie University.

You will each get five minutes for opening remarks. When you see this phone up, it means you should be wrapping up within 15 to 20 seconds.

We will start off with Mr. Kennedy.

You have five minutes.

[Trevor Kennedy, Vice-President, Trade and International Policy, Business Council of Canada]

Thank you, Mr. Chair, for this opportunity to speak to this committee about the Russian invasion of Ukraine and the implications for global peace and security.

The Business Council of Canada comprises 170 chief executives and entrepreneurs of Canada's leading enterprises. Many members lead global businesses with extensive trade and investment interests all around the world.

Following Russia's brutal invasion of Ukraine, companies quickly severed ties with Russia and have steadfastly supported Ukraine. Canadian businesses have also worked to alleviate supply chain disruptions stemming from the war. Canadian potash producers like Nutrien increased output to help our partners reduce their reliance on Russian and Belarusian suppliers. Cameco is supplying Ukraine's energy utility with nuclear fuel to safeguard its energy security and independence for years to come. These are just a few examples of many.

As the war rages on, it is important that Canada remain engaged to support Ukraine and Ukrainian businesses. We can't wait for the war to end to start rebuilding and to strengthen our economic ties. As the Ukraine ambassador to Canada, Yuliya Kovaliv, has mentioned before, Ukraine's economy is the third front in the war.

That's why the Business Council of Canada is proud to support the Canada-Ukraine Chamber of Commerce for its second “Rebuild Ukraine Business Conference”, taking place this week in Toronto. Our president and CEO, Goldy Hyder, as well as other members of the business community, will participate in this important and timely conference to highlight the needs and opportunities to rebuild and modernize Ukraine's economy.

We also support the recent modernization of the Canada-Ukraine Free Trade Agreement. This agreement brings important new chapters and provisions to our bilateral trade agreement, including covering trade and services. It will also create an environment of predictability and stability for our bilateral trade and investment flows. Our Ukrainian friends and partners have been clear how important this deal is to demonstrate to Canadians that Ukraine is open for business and that businesses can have confidence in the market in the long term. We agree, and we urge parliamentarians to swiftly ratify this deal.

We've also urged Export Development Canada to put in place war risk insurance and two-year export credits to help support Canadian companies that wish to trade and invest with Ukraine. As our CEO wrote to EDC two weeks ago, credit agencies from Germany, France, Japan, the United Kingdom, Sweden, Poland and the Netherlands are all providing political and/or war risk insurance for companies in their respective countries that are investing in Ukraine. Similar programs have been put in place by the United States. Canada has promised to support Ukraine, and we agree with EDC president Mairead Lavery that EDC can play a pivotal role in supporting Ukraine's long-term reconstruction.

The conflict in Ukraine and the deteriorating global situation highlight the need for Canada to step up and play a more active role in peace and security. We welcome Canada's materiel support to Ukraine. The war also underscores the importance of the NATO alliance in safeguarding Europe and North America. Canada must, at a minimum, meet its 2% defence spending commitment. It was once commonplace across the alliance for countries to miss this target, but following this war, many NATO members have either increased their spending or outlined plans to reach that level, and Canada cannot be an outlier.

The war marked a turning point in the global economy. Economic security is now a priority all across the world. Many nations less blessed with natural resources than Canada are preoccupied with securing a safe supply of energy, food and other natural resources. Many like-minded partners are looking to Canada to be that reliable and safe supplier.

In the summer of 2022, German Chancellor Olaf Scholz visited Canada and clearly stated his country's interest in Canadian energy, including LNG, as well as hydrogen and critical minerals to power its economy today and into the future. This visit was followed by South Korean President Yoon Suk Yeol's in September 2022 and Japanese Prime Minister Kishida Fumio's earlier this year. In both cases, north Pacific leaders clearly expressed their desire to enhance economic and energy security through closer economic partnerships and linkages to Canada.

Finally, when European Commission President Ursula von der Leyen visited Canada in March this year, the EU outlined how important Canada is as a partner as it pursues a reliable supply of energy and raw materials. Among other issues, leaders committed to a Canada-EU working group on energy transition and LNG to identify and advance medium-term solutions. As European leadership returns to Canada this week for the Canada-EU summit, we hope to see concrete progress toward supporting our partners and allies in Europe.

We believe that Canada has an important role to play in ensuring that Ukraine wins this war and thrives in the years ahead. Canada also has an important role to play as a stabilizing force in the world, and business leaders are eager to partner with government whenever possible to support a more peaceful and prosperous world.

Thank you.

[The Chair, Liberal, Ali Ehsassi]

Thank you very much, Mr. Kennedy.

We will now go to Mr. Mousseau.

Mr. Mousseau, you have five minutes.

[Normand Mousseau, Scientific Director and Professor, Trottier Energy Institute, University of Montreal, As an Individual]

Thank you, Mr. Chair.

I'd like to thank the committee for inviting me.

Before I give my opening remarks, I'd like to make clear that my expertise is mainly in Canada's energy system. I'm not an expert in international relations or the Ukrainian or European energy system. That said, as we all know, energy systems are obviously interconnected. In that sense, I think I can contribute to the committee's study in a useful way. I should also say that I didn't get the committee's invitation until just recently, so my presentation may not be as well-thought-out as it could be.

Russia's invasion of Ukraine has had a profound impact on the global energy system. First, it created uncertainty. Then, embargoes were put in place, somewhat rebalancing fossil fuel distribution. For many countries and many regions, the situation underscored the importance of reducing their reliance on Russian fossil fuels, as well as their overall reliance on foreign energy.

At the end of the day, this crisis may not have led to a significant reduction in overall demand, but there was a reduction in the fuel produced by Russia in 2022‑23. Nevertheless, a major reduction was not observed globally. Instead, the world saw a redistribution of resources. Countries that had imposed embargoes turned to new suppliers, leaving oil for countries that had not imposed embargoes and could therefore access Russian oil at a discount. Production levels remained more or less unchanged owing to the shift in costs and energy reliance relationships, if you will.

In North America, the direct impact of the crisis on the price of fuel, other than oil in the rather short term, was limited. However, it allowed North America, especially the U.S., to position itself as the world's top exporter of liquefied natural gas, or LNG. This had a transformative impact on international trade since the U.S. had not been a major player in the sector prior.

Canada, for its part, didn't really benefit from the transition. Canada actually has few LNG terminals in the works, and most of them aren't very far along. A witness said earlier that the LNG Canada project would be going ahead soon, so in about two years. Canada's situation is such that it wasn't able to take advantage of or support the transformation. The details have yet to be laid out.

Europe is in transformation. In reducing its reliance on foreign energy, Europe has accelerated its energy transition measures. The focus is shifting to more reliable countries. The European countries are turning to Morocco for solar energy and green hydrogen. The push is also on to find other sources of fossil fuels, like LNG in the U.S. Nevertheless, the European Union is still Russia's number one customer for natural gas.

Finally, access to cheaper fossil fuels in China, India and other countries that are benefiting from Russian oil could have the opposite impact that we're seeing in Europe. With cost pressures being more limited, the energy transition could potentially slow down.

How are these issues impacting Canada? LNG import infrastructure is a bit late to arrive. I think it's too late to increase the number of export locations because LNG terminals present certain challenges. We're a bit behind other countries.

As for producing and exporting green hydrogen, Canada has some agreements in place. The structural work is still at a very preliminary phase. Could Canada position itself in that market? Potentially, yes, but it's not clear whether the revenue would be worthwhile. In a landscape where everyone is trying to increase their renewable energy independence, the same supply chains are likely to come under the same pressure in these infrastructure sectors around the world. Since Canada produces relatively little renewable energy infrastructure, it will have a hard time meeting its own climate targets.

Europe is working to decarbonize its energy system and paying a lot to do so. That pressure will lead to Europe's carbon tax on imports being deployed sooner. Unless Canada moves quickly towards decarbonization, it could be impacted.

Thank you.

[The Chair, Liberal, Ali Ehsassi]

Thank you very much, Monsieur Mousseau.

I'm sorry. We have just realized that the sound check for Mr. Charlebois did not work the first time around, so we're going to try once again. I would ask for your patience.

We will suspend for no more than two minutes.

[The Chair, Liberal, Ali Ehsassi]

We will now resume.

Welcome, Mr. Charlebois.

You have five minutes for your opening remarks.

[Dr. Sylvain Charlebois, Director, Agri-Food Analytics Lab and Professor, Dalhousie University]

Thank you, Mr. Chair and honourable members of the parliamentary committee on foreign affairs and international development.

It is my privilege to present before you today as we deliberate on the significant strides our nation is making in global trade and diplomacy, particularly through the Canada–Ukraine Free Trade Agreement Implementation Act. This landmark legislation not only fortifies our international trade relationships, but also opens new avenues for Canadian agri-food industries, which are pivotal to our economy and societal well-being.

Canada's agri-food sector stands at a crucial juncture poised for transformative growth and international expansion. The implementation of this agreement with Ukraine, a nation with vast agricultural potential and complementary trade needs, presents unique opportunities for Canadian producers, processors and exporters.

In this context, I wish to put forth three key recommendations that are instrumental in maximizing the benefits of this agreement for our agri-food sector.

First, investment in agricultural technology and innovation should be prioritized. This agreement provides an avenue for Canadian agri-food businesses to assess new markets and adopt advanced agricultural technologies. Emphasizing innovation will not only enhance the productivity and sustainability of Canadian agri-food businesses, but also position Canada as a global leader in agricultural technology. We should encourage partnerships between Canadian and Ukrainian entities in research and development focusing on sustainable farming practices, climate resilience and advanced food-processing technologies.

Second, it is imperative to strengthen supply chain infrastructure. The expansion of trade with Ukraine necessitates robust and efficient supply chains. Investment in transportation infrastructure, storage facilities and digital supply chain solutions is critical. This will ensure the smooth movement of goods, reduce logistical bottlenecks and mitigate risks associated with international trade. Enhancing supply chain resilience will also prepare our agri-food sector to effectively respond to global food security challenges.

Third, I recommend the development of a comprehensive market access strategy. While the agreement opens doors, Canadian agri-food businesses need support in navigating the Ukrainian market. This strategy should include trade promotion activities, market intelligence services and guidance on regulatory compliance in Ukraine. Establishing a Canada-Ukraine agri-food business council could be a strategic step in this direction as well, fostering bilateral trade relationships and providing Canadian businesses with the insights and networks needed to succeed in the Ukrainian market.

In conclusion, the Canada–Ukraine Free Trade Agreement Implementation Act heralds a new era in our trade relations, offering significant prospects for the Canadian agri-food sector. By focusing on technological innovation, strengthening supply chain infrastructure and developing a comprehensive market access strategy, we can fully leverage the potential of this agreement, bolstering our economy and reinforcing Canada's position as a global leader in agri-food.

Thank you very much, Mr. Chair, for the opportunity to present these recommendations. I look forward to a fruitful discussion on these matters.

[The Chair, Liberal, Ali Ehsassi]

Thank you, Mr. Charlebois.

We now go to the members for questions. For the first round, each member is provided four minutes.

We start off with MP Epp.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Mr. Chair, and thank you to the witnesses for appearing today.

There are eight billion people on this planet, four billion of whom owe their lives to synthetic fertilizers producing the food they eat, so I want to start with fertilizer and Dr. Charlebois.

As I understand it, $115 million in tariffs have been collected by Canada on Russian and Belarusian imports into Canada. Who is paying the price of that, and who is bearing the cost, particularly in the context of Canada as a trading nation and in the context that we're the only country of the G7 imposing that tariff?