Government Operations Committee on May 27th, 2024

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you very much, Mr. De Thomasis.

Listening to our ports and listening to companies and businesses like yours is so critical. This year at Morterm, we met together with Minister Mary Ng, Minister of International Trade, and with Ambassador Hillman, to see the great work that's being done there and the amazing workers there.

You mentioned some of the regulatory irritants that you think could be fixed or addressed. Do you have an example of how eliminating some of those small administrative hurdles can create a big positive impact? Can you talk a bit about those?

[The Chair, Conservative, Kelly McCauley]

I'm afraid one of those hurdles is that the five-minute session is up. Perhaps I can get back to it in the next round, or perhaps, Mr. De Thomasis, you can provide that in writing to us.

I will go to Mrs. Vignola for two and a half minutes, please.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

My question is for Mr. Girard, but the other witnesses are welcome to weigh in if there's any time left.

The subject of artificial intelligence came up earlier. I've been at meetings where people were saying that the leading AI players are very competitive, but they want structure, beyond Asimov's three laws.

If we regulate before we legislate, are we putting the cart before the horse? Would that be less democratic? Regulations are not passed, contrary to what some may say in the media, but legislation is.

Should we legislate first and regulate later, or is it okay to regulate without legislating?

[Michel Girard]

You have to establish the broad strokes first, and that means legislation. Laws set out what must be done and what must not be done to reduce risk. Regulations set out how all that is done.

Given that technology is changing rapidly and that we're always reacting to the deployment of new technologies, here's my solution. We need an approach whereby regulatory authorities can decide to set standards. It takes a year to create a standard. A standard can be modified frequently, and then the results can be assessed. Once the technologies mature, it makes sense to regulate them.

This approach could enable the government to react quickly to ensure that a piece of legislation is consistent with reality, without impeding innovation. It would be a middle-of-the-road approach. That's what the government has done for a lot of new technologies: set reasonable minimum standards for everyone. It can be done.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

Ms. Kozhaya, what do you think?

[The Chair, Conservative, Kelly McCauley]

Give a brief answer, please.

[Norma Kozhaya]

That's not my area of expertise, but, yes, there should be a general act, a framework of some sort, to which standards and regulations would be added.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mrs. Vignola.

Next we have Mr. Bachrach and then Mr. Aboultaif.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

I'll ask Mr. Girard a question about regulatory capture and how to avoid it in the setting of standards.

One of the criticisms we hear—and we've had these conversations recently with members of the labour community—is that regulations get drawn up in close consultation with what government sees as being the key stakeholders, which is often the industry that is being regulated. They see them as being the key stakeholders because there's an entire industry around lobbying government, as anyone who works on the Hill knows.

Often the public, who are the beneficiaries of regulation, are left out of that initial conversation, and unions often feel the same. They're brought in to consult on something that has essentially been written without them.

How do we avoid that, both in the regulatory process and in the standards process you were talking about?

[Michel Girard]

It's about openness and transparency. You have to be open and transparent before you start, as you're doing it and after you're done.

If I can give you the standards track, committees have to be balanced. You can't have industry take all the seats. Industry has a quorum. Then consumers, academics and experts are also there, and they have a voice and a vote. Every time there's a comment made, it has to be disposed of, with everybody around the table agreeing.

I think that those kinds of rules work well when it comes to openness and transparency. I prefer an open and transparent process whereby everything has been looked at, rather than basically a black box.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Would you say that currently there is a difference between the standards-setting process, which is done by a committee with balanced representation, and the regulatory process, which is led by government, and government chooses with whom they consult, etc.?

[Michel Girard]

There was a mention of 66,000 to 77,000 regulations. It must be quite different, depending on the jurisdiction, the ministry or the department, but openness and transparency.... I mean, you could design an approach through which it becomes a norm.

I know that in my process for digital standards, everybody can become a member of a committee. You're not excluded. Everybody can take a look at everything that's being drafted. To me, that's the ultimate.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you very much, gentlemen.

Mr. Aboultaif, welcome back to OGGO. It's been a few years.

Go ahead, sir, for five minutes.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Thank you. That's super, Mr. Chair. Thank you.

Thanks to the witnesses.

I'll delve into the questions quickly.

Ms. Furlong, you mentioned that investments from Canada to outside of Canada are higher or are going up, while investments inside or into Canada are going down. That tells me, as a former businessman, that there's an issue of productivity and that there's an issue of regulations.

Are we over-regulated?

[Shaena Furlong]

That's a great question.

I think the business answer to that would be that, yes, we are. If we look at the numbers, we see that at the end of 2023, Canadian investment abroad had grown to $2,171.3 billion, while foreign direct investment in Canada was about $1,360.3 billion. That net direct investment position of $811 billion is absolutely concerning.

There is a very good graph that shows the growth in that net direct investment position over the past 15 years. Really, we are seeing that exponential growth of money not being invested in Canada and foreign direct investment leaving Canada.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Do you think that regulations are done at the government level solely with a lack of consultation with the stakeholders and the businesses and the main people doing the business? What can we do?

We do have a problem and we know it, and we're looking for solutions. Can you suggest something in this regard? Can you tell us if there's a lack of consultation with the main stakeholders?

[Shaena Furlong]

I don't think it's the case that it's being done, necessarily, with a lack of consultation. I think that there are many very well-meaning people looking at problems that are facing people and industries across many different aspects of regulation. Unfortunately, I think we are not reviewing our regulations frequently enough and we are not measuring how regulation is affecting our economic competitiveness.

When I spoke before, I said that we should introduce an economic competitiveness mandate across all regulators. Right now we're not accountable for the economic competitiveness of the impact of regulation. We're not measuring it, so it's not something that we're focusing on in all regulators. We would really like to see that.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

I'll take two G7 countries, Germany and the U.S., as examples. We are way behind these two countries with regard to productivity. If there's any side to look at to learn from, it should be these two countries.

Are we doing enough to look outside the box to try to fix our problems, or not?

[Shaena Furlong]

I think that's a great point and a great question.

We have seen very novel regulatory tools to mobilize the private sector in financing massive construction of clean energy facilities in particular. In particular, in Germany they've provided an example of how feed-in tariffs can help accelerate the build-out of wind and solar facilities. These are all things that we should be looking at.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Mr. De Thomasis, you presented three solutions. One of them is to set up a free trade zone in Windsor. This is an amazing idea. I know that Dubai did it 20 or 30 years back.

What are you doing to convince the government to be that creative?

[Tony De Thomasis]

It goes back to what you were saying about competitiveness. In order to stay competitive in a changing world, with a lot of the reshoring efforts that are happening in moving product back to North America, we need to look at new, innovative ways to become more compatible with our biggest trading partner, which is the U.S., and also with Mexico.

Infrastructure is key to moving that product. At Morterm in Windsor, we have connectivity with railways and highways. We're soon launching the new Gordie Howe international bridge. That will help to expedite the movement of goods.

I think that right now we're lagging on the administrative side, where it's the paperwork, the movement of paperwork and clearing quantities across the borders to allow this trade to happen.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

You also mentioned proposing a bonded warehouse or what you call a sufferance warehouse. That was a demand of U.S. and European clients. Can you talk about this a little bit more, please?

[The Chair, Conservative, Kelly McCauley]

You have about 15 seconds, I'm afraid.

[Tony De Thomasis]

A sufferance warehouse allows shippers to move product into Canada under one bond. That allows you to store product in a warehouse. You can trade the commodities without the movement of those goods, and they remain in that warehouse. It allows for faster, quicker, more efficient trade of commodities.