International Trade Committee on May 16th, 2017

[Angella MacEwen]

We have health care and that has helped us to respond better to those shocks.

[The Vice-Chair, Conservative, Randy Hoback]

Is there anything in the trade agreements that doesn't allow the unions to expand into the U.S.? If the Canadian Labour Congress were to say, “Why don't we try to organize some workers in New York State, or down in Washington, or look at taking our union and making it more international?” are there any restrictions in the trade agreement that prevent you from doing that, or is it basically a goodwill gesture that we won't step on their ground as long as they don't step on ours?

[Angella MacEwen]

We do have international unions that are mostly cross-border between Canada and the United States, and they co-operate a fair amount. They've been working together again to spread this message about how integrated the labour markets are.

One of the important things that we could do in NAFTA is to improve the labour mobility. There are electricians who live in Windsor or nurses who live in Windsor who work across the border, so giving them the opportunity to do that in a way that makes sense would be good for both economies, because sometimes there are contracts and they need lots of electricians on the Windsor side, and sometimes they need lots on the American side. There are attempts at that.

I also think there are international rules about cross-border bargaining that we could work on that are separate from NAFTA.

[The Vice-Chair, Conservative, Randy Hoback]

Okay, that would be separate from NAFTA in a side agreement.

David, you're nodding your head. I think everybody in this room would say labour mobility is something we'd all like to see addressed, so that's something we'd put on the list and to make sure that's put in there.

[David Podruzny]

I'd like to take it even one step further—to have the ability to move people around in the services that support manufacturing trade or goods trade, and be able to provide after-sales service. The one thing NAFTA could see some improvement on is on the people side, on their movement. We have global experts who move around the world much more easily between Egypt and New Zealand than between Canada and the U.S.

[The Vice-Chair, Conservative, Randy Hoback]

Or even from Ontario to Quebec.... I get your point.

[David Podruzny]

We have some things we can do to improve things so that the services associated with goods, which are becoming more and more a component of trade, are looked after. That's a modernization aspect of this agreement that would benefit all three countries.

[The Vice-Chair, Conservative, Randy Hoback]

Joseph, when I was down in the U.S. with one of my colleagues from Sault Ste. Marie, he talked about how their steel plant used U.S. ore, U.S. coal, and that basically everything was from the U.S., but it wasn't qualifying under buy American. How do you guys work with the Americans on that type of situation to say, “Wait a minute. This isn't Canadian steel. It's actually U.S. steel”?

Have you any suggestions on how to tackle that?

[Joseph Galimberti]

There's $1.5 billion in raw materials coming into Canada supporting transportation networks in places like the Great Lakes. Buy American is a very difficult nut to crack. The Americans get full access to our infrastructure program. We can't access theirs. We've been at it for a long time.

[The Vice-Chair, Conservative, Randy Hoback]

Okay. I'm going to have to cut myself off. I'm over.

We'll move on to Ms. Ramsey. You have three minutes.

[Tracey Ramsey, NDP, Essex, ON]

Thank you.

I think that labour mobility is something that we can all agree to, certainly down in Windsor. I'm on the border in Essex. We understand that very keenly. Every week I have businesses calling me that can't get people across the border, that are unable to have skilled people go across. We also have a lot of academics who are not crossing the border because of the bans and things that have taken place in the U.S. There's that kind of chill existing.

Mark, in this interim period, where we're waiting to see what happens in the next Tweet or announcement from the States, there's this chill that's happened around businesses and investment. Can you speak to that in the Great Lakes region and the impact that you've seen?

[Mark Fisher]

I haven't seen an immediate impact. The economy is moving along. I think there are two perspectives in the short term. One is making sure that we do no harm. If we're going to reopen NAFTA, let's really try to look at what we can do on the ground in terms of some of those cross-border supply chains, the labour mobility, the infrastructure, the things that will really underpin the strength of the economy going forward.

[Tracey Ramsey, NDP, Essex, ON]

Thank you.

My last question is to Mr. Galimberti. It's about the presidential executive order on buy American with U.S. procurement. Someone mentioned the infrastructure in the U.S. Of course, we have our own infrastructure plans here in Canada, but I want to ask you how Canadian businesses in the steel sector would be affected by that executive order.

[Joseph Galimberti]

There are actually three ongoing investigations at the Department of Commerce triggered by various executive orders. There's the one on pipelines that we know about, which would essentially be an extension of buy American policies to private sector projects on pipelines specifically. That would be of significant concern, for instance, to one of our member producers, Evraz, in Regina, that makes large-diameter line pipe. That would be significantly problematic were Canada to not receive a national exemption.

The buy American investigation, or the process there in the commerce department, is about finding loopholes and closing loopholes in existing buy American policies, making sure that there are no inappropriate exemptions. We really need to see how that one plays out. Any extension to buy American is going to be de facto negative for the Canadian steel industry. On what kinds of exemptions they're after targeting, we're not really sure how we'd be implicated yet.

Then there is the third Department of Commerce investigation on section 232 as it relates to national security. That is another one where it is critically important that Canada be nationally exempted from whatever policy step the U.S. is considering. That investigation is being done on the basis of illegal or dumped and subsidized imports damaging the national security of the United States. We would make the case, given our mutually beneficial, balanced trade relationship, that Canada has ample reason for an extension.

[The Vice-Chair, Conservative, Randy Hoback]

Thank you.

We'll move on to Bryan.

Welcome to the committee. You have five minutes.

[Bryan May, Liberal, Cambridge, ON]

Thank you very much, Mr. Chair.

I also want to thank committee members for allowing me to contribute today. I am just a visitor today.

We've elaborated on my question a bit, and I want to allow the witnesses to elaborate maybe a little. As we know, on January 24, 2017, the new President of the United States signed the executive order, “Buy American, Hire American”. We understand that the intention of that executive order is to improve production in the United States. You've talked a little about what the impact would be on steel. I'm wondering if any of the other witnesses would like to jump in, in terms of how it's going to impact their industry. More importantly, what should we be doing about it? What actions, if any, should the Canadian government be taking with regard to this executive order?

Maybe we'll start with Mr. Masterson.

[Bob Masterson]

Sure. First of all, I talked about the large number of investments that went into the U.S., and the question from Ms. Ramsey about what this means. Are people going to want to invest more in the United States perhaps?

I think we're seeing two things. American companies are worried that they have to be seen to be doing the right thing. Global companies that are currently investing in the United States are very concerned about the proposed anti-trade measures because the facilities that are being built there are export-oriented.

That brings us back to what we should and shouldn't do in Canada. The first thing we would say is that we shouldn't fight bad policy with bad policy. We all agree buy American is not a good policy. Let's not do “buy Canadian”. It's not going to work for us. Let's not make the same mistake. We certainly should put more attention on our market diversification, which we've talked about for many years, and work on those trade agreements, especially with China.

Some perhaps don't like it, but the energy sector remains the backbone of the country. There are ample customers for our product. The only thing that's holding us back from getting those products there, and then all the other downstream products, is our policy environment. We have to come to grips with the way we can move our products, especially our energy and related products, off the west coast to the large and growing Asian markets I talked about.

If we do those things, let Mr. Trump set whatever policies he wants. We'll have diversified ourselves and remain competitive.

[Bryan May, Liberal, Cambridge, ON]

That's excellent. Thank you.

Mr. Schultz, would you add anything to that?

[Nick Schultz]

I would share those comments. There are two aspects to the buy American thing. One is for government procurement, but other pieces creep into the private sector, which is of course particularly worrying. I believe the Government of Canada is pursuing a targeted approach to that but in a very consistent and principled way. We do support that. We too would seek market diversification, but that is proving a challenge. There was an all-pipeline proposal that would have provided that in our northern gateway, but that doesn't fit with the current government's priorities, so that's not going anywhere.

As well, I was talking earlier about the challenges with getting natural gas to offshore markets, which are a combination of market conditions and regulatory delay.

[Mark Fisher]

To add very quickly, market diversification is obviously important for any international trade policy. It certainly doesn't happen overnight but I think in the long term as we're an export economy, it can only help.

With respect to the United States around “Buy American, Hire American”, border adjustment taxes, what have you, I think we've been doing the right things in engaging Congress directly in both the House and the Senate. We need to be doing more of that on a legislator-to-legislator basis, Prime Minister to President, governor to governor, governor to premier, but we also need to be getting business to business engaged.

We have a lot of counterparts on this panel that have subsidiaries and parent companies in the United States. If they truly believe in the strength of the supply chains and the clusters that exist across the border, there's no reason why Dow, Dupont, Walmart, all the companies that are active in Canada and the United States shouldn't be in Congress speaking to the benefits of the joint economic partnership that we have between the United States and Canada.

On the government-to-government side and legislator-to-legislator side, we're doing fine. I think we could amplify that by having more business-to-business interaction and having them engaged in that conversation.

[Bryan May, Liberal, Cambridge, ON]

Thank you.

Mr. Chair, do I have any time left?

[The Vice-Chair, Conservative, Randy Hoback]

You're done.

Colleagues, this finishes our second round, but we do have lots of time on the clock.

Mr. Peterson, you said you wanted to go in camera for a few minutes at the end, so we'll allow time for that.

I thought maybe we'd go into the third round and go two minutes instead of five minutes and that way if you had a few more questions—I know it seems as if everybody does—we'll do that and from there we'll finish and then go in camera.

We'll start with Mr. Van Kesteren and then we'll go to the Liberals and then we'll go to Ms. Ramsay to finish off the third round.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Chair.

I have a quick question. Mr. Schultz, you stated something that I wasn't aware of, that the east coast is now primarily supplied by the U.S. Is that a result of fracking?

[Nick Schultz]

It's the growth in the light oil production in the United States, which is the result of bringing the advanced technologies to bear. This involves the multiple horizontal drilling and multiple fracturing.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Where is most of that taking place, in Pennsylvania or do they bring it all the way from out west?