International Trade Committee on May 16th, 2017

[David Podruzny, Vice-President, Business and Economics, Chemistry Industry Association of Canada]

To take one example, the market is finding some great ways to do further integration. Where once upon a time we would look at raw materials from Canada going down into the United States to be converted, we now have companies that are building pipelines to bring natural gas liquids up into Canada to convert into high-value petrochemicals and then to ship those finished products at 10 and 20 times the value back down into the United States. The companies are finding good ways. Products that might have otherwise been flared as being in the way are now being used to make high-value products.

The integration goes on. We're now looking at some big investments to produce a grade of plastics that will be converted into lightweight auto parts and will have a significant impact in reducing greenhouse gas emissions. I see the opportunity for integration and greater net value on both sides of the border—

[The Vice-Chair, Conservative, Randy Hoback]

Thank you.

We'll move on to Dave Van Kesteren.

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

Thank you, Chair.

Thank you all for coming. It's a fascinating discussion.

Mr. Fisher, are you an American or...?

[Mark Fisher]

I'm Canadian.

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

You're Canadian, okay. I have to ask you this question. I wasn't able to attend the bridge consultation, but there was a briefing as to how the Gordie Howe international bridge was coming along. Of course, if we're going to have this trade—and we all know in the auto industry it goes back and forth a number of times—how's that coming on the American side? What's your analysis?

[Mark Fisher]

It's coming along, but it's moving slow. My understanding with the president and CEO of the Windsor-Detroit Bridge Authority is that they're in the process of moving forward with their RFPs. I think there are still outstanding questions about financing for the customs plaza on the U.S. side. All of those things are moving forward in due course and I think at a quicker pace than they were five or six years ago. It is moving forward, and we need that capacity in the region.

The Ambassador Bridge is responsible for roughly a quarter of all trade across the Canada-U.S. border, so we need that additional capacity and additional redundancy in moving goods if this region is going to grow.

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

We're hearing rumours that there is a deliberate movement to stall this thing with—

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Manuel Moroun.

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

—the owner of the Ambassador Bridge holding some property and such. Yes. Is there a willingness on the American side...?

It's the fear of a lot of us that the worst-case scenario would be that Trump suddenly sees this as an opportunity to bring a lot of this industrial movement, especially in the auto industry, to the American side. Is that something that's concerning you as well?

[Mark Fisher]

I don't necessarily see it that way. The bridge was identified as a priority when the Prime Minister and the President met back in February. You have a Republican governor in Governor Snyder who's very supportive of the project and has been working hand-in-glove with the Canadian government and the Ontario government to move this project forward.

When I look at the wins and losses for the Moroun family in court, he has seen more losses than wins. I know the process is just going to have to work itself out. I see there are more people in favour of the project moving forward than not. It's a big infrastructure project that aligns with the President's infrastructure agenda as well.

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

We had a fascinating discussion about a year ago in my office, and you were giving me some of the exciting new movements in the chemistry industry and some of the new things that were taking place.

Maybe you could just tell this committee, what's stalling the Canadian side? You mentioned that there was much more investment on the American side, so what's the problem on this side?

[Bob Masterson]

Minister Morneau has convened an economic advisory council to try to get to the question of why Canada is lagging in global foreign direct investment and why we are at below 2% in economic growth. It's a very complicated story. I think the simple message is that we simply don't try enough. When we look at our competitors in the United States.... Let me go back to where we are with free trade.

By and large, I think most Canadians understand that firms operating in Canada have to compete for global market share. We know we have to trade our way to prosperity, and we can't get there by just ourselves consuming. We accept that. What we haven't understood in Canada that other jurisdictions have is that we also have to compete for investment share.

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

We have more trade agreements than the Americans. We've done that. I know the former government certainly opened up those avenues.

[Bob Masterson]

Yes.

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

A lot of these companies we're talking about aren't Canadian companies. They're American companies. Why are they not investing in Canada?

[Bob Masterson]

We do not have the competitive landscape for investment. We don't have the conditions to attract global investment. There are many things that aren't working in our favour.

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

Give me some examples.

[Bob Masterson]

Today, in the U.S. Senate there was a bill introduced that would provide significant federal support to create the infrastructure in Pennsylvania to store the natural gas liquids that are abundantly available to facilitate the processing of that industry, so you have a partnership approach. It's not just financial. There's a true partnership approach to try to intentionally develop the chemistry sector in states like Pennsylvania, Louisiana, and Texas.

Here, to be honest, it's more of a laissez-faire approach. If the investment comes, fine; if it doesn't, fine. That will hurt us in the long term if we don't get more aggressive and try to figure out what we need to do to recruit that investment. I think today's introduction of Bill C-49 takes a number of important steps that will improve transportation competitiveness in Canada. That's a good step in the right direction. Many of our investing companies tell us the cost of transportation in Canada is the second most important factor they look at when deciding whether to invest.

[The Vice-Chair, Conservative, Randy Hoback]

Thank you, Mr. Van Kesteren.

We'll move on to Mr. Peterson.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thanks, Mr. Chair.

I'll compliment you on the masterful job you're doing on chairing this meeting.

[The Vice-Chair, Conservative, Randy Hoback]

You only get five minutes, though.

[Some hon. members]

Oh, oh!

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you, everyone, for being here today to discuss this important topic.

I want to get right to the relationship between the U.S. and us, especially when it comes to trade balances, whether they're trade, investment, or services.

Joseph, the steel industry is roughly in balance, isn't it, give or take 10% either way?

[Joseph Galimberti]

It's pretty much an exact balance. It's 4.4% going from us to the United States, and 4.45% coming back.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Yes, so that's pretty good. Obviously, maintaining the strong relationship, I think it would be fair to say, would be important to your industry.

We've also heard from your industry on another study we're doing that deals with the dumping of steel into the Canadian economy, of course, but it's really the North American economy. Do you see the relationship in NAFTA between Canada, the U.S., and Mexico to some extent, as a way of perhaps defending against that dumping?

Is there a way we can work together towards the common goal of doing what we can to make sure projects in North American are made with North American steel?