International Trade Committee on May 16th, 2017

[Joseph Galimberti]

Yes. I think it's essential. We've known for some time that steel dumping is the primary trade irritant of the United States. The last administration was very keen on it, and during the campaign, both sides raised it often.

I believe we offer a shared defence in NAFTA. We have done things like establish the trilateral customs steel enforcement dialogue to make sure that circumvented and subsidized steel is not coming into Canada and going into the United States, and to make sure that we're sharing information.

There is also our ability to manufacture here in North America and to meet the needs of our customers. Frankly, we feel very strongly that North American steel is of a higher quality. Our advanced manufacturing is of an excellent standard. We feel that's the basis on which we're most effective in competing. Partnership with the United States from that perspective is essential.

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

Is it fair to say that NAFTA can be more than just a trade agreement, that it can also be a way of dealing with international trade irritants if we work together as opposed to separately?

[Joseph Galimberti]

Yes, absolutely. I think it's certainly a shared defence. Look at things we're doing as a NAFTA bloc internationally, like our participation, which I mentioned, in the G20 forum on global overcapacity. That is an area where the NAFTA governments have really driven the agenda on overcapacity, and I think we have used our combined influence for the good. Ultimately we're hoping for a positive outcome.

The answer is yes, certainly domestically and certainly in terms of NAFTA, but projecting that influence as a NAFTA bloc is also crucial.

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

Thank you for that.

I just want to move to Bob, to talk about the chemistry industry for a little while.

I think you mentioned that it's a $53-billion industry. Is that the Canadian, or is that the...?

[Bob Masterson]

The Canadian industry, yes.

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

Good stuff.

How intertwined is the chemistry industry in North America? How essential is NAFTA to the success of your industry?

[Bob Masterson]

It is entirely essential. Again, 75% of everything we produce in Canada is exported down to the United States, $30 billion-plus, and then we bring $33 billion up.

Dave talked about this back and forth. It's much like the auto sector. Raw materials come up. We semi-process them and partially upgrade them. They are turned into a product that goes to somebody else who turns it into another product, and ultimately you have a dashboard in a car or a rubber tire. We have a rubber plant in Sarnia. It's a highly-integrated, complex supply chain. To dismantle that would be very difficult.

I would just add one comment on what you just talked about with the NAFTA bloc. I think that in the chemistry sector we don't look at it that way. We look at the global environment, and we are very keen that Canada pursue rules-based fair trade that's mutually beneficial with those jurisdictions we may have concerns with now. We think there are significant opportunities for Canada, especially given some of the threats we're seeing south of the border, to look for a mutual trade advantage with China and other Asian nations.

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

Thank you.

Mr. Schultz, the vast majority of what we sell goes to the States, 99% or something like that. Is that what I heard you say?

[Nick Schultz]

That's correct.

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

But there is some value added. Do we import some value-added exports from the U.S. as well?

[Nick Schultz]

The refined products go back and forth, and some of those manifest themselves through the petrochemical industry.

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

Right, so there is potentially more than one border crossing before it gets to the final consumer.

[Nick Schultz]

Yes, if you follow it in that way, absolutely, yes.

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

Okay. Thank you very much for that.

I think I'm out of time.

[The Vice-Chair, Conservative, Randy Hoback]

Thank you, Mr. Peterson.

I'm going to take the next few minutes, as the chair, in the Conservative Party slot. I just have a few questions.

I'll start with Angella. You talked about the disruption and loss of jobs because of trade, and the impact that's had on different sectors. Have you done any studies that compare that with technology change versus trade and how that looks?

[Angella MacEwen]

There was a recent study by the IMF. It was in the news. The headline was that it wasn't trade, it was automation, but if you read the study, you'll see that the researchers found it's actually really difficult to disentangle the effects of automation and trade, because where investment goes is partly driven by trade flows and where the cheap labour is and all of that stuff, so it's all very integrated.

[The Vice-Chair, Conservative, Randy Hoback]

Is it fair to say that since automation makes you more competitive in the global marketplace, if a company didn't have automation, in theory, there's the possibility of that company not existing there?

[Angella MacEwen]

Exactly, if you had one without the other, you wouldn't know what the counterfactual is.

[The Vice-Chair, Conservative, Randy Hoback]

Do you think there needs to be more attention payed to that aspect of automation? High-tech sectors are making disruptive changes in a lot of sectors around the economy, and it's happening faster. It used to take 10 years to see a new product come in and replace something old. Now it's done in a year or two, and you see all of a sudden a whole sector displaced. What advice do you have—

[Angella MacEwen]

Right. The research shows that people, communities, or countries that respond successfully to both kinds of shocks have similar programs. They have a social safety net. They have bridging to retirement. They have active labour market policies. They have unemployment insurance that actually works for workers; it's not just a short-term solution, and then your whole community is closed because the coal plant is done and you can't sell your house because it's not worth anything.

Having a broad range of supports for workers who are negatively impacted by either kind of shock is important.

[The Vice-Chair, Conservative, Randy Hoback]

Would it be fair to say, if you look at our views on trade, that Canadians are very pro-trade people? We understand it. We get it, but then we also have unemployment insurance. We have those safety nets that you talked about.

[Angella MacEwen]

You don't have the active labour market policies. If you look at what Canada spends on active labour market, it's nothing compared with what—

[The Vice-Chair, Conservative, Randy Hoback]

If you compare it to what the U.S. has for—

[Angella MacEwen]

We spend less than the U.S. on active labour market.

[The Vice-Chair, Conservative, Randy Hoback]

Okay, but even what the U.S. has for unemployment insurance, for health care, those types of things—