International Trade Committee on Dec. 4th, 2020

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I call this meeting to order. Welcome to meeting number 10 of the House of Commons Standing Committee on International Trade. Today’s meeting is taking place in a hybrid format, pursuant to the House order of September 23. The proceedings are available via the House of Commons website.

To ensure an orderly meeting, I would like to outline a few rules that we've heard many times. Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice, at the bottom of your screen of the floor or English or French.

For members participating in person, proceed as you usually would when the whole committee is meeting in person in a committee room. Keep in mind the directives from the Board of Internal Economy regarding health protocols and masking.

Before speaking, please wait until I recognize you by name. If you are on the video conference, please click on the microphone icon to unmute yourself. Those in the room, your microphone will be controlled as normal by the proceedings and verification officer, as you all know very well. When you are not speaking, your mike should be on mute.

Pursuant to Standing Order 108(2), the committee will now proceed with the study of Canada’s recovery plan for exporters after COVID-19.

We welcome our witnesses today. From the Canadian American Business Council, we have Maryscott Greenwood, chief executive officer; from the Trade Justice Network, Angella MacEwen, co-chair; and Eddy Pérez, international policy analyst, Climate Action Network Canada.

We're very glad to have you with us today.

Ms. Greenwood, you may proceed.

[Maryscott Greenwood, Chief Executive Officer, Canadian American Business Council]

Good afternoon, Madam Chair, and members of the committee.

It is a great pleasure to join you today.

It has been a while since we last met.

When the pandemic arrived 10 months ago, it triggered a powerful mix of emotions and instincts. It's just human nature. Individually, we scramble to protect ourselves and our families, and then have to cope with the isolation and fear that resulted, and our governments went into protective crouches. They began competing with one another for personal protective equipment and other crucial supplies, and ultimately began to turn inward. It was all understandable enough. The coronavirus disrupted entire sectors of the economy and robbed millions of their livelihoods, not to mention lives. In those circumstances, it was natural for governments to resolve that the health and jobs of their own citizens came first and to fashion arrangements accordingly, but it was ultimately counterproductive, especially where the United States and Canada are concerned. I don't have to explain to any members of this committee the extent to which our economies are integrated. In many ways, we are now one economy, and it's a fantastically successful model.

If Ontario were a sovereign nation, it would be America's third biggest trading partner, and it's the number one trading partner of 19 states. Alberta provides nearly half of America's crude oil imports, and more than 87% of U.S. aluminum imports come from Quebec, and those, by the way, are low carbon. I could go on.

I got together with the Quebec delegate general in New York, Catherine Loubier , and we came up with a North American rebound campaign. Our message was pretty simple and, we think, pretty effective. It was that we are in this together, and we need each other to get through it.

If the New England states can get together and form a co-op of sorts to secure personal protective equipment, why couldn't Quebec be part of that group? For that matter, why not the whole of Canada and the U.S.?

We started contacting like-minded people in Canada and the U.S. to support us. As the CEO of the Canadian American Business Council, my rolodex, if I can still use that term, is full of people who understand the profound need for mutual reliance.

Since we launched the North American rebound campaign in May, we've signed up over a thousand Canadian and American business leaders and 140 prominent business and industry associations in both countries, from Kansas to California and from Arizona to Atlanta. We've reached 150,000 people on social media, and we've managed nearly 113 million impressions in print media so far.

The people who signed on to the North American rebound believe that both countries must maintain a strong common cross-border manufacturing response until this pandemic is brought under control, and, in fact, in the economic recovery that will follow, we need to collaborate on securing personal protective equipment.

We must design Canada-U.S. solutions to maintain and replenish strategic stockpiles of medical equipment. The common border must remain open to essential business, our supply chains cannot be interrupted, and we have to find smart, safe, risk-safe ways to reopen the border ultimately.

We have to continue what we've been doing now for decades, expanding market opportunities for each other. That is crucial for recovery and to complete globally once we move past this pandemic. We will continue to work with the new Biden administration and the 117th Congress and, of course, this Parliament.

There's a lot of talk these days about building back smarter. For our two countries, rebounding together is the smartest move of all.

Thank you very much.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Greenwood.

We go to Ms. MacEwen, please.

[Angella MacEwen, Co-Chair, Trade Justice Network]

Thank you very much.

I would like to thank the committee for inviting me to appear here on behalf of the Trade Justice Network. We are a coalition of environmental, civil society, student, indigenous, cultural, farming, labour and social justice organizations. We came together in 2010 to call for a new global trade regime founded on social justice, human rights and environmental sustainability.

Our members include the Canadian Labour Congress, Unifor, the Canadian Union of Public Employees, the United Steelworkers, the Climate Action Network of Canada, the National Farmers Union and many other groups who represent people in Canada from all walks of life.

I will focus my remarks on the role we see international trade deals and policy playing in a just recovery from COVID-19 and ensuring that Canada is well prepared to cope with a future crisis.

First, we have seen the importance of maintaining domestic manufacturing capacity in Canada for a number of essential goods, such as personal protective equipment and vaccines. Buy Canadian procurement policies may be necessary to recover and promote existing companies in Canada with that capacity, so it will be important for federal legislators to keep this mind as they engage in any bilateral trade negotiations or as they have talks within international trade organizations, such as the World Trade Organization.

We also want to make sure that we have the capacity to bring back publicly owned businesses, as in the case of vaccines, that could do this work and make sure our hands are not tied behind our backs because we didn't take this possibility into account.

Regulatory harmonization is a key part of the new NAFTA and CETA, two of our major trade deals. We should be particularly cautious as we proceed here so that we are able to maintain the freedom to respond appropriately to future crises in health, climate and the economic fallout that comes from these crises.

Right now the federal government is exploring what it means to have a feminist foreign policy, and we congratulate it for this. We want to note, though, that it doesn't simply mean token exclusions for women-owned businesses in trade agreements. We want to remind you that gender equity, especially in terms of education and employment, contributes to economic growth. However, the reverse is not true. Economic growth does not, on its own, contribute to gender equality or to improvements in health, welfare or basic rights.

Finally, we think that as we're planning our future in trade, it's important to think about how our trade policy fits with other international commitments, such as the sustainable development goals and the United Nations Declaration on the Rights of Indigenous Peoples.

If we take our commitments to the SDGs seriously, we would do an impact assessment, before finalizing any deal, of the social and economic consequences the agreement will have on participating nations' ability to progress toward the SDGs. Also, in implementing UNDRIP, we should consider what that means for including first nations, Inuit and Métis people at the bargaining table during international trade negotiations.

I'd like to turn the remainder of my time over to Eddy Pérez from Climate Action Canada.

[Eddy Pérez, International Policy Analyst, Climate Action Network Canada, Trade Justice Network]

Thank you so much, Angela, and thank you to the committee.

Thank you very much for this invitation to appear today.

I would first like to acknowledge that I am currently in Tiohtià:ke, commonly known as Montreal.

I would like to begin by telling you that, in 2020, as we experience this devastating crisis, we are also celebrating the fifth anniversary of the adoption of the Paris Agreement and 30 years, almost 31 now, of climate action.

I would like to complete my colleague's remarks by adding some climate-related factors.

COVID-19 has weakened us to the extent that we have discovered the vulnerability of the system that governs us. It has also shown us that, in terms of climate fairness and the ecological transition, it is not a matter of deciding whether or not we want to make that transition. The only decision to be made is how ambitious the actions we undertake will be, and the level of risk that we are imposing on future generations through policies such as those, for example, that the Parliament of Canada is adopting.

As for free trade, COVID-19 has a direct impact on the industries that depend on international supply chains. More specifically, energy exports have been affected simultaneously by COVID-19 and by geopolitical conflicts that have led to a decrease in the price of oil, a decrease that reached 21% in March 2020 over the same month a year earlier. Overall, we have seen a drop in exports and imports of automotive products, machines and material for electronics.

This leads me to an important factor, namely Canada as an energy exporting country.

COVID-19 has heavily impacted the fossil fuel sector. Restrictions in economic and social activity and travel triggered the biggest shock to global fossil fuel consumption in seven decades. Oil prices plunged to historic lows in some places. Countries reliant on oil revenues found themselves saddled with additional hardship in the midst of the health crisis. That fact shows that in the context of Canada, we continue living under the impression that we could both meet Paris Agreement goals and increase coal, oil and gas production. Accepting that reality is not something I see this Parliament doing now as it oversees the future of Canada's trade policy during the recovery.

Canada has already committed to global net-zero emissions in 2050, though we are a country that has never met its emissions target. We feel that it is the role of Parliament to analyze and address the incoherent approach that suggests that Canada could meet its climate goals while at the same time projecting an increase of 6.4 million barrels per day, or 187 billion cubic metres of gas through fracking in 2030.

The trend of decarbonization is moving rapidly, with economies around the world committing to stronger climate ambition. That means that trade and foreign policy will be impacted both by climate action and climate impacts, and will particularly impact oil-producing countries like Canada.

The IEA has said that producers could lose up to $7 trillion U.S. by 2040 as economies decarbonize. Economies unwilling to diversify will face higher economic and geopolitical instability.

[The Chair, Liberal, Judy Sgro]

May we have your closing remarks, Mr. Pérez, please?

[Eddy Pérez]

Yes, I'm going to the closing remarks.

I think the role of Parliament, as we look forward to modernizing and transforming Canada's trade and responding to the COVID pandemic, is to help us understand how trade can be used as a tool for responding to global threats, enhancing climate action and protecting those key non-negotiable priorities that we saw during COVID: health, social safety nets, the rights of workers, gender equality and the rights of indigenous people.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Pérez.

We'll move on to Mr. Hoback for six minutes, please.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Thank you, all witnesses, for being here on a Friday; it's nice of you to attend.

When we starting looking at this, we thought this was an area where the WTO was possibly going to fall apart; we weren't sure who was going to be elected president of the United States; we were seeing issues with PPE and protectionism around that. We were hearing of issues with countries grouping together, where Canada wasn't part of those groups, and making sure they took care of each other.

One of the things I've been curious about during this COVID-19 crisis and in the future as we progress down this vaccination path, and knowing that COVID-19 is going to be with us even once we're vaccinated, is how do we proceed? In terms of structural changes because of COVID—including the election of a new president in the United States, which will also structurally change things there—what are the things we should look for?

Ms. Greenwood, you talked about your North American rebound. How do we take something that should have been done in the last CUSMA agreement, which was bringing us closer together, but unfortunately the minds weren't at the table to do that...? I think we can do that now. What are the types of things we should be looking at, and I'll use the example of PPE? Should there be an agreement, not necessarily that it all be built in Saskatchewan, or all be built in Canada, but maybe certain things like this should always be built in North America?

[Maryscott Greenwood]

I think we could look at a number of specific models. We've been promoting them, but they're more poignant now.

For example, Canada and the United States have a memorandum of understanding with respect to defence procurement. We've had it since the 1960s. It's part of the U.S. defence production sharing agreement, and it says that for the purposes of Pentagon procurement, Canada should be treated domestically and vice versa. So, if there are Canadian suppliers for defence contracts, they should be able to bid on an equal playing field with American suppliers.

We think this model, which has worked very well in that sector for several decades now, is a good model to look at for PPE procurement and for everything else in the economic rebuild. In other words, we think that Canada and the United States should treat each other as if we were domestic suppliers for the purposes of government contracts that would apply to infrastructure.

Another way to look at this is that if you go back to 2008 with the economic crisis at that time, there was the investment in the economy to try to prevent economic collapse, and there was a Canadian exemption from the Buy American provisions ultimately. That was hard fought, but we got there. So, I think the idea is that if we can treat each other domestically for the purposes of procurement, that would go a long way to addressing the kind of challenges you identify.

[Randy Hoback, Conservative, Prince Albert, SK]

Do you think we need to take it to another level? Do we need to look at things such as rare earth elements, things we look at and say, “You know what; we don't want to be beholden to anybody other than the people we really trust”?

Going forward, are those the types of things we should also be looking at?

[Maryscott Greenwood]

Absolutely, and that's another area that our organization has been talking about quite a lot. Canada's expertise in responsibly developing and producing resources and its infrastructure, whether it's railroads, ports, or things such that, and engineering ingenuity all these years, whether it's uranium, aluminum, oil sands, and so on, could be brought to bear and Canada could be a leading supplier of critical minerals and rare earth processing for the U.S. and world markets.

By the way, that's important when we think about the transition to a low-carbon future, because when you think about electric vehicles and solar panels, those things involve rare earth minerals. We need to be good at recycling them. We need to be good at producing them, and in our opinion, we in North America should not be reliant on the monopoly from China, which is where the overwhelming majority of these resources are produced and in a way that's quite toxic and harmful to the environment.

So, yes, I couldn't agree with you more that rare earth elements would be an ideal area of collaboration for our two countries.

[Randy Hoback, Conservative, Prince Albert, SK]

How do you see our working together in regard to all sorts of possible barriers being put up, non-tariff trade barriers, with historical trading partners? Is this something where Canada and the U.S. can work together, as we see companies trying to protect their domestic supply and breaking agreements that they've made with us in the past?

How do you see that working? Do you see that as a possibility, or is that just too far out there?

[Maryscott Greenwood]

With respect to Canada and the United States, this is exactly why we launched the North American rebound campaign. We wanted to talk to chambers of commerce and businesses on each side, civil society on each side, to ask whether they thought we should collaborate, and the answer was yes.

We have 654,400 chambers across the U.S. currently that are telling our political leadership that it's important that we, Canada and the United States, collaborate on these things. I think there's a willingness and an openness. We have to engage with each other. We have to talk about it. However, I do think what you're talking about is exactly why we launched the North American rebound a few months ago.

[Randy Hoback, Conservative, Prince Albert, SK]

Can you give me examples of some of the possible new threats we could be facing post-COVID?

[Maryscott Greenwood]

Well, protectionism is always a concern, and the idea that when the new Biden-elected administration takes office and the 117th Congress comes, the very natural instinct is to say that if we're going to spend a lot of government dollars, a lot of American taxpayer dollars, and let's make sure that we first give those opportunities to American suppliers.

That's understandable and a real possibility, so what we have to do is really continue to talk about how it's great if you can find a domestic source, whether you're Canadian or American, and that's fantastic, but if you don't have in your supply chain the ability to source domestically....

Aluminum is a perfect example. Aluminum is used ubiquitously. Think of all the products that have aluminum. There just isn't the capacity in the United States. In fact, 87% of our Canadian aluminum exports go there.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go on to Mr. Sheehan for six minutes.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much to the presenters for their excellent presentations on this very important work we're undertaking.

As I was doing my sound check I mentioned that I am from Sault Ste. Marie. In the presentations we've been talking about supply chains. Sault Ste. Marie is a resource city, and there are many of them across this country. It is based around steel, and we're the second-largest steel producer in Canada. Therefore, both the upstream and downstream supply chains are absolutely critically important to a lot of cities, including the one that I represent.

Can you tell us how the government's efforts to keep supply chains open throughout the COVID-19 pandemic has helped our exporters? Are there any additional measures you'd like to see the government make for the movement of goods across our borders so it's smoother and more efficient, while ensuring it is still safe for Canadians? At a border town, it's very challenging, because we need to keep that $2 billion in trade crossing, but obviously when we take a look at what's happening in Chippewa County with the surge, we have to keep it safe and we have to keep the trade moving.

Are there other additional measures we can take to keep our supply chains moving? I'm thinking of things such as the wage subsidy, which originally Algoma Steel and Tenaris weren't eligible for, but subsequently are. They told me it really helped them stay open.

[The Chair, Liberal, Judy Sgro]

Thank you.

Who would like to answer that?

Ms. MacEwen.

[Angella MacEwen]

I can answer briefly, but I think Ms. Greenwood might have some more useful information.

The wage subsidy is quite problematic, because it has been difficult to target it well to producers. Some people who needed it, as you say, weren't eligible for it, and some people are getting it, and we're basically subsidizing businesses that would have been profitable anyway. It's very difficult to make that work, although the CERB has been excellent, because everybody who got it was laid-off for lost time. The CERB was much better targeted than the wage subsidy.

I certainly think that helping any businesses manage their rent is going to be key to helping businesses stay afloat. That's not the supply chain per se, but that's helping businesses make it through here, because I think everybody's having a tough time paying rent.

Obviously, with Biden being elected in the United States that will, hopefully, help health measures in the States, and that will help us have safer trade with them as well. The key thing has been that the numbers in the United States are just so much higher than they are in Canada that it's quite difficult to trade safely.

[The Chair, Liberal, Judy Sgro]

Ms. Greenwood, did you want to add something to Mr. Sheehan's question?

[Maryscott Greenwood]

I'm happy to if you would like me to, but I can yield back. It's up to you.

I think he's saying yes.

[The Chair, Liberal, Judy Sgro]

Mr. Sheehan, you're on mute.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Sorry. Thank you.

In particular on the supply chains, from your experience what has worked well, and what potentially could be improved?

[Maryscott Greenwood]

On supply chains, getting rid of retaliatory tariffs is obviously very important, and Canada and the United States have been working on that. Hopefully, we will not see threats of steel and aluminum tariffs from the U.S. administration again any time soon. That's a positive.

Keeping the border open for essential commence has been really important, but it hasn't worked perfectly. It is still difficult and unpredictable getting human beings back and forth across it. It is important to do that in a risk-based way.

I would say that the pilot project that Alberta is looking at for travel is worth considering. By leaning into testing and making sure that if somebody tests negative before they leave and when they enter, we can reduce the quarantine period. This is something that actually helps supply chains, because we're running into people not being able to get across the border to deliver goods that have been ordered, and that sort of thing.

I also think, to Ms. MacEwen's point, the Biden administration just announced that for the first 100 days of its administration there will be a national mask requirement. Hopefully, measures that are taken in the United States, in particular, will be helpful in fighting the virus, and also give leaders' confidence that we can resume and rebound our supply chains in a way that's helpful.

Certain big legacy projects you just can't relocate and reshore. Steel is a good example, and aluminum is another. Canada and the United States do so well together. We should figure out how to keep doing that—not figure out how to pull apart from each other, in our judgment.