International Trade Committee on May 9th, 2024

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Yes, sorry, it's $1 billion. In return, he promised to immediately revoke dozens of decisions made by Joe Biden on climate change and the environment. These include measures related to electric vehicles, wind energy and drilling restrictions. Decarbonization and the electrification of transport rely heavily on aluminum.

I'm asking you a rhetorical question: are you concerned about this announcement?

[Jean Simard]

Yes, I'm concerned about that one and the others we've heard before about the reimposition of tariffs. This creates a context of high political volatility, which is very harmful to investment in aluminum production on this side of the border and probably on the other side as well. It's not a good business climate for us.

[The Vice-Chair, Conservative, Kyle Seeback]

Thanks very much.

We'll now turn to our last question for round one.

Ms. Blaney, you have six minutes.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Thank you so much, Chair.

I thank all the witnesses for being here with us today to talk about this really important issue.

I'm going to talk with Mr. Deith. I have a few questions.

I was really saddened to hear some of what you had to share today, and I was really compelled by what you said about critical minerals and that we are in a process, hopefully more and more, of moving towards an energy transition.

Right now, China does have the monopoly. As we look at our commitments in this country and as we want to look at growing our economy, that is something we should be taking seriously. As we know, there are other countries that are looking to buy these resources ethically.

You talked a lot about the fact that the capital is just not appearing. I know that across Canada we're seeing the federal government and a lot of provincial governments still significantly subsidizing the fossil fuel industry. We know that Canada has spent $35 billion on the Trans Mountain pipeline expansion, which is another example of a lot of resources being given to the fossil fuel industry.

From your perspective with those critical minerals, what would help Canada create a stronger domestic clean energy supply chain that could, probably, quickly become an international one?

[Jamie Deith]

Yes. Thank you for that.

My belief is that Canada—like most of the west—is coming from very far behind in the development of the industries and the ecosystems related to electric vehicles, and the energy transition more generally. This means that not only is it difficult to set up an ecosystem but also that we're competing with ecosystems that are already largely fully developed in other parts of the world. This makes it doubly difficult to make up for lost time.

The reality is that capital scarcity has been part of the reason for that, but I would also say there's a lot of uncertainty as to government policy going forward. There's going to be a lack of commitment if those who have the capital and want to deploy the capital have no certainty as to where policy is going to be in five, 10 or 15 years' time.

[Rachel Blaney, NDP, North Island—Powell River, BC]

You also talked about the stabilization of the critical minerals plan, and I really enjoyed hearing about your idea for stockpiling those materials. What is interesting to me and what I want to understand a little better is what the stability in having this type of model moving forward would do for businesses that are growing within Canada. Specifically, because they're a particular passion of mine, what would be the impact on small, remote communities? When I look at the economy in Canada, one of the things that concern me is that we're not strongly motivated to see transition happening in those smaller communities. We've lived through boom and bust in those communities again and again, and we really do need to diversify and stabilize. How would the model you presented benefit those types of communities?

[Jamie Deith]

Certainly for any community that's involved in the energy transition, doing something that stabilizes both availability and prices within the markets should go a long way to giving certainty to those who need to do the planning for those communities. That should help with an environment that will give everyone in the supply chain—from the very end-users in those communities all the way up the supply chain to those who need to produce the materials—a sense of certainty that they understand where things are going. There will always be times when there's a bit of a wild ride in some of these markets, especially with the pace at which things are changing, but at least there is some cushioning and there's some advantage to those who make those commitments domestically.

[Rachel Blaney, NDP, North Island—Powell River, BC]

I appreciate that. I know that in February 2021, you were a witness before the national resources committee. As part of your testimony, you said:

there is a renewed sense of urgency for secure, localized and diversified supply chains across all industries, but especially those critical to defence and otherwise foundational to the economy. It has finally dawned on us and our allies collectively that some parts of the economy need a reliable underpinning of steady supply.

It's been three years since you made that comment. Do you see any increased action or any results?

[Jamie Deith]

The biggest single event was probably the Inflation Reduction Act in the United States. It has gone some ways, but even in recent days we've seen that they are backing off from some of the commitments to shore up the security of supply chains. Chinese graphite in particular has been exempted for a couple of extra years.

This actually speaks to the issue I mentioned earlier, that without some consistency in government policy, market players and capital providers will second-guess that policy and say that if we will just have to live off Chinese supply for two years, then what's to say that in two years' time we won't get another two years and another two years after that? With respect to a lot of these decisions, although on balance things have gradually moved in the right way, I would say they have not moved at nearly the pace that's required if we want to achieve anything within a reasonable time frame, such as 10 years.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Thank you for that. I know my time is almost up, so I'll let it go.

[The Vice-Chair, Conservative, Kyle Seeback]

It is. You have 15 seconds. Thank you, Ms. Blaney.

We'll now turn to our second round of questioning, beginning with Mr. Jeneroux of the Conservative Party for five minutes.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Thank you, Mr. Chair.

Thanks, everybody, for coming here on a Thursday afternoon.

I hope to get to you, Ms. Smith, but before I do, I have a quick question for Mr. Geffros.

A supply chain task force report was developed in October two years ago. It's the focal point of a lot of the study we have here in front of us.

Given the way you talked about the impact of the Wood Pallet and Container Association's being quite instrumental in the supply chain, I'm just curious as to whether you were consulted on this report.

[Scott Geffros]

Thank you, Mr. Jeneroux.

No, we were not consulted. In fact, we sent correspondence back to the committee about the lack of consultation in the document and several findings we encountered in it that seemed rather erroneous.

It appeared that the committee looked to some of the largest of what we call “pallet pooling” companies for its information as opposed to looking to what we would call the "white wood sector", which is made up of the small ma-and-pa shops around the country that are really the backbone of the industry.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

That was one instance. Were there others? You mentioned that there were a few parts of the report.

[Scott Geffros]

Yes. I'm sorry. It's been quite a while since I've gone through the documents, so I would—

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

I'm sorry to put you on the spot.

[Scott Geffros]

—want to review them again. I'll just point out that I have notes on them at home.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

When you get home, send us an email. I'd be happy to hear more of those. I know you said you sent it to the committee before, but I just want to make sure that it gets incorporated as part of this study.

[Scott Geffros]

Absolutely. Thank you very much for that.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Madam Smith, I really appreciated your testimony. I want to talk to you a bit about interswitching. You discussed it again.

We've had some conversation here about it at the committee over the years. I know they've also had it over on the agriculture side over the years. The ability to shed some light on it from your perspective, I think, would be helpful if we got into a bit more of it.

I'm hoping you can explain the impact of interswitching on the workforce, and workers in particular.

[Lora Smith]

Sure. Thank you for the question.

Interswitching is the transfer of goods between two railways. It's a very common practice that's been done, really, since railways existed. The problem with extended interswitching is that the kilometre limits grew from 30 kilometres to 160 kilometres. The policy covers the three prairie provinces. What that means is the 160 kilometres now extends and enables a U.S. railroad to have access to Canadian traffic into Canada, whereas it wouldn't be able to on an even playing field.

It's created an uneven playing field with that U.S. player being able to take traffic from both CN and CP during this pilot program, which started in September 2023 through the budget and is meant to sunset in March 2025. What it means is that at a below-market rate, at a cost rate, the Canadian railroad will have to pass the traffic off to a U.S. railroad, which will take it the rest of the way. In the case of grain, it would quite likely go to the port in Tacoma or Seattle. Therefore, it wouldn't go to our Canadian port and be shipped out.

This will affect investment in our railroads and it will affect the workers who obviously do that traffic work. It will also potentially affect the capacity at the port, because it will be handled by a U.S. port and not a Canadian port.

It's not just the railways; there's very much a downstream effect as well.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

You've hit on some of the competitive implications there. You mentioned grain. Are there others that we should be concerned about?

I think I only have about 30 seconds left.

[Lora Smith]

Grain is the predominant one, because it is focused on the three prairie provinces of Manitoba, Saskatchewan and Alberta. Yes, there could be other commodities that are affected, and I could perhaps provide your office with a more complete answer on that.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

I'll get a couple of emails out of this, Chair.

[The Vice-Chair, Conservative, Kyle Seeback]

That's your time. Thank you, Mr. Jeneroux.

We have Mr. Sheehan for five minutes.