International Trade Committee on May 1st, 2023

[George Christidis]

It's really an opportunity to make sure that in the nuclear energy space.... Nuclear exports do require state involvement and state promotion, which of course the Canadian government has done, but we need to continue those efforts.

Coordinating working with like-minded countries, in the case of Romania and other eastern European countries, will be very much about energy security and making sure the financial models are in place that would help support that export, which in the end supports the Canadian supply chain in Canada but also enables these countries to have a very long-term relationship with countries like Canada that obviously meets their climate and energy security goals. A country like Romania is looking for that type of financial modelling that would be supportive of their goals.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thank you very much, Mr. Christidis.

Madam Chair, I have nothing further. Thanks.

[The Chair, Liberal, Judy Sgro]

Mr. Martel, you have five minutes, please.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Thank you, Madam Chair.

Mr. Harvey, I was looking at a Statistics Canada study this week. In the 2019 study, Statistics Canada says that non-tariff barriers are the main source of trade friction between Canada and the United States. For each of Canada's sectors, what are the most significant non-tariff barriers affecting exports to the U.S., and what is the estimated total economic cost to each sector?

[Michael Harvey]

I did not prepare enough to provide you with those kinds of statistics by industry sector, but we all know of industries where things became complicated. Lumber, among others, is an issue we've talked about for several decades, and steel has recently come up as an issue as well.

I would go back to what I said at the beginning of my remarks, that it's normal to have non-tariff barriers. Where trade agreements can be really helpful is to frame the discussions and allow Canadian companies that are encountering problems to come before a committee, a panel or a council to help them find a solution and to resolve their dispute. However, it's not perfect. Some disputes have never been resolved and we hope that we can resolve them one day.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

It's because we're trying to be perfect. That's why we are asking questions.

The Canada-U.S.-Mexico Agreement, the Comprehensive Economic and Trade Agreement, and the Comprehensive and Progressive Trans-Pacific Partnership Agreement still have several trade irritants. Has anything been done to address them, or has absolutely nothing been done?

[Michael Harvey]

Those issues are often addressed by regulatory cooperation boards or councils. I mentioned Europe, where I was a virtual participant at the meeting in Brussels. Under the Canada-Europe agreement, the Regulatory Cooperation Council allows regulators from both countries, or more accurately from both systems since Europe is more than one country, to come to a common understanding of certain disputes, which helps to resolve them. It's about separating, prioritizing and focusing on the resolution of disputes, where there is an opportunity to resolve them.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

As I understand it, it's important to address these irritants now, because later on we're going to have new trade agreements, including between Canada and India.

[Michael Harvey]

I think the agreements have improved. The Canada-EU agreement, which is a recent agreement, is much better than the previous ones. We have learned over time. In the case of India, negotiations will certainly be difficult and I think we should try to focus on regulatory cooperation.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Harvey.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Sheehan, you have five minutes.

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

Thank you very much.

Thank you to all our presenters who are here this afternoon for this really important testimony.

As I alluded to, I ran out of time a bit. I wanted to stick with steel, of course, but not just steel. I wanted to talk about the whole up-and-down supply chain as it relates to the auto industry. For our friend from the auto industry who is online, could you describe this?

We really were ahead of the Americans, quite frankly, from 2015 on, in our efforts to decarbonize the economy. You've seen recently the investments of the steel industry in Sault Ste. Marie at Algoma. That is really going to make a huge difference. It's going to anchor Algoma Steel in Sault Ste. Marie for generations. We're calling it “generational funding”. The steelworkers are going around and saying, “Hey, if my grandkid wants to be a steelworker, he or she, if they choose it, they can.”

It's also taking a million cars off the road, or the equivalent thereof. It's pretty significant, but then we're seeing a lot of things happening with the recent announcement with the Volkswagen EV batteries. We're seeing a lot of focus on the unlocking of even more of the minerals needed for the industry.

Through you, Madam Chair, to our presenter, could you talk about these non-trade barriers and how, if they target one area of that supply chain, that could upset the whole apple cart?

There are many pieces of that supply chain that I've been talking to. I talked a little bit about the transportation stuff. Please also speak a bit about unlocking even more critical minerals and that potential.

[David Adams]

Madam Chair and Mr. Sheehan, thanks very much for the question. I appreciate it.

You highlight a key point. I think it's a point that's hit home to everybody in every industry. I think what happened in the auto industry during COVID showed the fragility of the global supply chain and the importance of having control over our global supply chain. As we do more so-called friendshoring and as we repatriate some of the manufacturing and our supply chains back to our North American region, I think that provides security, but it also comes at a cost, which tends to mean increased prices to consumers as well.

As I said, we've seen non-tariff barriers potentially applied through the Inflation Reduction Act to try to ensure that battery production for electric vehicles is done in the United States. We need to continue to be vigilant and take the appropriate action to ensure that we maintain some of that here in Canada.

In terms of other non-tariff barriers, with respect to our supply chain, I think the biggest challenge for elements that go into that electric vehicle supply chain that can't be sourced domestically at the moment are other jurisdictions realizing the value of those critical minerals and potentially putting export controls on those critical minerals as well. That only introduces more vulnerabilities into the supply chain.

I'm not sure that I've answered your question exactly, but I'll leave it there for now. If you have a rejoinder, I'm happy to try to answer that.

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

I'll go back to Michael.

You were talking about meeting Mr. Beatty in Japan. I'm also the co-chair of the Canada-Japan Inter-Parliamentary Group. I had the opportunity to meet with him last week, and we were talking about things. How important is that relationship with Japan to the Canadian economy?

I look at Kitimat, for example. I think they're at about 15% of a $40-billion investment. It's about unlocking that potential. How important is Japan to unlocking the investment that they have in some of these critical minerals?

That's to you, Michael.

[Michael Harvey]

I'd say it's tremendously important.

It was very interesting to be in Japan, speaking with the Japanese and trying to understand their perspective on the events in the world. They were explaining to us some of their difficulties in terms of importing natural gas, since they got their natural gas from Russia. It's become much more difficult. There's the fact that they're right next to China and that their economies are very much interlocked. For them, energy in particular is a big national security issue.

They look at Canada as a friendly democratic country that can provide them with energy and as a country with a higher ethical profile and better environmental profile. They would just love for us to produce more and for them to be able to purchase from us rather than from others who create some national security issues for them.

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

That's why I thought it was really outstanding that they joined us in sanctioning Russia, knowing how isolated they are with China and North Korea, and then with Russia being right there too. They put on those important sanctions to end this unjust war.

[Michael Harvey]

Absolutely.

Quite a bit of their gas was coming from islands that they've owned at certain periods in history. They're close.

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

Those are the northern territories, yes, for sure.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

The budget for this study that we are doing has been circulated to the committee. The clerk has passed it to everybody. I assume everybody's supportive of it?

[A voice]

Yes.

[The Chair, Liberal, Judy Sgro]

Thank you very much to the witnesses.

I will adjourn the meeting and we can go to vote.

The meeting is adjourned.