International Trade Committee on May 1st, 2023

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will go to Mr. Carrie for five minutes.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you, Madam Chair.

Buenos días, Señor Harvey. Cómo estás?

I was looking through your bio, and you've done a lot of work in Latin America. You probably have some insight on Mercosur and where we're moving in that regard.

During your questioning with Mr. Seeback, you mentioned some irritants with regard to mining. I was wondering if you have any other examples you could give to the committee from what you're getting through your LinkedIn or Twitter feeds.

[Michael Harvey]

In Mexico in particular, there have been the issues with the Canadian energy sector. I won't speak for companies, but they've been in the media.

ATCO gave back a pipeline, basically, to the Mexican authorities after an arbitration award. TC Energy Canada came to a very good agreement with the Mexican authorities and made new investments in Mexico, but the fact that these companies had an investment treaty that allowed them to get arbitral awards, or to get almost to the point of getting an arbitral award that the Mexican government knew was going to happen, gave them something to negotiate with, a big bargaining chip. If it were otherwise, the Mexican government would just change their rules on energy in favour of their state company, CFE, in a way that was very detrimental to those Canadian companies' interests. The arbitration possibility was huge for them in settling that.

[Colin Carrie, Conservative, Oshawa, ON]

I think that illustrates how important it is to get these things right.

Keeping with the theme of energy, Mr. Christidis, you mentioned the opportunities with small and medium reactors and the potential for Canada for export, and we have the uranium. I was wondering if we have a regulatory harmonization for nuclear energy in the CETA, the CUSMA and the CPTPP. Is there a regulatory harmonization there yet?

[George Christidis]

No. That really wouldn't be the environment that I believe that these discussions would occur in. I think the CNSC has done a super job in terms of President Velshi having discussions at the IAEA in Vienna, where the international regulators come together and talk about their issues. Our message, quite frankly, is just to continue that.

In terms of the international trade agreements, it's really important in the definitions, particularly in relation to clean or green energy, to have a consistency in the inclusion, not only from a Canadian perspective but internationally as well, which we're seeing. We're seeing this trend actually occur, and to some extent it will facilitate those opportunities for the Canadian nuclear industry in uranium, the large reactors like CANDU and the SMRs.

Even in terms of the nuclear waste, I must state that Canada is seen as a leader in terms of what it's projected to do or how our Nuclear Waste Management Organization is managing the discussions around nuclear waste. All of those opportunities in terms of learning from Canada and accessing its services are there; it's just that the processes have to be ready and resourced to take advantage of those opportunities.

[Colin Carrie, Conservative, Oshawa, ON]

Are they harmonized yet? I was wondering if it has been done yet, because I know we signed these agreements in the last few years. You mentioned Germany. I was just thinking of how easy would it be for Canada to sell into Germany.

[George Christidis]

Germany is not interested in acquiring nuclear technologies, but in terms of the regulatory discussions, those are being driven by the CNSC in those international arenas, particularly at the IAEA, another collaboration that it's undertaking. As I said, it's going very well. They're doing very good work. It's just making sure that this is a component of the effort.

In terms of Germany itself, their decision not to continue with nuclear operations has, quite frankly, led to a significant increase in emissions, an increased dependency on coal, and to some extent dieselization in terms of energy security, which is of course impacting Europe. That's really a European question and it's really a German question, but you are seeing within the European Union this debate emerging in countries such as France, or in eastern Europe Romania, which is looking at refurbishing and building new CANDU reactors. It's causing an internal debate in terms of how they increase their energy security and meet climate goals when a core economy like Germany has gone the other way. That's a real issue.

[Colin Carrie, Conservative, Oshawa, ON]

I think I missed it, but are the definitions agreed upon in the agreements we already have, or do we still have a way to go?

The reason I'm asking is that I know we're looking at trade with India and even the U.K., and I know how important it is if the government doesn't address the trade agreements we have as we move forward with these new ones. If we don't get it done, how problematic is that going to be?

[George Christidis]

Including nuclear in the definition of clean and green is occurring, and in the announcement of this federal budget, the government indicated that's an area they're going to be looking at as well, but there is again this international trend. You mentioned the U.K., which is clearly including nuclear in its green definitions, and there's the EU, which has also modified its taxonomy to sort of enable it. It's certainly moving in the right direction. We're just encouraging it to do so in accelerating—

[Colin Carrie, Conservative, Oshawa, ON]

But it's not there yet, right?

[George Christidis]

It's not there yet.

[Colin Carrie, Conservative, Oshawa, ON]

I just wanted to clarify that.

[The Chair, Liberal, Judy Sgro]

I'm sorry, Mr. Carrie; your time is up.

Go ahead, Mr. Arya, for five minutes.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Madam Chair.

Mr. Harvey, you did touch a bit on the current national order. Globalization, as we knew it during the last several decades, is on its way down. The former cheerleaders of international trade investment countries are now practising friendshoring protectionism, and that is leading to lots of non-tariff barriers. Canadian exports, obviously, always face these non-tariff barriers. For example, the beef exports to Japan and South Korea faced the age of the cattle problem and those types of cuts, and even Japan was putting some restrictions on frozen beef exports.

I'm glad you have a background in mining. Non-tariff barriers being imposed by countries like Tanzania through banning or limiting the exports of gold and copper concentrates and insisting on domestic processing. In DRC, I believe, the second-biggest cobalt mine was shut down, again by non-tariff barriers, by insisting on domestic processing.

Indonesia, with which we are now discussing a free trade agreement, has now banned the export of raw nickel ore, and it is also imposing an export tax of up to10%, if I'm not wrong, and insisting on domestic content and domestic processing.

Before I come back to you with a specific question, I have a question for Mr. Christidis, who is not only the vice-president of the Canadian Nuclear Association but also my boss, because he's my constituent.

George, we are negotiating a trade agreement with India. India is a big market for the Canadian nuclear industry. It's not just the uranium; potentially, there's a huge market for the SMRs, the small modular reactors.

Now that the negotiations are going on with India, I have two questions specifically and quickly.

Has the Canadian negotiating team consulted you on what's happening with the negotiations with India?

Number two, do you see any non-tariff barriers coming up from India for the nuclear exports, maybe for SMRs, in terms of the domestic content requirements? It already has certain non-tariff barriers for pulse exports to India. Similarly, do you foresee anything from India there?

[George Christidis]

Thank you for the question.

With regard to India specifically, we're obviously quite aware that certain discussions are occurring. We've had much more robust conversations, particularly with regard to eastern European countries, which are particularly interested in Canadian knowledge and know-how.

To that extent, India, for us, is an interesting market, of course. It has a very robust nuclear ecosystem on its own. What we're finding is a lot more interest in some of the eastern European countries, particularly countries like Poland and such.

[Chandra Arya, Liberal, Nepean, ON]

George, I have limited time. Has our international trade team contacted the Canadian Nuclear Association on the current ongoing negotiations?

[George Christidis]

Have we been contacted directly? I'm not familiar with that, no.

[Chandra Arya, Liberal, Nepean, ON]

Do you foresee any specific non-tariff barriers for exports to India from your industry?

[George Christidis]

There would be questions we would have. We're particularly interested, obviously, in the supply chain for uranium export and other technologies that we would be able to support.

[Chandra Arya, Liberal, Nepean, ON]

I only have one minute left.

Mr. Harvey, specifically on Indonesia, they are banning the export of nickel ore. My friend Mr. Savard-Tremblay mentioned the palm oil production there.

With your background in mining and your knowledge of international trade, do you think this increase in non-tariff barriers in terms of insisting on local processing and local content will affect the Canadian mining industry?

[Michael Harvey]

What I'd say is that the Canadian mining industry can work through those barriers more effectively if we have institutionalized processes that generally come in the context of trade agreements, which gives you something to hang your hat on when you try to solve a dispute. It could be regulatory co-operation groups or it could be arbitration-type possibilities. Institutionalizing the dialogue through our trade agreements will allow our companies to have a better chance of getting what they need.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll now go to Monsieur Savard-Tremblay, please.

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

Mr. Adams, I seem to recall that your organization, if not you yourself, appeared before the committee as part of our study of the U.S. Inflation Reduction Act. The United States introduced a lot of incentives. I think we are seeing a very ostentatious display of non-tariff barriers, including tax credits.

Representations made to U.S. actors may have had a positive effect with regard to some tax credits, but not to others. In your opinion, are there any that remain? We talked about the 45X tax credit, which is only applicable to batteries produced in the United States. Do you think Ottawa should continue to make representations to the U.S. Congress to extend these provisions to all of North America?

[David Adams]

Thank you very much for the question.

It's a good one. I think what Canada needs to be doing is ensuring that they're continuing to dialogue with the Americans in terms of the subsidies that the U.S. has implemented under the IRA. It was pivotal.

As an association, it was our recommendation to the federal government that to the extent possible, in order to benefit from foreign direct investment in the areas of batteries, electric vehicle production and whatnot, Canada has to find a way to strategically match the subsidies and whatnot that the U.S. is implementing.

We should make no mistake: These are provisions that are, as I think we all know, intended to try to get all the capacity for battery manufacturing and production within the United States.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go on to Mr. Cannings for two and a half minutes, please.