International Trade Committee on Feb. 1st, 2024

[The Vice-Chair, Bloc, Simon-Pierre Savard-Tremblay]

Thank you.

I now give the floor to Mr. Cannings.

You have two and a half minutes.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

I'm going to continue down the line to Mr. Greer with the question I was asking last time about the just-in-time method of handling supply chains. I've been reading about how some companies are adjusting that strategy to make it a little more nimble for figuring out, if they are getting parts in, which parts they need to store or have on hand and which ones they can pretty much rely on.

Can you comment on what you're hearing from your members in that regard?

[Ryan Greer]

Thank you.

I think we're hearing some of what you're hearing, which is that supply chains are highly elastic. We're not hearing that our members are keeping as much inventory as they were during and in the immediate crunch postpandemic. They're also not going back to the way it was prior to the pandemic, when things were just-in-time.

Honestly, what we're hearing most from them is some of what we're talking about today. To the extent that we can ensure that we are investing in the trade and transportation infrastructure required to give them more predictability and certainty, they can make business decisions based on that.

The other thing our members are looking at a lot is how they can implement new digital technologies to help them manage those inventory processes, including potential opportunities around artificial intelligence, which would optimize route planning for their goods, shipping volumes, predictive maintenance and safety monitoring.

There is opportunity to improve productivity and resilience, but it's going to require significant investment and significant capital investment, which means the business investment environment needs to be conducive to that.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I would assume then that small businesses and large businesses are looking at this in very different ways.

I mean, this all started with Toyota shifting its strategy, but a mom-and-pop operation wouldn't have those resources.

[Ryan Greer]

That's exactly correct. The challenges are different. The ability to respond is different.

That's why you have constituents talking about finding additional warehouse space. They need to build in the uncertainty. They have less flexibility than some of these larger multinationals or foreign-direct investors, which means there are higher costs for them and there's a greater impact on their business. It lowers the competitiveness and it creates real challenges for them on their bottom line, which is why they are looking to take advantage of government programs, tax credits and other things that can help them adopt some of these technologies and implement some of these processes to the extent it's possible.

It is a competitive disadvantage and one that costs them, their employees and their families dearly.

[The Vice-Chair, Bloc, Simon-Pierre Savard-Tremblay]

Thank you.

I now give the floor to Mr. McLean for five minutes.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you, Mr. Chair.

Welcome, colleagues, and welcome, guests. Thank you very much.

I want to start with what we're looking at here. I'll start with you, Mr. Whelan, because I've gone through the report on the supply chain.

There are a number of issues that are raised in there that need to be addressed, one of which, of course, is that the actual freight flow has gone down in every realm—rail, port and road—but up in aviation from 2009 to 2022. It's saying that aviation is being used more, but all our traditional infrastructure is being used less.

Do you understand why that might be happening?

[Michael Whelan]

To be honest with you, I'll say no.

When we look at it from the timing perspectives, that could certainly drive part of it.

Diving into the depths of the report, I'm going to refer to Mr. Montanti if he is still there.

[Martin Montanti]

Yes, and that's a great question.

[Greg McLean, Conservative, Calgary Centre, AB]

I have only a little bit of time here.

[Martin Montanti]

That's a great question, and I'll answer it quickly.

The things that happened were that lots of companies went to a more horizontal approach and outsourced lots of items. It changed the dynamics, where things were coming into the marketplace as assemblies rather than as individual pieces, so that—

[Greg McLean, Conservative, Calgary Centre, AB]

Okay. I'm going to move on. Thank you.

You take a look at some of our metallurgical and—it's been referred to before in this committee—critical minerals. The government has a strategy on critical minerals. I think it's an incomplete strategy. Nevertheless, you talk about how we ship out critical minerals.

Let's talk about lithium. Lithium is produced at one mine right now in Canada, in Manitoba. How does that get to the actual buyer, which is a Chinese company at this point in time? Can you explain how that goes from the Manitoba mine to China?

[Matthew Holmes]

My understanding is that it's largely.... There is the mining and there is the refining as well, because there is a chemical process typically used—

[Greg McLean, Conservative, Calgary Centre, AB]

I don't think the refining has opened there yet. I think it's just a mine.

[Matthew Holmes]

—and then it's transported by rail to the west coast.

[Greg McLean, Conservative, Calgary Centre, AB]

To a port...? Thank you.

The strategy, of course, is to use all that internally in Canada, according to the government's strategy on how they'll build the supply chain for electric vehicles. They've spent $135 billion on this, yet the basic element isn't available to them at this point in time. Is that correct?

[Matthew Holmes]

I would say that the full ecosystem, in order to have that finished product, is not yet here in Canada.

[Greg McLean, Conservative, Calgary Centre, AB]

Okay.

I'll go back to you, Mr. Whelan.

A lot in this report talked about collaboration between the private sector and the public sector.

There was a time when the private sector would focus on opportunities and the public sector would facilitate that investment, but that investment had to have the transparency of an outcome from both an end-result perspective and a financial perspective. It seems this government has usurped that relationship, and they're picking winners and losers now and actually trying to determine what goes there. Industry is sitting on its hands.

As a matter of fact, in Q1 2023, it is reported that $212 billion of investment capital left Canada because of lack of transparency of outcome. There is no money going into infrastructure in Canada because the opportunities aren't there until the government picks them.

Are we going to continue to have a degradation of our infrastructure in Canada unless the government gets out of the way and allows industry to actually start making decisions about what we export and what we do in Canada for economic activity?

[Michael Whelan]

Again, from our perspective, we're dealing with the people who are within the supply chain. Getting that there, I'm not really sure, to be honest with you, where the....

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you.

I have one last question, and I'll leave it to anybody from the panel who wants to answer.

The Impact Assessment Act has been ruled ultra vires by the Federal Court of Canada. As a result, it leaves another big uncertainty mark for businesses in Canada that want to invest in projects. Is this going to continue going on here, and how much capital are we actually going to have to develop any of our infrastructure if this government continues to create uncertainty?

Are there any comments, please?

[The Vice-Chair, Bloc, Simon-Pierre Savard-Tremblay]

You have 10 seconds. So provide a good summary.

[Robin Guy]

I'll simply say that uncertainty is a poison pill to investment in the country.

[The Vice-Chair, Bloc, Simon-Pierre Savard-Tremblay]

Thank you. You answer was very concise.

Mr. Sidhu, you now have the floor for five minutes.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you, Mr. Chair.

As many of our witnesses may know, Minister Ng and Minister Champagne are leading a renewed team Canada engagement effort with the United States, working in collaboration with our ambassadors. We all know that the supply chain between Canada and the United States is one of the most integrated supply chains in the world.

I want to hear from some of you what you would recommend to help improve North American supply chains and resilience.

[Matthew Holmes]

I'll get us started and warmed up. I'm sure the whole bench is ready to weigh in on that one.

I think it's very important that we take the upcoming election and the potential for CUSMA renewal very seriously. I think it's important that the Prime Minister made that announcement.

What I would say, though, is that if it's truly team Canada, it needs to be a full bench. It needs to have everyone involved, as we have previously had as a country in such situations, and across multiple governments. We need to see the appointment, in my opinion, across multiple parties of some leaders and champions to represent Canadian interests who can speak to governors in individual states. We need to mobilize the business community to go down to the United States, talk to their supply chain and ensure that the conversation and trade relationship are fresh and very apparent to all parts of it.

The Canadian Chamber of Commerce announced today some of our programming that we will be putting in place this year. We'll be doing a minimum of four trips down to the United States with our members for certain core industries and member sectors to ensure that we're speaking directly to policy-makers and that we're bringing businesses down to have B2B conversations as well.

That's our contribution. We hope and expect that other businesses, sectors and the full government will participate.