International Trade Committee on Feb. 1st, 2024

[Chandra Arya, Liberal, Nepean, ON]

I'll start again.

Mr. Greer, thank you for bringing up the issue of the global supply chain and the transformation that is taking place due to many factors, including the changing geopolitical structure and the changes in globalization, as we have seen. Though the bulk of our trade is with the U.S., which is quite good for us, because of the complex nature of the supply chains, the global nature of the supply chains, if Asia sneezes, we catch the cold. The supply chain management, the supply chain that has to work seamlessly across the world, is very important both for Canada and the U.S. for our trade going forward.

Has the Canadian Manufacturers and Exporters association looked at what happened during the pandemic and how it affected the supply chains? If we have, say, another pandemic hit us in the next months, do you know exactly which are the members of yours, which are major companies of yours or the major product lines, that will be affected and what needs to be done?

[Ryan Greer]

The short answer is yes. We are constantly examining, as I mentioned, the geopolitical, environmental and technological environment in which all our members are manufacturing and that our supply chains are adjusting to.

In terms of Canada-U.S. and the border, I think a number of challenging lessons were learned, not just for the private sector but for governments and other partners alike. Maybe our fear is that some of those lessons might get forgotten. I think of how certain procurements and project approvals and other decisions that were made with public-private collaboration were done in a fairly expeditious manner. We—

[Chandra Arya, Liberal, Nepean, ON]

I'm sorry to interrupt, but I have limited time.

Are there any specific things you identified that would affect major product lines of your members' companies if the pandemic were repeated?

[Ryan Greer]

Anything that seizes up the border, anything that creates any delay at the border, will in fact impact all of our members. When we consider a future event such as that, anything that slows up the border in any way impacts all of our members. Which businesses can be open and in what way would obviously impact our members, but really ensuring the border continues to be open and seamless is the single most important one.

[Chandra Arya, Liberal, Nepean, ON]

Thank you.

Mr. Holmes and Mr. Guy, I'd ask you the same thing. I'm talking about the global supply chains, where components or parts of the goods are supplied from China and southeast Asian countries, if there's a disruption how are your members going to be affected? Do you have any idea if any political study has been done?

[Robin Guy]

I think to answer the question I'll go into a bit more detail. We just can't have the one path to get goods to market. We have a big country. We have the ability to go east and west, and for that matter, as the climate starts to warm in the north, I think we should be exploring an Arctic gateway strategy to make sure that we can get goods out no matter which way.

If we have, for example, a strike on Canada's west coast, if we have flooding taking place where we simply can't move, the ability to ensure that goods continue to move is a massive piece that we need. In addition to that, looking at the controls that government has and the leadership that government can play, things like interprovincial trade barriers make—

[Chandra Arya, Liberal, Nepean, ON]

You touched upon the need to respond to the IRA. We did a study in this committee and one of the witnesses very neatly said that we can't match dollar to dollar, but we can respond smartly to the U.S.

One thing that has come out of the U.S. IRA and the CHIPS and Science Act is that the U.S. understands that not everything can be manufactured in-house. Onshoring is not possible and that's the reason they're trying to de-risk their dependence on China through friendshoring or nearshoring, etc.

Have you guys identified the opportunities that are available for Canada? You guys may know that Canada and the U.S. have a supply chain working group that identifies the various critical sectors where we can act jointly in ways that we co-operate with each other. Have you looked into that and identified the sectors that provide opportunities for Canada to step in?

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

You have 20 seconds left.

[Matthew Holmes]

To be very brief, there are two things.

One is that we have to diversify our trade, of course—always—both in terms of our infrastructure and our trade relationships. That's profoundly important.

Two, three-quarters of our trade is with the U.S., and we need to really make sure that we're focused on those critical trade relationships.

Critical minerals is actually a great example of where we're nearshoring and friendshoring. We need to ensure there's a rigorous ecosystem here in North America that's done in coordination.

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

Thank you, Mr. Holmes and Mr. Arya.

It's my turn to have the floor for six minutes.

Ms. Campbell, you mentioned the Canada-United States-Mexico Agreement, or CUSMA, in your opening remarks. As we know, all kinds of negotiations are under way with various countries, including Ecuador, the United Kingdom—it's a bit complicated in the United Kingdom's case—and the countries of the Association of Southeast Asian Nations. The negotiations are under way, or they are planned over the short term.

In your opinion, what priorities and concerns should the negotiators be focusing on?

[Kim Campbell]

Thank you very much.

I feel that the priorities for the negotiator should obviously be to make the application of the trade agreement as simple as possible.

We've talked about—and I've heard previously in the committee—people aren't really using the free trade agreements because they're very hard to execute on. That would, to me, be the simplest. We say free trade, but when you dig into it and actually have to use it and make sure that you qualify, it's a very technical, complicated and confusing exercise for importers and exporters.

That would be my biggest recommendation: to try to make them as easy as possible to execute on.

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

Thank you, Ms. Campbell.

My next question is for the Canadian Manufacturers and Exporters representative.

In a 2019 pre-budget submission, and on other occasions, you supported the creation of a national accelerator program that would be dedicated to manufacturing exports and would be similar to the current Canadian technology accelerator program.

Was that proposal heard? To my knowledge, no such program has been set up. Have other measures with the same objective been put in place?

[Ryan Greer]

I think that one was for us.

The short answer is yes to an extent, in the sense that there are a number of current government initiatives and programs that are focused on advanced manufacturing, clean technology exports and how to build our capacity to access those markets.

Everything has shifted, as we've noted, significantly since the introduction of the IRA. At the present moment, our focus is on the investment tax credits, which are of extreme importance to our members, and to foreign direct investment. When we think of North American supply chains, decisions are being made every day about where to invest.

There is a manufacturing factory boom happening in the U.S. Manufacturing construction is up 70% year over year in the U.S., and we have focused all of our energy in the last 12 to 18 months on matching, keeping up with and finding Canada's unique response to the IRA incentives.

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

I'm going to take advantage of the fact that you mentioned the Inflation Reduction Act to pick up on that.

In its June 2022 progress report on Canada-U.S. supply chains, the Canada-U.S. Supply Chain Working Group highlighted the importance of nearshoring by U.S. and Canadian elected officials for parts of the supply chains that were critical in the electric vehicle sector.

We know that the Inflation Reduction Act, which is a plan that is very focused on green technologies and the energy transition, touches on some sensitive considerations. The Americans have many initiatives in place to encourage investment.

Do you think Canada is doing enough on its side?

[Ryan Greer]

First, your point is exactly right, but it's not just a clean technology issue; it is a geopolitical issue. We've seen comments from the U.S. national security adviser, talking about how the nature of global changes has fundamentally changed under this administration and, frankly, will be for future administrations.

Canada has worked closely with us and taken a number of our recommendations on what Canada's response to the IRA should be. As I mentioned, our focus is really on the investment tax credits. We need to get those available for companies to apply for so that opportunities are not missed out on.

I think the difference and the importance of those is that Canada and the U.S. are not traditional trading partners like we would think of in other markets, where they're often competing for market access. Our integrated supply chains mean we build things together. It is really about working together and how we, as a region and as a continent, can export to the rest of the world.

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

I have a minute and a half left.

I would like to call Mr. Martel to order and ask him to stop interrupting me when I have to do my job.

Mr. Greer, you said that the considerations were geopolitical or even geostrategic in nature. I can't remember the exact word you used.

Could you give us more details on that idea?

[Ryan Greer]

I referenced the U.S. national security adviser. I'll read his quote directly. He said, “Market access has been the orthodoxy of all trade policy for 30 years, and that no longer fits today's challenges.” It's not just the economics; it's now the security of supply chains. For a number of strategic reasons, this applies a significant decoupling between the United States and China.

Economic security has once again become an integral part of national security. Given our location and the value of our trade with the U.S., how we work closely with our friends and partners in the U.S., how we respond to their incentives and how we recognize this decoupling and ensure that it is Canada, the U.S. and Mexico—North America—exporting, building and making products here in this region in highly integrated supply chains....

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

Thank you.

My time is up.

I now give the floor to Mr. Cannings.

Mr. Cannings, you have six minutes.

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

Thank you.

Thank you all for being here today.

I am going to start with Mr. Guy. You mentioned Bill C-58. That's the bill that would ban replacement workers in federally regulated industries.

You intimated that places that ban replacement workers will have longer strikes and be more disruptive and less stable when, in fact, the longest, bitterest, worst strikes in Canadian history were generally those that involved replacement workers, because they took away the need for the employer to even talk to the workers. This whole bill is designed to basically level the playing field and make things more stable. British Columbia has had this legislation for decades. Quebec has had this legislation.

We heard at an earlier meeting of this committee, when we were studying the last Vancouver port strike, that it was over 50 years ago. It's not like British Columbia is a rampant place for strikes. Part of that is that it has the same legislation in the provincial jurisdiction that we are proposing for the federal jurisdiction.

I'm just wondering where you get this idea that banning replacement workers would make strikes last longer and happen more often. This legislation is designed to give workers the same rights that employers have. Those disputes tend to be solved more quickly because both the workers and the employers have their minds fixed and focused on finding a solution.

[Robin Guy]

I think, in reading Bill C-58, that it firmly tips the power in favour of one of the parties. Where do I get the piece? I'll cite the passage from the government's own consultation paper, which states, “The majority of these studies suggest that when a province prohibits replacement workers, this is associated with more frequent strikes and lockouts, at least in some sectors”. I'm citing the government's own consultation paper when I say that this is going to cause problems. To be honest with you, our members are superworried.

I think that, when we take a look at what replacement workers are, they are often managers who are really keeping the lights on for our economy.

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

In many cases, they're not. It's people bringing in real replacement workers to do the work that large numbers of workers normally have. If you're seeing increased lockouts, that's not a decision of workers.

It just strikes me that this demonization of legislation that creates a level playing field makes people forget that labour disputes have two sides. Whenever there's a labour dispute, whether it's a lockout or a strike, I get the feeling that everybody is blaming the workers, as they did in the Vancouver port strike, yet we heard testimony here that a lot of the delays in that negotiation process and the reason it took so long was more a result of the structure of the employer's bargaining process than that of the workers.

I don't want to belabour the point, but I just can't let that lie because I don't know where you're getting that data. If there are more frequent strikes, maybe it's because workers feel that they have those powers. They deserve fair wages. They deserve a safe workplace, and that's what we hear they're going after. I'll leave it there. Mr. Greer made the same point, and I believe that those are simply beliefs that, certainly from the British Columbia experience, are not rooted in fact.

I want to turn to Mr. Whelan on the other side.

You said that one of the big problems was the labour shortage. I'm just wondering if you could elaborate on where that labour shortage is concentrated or what sectors are facing that, and what needs to be done.

[Michael Whelan]

I will also defer to Martin as well when we follow up on this, but, from my perspective, we are seeing that the labour shortage, as far as the skilled labour shortage within the supply chain, is across all sectors in private and in public. We're seeing it right across the board. It's something that has not been highly promoted, and we're working towards getting that increased advocacy and getting the training back towards it.

Martin can probably identify a little more closely the specific sectors where we're seeing the worst of it, but certainly the manufacturing area and the transportation area are two key areas for us.

[Martin Montanti, Chief Executive Officer and President, Supply Chain Canada]

Thank you very much. I really appreciate the question. It is a key one that others have brought up in this discussion.

The big thing that we recognize through our members across Canada and the organizations that we deal with is that, although it appears to be a labour shortage, which you brought up, Mr. Cannings, we see it as a skills shortage. When I was assistant deputy minister for the supply chain for the Province of Manitoba, I put out some jobs and I got lots of applicants, but the applicants—

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

Mr. Montanti, unfortunately, you have only 10 seconds left to conclude your remarks.

[Martin Montanti]

I'm sorry; do you want me to continue?