Evidence of meeting #5 for International Trade in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was infrastructure.
A video is available from Parliament.
Conservative
Jason Groleau Conservative Beauce, QC
You don't have it. Okay.
Thank you, Mr. Bellisle.
Ms. Tronnes, earlier you said that the Carney government should focus on removing the 232 tariffs.
Can you tell me what the consequences of these tariffs are right now, and what the urgency is for action? Why did you bring that up?
Executive Director, Center for North American Prosperity and Security
The impact of the section 232 tariffs is quite severe. It's affecting industries far and wide, not just here in Canada—obviously, getting our products to the U.S. is important—but it's also affecting products in America and finishing things off. Our supply chains, as Mr. Volpe has also talked about, are very intertwined. Without the ability for us to get our products out into the world tariff-free, it makes it very difficult for American manufacturers, or even Mexican manufacturers, who are trying to move through the supply chain to get that done.
There will not be section 232 tariffs on all parts of the car, but there will be on extra parts of a car that have made the inclusion list. We're seeing section 232 tariffs apply to things like electrical transformers. In a country like the United States, which is in a war to try to meet the AI demand for energy, the fact that they would put section 232 tariffs on electrical transformers, on aluminum power lines and copper that they need to build out the electrical grid right now, which is a priority for the government, is a little crazy.
It really does affect Canadian capacity to get things moving. It affects our ability to sell things to the United States, but more importantly, it affects us nationally in that to be subject to section 232 tariffs means that we are, in some way, an enemy of the United States, which I believe we are not. We have our traditional allies. We may be in a bit of a spat at the moment, but that doesn't mean we are a national security threat to the United States just for giving them aluminum, steel and copper.
Liberal
Liberal
Peter Fonseca Liberal Mississauga East—Cooksville, ON
Thank you, Madam Chair.
Thank you to the witnesses for coming before our international trade committee as we study this CUSMA review. Listening to all of you, I want to thank you for being champions and ambassadors for an integrated North American system. We heard Mr. Bellisle speak about leveraging the third-largest economy in the world. I also heard the same tones coming from Ms. Tronnes. I also think, Mr. Volpe, you said North America wins together, and you are so right.
As we communicate our message to the United States, how do we demonstrate to them best that an integrated North American system also means American jobs and “America first”? Mr. Volpe, I think you spoke to a 10% increase in jobs since the first agreement that we had after we renegotiated NAFTA.
For all of you, how do we best approach this so we can penetrate with the right message so that it will be heard in the White House, through the business community and through labour and the workers, etc., in the United States?
I'll start with Mr. Volpe.
President, Automotive Parts Manufacturers' Association
Thank you, Peter.
The challenge is whether the White House is listening. What we were able to do to get an exemption for auto parts is to explain to the Americans how heavily invested we are in 23 U.S. states and 176 factories. That number has gone up because this president initiated the original USMCA. Also, in that USMCA, about 10% more U.S. content is in a Canadian car in 2024 than in 2019. That's different from how they trade with Japan, which is a great trading partner of ours and theirs. American components don't go across the Pacific and come back as cars. We managed to convince them through that advocacy, I think—Canada didn't trade anything—that Canadian auto parts could enter the U.S. with a tariff exemption.
Very specifically, our joint focus on competing with China is important for the White House to hear but also see demonstrated. The Chinese are, for example, using graphite. If you want to make a positive terminal on a battery, you need graphite. Of the world's graphite, 95% comes from China, and 85% of the processing of that comes from China as well. We need to demonstrate to them that we have graphite.
It's the same thing for lithium. It's not just that we have it, but that our country, our government at both levels is committed now to permitting the extraction, processing and delivery of the things that gets them off China. I think the Americans are beyond warm rhetoric. They needs to see times and dates. We also need to do that for ourselves. Frankly, we don't have a pull market in Canada to be our own market. We need the safety and the volume of a U.S. market. It's a tough grind. It's a lot of chipping rocks, but you have to do that at the end of the day.
Liberal
Peter Fonseca Liberal Mississauga East—Cooksville, ON
Thank you, Mr. Volpe.
I'm going to you, Ms. Tronnes, because you had mentioned leveraging what Canada has in terms of what the U.S. values most, be it energy, defence or critical minerals. We just heard about one of those critical minerals that would be able to be delivered through our supply chain from Canada into the U.S. and into Mexico.
Can you expand on what you were discussing and tell us in terms of this grand bargain or how we can better communicate that to the United States?
Executive Director, Center for North American Prosperity and Security
Absolutely.
Canada has so much that the U.S. needs. We have all 34 critical minerals. We have rare metals. In fact, we even have critical gases, which we often forget about. Helium is a big component of making semiconductors, for example.
Canada is well placed...whether it's potash or uranium. Saskatchewan itself has a plethora of things that the United States needs. When I talk to Americans down in D.C. and talk about all of the opportunity in Canada for extractives, for mining, for critical minerals, they just can't believe it. They are wondering, “Why are we getting all this stuff from China? Why aren't we getting it from Canada?”
I have to say that it takes a long time to open a mind. The permitting takes a long time. These are things that I feel the government has kind of realized. We're hearing that from...permitting. We have the Major Projects Office that's open now. That is a great step forward to getting some of our products out of the ground, but we need to move as fast as we can. We're in a race, and it doesn't feel very much like we're moving fast.
In terms of the grand bargain, one of the things we talk about is bringing those things into a comprehensive fiscal trade agreement. Imagine saying to an investor in a mine, “Look, we've already secured a deal with the United States that they will already build a processing facility,” or “We have 10 investors from company X because we know that America is going to buy all of our tungsten,” or ”We know that there's already a processing facility being built for this specific mine. All we need you to do is build it.” That really creates certainty in the market. That creates investment and draws for investment. Those are the kinds of things that we could put into a trade bargain.
You asked earlier about some of the messaging that we use. My colleagues and I have analyzed our trade deficits. Sixty-six per cent of our trade deficit with the United States is manufacturing and primary and secondary inputs. These are inputs towards manufacturing in the United States that Americans really need in order to get things done. It gives us a huge amount of leverage. It is a good talking point to remind them that we're not giving them finished products. We're giving them things so that they can finish the products and then sell them and make money.
Liberal
The Chair Liberal Judy Sgro
Thank you very much.
We'll go to Mr. Savard-Tremblay for two and a half minutes.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot—Acton, QC
Ms. Tronnes, I would now like us to talk in a little more detail about strategic coordination with the United States, as compared to China.
We know that, in many respects, the United States doesn't trust Canada, perceiving it somewhat as a sieve, and at times, as a partner that is not very serious from a strategic standpoint.
How do you think we could strengthen that coordination and allay some of the fears of the Americans?
We know that your organization warned us that Beijing was taking advantage of this divergence.
How could we ensure that the Beijing regime does not exploit the political and economic differences between Canada and the United States?
Executive Director, Center for North American Prosperity and Security
That is happening for us in Canada. We have raised this point in Washington, D.C. and elsewhere that China is trying to create a wedge between Canada and the United States. They are interfering in this moment to try to crack open wedges in the relationship, and that is a major problem. I also feel like they are not getting as much ground out of it as they probably think they are.
I feel that the Americans, for the first time, are paying attention to some of the things that we're doing, and we are trying to show them some of the things that we are doing, but there's always more to be done. The fact that we've had to have the foreign interference committee and the Marie Hogue commission, and the fact that this had to happen means there is a problem. All the documented problems that came out of those commissions are things that Americans want to know about. They want to know if Canada is going to take foreign interference seriously. They want to know that we're going to take it seriously at a political level, at a security level and at a transnational security level, especially when it comes to international crime and international drug trafficking.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot—Acton, QC
In your opinion, is the answer yes or no?
Executive Director, Center for North American Prosperity and Security
We just have to do the work. We have to crack down.
Bloc
Liberal
Conservative
David McKenzie Conservative Calgary Signal Hill, AB
Thank you very much, Madam Chair.
Ms. Tronnes, I would like to pick up on critical minerals. Canada is extremely wealthy in critical minerals that are needed around the world but certainly in advanced manufacturing here in Canada and the United States.
Can you comment on the place that our production capabilities are taking in negotiations and in the strategy with Canada and the U.S.?
Executive Director, Center for North American Prosperity and Security
Certainly I'm not in the room when it comes to the negotiations but, from what I understand, the fact that we have that card to play is something that a lot of other countries simply don't have. The problem for us is that we don't have it ready; it's still in the ground. A lot of our critical minerals and a lot of our metals are not readily able to get to market. That is the problem for the United States in that they want them now.
The DOD has invested, through title III of the DPA in some of our critical mineral mines. We could and probably are reminding the Americans of the fact that they already have skin in the game and that the government has already invested in getting some of our minerals to market, which is a good thing for everyone.
Conservative
David McKenzie Conservative Calgary Signal Hill, AB
It's my sense that there hasn't really been a lot of utilization of that important lever that our critical mineral reserves and resources represent.
Do you feel, to date at least, that our federal government has not made use of that leverage?
Executive Director, Center for North American Prosperity and Security
I really couldn't tell you whether they have or have not behind closed doors. The problem right now is that they don't have anything to promise, because there's nothing that's been dug out of the ground. The permitting process takes 17 years on average to open a new mine.
We certainly could promise that to the Americans, but unless we show them and show our own country that we're able to get moving and to get these projects out of the ground as fast as possible, we don't have that leverage in our hands. It's still in the ground. It's still theoretical at this point, and that's the problem.
Conservative
David McKenzie Conservative Calgary Signal Hill, AB
Our federal government now has an express lane for nation-building projects, so surely there will be some critical mineral projects on that list.
Executive Director, Center for North American Prosperity and Security
I sure hope so.
Conservative
David McKenzie Conservative Calgary Signal Hill, AB
You mentioned trade irritants earlier. I wonder if there was anything specific there that comes to mind that you think we should be aware of.
Executive Director, Center for North American Prosperity and Security
There are so many trade irritants.
When I say trade irritants, I mean things that have bothered the United States for a long time. We know what some of the issues have been. There's softwood lumber, which is the dispute that's gone on for decades. It may be something like supply management. It could be looking at various other supports that we have for our industries that the Americans don't have. Agriculture in particular is going to be sensitive, probably because the Americans may be looking to bail out some of their own farmers, given with what's going on with soybeans down south.
As for other irritants, a long-standing one has been our defence spending. We can expect that the golden dome is going to come up, not just because Trump talks about it all the time, which he does, but because we haven't been pulling our weight in reaching our 2% goal. The Americans want to see some action on that.
Conservative
David McKenzie Conservative Calgary Signal Hill, AB
Thank you very much.
I wanted to ask you about CARM, which is the CBSA assessment and revenue management system. Mr. Bellisle indicated that it's not a general part of his world.
I wonder if you could comment on the efficacy of that system.
Executive Director, Center for North American Prosperity and Security
I really can't. It's also not a part of my world, I'm afraid. I'm sorry.