Thank you again, Madam Chair.
It is an honour to be among the witnesses to appear before this committee as it conducts this very important business on the review of Bill C-49, the transportation modernization act. In our brief time with you today, we want to share three key messages on behalf of Canada's chemistry sector. These are included in the brief before the committee, which provides additional details on our thoughts on Bill C-49.
Briefly, here are our three comments. First, it's important that you recognize that the chemistry industry plays an important role in the Canadian economy, and efficient and competitive rail transportation is critical to our business success. The second key point I wish to emphasize is that we enthusiastically applaud the work of Minister Garneau and his department. They've listened, and both the transportation 2030 agenda and Bill C-49 are highly responsive to the long-standing concerns expressed by our industry regarding Canada's freight rail system. Finally, while we do want to see Bill C-49 advance promptly, and we do not wish to introduce any new measures, we do believe that some amendments are necessary to ensure that the provisions of the act will indeed meet their intended objectives.
Let me begin by providing you with information about our sector, to underscore how important Bill C-49 is to the growth prospects of our industry. Canada's chemistry industry is vital to the Canadian economy. We are the third-largest manufacturing sector, with over $53 billion in annual shipments. Nearly 73% of that is exported, making us the second-largest manufacturing exporter in the country.
Like many people in the country, you probably don't give much thought to the role of chemicals in the economy, but it's important to note that 95% of all manufactured goods are directly touched by the business of chemistry. That includes all the key sectors of the Canadian economy: energy, transportation, agri-food, forestry, mining, and metals. Likewise, the goods the industry produces are also critical to communities and to quality of life for Canadians. This does include some dangerous goods: products such as chlorine, used to purify drinking water; and sulphuric acid, used in the manufacture of agricultural fertilizers.
Equally important, chemistry is a growing sector, both globally and within North America. During the past five years, more than 300 global-scale chemistry investments, with a book value of more than $230 billion Canadian, have been announced in the United States alone. Unfortunately, Canada has missed out on much of that initial wave of investment, but there are some promising prospects for capturing a share of the next wave of investments.
More than three-quarters of the chemistry industry's annual shipments in Canada move by rail. That accounts for 14%, or nearly one-seventh, of all freight volumes in the country. This makes rail costs and service two of the most important factors when investors are deciding whether to locate a next new facility or expand operations in Canada—or not. This makes a well-functioning and competitive rail freight market vital to the competitiveness of our industry and its investment prospects.
As mentioned earlier, we wish to stress that we applaud the government's efforts and are supportive of the rail freight measures to advance “a long-term agenda for a more transparent, balanced, and efficient rail system that reliably moves our goods to global markets”, as outlined in transportation 2030. Regarding Bill C-49, we believe the government has struck a balance between the needs and concerns of both shippers and rail carriers. We also believe the provisions of the bill are highly responsive to the concerns we have shared during consultations both with the Emerson panel, and more recently, with Minister Garneau leading up to the publication of transportation 2030.
Specifically, Bill C-49 addresses the important issues of data transparency and timeliness, market power, shippers' rights, reciprocity, fairer rates, and extended interswitching. The bill also proposes important measures to incorporate best available safety technologies by incorporating in-cab video and data gathering systems that have been used for many years in other transportation industries.
Taken together, the package of measures in Bill C-49 has the potential to make a meaningful contribution to a more balanced relationship between shippers and carriers, where the realities of today's transportation system mean a normal market environment cannot exist. Therefore, we believe that Bill C-49 presents a rare instance where our sector welcomes government involvement in creating market conditions.
The key word I want to stress in what I've just said, however, is the “potential”. Again, we do believe Bill C-49 is responsive to shippers' needs, we do believe it makes an important effort to establish a more balanced relationship between shippers and carriers in an otherwise non-competitive marketplace, and we are not here today to propose a suite of additional measures for your consideration.
Nevertheless, we are concerned that specific measures outlined and described in the bill may not achieve the desired outcomes. Specifically, with respect to the data transparency provisions in the bill, we would strongly recommend that these provisions include commodity-specific information on rates, volumes, and level of service that would support investment decisions and assessment of fair and adequate service. In this regard, we also recommend that the availability of information to shippers be expedited by establishing a firm early timeline for the implementation of the regulations.
On a closely related note, we recommend that the act include specific requirements for railways to provide the highest level of service that can be reasonably provided. We see ambiguity in the current language that stops short of equating “adequate and suitable” with the highest reasonable level of rail service. This should be clarified for all parties.
With respect to the Canadian Transportation Agency's powers and informal resolution process, we recommend that the agency's powers be increased, providing it with the ability to independently investigate issues on its own initiative and ensure informal resolutions are implemented and effective, and that policy-makers and stakeholders are then able to measure and analyze the broader trends in freight rail performance.
Finally, and perhaps most importantly to us, the intent of the long-haul interswitching provisions in the bill are most welcome. As noted in the government's own discussion paper, the previous competitive line rate measures were little used and provided no appreciable contribution to establishing a more balanced environment between shippers and carriers. We are, however, concerned that the range of limitations and specific exclusions on long-haul interswitching in the bill will likewise lead to its underuse and ineffectiveness. Many of our members are captive shippers. For many, trucking is not an option. For over 50% of our members, trucking becomes economically unviable at a distance of 500 kilometres. As such, we recommend the elimination of those limitations specifically related to toxic-by-inhalation products, to traffic originating within 30 kilometres of the interchange, and to exclusions pertaining to high-volume corridors.
Madam Chair, in my brief time with you, I'll stop here and welcome any questions you may have. Thank you again for the opportunity to speak to you today.