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Minister of Small Business, Export Promotion and International Trade appearance before the Special Committee on the Economic Relationship between Canada and the United States (CAAM) – Briefing material

2021-04-01

Table of contents

Appearance before the special committee on the economic relationship between Canada and the United States (CAAM), April 1, 2021

Meeting scenario

Committee context

First Round 

Second Round

Motion inviting you to appear

The motion to create caam indicated the intention to invite the minister of small business, export promotion and international trade (tab a3). The committee did not pass an additional motion to invite minister ng.

Committee membership & interests

Committee work

Raj Saini (IPC—Kitchener Centre, ON) Chair

Key interests

Parliamentary roles

Raj Saini has served as the Member of Parliament for Kitchener Centre since 2015.

Notable committee membership

Background

Saini completed a Bachelor of Science Degree at the University of Toronto and later completed a Bachelor of Science in Pharmacy at Boston’s Northeastern University. Prior to serving as a Member of Parliament, Saini was a pharmacist, having moved to Kitchener to start Greenbrook Pharmacy, a local independent business, which he has co-owned and operated for more than 20 years. As a pharmacist, Saini has been a long-time advocate of a national pharmacare program. He was President and Vice- President of the Kitchener Center Liberal Association, a Rotarian, and has served as a member of the Canadian International Council in Waterloo.

Statements about the United States

MP Saini is knowledgeable on the auto sector relations with Canada and the United States and has highlighted the importance of a working relationship between the two countries. Upon the announcement of his membership on this committee, he expressed his plan to work on a shared vision of a just and green recovery.

Questions asked at CAAM

March 2, 2021

March 4, 2021

Mark Strahl (CPC—Chilliwack-Hope, BC) Vice-Chair

Key interests

Parliamentary roles

Mark Strahl was first elected in 2011, re-elected in 2015 and again in 2019. He is currently that Shadow Minister for Labour. He was the Parliamentary Secretary to the Minister of Aboriginal Affairs and Northern Development from September 2013 to August 2015.

Notable committee membership

Background

Stahl is an Honourary Member of the Rotary Club of Chilliwack, and a member of the Royal Canadian Legion Vedder Branch 280, the Hope and Distract Chamber of Commers, the Chilliwack Healthier Community Group and the Chilliwack Housing First Task Team.

Statements about the United States

During Question Period in 2018 MP Strahl commented on CUSMA negotiations, specifically on supply management, stating that Canada’s farming families are worried about compromises the Government was making with the United States. MP Strahl has often used examples in the United States to contrast Canada’s management of its energy sector and natural resources. For example, when criticizing the Government’s budget in 2017 he stated “our biggest competitor, the United States, is cutting red tape and taxes and making its energy sector more attractive to job creators.”

Questions asked at CAAM

March 2, 2021

March 4, 2021

March 16, 2021

N/A

March 18, 2021

Daniel Blaikie (NDP—Elmwood-Transcona, NL) Critic for export promotion and International Trade, Vice-Chair

Key interests

Parliamentary roles

Blaikie was first elected in 2015. Blaikie is currently the NDP Critic for Democratic Reform, Employment, Workforce Development and Disability Inclusion, Export Promotion and International Trade and Western Economic Diversification, as well as the deputy critic for Finance. He has previously served as the Critic for Public Services and Procurement, Deputy Critic for Ethics, and as NDP Caucus Chair.

Notable committee membership

Background

Prior to entering politics, Blaikie worked as an electrician. He has served on the Manitoba Apprenticeship and Certification Board and the Winnipeg Labour Council.

Statements about the United States

MP Blaikie recognizes the importance of the Canada-US relationship, noting how many Canadians work in business where they either cross the border or have goods crossing the border every day. During his speech on the opposition debate to implement the CAAM, Blaikie noted the impact of the previous US administration over the last four years, especially impacts to the softwood lumber industry. He has also noted his support for workers in steel and aluminum industry. MP Blaikie stated that while Buy America is important at this time, “the emphasis on it is rightly a worry to many Canadians who depend on access to the U.S. market in order to earn their livelihoods”.

Questions asked at CAAM March 2, 2021

March 2, 2021

March 4, 2021

March 16, 2021

March 18, 2021

N/A

Simon-Pierre Savard-Tremblay (BQ—Saint-Hyacinthe-Bagot, QC) Vice-Chair

Key interests

Parliamentary roles

Savard-Tremblay currently serves as the Bloc Quebecois critic for International Trade and Industry.

Notable committee membership

Background

Prior to entering politics, Savard-Tremblay worked as an academic, author and columnist. His publications have touched on Quebec sovereignty and free trade. He has a Bachelor's degree in political science from the University of Montreal, a Masters in Sociology from the University of Quebec at Montreal, and a doctorate in the social economy of development from the École des hautes études en sciences sociales in Paris. He was heavily involved in the youth forum of the BQ and has been a frequent commentator in Quebec on economic and sovereignty-related issues. In his academic work, he is critical of neoliberalism and globalization.

Statements about the United States

MP Tremblay is supportive of the creation of the CAAM and has stated this committee will be an opportunity for the Government to answer for various items, such as using “farmers under supply management as a bargaining chip”, and softwood lumber, the aluminum industry, and COVID-19 vaccines. MP Tremblay also suggested in February 2021 that the United States should not only be Canada’s first trading partner, but also the first health partner. MP Tremblay has been critical of CUSMA.

Questions asked at CAAM

March 2, 2021

March 4, 2021

March 16, 2021

March 18, 2021

Leona Alleslev (CPC—Aurora-Oak Ridges-Richmond Hill, ON)

Key interests

Parliamentary Roles

Leona Alleslev was first elected to the House of Commons in 2015 and was re-elected in 2019.

Notable committee membership

Background

Alleslev earned a B.A. (Honours) in History and Political Science from the Royal Military College of Canada in Kingston and received her Queen’s Commission to serve as an Air Force Logistic Officer. Prior to serving as a Member of Parliament, Alleslev was a Canadian Air Force Officer, Senior Manager, and entrepreneur. Alleslev has held leadership positions in the Department of National Defence, as well as senior managerial roles with IBM Canada and Bombardier Aerospace. She served on the Aerospace Industry Association of Canada, the Ontario Aerospace Council and the Women in Aerospace Association joint government/industry change initiatives. Alleslev has also owned and operated two small businesses’ an eco-tourism business in Temagami, and a custom closet and home organization company in Aurora.

Statements about the United States

MP Alleslev has been supportive of the motion for a Special committee on Canada-US Economic relations, and has spoken to how crucial bilateral trade is between the two countries, noting that 70% of Canada’s trade is done with the US, and stated it is “not a free trade agreement; it is a managed trade agreement”. MP Alleslev has spoken to the tariffs on steel and aluminum, blueberries, strawberries, and red peppers, and protecting the exporters of these items. On August 12th, 2020, MP Alleslev stated “the new NAFTA is an abject failure when it comes to protecting Canada’s economy”.

Questions asked at CAAM

March 2, 2021

March 4, 2021

March 16, 2021

March 18, 2021

Randy Hoback (CPC—Prince Albert, SK)

Key interests

Parliamentary roles

Hoback was first elected in 2008, and has been re-elected in his Prince Albert riding in each of the 2011, 2015 and 2019 elections. Hoback currently chairs the Conservative Saskatchewan Caucus. He has served previously as the critic for International Trade and the critic for Canada-US Relations. He also served as President of the Canadian Section of ParlAmericas starting in 2010, and as President of ParlAmericas at the hemispheric level from 2011 to 2014.

Notable committee membership

Background

Prior to entering politics, Hoback worked in the farm equipment manufacturing industry before taking over his family farm. He has a business administration certificate from the University of Saskatchewan and a Chartered Director’s designation from McMaster University.

Statements about the United States

When debating the creation of CAAM in February 2021, MP Hoback raised the issue of regulatory differences between Canada and the United States, particularly as they apply to the agricultural sector. He also characterized Buy American and the cancellation of Keystone XL as “disturbing”, suggesting that Canadians might adopt a similar approach, buying only Canadian goods. MP Hoback has been critical of CUSMA, claiming that Canada has made too many concessions to the United States.

Questions asked at CAAM

March 2, 2021

March 4, 2021

March 16, 2021

March 18, 2021

Chris Lewis (CPC—Essex, ON)

Key interests

Parliamentary roles

Chris Lewis was first elected in 2019.

Notable committee memberships

Background

Before entering politics, Lewis served as a member on the Kingsville Town Council and was heavily involved in 13 Standing Committees for the Town. He was a member of the Kingsville Fire Department 7.5  years and chaired the Master Fire Planning Committee. Lewis was a member of his family business since 1995, specializing in non-intrusive sewer and water repair.

Statements about the United States

As a former deputy shadow minister for Canada-U.S. relations, MP Lewis supported the motion for a Special committee on Canada-US Economic relations. His arguments primarily on supporting workers by building a strong economy and creating secure jobs, stating that “Canada cannot afford to be a junior partner at the table and have our economy dictated by the stroke of a pen”. MP Lewis understands the importance of being a strong partner in working with the United States of America as a close ally and neighbouring country of Canada to continue seeking solutions for vaccines, Line 5, the Keystone XL pipeline, steel and aluminum tariffs, and softwood lumber agreements.

Questions asked at CAAM

March 2, 2021

March 4, 2021

March 16, 2021

March 18, 2021

(LPC—Outremont, QC) Parliamentary secretary to the minister of small business, export promotion and International Trade

Key interests

Parliamentary roles

Bendayan was first elected in a by-election in February 2019. She is currently the Parliamentary Secretary to the Minister of Small Business, Export Promotion and International Trade.

Notable committee membership

Background

Before entering politics, Bendayan was a lawyer with Norton Rose Canada in Montreal in the fields of litigation and international arbitration, specializing in international trade law. While in private practice, Bendayan also taught at the Université de Montréal’s Faculty of Law. She ran for the Liberal Party in Montreal in 2015, losing to Thomas Mulcair. After the election, she was hired as the Chief of Staff to the former Minister of Small Business and Tourism Bardish Chagger.

Statements about the United States

In regard to the Canada-United States Economic Relationship, Bendayan is largely supportive of the relationship between the two countries, “We (Canada and the US) are stronger together, and our two countries share so much more than the most deeply integrated economies. We share the values of democracy, freedom and human rights, and a deep and strong North American culture.” (February 4th, 2021). In the past (October 2020) Bendayan has mentioned her concern about the decision of the United States to investigate the export of blueberries and stated her party will advocate for exporters. Bendayan has expressed interest in tariffs, exports, and bilateral trade with the United States.

Questions asked at CAAM

March 2, 2021

March 4, 2021

March 16, 2021

March 18, 2021

Anthony Housefather (IPC—Mount Royal, QC) Parliamentary secretary to the minister of labour

Key interests

Parliamentary roles

Anthony Housefather was first elected in 2015. From 2015 to 2019, he was Chairman of the Standing Committee on Justice and Human Rights. Following his re-election in 2019, he was appointed to serve as the Parliamentary Secretary to the Minister of Labour

Notable committee membership

Background

Housefather has two Law Degrees (B.C.L and LL.B.) from McGill University and an MBA from Concordia University’s John Molson School of Business. Prior to being elected as a Member of Parliament, was served as Executive Vice President Corporate Affairs and General Counsel at a multinational technological company. Housefather was first elected to office in 1994. He was initially elected as a municipal councillor in Hampstead, then elected in Côte Saint-Luc /Hampstead/Montreal West and served as Mayor of Côte Saint-Luc between 2005 and 2015.

Statements about the United States

In a Human Resources committee MP Housefather has stated that he is passionate about trade relationship with the United States, and noted “They are our biggest trading partner, the partner that we need the most to be onside with”, and he believes in a “team North America” approach. He has previously commented on the number of jobs directly linked to free trade with the United States and, when CUSMA was being debated, stated that the impact of Canada not having a trade agreement would be “disastrous”.

Questions asked at CAAM

March 2, 2021

March 4, 2021

March 16, 2021

March 18, 2021

Sherry Romanado (IPC—Longueuil-Charles-Lemoyne, QC)

Key interests

Parliamentary roles

Sherry Romanado was first elected in 2015 and re-elected in 2019. During her first term as Member of Parliament for Longueuil-Charles-LeMoyne Romanado was Parliamentary Secretary to the Minister of Veterans Affairs and Associate Minister of National Defense.

Notable committee membership

Background

Romanado has a certificate in Public Relations from McGill University and a Master’s degree in Business Administration from Concordia University. A faculty lecturer for the Public Relations program at McGill University’s School of Continuing Studies, she is a former member of the Board of Directors of the Charted Institute for Transport and Logistics and a past chair of the Education Committee for North America. Romanado has served as Vice President and later as Director of Communications in the CGG 1979 Centennial Cadet Corps at Greenfield Park. She is a long-time member of the Royal Canadian Legion (Branch 94) as well as the Lions Club of Greenfield Park.

Statements about the United States

MP Romanado has noted during CUSMA debate that many people from her riding were concerned about tariffs, culture and protection of industry in Quebec, and that she was content with CUSMA. MP Romanado has previously expressed concerns over vulnerabilities created by shared cyber spaces with the United States.

Questions asked at CAAM

March 2, 2021

March 4, 2021

March 16, 2021

March 18, 2021

Randeep Sarai (IPC—Surrey Centre, BC)

Key interests

Parliamentary roles

Sarai was first elected in 2015. In the previous parliament, he served as the chair of the Liberal Pacific and Northern Caucus. He has also been a member of many interparliamentary associations.

Notable committee membership

Background

Sarai is a lawyer by training, with experience in real estate development and urban planning. He has a Bachelors degree from the University of British Columbia, majoring in political science, and a Bachelor of Laws degree from Queen’s University. He has served on the boards of a number of community organizations dedicated to combatting youth violence in Surrey.

Statements about the United States

In 2020, during the debates for Bill C-4, Sarai stated his support and noted that the United States is Canada’s largest trading partner. During meetings of the International Trade Committee, Sarai has been vocal of the opportunities with not only the bilateral trade between the United States and Canada, but the opportunity to become a hub for trade, being the only North American nation with free trade agreements in so many regions that reach over 1.5 billion people around the world.

Questions asked at CAAM

March 2, 2021

March 4, 2021

March 16, 2021

Hon. John Mckay (IPC—Scarborough-Guildwood, ON)

Key interests

Parliamentary roles

John McKay was first elected as Member of Parliament in 1997. He was re- elected in October 2019 to serve his eighth term in the House of Commons. He was Parliamentary Secretary to then Minister of Finance Ralph Goodale, from 2003 to 2006 during the government of Paul Martin. In 2006 He was the Official Opposition Critic for Crown Corporations. In 2008 he was the Official Opposition Critic for Small Business and Tourism. From 2011 to 2013 he was the Critic for Defence. He then served as a Critic for Environment until November 2015.

Notable committee membership

Background

McKay has a Bachelor of Arts degree from the University of Toronto at Scarborough and a Bachelor of Laws degree from Queen’s University. Prior to serving as a Member of Parliament, he practiced private law as a real estate attorney, assuming positions of leadership in the legal community. Most notably, he was the President of the Durham as Association, an Executive Member of County and District Law Association, Real Estate Executive of the Canadian Bar Association, and a member of the Law Society of Upper Canada’s Committee on Title Insurance.

McKay has successfully sponsored two Private Members Bills during his tenure as a Member of Parliament: C-260, passed in 2003, requiring cigarette manufacturers to produce ‘fire-safe’ cigarettes, and C-293, passed in 2008, outlining specific requirements for the disbursement of Canadian foreign aid.

Statements about the United States

At the time of CUSMA negotiations, MP McKay was very supportive, citing endorsements from the Business Council of Canada, and various premiers. MP McKay specifically noted the security benefits of CUSMA, stating “the two are mutually reinforcing, because security creates trade and trade creates security”. He also stated that “the Government has done a magnificent job of protecting the supply chains” in particular its critical protection of the dairy industry. During NAFTA negotiations McKay noted that the deal had to be well received by White House, otherwise Canada would suffer.

Questions asked at CAAM

March 2, 2021

March 4, 2021

March 16, 2021

March 18, 2021

Motion to create CAAM

February 2, 2021 — — That, given that trade between Canada and the United States of America exceeds $1.5-billion per day, more than 300,000 persons normally cross the common border monthly, the two countries have enjoyed one of the world's largest open trading blocs for the free movement of goods, services and people since 1989, the economic challenges caused by COVID-19, and the need for a serious plan for the economic recovery that recognizes the integration of the North American economy, the House appoint a special committee with the mandate to conduct hearings to examine and review all aspects of the economic relationship between Canada and the United States, including, but not limited to:

  1. the expressed bilateral economic priorities of the governments of Canada and the United States;
  2. natural resources issues, including oil and gas exports and transportation, softwood lumber exports, and related jobs;
  3. "Buy America" procurement rules, requirements and policies;
  4. the government's efforts with the United States' administration to ensure a stable and predictable supply of COVID-19 vaccine doses for Canada as a major border and trading partner;
  5. provided that: the committee be composed of 12 members, of which six shall be from the government party, four shall be from the official opposition, one shall be from the Bloc Québécois, and one shall be from the New Democratic Party;
  6. the members shall be named by their respective whip by depositing with the Clerk of the House the list of their members to serve on the committee no later than Thursday, February 18, 2021;
  7. membership substitutions be permitted, if required, in the manner provided for in Standing Order 114(2);
  8. changes to the membership of the committee shall be effective immediately after notification by the relevant whip has been filed with the Clerk of the House;
  9. the Clerk of the House shall convene an organization meeting of the committee on Tuesday, February 23, 2021;
  10. the committee be chaired by a member of the government party and, notwithstanding Standing Order 106(2), there shall be one vice-chair from each of the other recognized parties;
  11. quorum of the committee be as provided for in Standing Order 118 and that the Chair be authorized to hold meetings to receive evidence and to have that evidence printed when a quorum is not present, provided that at least four members are present, including one member of the opposition and one member of the government party;
  12. the committee be granted all of the powers of a standing committee, as provided in the Standing Orders, provided that (i) the provisions of Standing Order 106(4) shall also extend to the committee, (ii) until Sunday, April 11, 2021, the committee shall not meet on a day when the House is sitting, except for (A) the meeting required by paragraph (i), (B) the committee's subcommittee on agenda, if one is appointed;
  13. the committee have the power to authorize video and audio broadcasting of any or all of its proceedings;
  14. the Deputy Prime Minister and Minister of Finance, the Minister of Foreign Affairs, the Minister of Small Business, Export Promotion and International Trade, the Ambassador of Canada to the United States of America, and other ministers and senior officials be invited to appear as witnesses from time to time as the committee sees fit;
  15. the committee be instructed to present an interim report, concerning an analysis of the importance of the Enbridge Line 5 pipeline to both countries' economies and the consequences of its possible closure, including the labour market implications caused by layoffs of unionized and other workers, together with recommendations to address and safeguard Canadian interests, no later than Thursday, April 15, 2021;
  16. the committee be instructed to present a second interim report, concerning current and proposed "Buy America" procurement rules, requirements and policies, together with recommendations to address and safeguard Canadian interests, no later than Thursday, June 17, 2021; and
  17. the provisions of the order adopted on Monday, January 25, 2021, authorizing virtual and hybrid committee proceedings, shall continue to apply to the committee and any of its subcommittees until Sunday, September 19, 2021.

Canada – U.S. bilateral economic overview

Supplementary messages

Supporting facts and figures

Background

The U.S. economy saw a milder decline (3.5%) in economic performance in 2020 than many other advanced economies and is now closer to its pre-pandemic GDP level (-2.4%) than most other major advanced economies. The Canadian economy shrank 5.4% in 2020, the steepest decline since comparable data was first recorded in 1961. A notable feature of the Covid-19 economic recession is the uneven nature of the recovery, with sectors that rely on social gathering and face-to-face interactions such as accommodation and food services continuing to struggle.

Canada and the U.S. have one of the most important trading relationships in the world. In 2019, bilateral trade in goods and services between the U.S. and Canada totaled $1 trillion, or $2.7 billion per day. In 2020, Canadian trade with the U.S. declined significantly with notable weaknesses in energy, automotive, and travel. Exports declined 15% and imports declined 13%. However, as of January 2021, Canadian goods exports to the U.S. have surpassed pre-pandemic levels. On the other hand, services trade continues to struggle as travel and passenger transportation services remain depressed. Commercial services however, many of which can potentially be delivered remotely, actually managed to grow (5.6%) in 2020.

The Canada-U.S. trade relationship is built on long-standing binational supply chains. About three-quarters of U.S. imports from Canada are related to supply chains and are used for domestic U.S. production. When sold to the U.S., Canadian goods contain on average 20% American content and, in some sectors like machinery and automobiles, it is significantly higher. At the sub-national level, 32 states count Canada as their top customer.

Investment is also an important part of the Canada –U.S. commercial relationship. In 2019 alone there was over $600 billion in FDI stock from Canada in the United States and over $455 billion in FDI stock from the U.S. in Canada. Importantly, over a quarter of Canada’s exports to the U.S. come from U.S. majority-owned enterprises.

Canada – U.S. economic relations remain important for both economies as 7.8 million jobs in the U.S. are supported by trade with Canada, more than from any other single trading partner. Canada’s investment in the US is important for generating U.S. jobs, including employment at Canadian affiliates (nearly 726,000 jobs in 2018).

Going forward, on-going accommodative monetary policy and the newly approved $US1.9 trillion fiscal stimulus should provide solid supports for economic recovery in both the U.S. and Canada, and is expected to increase Canadian GDP by 1.2% in the first full year. Full recovery and future growth, however, can only be achieved with widespread vaccinations, in both home countries as well as globally. The U.S. vaccination effort is going much better than the global average, and the U.S. now expects to have vaccines available for all adults by the end of May.

Buy american and buy America

Supplementary messages

Background

Buy American requirements were first established during the U.S. Great Depression and are set out in the Buy American Act of 1933, which mandates that all federal government departments purchase only U.S. goods. Canada is exempt from Buy American requirements as a result of our respective obligations under the revised WTO Agreement on Government Procurement (GPA).

However, Canada is not exempt from Buy America requirements. Since 1982, Buy America requirements have applied to the purchase of iron, steel and manufactured goods used in state/local infrastructure projects funded – in whole or in part – by certain U.S. federal departments and agencies (mainly the Department of Transportation and the Environmental Protection Agency). In addition, procurement of rolling stock (e.g. buses, subway cars, vehicles) requires 70% U.S. domestic content and final assembly in the U.S. to be considered Buy America compliant. As federal transfers or grants to lower levels of government are not covered by the U.S. under the GPA, imposing Buy America requirements is consistent with U.S. trade obligations.

There is broad bipartisan support for Buy America policies in the U.S. and President Biden has pledged to attach existing, or potentially expanded, Buy America requirements to the upcoming U.S. infrastructure package, which is expected to be in the range of US$1-2 trillion. This initiative, which would be the subject of new legislation, could particularly impact Canadian companies supplying products for:

The federal government is engaging the U.S. Administration, members of Congress, allies at the sub-national level and in the U.S. business and labour communities, to advocate for a Canada-U.S. approach to the U.S. infrastructure package. A strong Team Canada approach will be required to advance Canada’s interests.

Canada’s response to the 2009 american recovery and reinvestment act (ARRA)

Supplementary messages

Background

The American Recovery and Reinvestment Act of 2009 (ARRA) was economic stimulus legislation passed by the U.S. Congress in February 2009 as part of the Obama Administration’s response to the economic downturn of 2008-09. The ARRA funding was distributed by various federal departments and agencies, such as the Department of Transportation, Environmental Protection Agency and the Department of Energy to states and local governments or non-federal entities (e.g. transit authorities, development organizations). Entities that received ARRA funding for infrastructure and energy projects were required to use U.S. iron, steel and manufactured products in infrastructure projects (e.g. construction of public buildings and highways and bridges; energy, public transit, water and wastewater projects). Canadian goods and suppliers were unable to access these procurement opportunities given the lack of U.S. international obligations at the sub-federal level and the fact that much of the ARRA’s infrastructure spending would be transfers to states and local governments.

Following significant engagement by a wide range of Canadian stakeholders – from all levels of government, industry and civil society as well as Canada’s commitment to cover provincial/territorial procurement under the WTO Agreement on Government Procurement, Canada secured a “carve-in” for certain ARRA-funded infrastructure projects under the 2010 Canada-U.S. Agreement on Government Procurement (CUSGPA). However, by the time the CUSGPA was signed in February 2010, a significant portion of ARRA-funding had already been allocated, which limited Canadian suppliers overall opportunities. Canada will focus on trying to secure a carve-in at an earlier stage with respect to the development of the current infrastructure package.

Keeping supply chains open

Supporting facts and figures

Background

Keeping supply chains open is a priority for the Government of Canada and is being raised at all levels with the Biden administration.

Since the beginning of the pandemic, Canada has closely collaborated with its partners in the U.S. to maintain the two-way flow of medical supplies and critical inputs. The export of certain medical products is restricted under the Federal Emergency Management Agency (“FEMA“). Canada has an exemption valid until June 30, 2021. The list of restricted items does not include COVID-19 vaccines.

On January 21st, President Biden signed an Executive Order on a Sustainable Public Health Supply Chain directing federal authorities to secure supplies necessary to respond to domestic needs related to COVID-19, including through the authorities of the Defense Production Act. There is no evidence to date that Canada’s vaccine orders are being held up as a result.

No country supplies more unique imported products to the U.S. than Canada – not even China. This includes products used in construction and manufacturing, like metal presses, specialized steel and iron, road surfacing material and rail cars.

The U.S.-Canada trading relationship is essential for the stability and security of both of our nations. Through cross-border defense trade and the National Technological and Industrial Base, we collaborate to produce the world’s best defense materiel.

Supply chain security and resilience were recognized as a key element of the new Roadmap for a Renewed U.S.-Canada Partnership. Leaders launched a strategy to strengthen Canada-U.S. supply chain security, recognizing the opportunity to work together on clean growth, building the necessary supply chains for all aspects of battery development and production and strengthening the Canada-U.S. Critical Minerals Action Plan to target a net-zero industrial transformation, batteries for zero- emissions vehicles, and renewable energy storage. Prime Minister Trudeau and President Biden will meet in the spring of 2021, while the similar themes of Build Back Better and climate change will be priorities for the G7 meeting in June of 2021.

Canada-U.S. relations

Supplementary messages

Trade

Climate and energy

Border and pandemic

Arctic

International security and foreign policy

Inclusion and respect for diversity

Supporting facts and figures

Background

On February 26, Secretary Blinken undertook a virtual visit to Canada during which he had a bilateral meeting with MINA and a courtesy call with PM Trudeau. MINA and Sec. Blinken discussed issues in the Americas (Venezuela, Cuba, Nicaragua, Haiti), China, Iran, Saudi Arabia, as well as multilateralism, democracy and migration.

Political context: Joe Biden was inaugurated U.S. President on January 20, 2021. He has nominated all Cabinet members, and their Senate confirmation processes are almost completed. Biden’s cabinet is the most diverse in U.S. history with almost as many women as men, a non-white majority, and multiple historic nominations, including Deb Haaland, the first Native American in a president's Cabinet.

The new administration inherited significant domestic challenges – including tense partisan and racial relations, the impact of the COVID-19 pandemic, immigration pressures and a fragile economic recovery – which are expected to focus the Biden administration and Congress on domestic matters rather than foreign affairs. Nevertheless, President Biden has consistently expressed an intention to rebuild alliances with foreign partners and renew U.S. leadership internationally.

Canada-U.S. Roadmap: PM Trudeau and President Biden had their first virtual meeting on February 23. The two leaders committed to a Roadmap for a Renewed U.S.-Canada Partnership, which is intended to be the cornerstone of a whole-of-government approach to Canada-U.S. relations. It includes the creation of a High-Level Ministerial Dialogue on Climate, the revival of the North American Leaders’ Summit, and expansion of the U.S.- Canada Arctic Dialogue, among other initiatives. In particular, the Roadmap prioritizes:

PM Trudeau and President Biden also discussed a wide range of bilateral issues, including an inclusive and sustainable economic recovery, fighting against all form of discrimination, and protecting energy infrastructure. The leaders also considered ways to address key global challenges, such as climate change, NATO, China, digital economy and cybersecurity, and priorities in multilateral forums.

The U.S. administration signalled its interest in hosting the North American Leaders’ Summit (NALS) around April 22, 2021.

Trade: Canada and the U.S. enjoy the largest trading relationship in the world. Canada’s efforts are focused on ensuring the effective implementation of the CUSMA and defending Canadian trade interests in the U.S., and collaborating closely to address global trade challenges, including with respect to China and the WTO.

The CUSMA entered into force on July 1, 2020, reinforcing the strong economic ties between the three parties and enhancing North American competitiveness. More recently, the parties have focused on the implementation of the rules of origin for automotive trade and standing- up CUSMA committees, including those on Small and Medium-Sized Enterprises and North American Competitiveness.

While implementation is proceeding well overall, certain bilateral irritants exist. For example, the U.S. has pursued dispute settlement consultations with Canada regarding tariff rate quota administration policies for dairy, and Canada has requested consultations with the U.S. regarding its continued illegal global safeguards on imports of Canadian solar products. U.S. trade policy continues to be closely linked to domestic priorities and a tendency towards protectionism will remain.

President Biden is moving forward on his campaign promise to expand Buy America and Buy American requirements. On January 25, President Biden signed an Executive Order (EO) on ‘Ensuring the Future Is Made in All of America by All of America’s Workers’, which is largely focused on streamlining process, increasing transparency and oversight, and re-enforcing existing commitments for Buy American requirements. As such, it will have limited impact for Canada.

Climate and energy: New U.S. policies and overall approach on climate change and environmental protection are aligned with Canada’s views. As part of the Roadmap, PM Trudeau and President Biden pledged to explore opportunities to align policies and approaches to create jobs, while tackling climate change and inequality, and enhancing adaptation and resilience to climate impacts. They also agreed to protect businesses, workers and communities in both countries from unfair trade by countries failing to take strong climate action, and to reduce oil and gas methane emissions to protect public health and the environment.

There is also local and national opposition in the U.S., including court actions, against Enbridge Line 5 and Line 3 pipelines. The Biden administration has not pronounced on these two projects yet. The renegotiation of the 1964 Columbia River Treaty, a bilateral flood control and hydropower Canada-U.S. agreement, is currently underway and remain a priority.

Border management: On March 17, the temporary border arrangement between Canada and the U.S. was extended through April 21, 2021. In the Roadmap for a Renewed U.S.- Canada Partnership, Prime Minister Trudeau and President Biden recognized that coordinated border policies remain central to controlling COVID-19 and new variants while promoting economic growth and recovery. Both leaders agreed to take a coordinated approach based on science and public health criteria when considering measures to ease Canada-U.S. border restrictions in the future.

International security and foreign policy: As part of the U.S.-Canada Roadmap, PM Trudeau and President Biden reaffirmed the importance of investment in modern, ready, and capable forces in line with their commitments to NATO, and agreed to expand cooperation with respect to the promotion of democracy, human rights, and media freedom in our hemisphere and around the world. President Biden also condemned the arbitrary detention of Michael Kovrig and Michael Spavor and his commitment to work for their release.

The Biden administration has expressed its commitment to a rules-based international system and multilateral co-operation, notably by cancelling plans to withdraw from the World Health Organization and rejoining the Paris Climate Agreement. There is a recognition from the Biden administration that the U.S. will have more of a lasting and consequential impact on regional and global challenges when it works in concert with partners. The foreign policy challenges identified by the U.S. include building back from COVID, global migration, democracy vs. authoritarianism, China, Russia and Iran.

COVID-19: As of March 18, there have been more than 29.4 million cases and over 530,000 deaths in the United States. About 113 million people have received at least one dose of a COVID-19 vaccine, including about 40 million people who have been fully vaccinated. On March 11, President Biden signed a new COVID economic relief package totaling US $1.9 trillion into law.

Representation: Canadian Ambassador to the U.S., Kirsten Hillman. U.S. Chargé d’affaires to Canada, Katherine Brucker.

Canada-U.S. trade promotion

Supplementary messages

Supporting facts and figures

Background

Approximately 80% of new exporters are SMEs that export to a single market and almost 70% of new exporters choose the U.S. as their first export destination. The U.S. is a proven testing ground both for new exporters, and for established ones piloting a new product or service. Canada is the United States’ largest customer and buys more goods from the United States than do China, Japan and the United Kingdom combined.

Solar tariffs and other trade remedy issues

Solar Tariffs

Fact-Finding Investigations on Seasonal Produce

Supplementary messages

Supporting facts and figures

Background

Solar Tariffs

In 2018, the Trump administration purposely ignored NAFTA global safeguard rules and imposed a 30% safeguard tariff on solar modules from Canada. The U.S. also blocked Canada’s attempt to launch NAFTA dispute settlement proceedings. Despite a high level of engagement with the Trump Administration since the tariff was illegally imposed in 2018, the tariff has remained in place. On December 22, 2020, Canada launched CUSMA dispute settlement proceedings and held consultations on January 28, 2021, with the goal of convincing the Biden Administration to respect NAFTA and CUSMA rules and exempt Canada from the solar tariff.

Fact-Finding Investigations on Seasonal Produce

The Trump Administration also launched various investigations on seasonal produce. Although Canada was successful in preventing the imposition of a safeguard duty on blueberries, the threat of new safeguard investigations on bell peppers and strawberries remain, and any resulting tariffs could disrupt Canadian exports of these products (fact-finding investigations can lead to safeguard investigations). It will be important to ensure that the Biden Administration adheres to CUSMA safeguard rules, which require the United States to exempt Canada from the application of these tariffs, subject to certain conditions.

Section 232 Investigations on Transformers and Vanadium

The U.S. 232 National Security investigations on Vanadium and Transformers and parts that were launched by the Department of Commerce in 2020 remain without final decision or closure by the President. In both cases, there is no indication that the Commerce Secretary submitted a final report to the President. Although the tariff threat appears to have diminished greatly with the new Administration, the Embassy in Washington continues to seek clarity on the status of these investigations.

Canada-U.S. border

Supplementary messages

Update

Discussions continue within the Government of Canada as to options to move forward on the future of the temporary border arrangement, and an eventual border reopening. Canadian officials have developed productive working relationships with incoming members of the Biden Administration.

Stakeholder interest in the future of the temporary border arrangement and options for re-opening the border to normal flows is expected to continue to rise. Next month, the Wilson Center Task Force on Public Health and the U.S.-Canadian Border, co-chaired by Anne McLellan, Jean Charest, as well as U.S. co-chairs Christine Gregoire and James Douglas, former governors of Washington State and Vermont, respectively, plans to release a report with recommendations as to next steps to re-open the border.

Supporting facts and figures

Background

The one-year anniversary of the Canada-U.S. temporary border arrangement recently passed; on March 18, 2020, Prime Minister Trudeau announced that the two countries had agreed to temporarily restrict all non-essential travel across the Canada-U.S. border, taking effect on March 21, 2020, and ending on April 21, 2020. The arrangement has since been extended 12 times.

Canada-U.S. cooperation on China

Supporting facts and figures

Background

Whereas in the past the U.S. has seen China as a developing country (with nuclear weapons), its unprecedented economic growth over the last 20 years, technological advances, large military expenditures, and more assertive foreign policy under President Xi have led to the realization that American pre-eminence cannot be guaranteed. Also, the hope that U.S. support for economic liberalization, especially following China’s accession to the World Trade Organization in 2001, would lead to greater democratization has been unrealized.

In light of these conclusions, a new narrative has emerged in Washington, partly reflected in and influenced by President Trump’s “America First” agenda, that China will not engage as a constructive, cooperative partner with the U.S. and that a new era of great power competition has begun. As stated in his January 2021 Senate confirmation hearing, U.S. Secretary of State Antony Blinken believes that China poses the most significant challenge of any state to the U.S. Supported by a bipartisan consensus in Congress, counter-balancing China’s growing global influence and safeguarding U.S. national and economic security is a high priority for the U.S. administration, which is expected to adopt a whole-of-government approach to China. That said, President Biden and his top national security officials have also stated that the U.S. must find ways to coexist with China, noting that competition and cooperation are not mutually exclusive. Canada also recognizes that we need to work with China to address global issues such as climate change, health, non-proliferation, and finance.

In these circumstances, the Biden administration is seeking to act in concert with like- minded democratic partners to address shared concerns about Chinese domestic issues such as repression of human rights (including in Xinjiang and Hong Kong), media freedom, rule of law, growing military expenditures, conditions for foreign investors, market access, and technological competition. The U.S. is also seeking to work with allies to counter other Chinese activities it sees as problematic, such as assertions of its maritime/territorial claims in the South China Sea, foreign direct investment/financial assistance under the Belt and Road Initiative, coercive diplomacy, state-sponsored cyber program (including 5G network concerns) and foreign interference. Long-standing concerns about Taiwan and growing Chinese interest in the Arctic, Latin America, and elsewhere will also preoccupy the United States.

Canada shares many of the U.S. concerns with respect to China’s assertive behaviour both internationally and domestically, notably with respect to trade, intellectual property, human rights, rule of law, security issues and industrial policies. For example, as part of the CUSMA Canada and the U.S. jointly signed on to new obligations that prohibit each country from importing goods made in whole or in part by forced labour. Canada has made use of this provision in order to bring attention to and minimize risk exposure for Canadian companies to the on-going human rights situation in Xinjiang as part of its measures announced on January 12. On March 22, in coordination with the U.S. and U.K., and in solidarity with the E.U., Canada announced new sanctions against 4 officials and 1 entity under the Special Economic Measures (Peoples Republic of China) Regulations, based on their participation in gross and systematic human rights violations in the Xinjiang Uyghur Autonomous Region.

Secretary Blinken and the U.S. administration have also commended Canada’s leadership on the Arbitrary Detention Initiative, supported Canada in advocacy around the world, and joined Canada and 60 other parties in endorsing the Declaration against Arbitrary Detention in State-to-State Relations. The U.S. has also pledged to raise the arbitrary detention of Michael Kovrig and Michael Spavor systematically with China at every level and treating it as though they were American citizen.

Some specific policies of the Biden administration are already apparent. Domestically, Trump-era restrictions, such as the requirement for China-based media to register as foreign missions in the U.S., limits on the network of Chinese-language Confucius Institutes, and attempts to ban Chinese technology companies from critical sectors (e.g. semiconductors, 5G) will likely remain in place. Plans to strengthen domestic U.S. manufacturing and increase supply-chain resiliency, particularly for medical supplies, are partly intended to reduce dependence on Chinese sources. The Biden campaign pledge to increase government spending on green technology explicitly refers to the advantage that state subsidies and industrial strategies have given China’s own industry. Canada is also moving forward on investment in green technologies and is considering options with respect to supply chains resiliency in critical sectors, particularly telecommunication technologies (i.e. 5G), critical minerals, and medical supplies.

To counter China’s aggressive foreign policies, the Biden administration has argued that the U.S. should focus on ad hoc coalitions or issue-specific groups to increase pressure on China such as a “D-10 coalition” (G7 + Australia, South Korea and India) proposed by the UK to address issues related to trade, technology, supply chains, and standards. Increased U.S. engagement in multilateral organizations such as the U.N.

as well as regional groupings such as Quads, ASEAN and APEC are also expected to be instrumental in a Biden strategy to counter-balance China. Secretary of State Blinken has stressed the importance of taking a lead role in international institutions instead of, through disengagement or absence, effectively ceding leadership to China. Biden has advocated greater consideration at NATO of the risks stemming from China’s growing military capabilities and assertiveness (e.g. Taiwan, South China Sea) and in favour of increased military capacity to address potential Chinese security threats in the Euro-Atlantic and Indo-Pacific regions. As a member of the G7, NATO, ASEAN, and other multilateral organizations, Canada will be a key partner for the United States. A number of bilateral priorities will also feature prominently in the U.S. strategy to counter China, such as modernizing NORAD, the Arctic, cybersecurity, and strengthening democracy.

On trade and economic issues, President Biden made campaign promises to address structural issues such as steel overcapacity, industrial subsidies, and support for state- owned enterprises, as well as forced technology transfer, cyber threats, intellectual property theft faced by U.S. companies in China. Canada is already well aligned with the U.S. on these issues.

While Canada did work with the Trump Administration on some China-related issues, it’s clear that the Biden administration policies toward China will provide many opportunities for collaboration and cooperation, including a much greater focus on some of Canada’s top priorities, including human rights. Early signs from Washington are encouraging and there is a clear recognition from the U.S. that working in tandem with like-minded partners, including Canada, will be likely to achieve results when it comes to China.

CUSMA implementation and reinforcing the Canada-U.S. economic partnership

Supplementary messages

Responsive – Mexico labour reform

Responsive – U.S. concerns on Canada’s dairy tariff rate quotas (TRQs)

Supporting facts and figures (statistics in canadian dollars unless otherwise noted)

Background

CUSMA implementation: Following entry into force on July 1, 2020, the Parties have focused on the implementation of the autos rules of origin and standing-up CUSMA committees, including those on Small and Medium-Sized Enterprises and North American Competitiveness. More recently, work is underway to support a Free Trade Commission meeting, which could take place as early as mid-April. While implementation is proceeding well overall, certain bilateral irritants exist including with respect to U.S. concerns on Canada’s dairy tariff rate quota practices and Canada’s concerns with continued U.S. safeguard tariffs on Canadian solar products.

Mexico labour reform support: Canada has devoted $27.5 million over 4 years, starting in April 2021, to support Mexican labour reform programming and establish a monitoring and compliance regime. The U.S. has appropriated US$180 million for programming to support similar efforts in Mexico. Canadian and U.S. officials are engaged in regular discussions to coordinate efforts.

Dairy tariff rate quota administration: On December 9, 2020, the U.S. requested consultations under CUSMA regarding the administration of Canada’s dairy tariff rate quotas (TRQs), specifically Canada’s practice of allocating a high proportion of its TRQs to processors. Consultations took place on December 21, 2020, between officials from Canada and the U.S. At the end of the meeting, the U.S. indicated that it remained dissatisfied with Canada’s administration of its CUSMA dairy TRQs. The U.S. has been in a position to request the establishment of a panel since January 8, 2021.

Canada-U.S. cooperation on global trade issues: Early engagement with the U.S. on global trade issues is crucial to demonstrate the role that Canada can play in advancing shared objectives. In particular, there is an opportunity to collaborate to support resilient supply chains and North American competitiveness; advance the global response to climate change; and, demonstrate the benefits of our essential security relationship and make progress on global trade issues (e.g. China and the Indo-Pacific, WTO reform, forced labour).

Softwood lumber litigation

Background

Shortly after the expiry in late 2016 of the one-year standstill period provided by the 2006 Softwood Lumber Agreement, the U.S. Department of Commerce (Commerce) launched, at the request of U.S. industry, anti-dumping (AD) and countervailing (CVD) duty investigations regarding certain Canadian softwood lumber products. In parallel, the U.S. International Trade Commission (ITC) investigated U.S. industry’s claim that it was injured by imports of Canadian softwood lumber.

As a result of these investigations, most Canadian companies were subject to a combined 20.23% duty rate on their softwood lumber exports to the United States from January 2018 until late 2020, when the combined duty rate was reduced to 8.99% for the vast majority of companies. Moreover, in its initial investigations, Commerce determined that softwood lumber imports from Nova Scotia, Prince Edward Island and Newfoundland and Labrador, are not subject to U.S. duties as long as they are certified by the Atlantic Lumber Board (ALB) as having been first produced in these provinces from logs originating in these provinces.

Canada is actively challenging U.S. duties on softwood lumber. Canada launched three challenges under NAFTA Chapter 19 in late 2017 and early 2018 (on Commerce’s initial CVD and AD determinations and the ITC’s injury determination). Canada’s injury challenge ended in May 2020 when the NAFTA Panel adjudicating the case unexpectedly affirmed the ITC’s decision on remand that imports of Canadian softwood lumber injure U.S. industry. Canada and the United States continue to be engaged in protracted discussions regarding panel composition for the CVD and AD cases.

Canada is also challenging Commerce’s determinations before the WTO. The Panel’s Report on Canada’s AD challenge was released on April 9, 2019. The Panel agreed with Canada that the United States improperly calculated dumping margins. However, the report also contains findings unfavorable to Canada. On June 4, 2019, Canada appealed the Panel’s findings on those issues. The Panel’s report on Canada’s CVD challenge was released on August 24, 2020. The WTO Panel’s findings were overwhelmingly in Canada’s favour; the panel unanimously determined that U.S. CVD duties on Canadian softwood lumber are inconsistent with the United States’ WTO obligations. However, the United States appealed the Panel’s report on September 28, 2020. Timelines for both appeal proceedings are unclear due to the WTO Appellate Body’s current lack of quorum.

Finally, Canada is pursuing challenges of the final results of Commerce’s first administrative reviews under Chapter 10 of CUSMA. Canada filed a request for panel review regarding the CVD results on December 10, 2020 (CUSMA Chapter 10 replaced NAFTA Chapter 19 as of July 2020). Canada is also participating in the CUSMA Chapter 10 case launched by Resolute FP regarding the AD first administrative review results.

Forest sector support and trade diversification

Supplementary messages

Supporting facts and figures

Background

In response to the imposition of preliminary U.S. countervailing duties on softwood lumber in April 2017, Canada reacted swiftly to mitigate the impact on workers and communities. On June 1, 2017, the government announced the Softwood Lumber Action Plan (Action Plan) to provide $867 million over three years for measures to support forest industry workers and communities affected by the softwood lumber dispute. Budget 2019 allocated a further $251.3 million over three years to some of the programs funded by the Action Plan that aimed at supporting companies to diversify their markets, expand market opportunities or make capital investments (Natural Resources Canada is the lead on this issue). Canada’s approach to support remains that any assistance to industry must comply with its international trade obligations.

The economic shock resulting from the COVID-19 pandemic drove the curtailment or closure of over 130 forest sector facilities nationwide, affecting about 20,000 employees. Canada-wide, sawmill activity curtailed due to COVID-19 has since recovered and mills are now operating at full capacity. However, the industry continues to face significant challenges that existed prior to the pandemic. For instance, in BC, the province faces fiber supply issues due to environmental factors, including mountain pine beetle damaged timber and forest fires, in addition to ongoing pressures from unfair and unwarranted U.S. duties.

Ongoing U.S. trade remedy proceedings on softwood lumber

Supporting facts and figures

The rates in the table below are currently in effect for companies subject to the first administrative reviews.

First Administrative Review (Final Results) 2018 Rates
CVD RateAD RateCombined CVD + AD RatesCanfor Corporation
2.63%1.99%4.62%
Resolute FP Canada Inc.19.10%1.15%20.25%
West Fraser Mills Ltd.7.57%1.40%8.97%
J.D. Irving Ltd.2.66%1.57 % (All Others)4.23%
All Others7.42%1.57%8.99%

Companies not subject to the first administrative reviews will continue to be subject to the 20.23% “all- others” combined duty rate set by the initial investigation. The large majority of softwood lumber companies are subject to the first administrative reviews.

Background

The U.S. Department of Commerce (Commerce) conducts annual reviews of its anti- dumping (AD) and countervailing (CVD) orders. This process, known as an Administrative Review, is similar to the process used for the initial investigations, but applies only to companies that are subject to the review. A company is subject to the review if there has been a specific request for a review of that company filed with Commerce. The Administrative Review process establishes duty assessment rates for shipments entered during the period of review, as well as the new duty deposit rates going forward until the next annual Administrative Review is completed.

On November 23, 2020, Commerce issued the final results for its first AD and CVD Administrative Reviews (see results above). The final duty rates are, for most companies, significantly lower than those from the initial investigation (8.99% compared to 20.23% “all-others” rate). The only exception is Resolute, whose final rate increased to 20.25% from 17.90%. These new duty rates will be in effect until Commerce issues its final results in the second administrative reviews, which are expected in late 2021.

On December 10, 2020, Canada challenged the final results of Commerce’s first CVD Administrative Review under Chapter 10 of CUSMA. Canada is also challenging the AD results under CUSMA Chapter 10.

Commerce’s second Administrative Reviews are already underway. Preliminary results are expected May 2021 and final results may be issued by late November 2021. These timelines could change depending on extensions.

The third Administrative Reviews have also been launched. Preliminary results are expected around January 2022 and final results may be issued around August 2022. These timelines could change depending on extensions.

Negotiations for a future softwood lumber agreement and advocacy efforts

Supplementary messages

Supporting facts and figures

Background

Following the expiry of the 2006 Softwood Lumber Agreement (2006 SLA) in October 2015, Canada and the United States began discussions toward a successor agreement in January 2016. Aside from a pause caused by the change in U.S. administrations in early 2017, negotiations continued until the United States released final duty determinations for Canadian softwood lumber in November 2017.

Despite a high level of engagement with the U.S. government throughout 2016 and 2017, and considerable efforts in negotiations and stakeholder consultations, Canada and the United States could not reach an agreement. Since that time, neither the U.S. government nor industry have expressed a willingness to engage in discussions on mutually acceptable terms.

Canada’s position remains that a new softwood lumber agreement is in the best interests of both countries, and Canada is prepared to re-engage in negotiations when the United States is ready to discuss realistic proposals that would be acceptable to Canadian industry. In the meantime, Canada is continuing to vigorously pursue legal challenges against U.S. duties at the WTO and through NAFTA/CUSMA dispute settlement panels.

Softwood lumber continues to be a priority for the Government of Canada, and it is being raised at all levels with the new U.S. Administration. In addition, Canada will continue to work with long-time allies in the United States, such as homebuilder associations, to stress that U.S. duties are not only causing undue harm to Canadian producers, but also to U.S. homebuilders and consumers. The current record-high lumber prices are hampering the role that the U.S. housing sector may play in the economic recovery. U.S. homebuilders have been vocal about the need to find solutions to the high prices and to ensure stability of supply.

Canada-U.S. oil and gas pipelines

Supplementary messages

Supporting facts and figures

Background

Keystone XL (KXL)

For more than a decade, successive Canadian governments, including the present one, have strongly and consistently supported the KXL project through engagement with the U.S. federal and state governments, and other American stakeholders.

Canada was disappointed with President Biden’s decision to cancel KXL’s Presidential permit, but acknowledges this decision to fulfil his election campaign promise made in public in May 2020. We believed there was a strong case to be made for KXL. To that end, following the U.S. elections last November, Canada made every effort, and reached out to make the strongest possible case for KXL with the incoming Biden team, the transition team and their advisors. In his first telephone call with then President-elect Biden, the Prime Minister raised KXL.

Enbridge Line 3

Enbridge’s Line 3 replacement project has been completed in Canada, and is also complete for the portions in North Dakota and Wisconsin. For the incomplete section in Minnesota, Canada has strongly supported the project through formal, detailed, written submissions to U.S. federal and state regulatory and environmental assessments.

Construction is now underway in Minnesota, with approximately 25% of that leg of the project complete. As the project is still subject to some litigation, we are continuing to monitor the situation closely.

Enbridge Line 5

Line 5 is a 645-mile pipeline, running from the terminal hub of Superior, Wisconsin, to Sarnia, Ontario. It has operated safely since 1953, and carries light crude oil and natural gas liquids (NGLs) from Alberta and Saskatchewan to Michigan and Ontario. Connecting pipelines transport these resources further to Quebec, Ohio and Pennsylvania. A shutdown of the pipeline would cause significant economic disruption.

On November 13, 2020, Michigan announced that the it was revoking Enbridge’s 1953 authorization (‘easement’) to operate its Line 5 pipeline through the Straits of Mackinac, which connects Lakes Michigan and Huron. The State is citing alleged violations of the easement agreement by Enbridge, which Michigan sees as an unacceptable oil spill risk, and has given the company until May 12, 2021, to cease operations. In making this announcement, Michigan Governor Gretchen Whitmer also filed a legal claim seeking a state court decision to validate her proposed action.

Enbridge filed a suit against Michigan in federal U.S. District Court, seeking to remove the case from Michigan state to U.S. federal jurisdiction. The state court case is held in abeyance, waiting for a decision from the federal court. The federal court has set aside all consideration and motions, with the exception of a motion from Michigan to remand the case back to state court.

On February 17, the judge in the federal court set down a briefing schedule on only one procedural motion, whether to remand the case to state court, where all action is suspended until the federal court determines jurisdiction. Filings of pleadings may run until June 2, 2021, i.e. after Michigan’s stipulated shutdown date of May 12, 2021. The federal court judge ordered Enbridge and Michigan to enter into mediation to see if, in the meantime, they might reach a settlement that would render the court proceedings unnecessary. On March 16, a mediator was announced, with the first meeting scheduled to take place on April 16 after which they will report out a meeting schedule to the judge. The mediation outcome would be non-binding.

Commitment to a green economic recovery

Supplementary messages

Supporting facts and figures

Background

Canada and the U.S. are increasing public climate-resilient and green infrastructure spending as a means to spur economic recovery after COVID-19. Climate change is a “cornerstone” of the Government’s plan to create one million jobs and is included in the four pillars of the Speech from the Throne. The Government of Canada committed to making investments in clean energy and helping sectors transition to a net-zero future. Canada’s Task Force for a Resilient Recovery recognized green recovery as essential for Canada’s competitiveness in climate action – through buildings, zero- emission vehicles, clean energy, nature, and clean competitiveness.

President Biden’s US$2 trillion green infrastructure and clean energy plan, gaining traction through an Executive Order on Tackling the Climate Crisis at Home and Abroad, calls for investments in clean energy technologies and infrastructure, new electric vehicle charging stations, battery manufacturing incentives, and foreign investment. Part of that plan has been incorporated into draft legislation that is currently before Congress. The Roadmap for a Renewed U.S.-Canada Partnership, announced by the PM and the U.S. President on February 23, 2020, embraces the opportunity for clean growth by strengthening the Canada-U.S. Critical Minerals Action Plan for a net-zero industrial transformation, essential to zero-emissions vehicle batteries and renewable energy storage.

Increased demand for clean growth products and services equally leverages Canadian technological strengths – energy storage, renewables, electrification and power distribution via smart grids, and global Canadian infrastructure company expertise in services – project management, engineering, and consulting. Efforts to facilitate recovery after COVID-19 present a transformative opportunity to stimulate economic growth through climate resilient and green infrastructure investments. Canadian firms have significant experience building and operating some of the largest renewable energy plants in the world, through developers, engineering firms, equipment manufacturers and suppliers.

Climate change and border carbon adjustment

Supplementary messages

Background

Canada’s approach to carbon pricing

Canada has had a carbon pricing system in place since 2019, known as Pan- Canadian Approach to Pricing Carbon Pollution. The Pan-Canadian Approach to Pricing Carbon Pollution gives provinces and territories the flexibility to develop their own carbon pricing system so long as the system meets the established criteria designed to ensure all systems are stringent, fair and efficient (known as the federal benchmark).

On December 11, 2020, Canada introduced A Healthy Environment and a Healthy Economy – Canada’s strengthened climate plan. The plan includes $15 billion in investments to build a stronger, cleaner, more resilient and inclusive economy. As part of Canada’s strengthened climate plan, the Government of Canada proposes to continue putting a price on carbon pollution post 2022, by $15 per year to 2030. The Government will engage with provinces and territories, as well as with Indigenous organizations, on the proposal to increase carbon pricing from $50/tonne in 2022 (the current policy target) in $15/tonne annual increments to $170/tonne in 2030.

Current status of U.S. initiatives to tackle climate

President Biden has identified action on climate change as a key priority of its build back better agenda. In addition to commitments to rejoin the Paris Agreement and achieve net zero emissions by 2050, the Biden Administration’s trade policy agenda for 2021 prioritizes using trade to advance environmental sustainability. This includes inter alia: negotiating and implementing strong environmental standards; exploring and developing market and regulatory approaches to address greenhouse gas emissions in the global trading system, including considering border carbon adjustments (BCAs); working with trading partners as they develop their own approaches; taking action against trading partners who fail to meet their environmental obligations; and promoting resilient renewable energy supply chains. President Biden has also committed to condition future trade agreements on partners’ commitments to meet their enhanced Paris climate targets. Early engagement with the U.S. is essential to protect Canadian interests and to position Canada to be part of these discussions on BCAs.

Clean energy (hydro) exports

Supplementary messages

Supporting facts and figures

Background

At the PM/President meeting on February 23, the leaders: …agreed to take a coordinated approach to accelerating progress towards sustainable, resilient, and clean energy infrastructure, including encouraging the development of cross-border clean electricity transmission.

On February 24, 2021, the U.S. International Trade Commission (ITC) issued a report examining the economic effects of increased renewable energy commitments in New England and Massachusetts, and the role of renewable electricity imports. Canada and some of the provinces testified at the ITC’s hearings. The main finding is that Massachusetts can meet its increased renewable and clean energy commitments with a relatively small increase in retail electricity rates. Positive for Canada, the report states that increased imports of hydroelectric energy from Canada will likely support Massachusetts’s carbon emissions reduction goals.

Over 30 cross-border transmission lines move electricity back and forth across the Canada-U.S. border. These operate both under long-term contracts (e.g. Hydro Quebec supplies Vermont with 25% of its electricity) and on the spot market as supply, demand and price dictate.

From this existing electricity trade, Canada’s hydro exports are expanding with the Hydro Quebec New England Clean Energy Connect (NECEC) supplying Massachusetts and the New England grid under a 20-year contract, running through Maine. The project has obtained all federal and state permits, and pre-construction work has started. Local opposition to the project remains, and litigation is ongoing, but there is no expectation of federal intervention. Hydro Quebec’s Champlain-Hudson Power Express (CHPE) would provide clean power to the New York City government. The project is fully permitted at U.S. state and federal level, so construction could begin if a supply agreement is reached that includes financing the project. Manitoba Hydro, on July 1, 2020, brought into service a new export/import project the Great Northern Transmission Line (GNTL) between the province and Minnesota.

Vaccines (defence production act / executive orders, Canada-U.S. vaccine cooperation)

Supplementary messages

Supporting facts and figures

Background

On January 21, 2021, President Biden signed an Executive Order titled “Sustainable Public Health Supply Chain” to direct authorities to secure supplies necessary to respond to domestic needs related to COVID-19 including through the authorities of the Defense Production Act (DPA).

Since the issuance of this Order, the Biden Administration has invoked the DPA to increase production of vaccines by U.S. manufacturers. U.S. Government priority- rated orders do not explicitly prohibit exports. However, once a U.S. company has been issued a DPA-rated order from the U.S. government, it is legally bound to comply in fulfilling that order on a priority basis. A supplier can continue to fill other orders while working on a priority-rated order, if its supplies are sufficient, in accordance with the details of the order.

Canada has an exemption to export restrictions of certain related medical products under the Federal Emergency Management Agency (“FEMA“), valid until June 30, 2021. These restrictions do not cover COVID vaccines.

The White House announced on March 19, 2021, that the U.S. will allow exports of 1.5 million AstraZeneca-Oxford vaccine doses to Canada. This will count as part of Canada’s 20 million doses secured through a bilateral agreement with AstraZeneca.

Canada will receive 1.5 million doses as early as March and an equal number of doses will be provided to the U.S. at a later date.

Buy America stakeholder interactions, public consultations, and US outreach during Biden administration

The Government of Canada has been engaged and will continue to engage with stakeholders implicated by Buy America policies. Meetings and stakeholder engagements have taken place on both sides of the border. The issue is raised at every opportunity by elected officials as well as by Canadian representation at the Embassy of Canada and throughout our network of Consulates in the United States.

Title of canadian interlocutorInterlocutor nameInterlocutor TitleDateIntelocutor Type
WSHDC HOMCABC Advisory Groupn/a13- Jan -21Industry
WSHDC HOMJerry DiazHead of Unifor union14-Jan-21Labour
WSHDC HOMJay TimmonsPresident and CEO of the National Association of Manufacturers15-Jan-21Industry
WSHDC-TDMark Rowlinson, Gingrich, MegAdministrative Assistant to the National Director of the United Steel Workers; and researcher at United Steelworkers19-Jan-21Labour
WSHDC-TDJocelyne Dubois; Marie Clarke Walker; Chris RobertsDirector - International Department - CLC; Secretary-Treasurer - CLC; National Director of Social and Economic Policy - CLC19-Jan-21Labour
WSHDC HOMFirst Ministers' Meetingn/a21-Jan-21Provinces
WSHDC HOMBrian DeeseDirector - National Economic Council21-Jan-21US Government
WSHDC-TD, TPZ, ESDCMark Hennessy; Meg GincgrichUnited Food and Commercial Workers Internatinonal Union Canada (UFCW)21-Jan-21Labour
Dep_PMCoons, ChrisSenator25-Jan-21Senator
WSHDC-TDCatherine Loubier; François HouldQuebec government26-Jan-21Provinces
WSHDC-TDAustralia/Fischer, Suzn/a26-Jan-21Foreign Government*
CNGNY_A_HOMAndrew GarbarinoRepresentative27-Jan-21Representative
MINAElise StefanikRepresentative27-Jan-21Representative
WSHDC HOMClerks and Cab Secretaries Meetingn/a27-Jan-21Provinces
WSHDC HOMBrian KingstonPresident and CEO of the Canadian Vehicle Manufacturers' Association (CVMA)28-Jan-21Industry
WSHDC-TDJohn G. MurphySenior Vice President for International Policy - U.S. Chamber of Commerce28-Jan-21Industry
TFMCanadian Chamber of Commercen/a28-Jan-21Association
TFMCanadian Association of Importers and Exportersn/a28-Jan-21Association
TFMBusiness Council of Canadan/a28-Jan-21Association
TFMCanadian Manufacturers and Exportersn/a28-Jan-21Association
TFMU.S. Chamber of Commerce (MINT lead)n/a28-Jan-21Association
WSHDC-TDMatt PoirierDirector - Trade Policy - Canadian Manufacturers & Exporters29-Jan-21Industry
Prime_MinisterHarris, KamalaVice President01-Feb-21US Government
WSHDC-TDLuis PintoDirector, Corporate Affairs, North America & Europe at Alcoa01-Feb-21Industry
WSHDC-TDJanghee KimKorea01-Feb-21Foreign Government*
WSHDC HOMDennis KingPremier - PEI02-Feb-21Provinces
Minister AlghabraPete ButtigiegSecretary - U.S.D.O.T.03-Feb-21US Government
WSHDC-TDDavid PatersonVice President, Corporate & Environmental Affairs, GM Canada04-Feb-21Industry
WSHDC-TDKunoSwitzerland04-Feb-21Foreign Government*
WSHDC-TDJoseph MancinelliInternational Vice President and Regional Manager - Laborers' International Union of North America05-Feb-21Labour
Dep_PMBrian DeeseDirector - National Economic Council08-Feb-21US Government
WSHDC-TDAdemola Ayefeso; Rachel LyonsUFCW08-Feb-21Labour
WSHDC-TDIan SaundersDAS for the Western Hemisphere - Office of the International Trade Administration09-Feb-21US Government
BOSTN_HOMEric Kantern/a10-Feb-21US Government
WSHDC HOMJuan GonzalezSpecial Assistant to the President and NSC Senior Director for the Western Hemisphere at The White House10-Feb-21US Government
WSHDC HOMScott MoePremier of Saskatchewan12-Feb-21Provinces
WSHDC, NNB, TPZRoy Houseman; Mark Rowlinson; Meg GingrichUnited Steelworkers Union (USW)12-Feb-21Labour
WSHDC-TDBen NicholsonVice President Washington Operations - CAE12-Feb-21Industry
CNGNY_A_HOMFreiman, RoyState Representative16-Feb-21US Government
LNGLS_HOMAmodei, MarkRepresentative16-Feb-21US Government
BOSTN_HOMHysom, TimChief of Staff to Rep. Jake Auchincloss (D-MA)16-Feb-21US Government
WSHDC-TDGreta PeischGeneral Counsel - Office of the United States Representative16-Feb-21US Government
WSHDC-TDKatrin van DykenGermany18-Feb-21Foreign Government*
WSHDC HOMJuan GonzalezSpecial Assistant to the President and NSC Senior Director for the Western Hemisphere at The White House18-Feb-21US Government
WSHDC HOMJuan GonzalezSpecial Assistant to the President and NSC Senior Director for the Western Hemisphere at The White House21-Feb-21US Government
MNPLS_HOMFischbach, MichelleRepresentative23-Feb-21US Government
SenatorMurphy, PhilGovernor of New Jersey23-Feb-21US Government
WSHDC-TDMatt PoirierDirector - Trade Policy - Canadian Manufacturers & Exporters23-Feb-21Industry
MINTRichard NealRepresentative24-Feb-21US Government
WSHDC-TDJim Brewer; Ross Maradian; Rita Rahmati; Sean StricklandNorth America's Building Trades Unions: NABTUCanada's Building Trades Union: CABTU24-Feb-21Labour
WSHDC-TDRio Tinto/Brown, Judy; Chisholm, Carolyn; Modlin, RyanRio Tinto Mining Company24-Feb-21Industry
WSHDC-TDLiUNA/Pena-O'Sullivan, Yvette; Mallino, DavidLaborers International Union of North America (LiUNA)25-Feb-21Labour
WSHDC-TDIBEW/Keyser, Austin; Espinosa, SergioInternational Brotherhood of Electrical Workers Construction (IBEW)25-Feb-21Labour
MIAMI_HOMFranklin, ScottRepresentative26-Feb-21US Government
WSHDC-TDTeamsters/Dolan, MikeTeamsters Union26-Feb-21Labour
LNGLS_HOMGosar, PaulRepresentative01-Mar-21US Government
WSHDC HOMBCC/Hyder, Goldy; Kennedy, TrevorBusiness Council of Canada01-Mar-21Industry
DALAS_HOMCole, ThomasRepresentative02-Mar-21US Government
WSHDC-TDFord/Rowland, JamesGlobal Manager of International Government Relations at Ford Motor Company.02-Mar-21Industry
DALAS_HOMGonzalez, TonyRepresentative03-Mar-21US Government
DENVR_HOMLamborn, DougRepresentative03-Mar-21US Government
TFMCanadian Federation of AgricultureCanadian Federatino of Agriculture04-Mar-21Industry
LNGLS_HOMCarbajal, SaludRepresentative05-Mar-21US Government
WSHDC-TDFlo, Inc./Bullis, Coryn/a05-Mar-21Industry
LNGLS_HOMGarcia, MikeRepresentative09-Mar-21US Government
DTROT_HOMJohnson, BillRepresentative09-Mar-21US Government
DTROT_HOMKain, Amanda ShawLeg Director for Rep David Joyce (R-OH)10-Mar-21US Government
LNGLS_HOMLee, SusieRepresentative10-Mar-21US Government
WSHDC HOMJuan GonzalezSpecial Assistant to the President and NSC Senior Director for the Western Hemisphere at The White House10-Mar-21US Government
WSHDC HOMWayne Easter Brian MacDonaldCanada-US IPG Co-Chairs10-Mar-21Parliament
WSHDC-TDTrevor KennedyBusiness Council of Canada11-Mar-21Industry
WSHDC HOMDaleep SinghU.S. G7/G20 Sherpa16-Mar-21US Government
WSHDC HOMNEC Senior Director for International EconomicsNEC Senior Director for International Economics16-Mar-21US Government
WSHDC HOMJake SullivanNational Security Advisor16-Mar-21US Government
WSHDC-TDJulie Greene Sira AttapitOffice of U.S.T.R.17-Mar-21US Government
WSHDC-TDSMART/Hynes, Greg; Cassidy, Jared18-Mar-21Labour
WSHDC-TDWendy LiberanteDeputy Director - Intrernational Transportation and Trade - U.S.D.O.T.18-Mar-21US Government
WSHDC-TDRobert KulikTeva19-Mar-21Industry
WSHDC-TDSameera FaziliDeputy Director of the National Economic Council22-Mar-21US Government
WSHDC-TDEckdish, JessicaBlueGreen Alliance24-Mar-21Labour
Minister AlghabraButtigieg, PeteSecretary of Department of Transportation24-Mar-21US Government
WSHDC HOMCME CEOsCanadian Manufacturers & Exporters07-Apr-21Industry
WSHDC-TDNAM/Monahan, Ken09-Apr-21Industry
WSHDC-TDHarrell, PeterSenior Director for International Economics and Competitiveness - NSCTBCUS Government

*exchange of information and comparing notes on potential impact of certain US actions

Softwood lumber stakeholder interactions, public consultations, and US outreach during Biden administration

The Government of Canada is in regular contact with a plurality of stakeholders implicated by the softwood lumber dispute. The federal government works collaboratively with provincial and territorial governments, individual companies, regional and product sub-category associations, organized labour, and First Nation interests and reaches out to these groups periodically to provide updates and seek views on the way forward as the file unfolds. Softwood lumber is also being raised with the United States at every opportunity, including by the Prime Minister, the Minister of Small Business, Export Promotion and International Trade as well as officials with their U.S. counterparts.

Title of canadian interlocutorInterlocutor nameDateIntelocutor Type
WSHDC-TD[REDACTED][REDACTED]12-Jan-21US Government
WSHDC-TD[REDACTED][REDACTED]14-Jan-21Industry
WSHDC-TD, TPZ, ESDC[REDACTED][REDACTED]21-Jan-21Labour
WSHDC HOMBC Premier HorganProvincial Premier04-Feb-21Provinces
WSHDC-TD[REDACTED][REDACTED]16-Feb-21US Government
WSHDC-TD[REDACTED][REDACTED]26-Feb-21Industry
WSHDC-TDQC/Chrétien, Raymond; Hould, Jean-FrançoisSpecial Envoy for Quebec (SWL)17-Mar-21Provinces
WSHDC HOMBC COFI/Yurkovich, SusanCOFI08-Apr-21Industry
WSHDC-TDBC/Sanderson, MelissaTBCProvinces

Forest sector internal investments in operations - 2020 to 2021 (current as of march 19, 2021)

***Please note that this is an illustrative list for British Columbia, Ontario and Quebec based on key media reporting and thus does not represent a comprehensive picture of all investments made in these provinces during this time period***

Date of announcementCompanyInvestmentProvinceDetails
April 2020San Group$150 millionBCAcquisition and investment on mill over the past three years
July 2020Lignarex$3.5 millionQCInvestment to optimize operations
August 2020Arbec (Groupe Rémabec)$10 millionQCInvestment to expand two saw lines
August 2020Groupe Martel$5 millionQCInvestment to modernise the sawmill
September 2020Itasca Capital (GreenFirst Forest Products)$11.5 millionONAcquisition of Kenora Forest Products
October 2020Council of the Atikamekw and Tackipotcikan Sawmill Limited Partnership$3.5 millionQCInvestment in the construction of a new wood processing plant
November 2020Peak Renewables$30 millionBCAcquisition of Canfor’s mill assets and forest tenure
March 2021White River Forest Products$10-12 millionONInvestment to upgrade facility over the next 18 months
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