CABC CEO, Maryscott Greenwood Testifies in Front of the House of Commons Special Committee on the Economic Relationship Between Canada and the United States
Thank you for the invitation to appear before you today.
The members of this committee and I share a singular focus. In my case, it takes up much of my professional life. And I think we all know that while Canada-U.S. relations are pretty sound, and we enjoy all sorts of historical advantages, our business is not conducted to a soothing background chorus of Kumbaya.
No. The relationship has always been guided by self-interest. And you know…there have been times when our leaders didn’t even like one another very much.
We don’t actually have to wait for history’s judgment to know that the past four years were a nadir, so to speak. We in fact experienced a trade war.
One of our members at the CABC is A.O. Smith Corporation. It manufactures water heating and treatment equipment, and it was the target of trade retaliation by Canada…presumably because of its significant corporate presence in the home state of the Chairman of the Senate Foreign Relations Committee.
And yet, despite all the chaos, or perhaps because of it, Canada ended up with a very good result out of the last four years. Canada emerged with a modernized, updated version of NAFTA – the USMCA. That deal is now the gold standard for the world.
Now, how could that have happened in such a tense and challenging time? The simple answer is that Canada recognized the power of economic self-interest and did an excellent job of leveraging it.
When the President threatened to tear up NAFTA, Canada responded to the existential economic threat by going on the diplomatic equivalent of war footing. It focused on US interest and made in exceedingly clear to members of Congress what the economic cost would be in their districts and states. Let’s not forget, Canada is the number one customer for U.S. exports.
During the most intense periods of the trade negotiations, you could find no daylight between the government and opposition parties, between the feds and provinces, between unions, companies and public opinion. In the end, Canada came out the other side not just intact, but with an improved and enforceable trade agreement, blessed on both sides of the aisle in both chambers of Congress.
And now we have a return to diplomatic normalcy. President Biden shares a certain amount of political vision with Prime Minister Trudeau, and most Canadians are more comfortable with his values.
So, some in Canada are no doubt relieved. Maybe they think they can relax OR that the world is realigned on its axis, or that natural historical comity can be relied upon to ensure economic security and happiness.
That would be a mistake.
Various statesmen have asserted that nations have no permanent friends, only interests. I do like to think what Canada and the U.S. share is friendship, but there IS something to that quote.
One need look no further south than Lansing, Michigan, right now.
Last November, Michigan Governor Gretchen Whitmer announced that she was revoking the state’s easement for Enbridge’s continued safe operation of the Line 5 pipeline across the straits of Mackinac.
And of course, on his first day in office, President Biden killed Trans Canada Pipeline’s Keystone XL project.
The difference is, Keystone XL was under construction and still work in progress. Line 5, on the other hand has been safely delivering millions of gallons of Canadian crude oil and natural gas liquids to American and Canadian refineries for nearly seventy years.
I should pause here for a moment and make a disclosure: Enbridge is represented on the CABC board, and I do work for the government of Alberta in Washington.
In any case, Line 5 supplies more than half the propane Michiganders, both in the Upper and Lower Peninsulas, use to heat their homes and businesses each winter, and to run their businesses throughout the year. The propane is also consumed in throughout the region, in Wisconsin and Ontario.
The jet fuel loaded onto planes at Pearson Airport in Toronto, Trudeau Airport in Montreal, Detroit Metropolitan Airport, and Pittsburgh International Airport, comes from the crude oil that is transported through Line 5. So does a great deal of the gasoline sold at pumps in Ontario and Quebec.
Line 5 provides an essential service, period. Natural Resources Minister Seamus O’Regan has called its operation “non-negotiable,” but the fact is, Minister O’Regan has no jurisdiction in Michigan. Governor Whitmer has demanded that Line 5 be shut down by mid-May. Her attempted revocation of the easement and her attempt to shut down this pipeline is currently being argued before a U.S. federal court.
To Governor Whitmer, this is about protecting the environment, and I think it’s fair to say is a priority for Canada, too, and for the CABC. We and our members support carbon transition policy, and the goal of reaching net zero by 2050.
Canada and the United States are cooperating on multiple environmental initiatives – vehicle emissions, carbon capture and utilization, methane reduction, to name a few – and there’ll be an important Leaders Climate Summit hosted by the White House on April 22.
But…. economic self-interest remains any nation’s immovable object. We are still reliant on oil and natural gas, and the plain fact is that if Line 5 is closed down, Michiganders, Ohioans, Pennsylvanians and Ontarians and Quebecers will find some other way to import the hydrocarbons they need to fuel everyday life. More barges and tankers, loaded with crude, will appear on the Great Lakes. More trucks full of crude will crowd onto our highways.
The most important question is how long will these market adjustments take and at what cost, not only to the economy, and the people of Great Lakes region, but also to the environment.
As this committee knows, Line 5 at the Straits has never leaked, and Enbridge is in the process of making it even safer. Governor Whitmer’s own administration recently approved permits for Enbridge to route Line 5 through a concrete-lined subterranean tunnel it intends to bore under the lakebed.
We should not let energy projects with regional and international economic importance become litmus tests for anyone’s allegiance to protecting the environment. Actually, there is simply no safer way to transport crude than by pipeline.
Meanwhile, Canada needs to keep thinking in war footing mode. Yes, even in the Biden era.
And not just to protect Line 5.
We need regulatory harmonization if we are going to have the most effective economic rebound. We need to reopen the border to people as soon as vaccines make it safe to do so. We need agreements to collaborate on PPE manufacturing and vaccine distribution. Rather than competing, we have to cooperate. That is what’s in the economic interest of our citizens.
Canada and the US are at our best when we are arm in arm. And we cannot allow ourselves to be lulled into thinking everything will suddenly be fine. Governor Whitmer has provided a wake-up call.