September 18, 2024
The Empire Club of Canada Presents
Borderline: How Canada Can Matter More to the United States – and the Rest of the World
Chairperson: Jenna Donelson, President, Board of Directors, Empire Club of Canada
Moderator
Amanda Lang, Anchor, Taking Stock, CTV
Panellists
Edward Greenspon, President and CEO, Public Policy Forum
Janice Stein, Founding Director, Munk School of Global Affairs and Public Policy
Head Table Guests
Bradley Harker, Principal Commercial Officer, U.S. Consulate
Drew Fagan, Professor, Munk School of Global Affairs and Public Policy
Welcome Address by Jenna Donelson, President, Board of Directors, Empire Club of Canada
Hello everyone, and welcome to the Empire Club of Canada’s 121st season. I’m Jenna Donelson, and it is my great privilege to be chair of the Empire Club board, and your host for today’s event.
To formally begin, I want to acknowledge that we are gathering on the Traditional and Treaty Lands of the Mississaugas of the Credit, and the homelands of the Anishinaabe, the Haudenosaunee, and the Wendat Peoples. We encourage everyone to learn more about the Traditional Territory on which you live and work.
I’d also like to take a moment to recognize some dignitaries we have in the room. We have with us the Honourable Elizabeth Dowdeswell, Ontario’s 29th, and longest-serving Lieutenant Governor. And with her, we have Kathleen Wynne, Ontario’s 25th Premier, and the first woman to hold the role. Thank you both, for being with us today.
Today is a special moment for me. One of my very first jobs was working here at this club. And the connections I made here led me to Queen’s Park, which launched my career, and important experiences and relationships along with it. I owe a lot to this club, and I love what we do. And as you saw in this last video that was just played, there’s a new energy here at the Empire Club. The energy is captured in our theme for the year, Leading the Change. This is largely in thanks to our wonderful staff team. Kent Emerson, as you may know, was recently named CEO of the Empire Club—the first in our long history, in fact. And if, you know, Kent as I do, you’ll know he is driven and passionate. I’m excited to see where he and the team take the club, in the coming months and years. So, please join me, once again, in recognizing the tremendous work of our staff team.
Now, I tell my story not because it is unique or special, but because it demonstrates what happens here at the Empire Club, each time we get together. Because you never know, when you walk through those doors, what conversation you’ll have, what you’ll hear from our speakers, that will change the direction of your life, and your career. I’ve seen it happen, I’ve lived it. And that is why I’m so very proud to help lead this club, a place that has helped shape public discourse, here in Canada. For more than a century, more than 4,000 speakers have made the Empire Club their chosen forum for the speeches, debates, discussions, and announcements, that speak directly to the heart of public policy discussion and thinking in our country. We do not always have easy conversations here. We do not tackle trivial topics here. But we approach it all with respect and open-mindedness, in a way that is distinctly Canadian. Where else do you get a chance to sit at a table with people who do not share your views, but who are dedicated to engaging in issues that matter? I think that’s vital, in this day and age—and in any age, really. The Empire Club itself was born in 1903, following a major dispute regarding the US-Canada border; the very first speech delivered from our podium addressed that fundamental relationship we have with the United States. And so it seems that, although some things change, they also stay the same. And the Empire Club continues to be a place where we have conversations that matter. I can promise you that this season is going to be filled with such conversations, and I’m delighted that we have our guests today, to kick us off.
Before we dive in, as a nonprofit organization, we would like to recognize our sponsors, who generously support the club, and make these events possible and complimentary for our online viewers to attend. Thank you to our VIP Reception Sponsors for today, PNC Bank, Humber Polytechnic, and Waste Connections of Canada. Thank you, as well, to our Supporting Sponsor, Paisley Partners. And thank you to our Lead Season Sponsors, Bruce Power and Hydro One, and our VIP Reception Season Sponsor, Waste Connections. I also want to thank our Print Media Partner, the Toronto Star. And finally, I want to thank today’s Event Partner, the Public Policy Forum.
If you have a question for our speakers, please submit it by scanning the QR code that you’ll find on your program, or if you’re online, please hit the Q&A under the video player. For those of you online, if you require technical assistance, please start a conversation with our staff using the chat button on the right-hand side of your screen.
The Empire Club is your forum for sharing new ideas, and engaging in important conversations. And our first speaker today is no stranger to either one of those. Drew Fagan is a professor at the Munk School of Global Affairs and Public Policy. He spent 12 years in leadership positions in the government of Canada, and in the province of Ontario. Before becoming a public servant, he worked at the Globe and Mail, including as Parliamentary Bureau Chief, Associate Editor of the Report on Business, and the Washington Correspondent. And in addition to his many other accomplishments, I would be remiss, if I did not mention that he also holds a Bachelor of Commerce degree from Queen’s University, and a Master of Arts from Western. I think it’s fair to say that Drew has seen it all. He’s been an academic, a civil servant, a volunteer, and a journalist, and he’s played a key role in some of the policies and conversations that have shaped our country, and our province. So, please join me in welcoming to the stage, Drew Fagan.
Opening Remarks by Drew Fagan, Professor, Munk School of Global Affairs and Public Policy
What a pleasure to be here at the opening of the Empire Club’s fall season. I’m gonna speak for about half an hour on the 1903 dispute. And being an academic now, I think that was in Northwest, a border dispute. Anyway, I’m actually—you’ve had a nice meal; I’m kind of the appetizer for the main course. So, I’m gonna set the scene of the report, how we went about it, and the key findings, without stealing any thunder from Janice and Ed, who I will introduce later. And it’s been quite a process. This is a new season. This report, I must say, took a few seasons to do, and I think it benefited from that. And we had seven roundtables, including in Washington, and we talked to many officials on background one-on-one, and we got the benefit of their assistance, and we owe them our gratitude.
Let me encapsulate what’s in the report—it’s not that long, it’s very readable; we, we’re very happy with it. One, there’s a sense that Canada is a little bit, more than a little bit, at sea, and even alone, in a changing geopolitical world. We don’t reject that the world is changing, geopolitically. You all know that. But if anything right now, in the midst of that change, and for the foreseeable future, we think that Canada has, in fact, more to offer in this new global environment.
Two, there’s a sense—more than a sense, I think we all agree—that the United States is changing, and there’s little we can do, or there’s the sense that there’s little we can do, in terms of the bilateral relationship ,amid the protectionism, and even nativism, that we see in the United States. Well, the first part of this is true. Of course, the United States is changing. We follow the election probably as closely—we, in this room—more closely than the average American. But there are things we can do. In a nutshell, we find that Canada has more to offer continentally, to Canada’s benefit, and likewise, globally. Especially, among our Western friends and allies.
As we say, and we title the report “Matter More,” when we matter more to the United States, we matter more globally, and vice versa. We’ve often thought, through Canadian history, that there’s a balance. Create counterweights, we heard. Don’t get too close to the United States, don’t get too far. Think about that balance. We think, as often as ever, even with a changing United States, we’re drawn more closely to the West broadly, and the United States specifically, particularly in the sectors that we think are our opportunity. But—and I’ll get to those in a second, and I’m sure Janice and Ed will talk about them with Amanda at length—but to succeed, we must be more proactive, as I say, especially in the key areas where the US, and our friends, are looking to us to play a bigger role. And that’s in the context of three great strategic assets, our geography—and if you sometimes question being as close as we are to the hyper power, think about some, a country like Mongolia, stuck between Russia and China, for comparison. Our geography, our geology, our ingenuity. We’ll leave open dialogue to the Empire Club. That’s our fourth, you know, but we have four, in fact, great strategic assets, but we write about three. And four areas that we think about, as those that we need to focus on going forward, in the Canadian interest, and as I say, in the interest of continentalism and global interest. Arctic security, critical minerals, energy and the environment, and technology. And that’s all in the report. And I invite you to read that.
So, with that, that sets the table for it, a little bit. Let me introduce our panel, and I’ll keep it short. Janice Stein is probably Canada’s best respected geopolitical analyst. She’s the founding director of the Munk School at U of T, and the Belzberg Professor of Conflict Management. She’s also my boss. So, I would say that, but I would say that anyway. I promise. Ed Greenspon is president and CEO of the Public Policy Forum, and the former Editor-in-Chief of the Globe and Mail. He’s my former boss. And Amanda Lang was never my boss, but I’ve known her for, yeah, 30 years. In fact, when I was a correspondent for the Globe in Washington, she was the correspondent for the Financial Post in New York. She’s a well-known Canadian business journalist, hosting programs on CTV, BNN Bloomberg, CP24, and she was previously senior business correspondent for CBC News.
As they come up to the stage, and I invite you up, I’d like to thank our partners on the report, a PPF, CAE, Inc., ConocoPhillips, Canada Resources Corporation, Enbridge, Inc., Johnson & Johnson, Inc., Microsoft Canada, Inc., and Rio Tinto. And thank you for attending today.
Amanda Lang, Anchor, Taking Stock, CTV
Thank you so much for that, Drew, and everybody for being here. I know you’re here because of these two people, and what they bring to this kind of conversation, and if you haven’t read the report yet, it is short, but it’s meaty, and it is relevant, boy, for the time we live in. So, I wanna start, actually, with, you know, mattering more. Big picture, both of you. Janice, I’ll start with you. What does that mean in your view?
Janice Stein, Founding Director, Munk School of Global Affairs and Public Policy
So, I’m gonna try to put this in the starkest way I can, reaching for drama. No matter who the president, the next president of the United States is—so, I’m just setting the bar very high, here—the world is reorganizing, and our closest neighbour is our regional partner, as the world becomes regional. We have no choice, if we are gonna continue to grow, and to provide opportunities for our children and our grandchildren, but to understand how we can matter more to the United States. How do we do that, Amanda? We listen hard to what they need, we get inside the supply chains, so we understand where what we have is what they want, and we focus, focus, focus, and get stuff done.
Edward Greenspon, President and CEO, Public Policy Forum
Me, I think that if I had to take away, so mattering more means, as Janice says, that we need to recognize how we can align our national interests with those of the United States, but also in the kind of world we have, team democratic market-based nations.
Amanda Lang
Yep.
Edward Greenspon
And one of, I think, the revelations we had, in Matter More—Drew alluded to it—is that there’s an old view of you either deepen with the United States, as Brian Mulroney did, or you try to diversify away from the United States, as the third option tried to, under Pierre Trudeau, let’s say. And today, the idea of deepening and broadening are mutually reinforcing. So, if you’re helping your allies with their energy security in Japan and Korea, or Germany and Netherlands, is that broadening or is that deepening? Well, you know, it’s both, clearly. If you’re helping with Ukraine, which I would put in the democracies—not fully market-based, not fully mature, but nonetheless, certainly, on the front line of the democracies—what does that matter? So, I think the bottom line is, though, it’s on us. The world is challenging. What we found in our deliberations is that there’s all kinds of opportunity, and new opportunity, because the world is challenging. And we need to make decisions. We need to say, yes, you know, we’re gonna be an active member of team democracy.
Amanda Lang
One of the things that you did that I think is really interesting—and I hadn’t seen this framed this way—but was to take a look at the Auto Pact. And its importance, as we all know, in Canada, to how interwoven our supply chains are, in this particular sector, and its offshoots, and use that as the framing device for four new categories, where we could create, what you say, Auto Pact 2.0, 3.0?
Janice Stein
2.0.
Amanda Lang
2.0. Why the Auto, give me the parallel of that, because we’re—and the four things, as we talk, we’ll talk about them, but critical minerals, high tech, security, I’m forgetting the fourth at this moment, tell me the fourth.
Edward Greenspon
Energy and environment.
Amanda Lang
Energy and environment. Of course. Why the Auto Pact, why is that the right….
Janice Stein
That’s a really great question, Amanda. And I think it really matters. It’s a very, very useful metaphor. For the last 20, 30 years in our relationship with the United States, the focus has been on trade, and reducing tariffs, and creating more open markets. Unfortunately—it’s all we want, but unfortunately, that strategy is closed to us, in the United States, for the foreseeable future. So, that kind of more open or global approach is over, if you know anything about US domestic politics. What do we do, then? We get above them. The Auto Pact took a sector, very important to the economy of Ontario, absolutely critical to the economy of Ontario, got above it, and reached an agreement in which we integrated those two sectors.
And so, today, you know, if you look at a car—which is, really, just an advanced computer, with a fancy steel dress on it; that’s what it is—if you look at a car today, we can’t tell you what’s made in the United States and Canada, because the parts are made in both, and they cross the border so many times. That’s what we’re talking about now, in these four areas. In critical minerals, in energy, in the Arctic, and in technology. We call it continentalizing, co-investing, co-producing, and my biggest bugbear, co-procuring.
Edward Greenspon
Yeah ,and just to build on that, Amanda—and I was about to say continentalizing, and then you went and got ahead of me…
Janice Stein
I do that a lot.
Edward Greenspon
…as always. I think the key thing in this report that separates it—there’s a couple things that separate it—one, we are trying to lay out a strategy, so that as we enter [Indiscernible], which a lot of people are rightly concerned about, or as we form a Team Canada, here’s things we can say, here’s how we can get proactive, here’s how we can get ahead of things. Then the second, I think, large difference is that it’s not just about trade access, as Janice was saying, it’s about doing things together. And that’s how you get also your deepening and your broadening to come together.
So, you know, when the invasion of Ukraine happened, Europe was immediately in an energy crisis. And almost the first thing that happened is that the United States asked Canada if it could increase its natural gas production, and that would enable its LNG complex in the Gulf Coast to ship to Europe. So, that was like doing something together, that really mattered. There’s a whole bunch of opportunities like that, and we gotta grab them. So, and that will facilitate the trade and the transactions.
Janice Stein
By the way, just on that point, Amanda, there’s a really fabulous story about uranium. A Canadian company that had integrated supply chain, stepped in right after the Ukraine war started. Russia was the world’s biggest supplier of uranium. And here’s a Canadian company, saw the opportunity, inserted itself into that supply chain, doubled in size, and is now Ukraine’s principal supplier of uranium, but also, growing as a supplier of uranium to the United States.
Amanda Lang
So, that’s an excellent example, and leads us into one of the first of the Auto Pact 2.0s, which is critical minerals. And critical minerals in some ways might be the best opportunity, because there’s no existing anything. So, nascent spells blank page, we can do what we want. The third aspect, you talked about deepening with the US, broadening with the world. There’s a third one, and that’s accelerating. We ain’t good at that.
Janice Stein
Nope.
Amanda Lang
And we certainly have shown that with critical minerals, we’re not—so far anyway, TBD—but we’re not good at it. But talk through how we create a continentalized—I’m not sure that’s a word, I’m not buying it—a continent-wide approach to critical minerals that will integrate us with the US better.
Edward Greenspon
Yeah, so I think you’re right about critical minerals. As we were, you know, as we were talking and talking, as Drew said, we kept coming back to the question of what is the equivalent in Canada to what oil was in the 1989 Free Trade Agreement. So, you know, you’ve got to remember the context. The United States had been through 15 years of energy crises, two particular, you know, OPEC actions against the world on oil. And this had, you know, changed presidencies. This was consequential. It changed people’s lives. It rippled through the politics. Canada had an answer, and that answer gave us a major calling card to matter more in a whole bunch of ways.
So, what was the equivalent today? Critical minerals is, I think, clearly, as close as you can get to an equivalent. Canada has them. The United States needs them. China dominates them, and dominates, particularly, the processing. So much so, that in the OPEC days, OPEC supplied about 48% of the world’s oil. China controls 80% or more of the processing of critical minerals in the world. That’s a stranglehold that you can have when relationships turn adversarial, as has occurred here. So, Canada needs to get its act together. We’ve, you know, the ring of fire, you know, Premier Wynne may recall putting that in some speeches from the throne.
Amanda Lang
She just took a very deep breath.
Edward Greenspon
And she was not the first Premier to put them in speeches from the throne. Do we have critical minerals production in Canada? Well, yes. We have things that were there before, nickel and uranium and things. But, but we really have not developed that Ring of Fire, as one example, and other, you know, elements in other provinces. So, we gotta figure out how to accelerate, which is the third principle we have. Deepening, broadening, accelerating. Otherwise, you don’t matter.
Janice Stein
And maybe I can just add to that story. Protecting the innocent, I had a very illuminating conversation with somebody that’s in this room, while—just before we sat down. And I asked, “How are we doing on critical minerals?” “Well…” came back the answer—that’s enough for me, by the way, I know the rest of the story—I said, “How many projects do you have in production?” “Well, none.” “Why?” Well, first answer that came back was capital. And that’s a big problem in Canada. But in fact, the United States has made, under the, in a sense, almost an unimaginable rubric, is invested from its federal budget under the Inflation Reduction Act, it’s made investments, three small investments, in Canadian critical minerals exploration projects.
Okay, capital. What else? Permitting. How many years have we been talking about this, in this country? And I said that with the minister in the room. How many years—the federal minister, not any provincial minister—how many years have we been talking about simultaneous permitting? You can do an environmental assessment at the same time, at the federal level, and at the provincial level, and in partnership with our indigenous communities. We’re not there yet. Nothing has moved. If we cannot change our processes—this is just now about process—and create small chunks and get going, this country’s future is at risk.
Edward Greenspon
If you permit me, permitting, to just say one more thing about critical minerals, it’s a, there is a problem with capital. And capital, for the junior miners, as I understand it up to now, has most of them coming from China. And that’s no longer accepted. And capital, there’s also a huge problem in that the Chinese have such control over the market that they can move prices. And they have been using their influence to move prices in a direction that would discourage investment.
So, what do you do when your market signals, your price signals, are different than your security signals? And that is one of the places we’ll be going with those…
Amanda Lang
Yep.
Edward Greenspon
…important questions that we’ve raised. I mean, this is a huge issue. We need to, you know, companies need to have an incentive to develop them, and the market isn’t giving that incentive, and nations need to do this stuff.
Amanda Lang
Which is where this report shines, because it doesn’t just describe the problems, although it does that ably, but it offers policy recommendations, which of course is very helpful. Including, I mean, in this case, a strategic reserve of critical minerals, that could be backed by the US. Certainly, our government could play a role in something like that. But creating prices for things that give some assurance that there is a market, and allows the kind of mechanisms. It doesn’t solve the other problem.
And so as we, I’m gonna put that aside just for a moment, ’cause the one that’s sort of adjacent to that, ’cause critical minerals are of strategic importance now to all of us, national security, and how Canada plays in that space. Because both of them, there will be a Canadian response to we don’t want to cede control, or power, or authority, over these things to the United States. And politically, that will play better than we’re creating a continental approach. How do we address that part?
Janice Stein
So, I mean, that’s why I put the hardest challenge in front of us. It’s easy to imagine the world, were Kamala Harris to win the election; that is not a challenge for Canadians. Far different with Donald Trump to win the elections. We have to do this, regardless of who wins the election. We need political leaders, and sessions like this, to begin saying to the Canadian public, we need to deal with what is; we cannot shape the domestic process in the United States.
Just to add to Ed’s point, Amanda, ’cause you brought up national security, that’s another change. Many of our most important climate issues, and our economic issues, are now joined together in a security envelope. That has some real benefits, it has some real costs. But it is, and we can’t actively separate those. So, we have to understand that joining up, and use those cross-issue connections. Critical minerals, it’s a climate issue, and it depends on us using the smarts that we have in technology, commercializing that technology, so that we do it in a wholly different way. It’s an economic issue, but it’s also a huge security issue, for the reasons that Ed mentioned, when China controls 87% of the processing, and minerals will be central to everything, including the auto sector.
Amanda Lang
On security, what are the recommendations that we make?
Janice Stein
So, we went all in on Arctic security. I was really pleased to see what the government did, in its defence policy update. Semi pleased, right? I was pleased that we finally got to the Arctic. How many years late are we, Lieutenant Governor, in getting to the Arctic? That’s the right choice to make. But again, how do we do this? And I don’t want to go down a rabbit hole on submarines, so I won’t. But let me just say this. It has to be done in partnership with Indigenous peoples. And I think it’s important to recognize that there is an evolution in the leadership in Indigenous communities, and we heard that again and again. And it’s not adequately recognized, I think, either at the political level or in the private sector. There is a new generation of Indigenous leaders who are looking to be partners in investing, and looking to create opportunities for peoples in their communities. And so, to use that, you know, to treat that as an obstacle is to make a category mistake. It’s an opportunity.
Secondly in the Arctic that we’ll have to—the only way to put this is, Russia is outspending all other Arctic nations on military infrastructure. That should be alarming to every Canadian that cares about the North, frankly. So, we have to invest. But how do we invest? That’s really the point. We invest in partnership and we invest in the latest generation of technologies, in which Canada actually has capability. So, where are we really good? We’re really good at underwater sensing. We’re a maritime country, of some of the best. We’re excellent in space. We’re excellent in space. We’ve always been interested in space. The next generation is gonna be sea-to-space communication, and space-to-space communication. If our government had a genuine industrial policy, in which it picked, in areas that we already have capacity in, we would have the United States as a partner, and other partners. And everything we do connects up to the industrial infrastructure that has to be built in the North.
I’ll give you one example in the defence policy update—that did not get adequate attention, in my view, when it was being written—how do you build 10 hubs? 10 hubs. And when I asked are they connected in any way to the infrastructure of peoples living in the Arctic? No. That can’t be the right answer.
Edward Greenspon
Amanda, let me pull the camera back again, for a second. So, in the process of our research, we spent some time in Washington. We did roundtables, we did interviews in Washington. And at one of them, with people who would be involved in an administration, they said, you know, the 2% defence isn’t really your problem—[Indiscernible] unusual to me—the problem is that you don’t know how you wanna play in global security.
And we felt, right from the beginning, that we wanted to play in global security, with the disproportionate attention to the new frontline area in the world. And when I said opportunities a few moments ago, well, climate change is making the Arctic more accessible. That presents, you know, problems and opportunities. The designs that Russia has and China has—they call themselves a near-Arctic state—you know, makes a difference. The fact, now, that all of the non-Russian Arctic countries are in NATO for the first time ever, with Finland and Sweden coming to NATO, gives us a unity, institutionally…
Amanda Lang
Yeah.
Edward Greenspon
…that we can work on, and take leadership. And finally, in Canada, politically, it might be easier to go to 2%, with an attention on Canadian territory.
Janice Stein
And let me just add, the United States has agreed to count our spending on our Arctic as part of our 2% commitment.
Amanda Lang
Now, when it comes to both of those things, I would say buy-in from the US is sort of easy, and would be immediate, and obvious. When we move to, let’s move to technology, which is a place where, again, Canada shines in fits and starts. We know we have good raw material, we know we pioneer technology here, we do it as well as any country in the world, and then we give it all away. And we….
Janice Stein
But we sell it.
Amanda Lang
Sometimes we sell it. But usually, we sell it, or are too early to do what we should be doing with it. AI is now this prime example, quantum. This idea of a strategy that incorporates the United States. How—and I’m actually gonna pause that thought, ’cause that’s one of the new Auto Pacts, but there’s a question from the room—you were alluding to it—Donald Trump is president. He imposes across the board 10% tariffs on Canada. This is, obviously, a dire scenario; I hope it never comes to pass, for all kinds of reasons. But that’s a possibility. How does that fit with a more cohesive industrial landscape? That’s much less cohesive than anything we’ve enjoyed in the past.
Edward Greenspon
Okay, so first off, a Matter More strategy makes it more likely that Canada can get exempted. I’m not saying it will, but you know, if you matter more, the point is to use that in other areas. If the 10% tariff comes on Canada, as well as other nations—you know Canada won’t be, in some ways, penalized competitively, if it’s on all nations, we’ll just be our producers, we’ll have reduced margins, et cetera—but, and this might veer off course slightly, in terms of what we’re talking about, but the effects that we talk about in the paper, I think the best piece is one of the banks has put out a piece of research, and it shows that it would have a 3.8% hit on Canadian GDP. Now, 3.8% is huge. I mean, that’s twice as large, I think, as the, you know, early 1990s recession, as an example. It is a big, big hit. It struck us that it’s the almost exact number that people say is the impact of internal trade barriers that we impose on ourselves, 4% GDP. So, it might be a good incentive to finally take the damn tariffs off ourselves, if he puts tariffs on us. So, maybe we could just start by, you know….
Amanda Lang
Imagine.
Edward Greenspon
Yeah, magic.
Janice Stein
You know, and beyond that, just again, one quick sentence. I think everybody in this room remembers the tariffs on aluminum and steel that Trump put on, and the particular outrage in this country that he did it by invoking a rarely-used provision, a national security provision…
Amanda Lang
Yep.
Janice Stein
…and by implication, we were therefore a national security threat to the United States. It was literally outrage in this country, and rightly so. But nobody noticed, or very few, he did not do it on uranium. Why was that? Because the United States needs our uranium. I think there’s a lesson there. And that’s why the three of us were so seized with getting out in front of what could be an extraordinary—there’s gonna be two extraordinary difficulties here, I think, to be candid. One of them is how we respond to them—because you’re absolutely right, Amanda, that is a possibility, and it will be a shock to the Canadian economy, no matter who’s in power in Ottawa. But secondly, we have to have a different conversation with Canadians. It’s not about liking Americans. It’s about sharing a continent with the United States. And if, you know, Donald Trump were elected, and I took my magic saw and sawed off Canada from North America, and dropped it into the Mediterranean, where the food is better, and the wine is better, the weather’s better, we’d all love it. But I don’t have a magic saw, and neither does anyone else. We’re here forever. And we have to do this, because it’s overwhelmingly in our national interest.
Amanda Lang
So, then let’s stick with that line of thought, and just to play devil’s advocate a little bit on closer integration, what we know about this partner, which also benefits from our economic relationship, they are unafraid to exploit us to their advantage, and softwood lumber is a prime example. We will never, ever agree, apparently, on softwood lumber and how it should be priced and sold in North America. Because they don’t need to. Because they have plenty of producers of their own, and it’s an irritant, but it’s fine. Do we invite in a bigger, more powerful player, who holds more cards than we do, economically, and then cede some control over our own destiny?
Janice Stein
Yeah, see, I think we have to break down what we mean by more powerful. Of course they’re more powerful, they’re almost, now—because we’ve grown, proportionally—10 times our size, right Amanda? But that doesn’t mean they don’t need things that we have.
Amanda Lang
Of course.
Janice Stein
And I think, once we begin to think about it that way, what do we have that they need? That’s a very, very different conversation. And that’s why I told that story about Trump not putting tariffs on, when he was in a flight. Look at the situation Japan is in by now, right at this moment, by the way, in which Nippon has made an offer to buy US Steel, and the Biden administration, the Biden administration, is gonna disallow that investment, under a national security provision.
Amanda Lang
Yeah.
Janice Stein
So, the United States has invested two years in building a relationship with Japan, as its principal security partner in the Indo-Pacific, its highest issue of strategic concern. And now, it’s gonna infuriate the Japanese, by doing to the Japanese what Trump did to us. They’re gonna label them a national security concern. Japan needs to think the way we need to think. What do we have that they really need, if they want that investment to go forward?
Edward Greenspon
Yeah, we invite them in. We invite them in, because, as Janice was saying, we do share a continent with them. We invite them in because we benefit more than we’ve lost, from sharing a continent with them. We invite them in because 30 years after Jean Cretien took the Team Canada mission to China, our trade with China, which has grown immeasurably, our trade with China is surpassed by our trade with the United States every 19 days. Every 19 days, we trade more with the United States than we trade in a year with China. But we wanna change this conversation from access to working together, to sharing. Where do we have advantage in working together?
And let me just give one example—and in downtown Toronto, it might be a controversial example; in other parts of the country, in Vancouver and Calgary, it would not—and that’s around our liquified natural gas, our LNG. So, we have had, in the last—well, since the Ukrainian invasion, we have had the German Chancellor come to Canada, to ask us to develop more of this gas; we’ve had the Greek Prime Minister come to Canada to do that; we’ve had the leaders of Japan and Korea. Now, first of all, those guys don’t come to Canada very often. And the fact they’re coming to Canada shows that we do have assets that the world wants, and we’ve said no so far. We’ve said, well—we don’t actually say outright no, and we say, well, maybe take hydrogen 10 years, instead, which is a good idea. But not the immediate idea of our friends, who need energy security. The United States, its entire LNG complex faces the Atlantic, ours faces the Pacific. There is a—and the Panama Canal is no longer an easy option for the United States, because of environmental reasons. So, this is a natural place to be working together.
Amanda Lang
Not too long ago, a Canadian bank CEO said that we Canadians are not serious people, and he was reflecting back the view that he hears from the world—you probably have all saw that.
Janice Stein
From the United States, particularly.
Amanda Lang
From the United States, particularly—and in this context, that’s what matters. It hits close to home, because it feels true in some ways. How do we become more serious people? What does that mean?
Janice Stein
Well, I think it’s very, I take that comment very seriously, because I hear it a lot, when I travel abroad. Either they’re not talking about Canada at all, or they will say to me, “Oh, you’re not serious right now.” So, I look at, and I wanna, again, ground this. Because we, it can’t be general abstract discussions; it has to be about what can we start doing now, and get done by a certain deadline. That’s really the way we have to think. Let me give you just one example. Co-procurement, okay? I don’t think there’s anybody in Canada who will not admit privately that our procurement around defence, which is gonna be one of our biggest public expense over the next, it’s gonna outweigh the environment, unfortunately, so we’ve gotta get it right. We’ve gotta join up these agendas, in the next decade. Our procurement process is broken.
So, what has the United States done? It’s opened a window for its advanced technology companies. It’s opened a window, and it does the following: it says, six weeks up or down, you’ll have a decision about whether we’ll work with you. Six weeks. Six months, the finances will start to flow, because you’re not a big company, you can’t wait three years, three years from now, you’ll have sold your company out to some buyer, if you don’t get any financing. I go to our folks, and I say, let’s open the same window. Oh, that’s a really good idea, but you know, it would take a long time to get it open. Why? I didn’t go there. I said, let’s co-procure. Why would that work for Canada? Because it’s younger companies that need to grow in this country, and stay here, would have access to broader capital, would be inserted in a much more vibrant and competitive ecosystem, and some of them will do extremely well. And if the United States asked for it, they wouldn’t get the answer. That’s a good idea, but it will take too long to do. That answer should not be acceptable to anybody in this room, if you care about this country. And we need to make that clear to any government that comes to power. It will take too long to get it done. It’s not—if I said that, I would no longer be Drew’s boss.
Edward Greenspon
So, we’re not sufficiently serious, as a country, and our politics is not sufficiently serious. It’s trivialized, it’s angry, it’s not focused on solutions. We don’t have a strong enough consensus around big issues. In the United States, actually, they have a stronger consensus around issues like China, and how to behave around certain issues.
Janice Stein
Around industrial policy.
Edward Greenspon
Around industrial policy. Well, we’ll see. We’ll see. At least, as it comes to energy, we’ll see. I think, as far as technology, that will hold for sure. So, I think, though, that circumstances push countries in directions—and I thought and hoped that the invasion of Ukraine would be one of those circumstances, and I think it has had an impact—I thought it was gonna force us to think a little bit more about guns or butter, the classic economic equation. But we’ve decided to continue the butter for a while, and to do a little bit on guns, but not too much. I think that’s not a tenable position, out in the world. And the fiscal constraints that will impose themselves on us will force us to make serious choices, and have serious conversations, and I think that will position the country better.
You know, everything comes back to, you know, the strength of the economy, productivity. The report talks about how there used to be a 10%, 10% rule, kind of, in a way. Canada was 10% of the population, was 10% of the economy. Well, now Canada’s 12% of the population in the United States, and 8% of the size of the economy. You know, this is not helping. So, you have an affordability crisis. When you get to the root causes, all of these things start coming together.
Janice Stein
You know, and just to reference that CEO—I think we all know which CEO we’re talking about, ’cause it was so widely reported in the press—it was Dave McCott, of the World Bank, who said this is what he’s hearing. And he focused on what we’re talking about now. He talked about the importance of getting things done. We break up these big insuperable challenges, and we chunk them out, and then we hold people accountable for did you get past the first phase, and what did you learn? And you adapt and you shift. The answer that we hear in this country and we accept, I think is, there’s two issues. They’re both cultural. It’s okay not to get it done. We expect it, in fact. And it’s not safe. We don’t want to take a risk. It’s not safe. And that’s the issue we’re having with our young companies. So much talent. We are so good at so many things, if you know the sector. In many ways, we’re the best we’ve been ,with the young talent in this country. But they are shut out of growing past that $100 million phase, and all the investments that we make, public money, both in the R&D and in that early financing, those companies move to the United States and the United States gets the benefit, because there’s not the willingness to take the risk.
Amanda Lang
We’re being sung off the stage.
Edward Greenspon
We’re just getting started.
Amanda Lang
Before we go, before we go, I want both of you to answer this question. Because both of you have many demands on your time, and then—so does Drew—and you could do many things; you chose to do this. It’s obviously important, we get that. It’s a robust report. It has specific policy recommendations. It can be a playbook for somebody. When you do these things, you don’t want them to gather dust. What is it, in your most optimistic view—I’m gonna start with you, Janice—what happens?
Janice Stein
I wanna see real progress on building up that strategy in the Arctic, so it’s real, in partnership with indigenous investors, and it’s gonna be real, and there’s gonna be targets, and we’re gonna meet the deadlines. I’m gonna see a change in our procurement processes, so we make room for the young, talented companies in this country, that have to grow. And we’re gonna see one Auto Pact, of our four, in place, four years from now. One.
Edward Greenspon
Well, I’m gonna be even more optimistic. You know, first of all, I’d say that the fact that we said let’s narrow it down to four, let’s not try to do everything. You know, my journalistic doppelganger, John Stackhouse, posted today, you know, favorably about the support, but wanted to add a fifth, which was, you know, agriculture. And agriculture, and that’s a good fifth, that’s a very good fifth. But we decided we would contain it. My optimism is a new administration goes through inauguration in January, and begins to set out where it’s going, with a new cabinet, new advisors. And in those two, three months, where they’re kind of figuring out their agenda—and trade is complicated—that Canada is down there proactively, saying, here’s some stuff we could do together. Hey, take a moment, and think about us in a different way, ’cause we can do this—and it’s in Canada’s national interest, and it’s in your national interest, and it’s in the national interest of the democratic nations.
Amanda Lang
We, I believe I have to turn this podium back over to Jenna. Please join me in thanking Janice Stein, and Ed Greenspon, and Drew Fagan.
Jenna Donelson
Wow, what a great and important discussion. Thank you. I’m gonna invite you all to stay on the stage, while I invite Bradley Harker up, to give appreciation remarks. Thank you. Welcome, Bradley.
Note of Appreciation by Bradley Harker, Principal Commercial Officer, U.S. Consulate
Well, my name’s Brad Harker. I’m the Principal Commercial Officer at the U.S. Consulate, here in Toronto. First, I’d really like to thank the team, Kent, Drew, Amanda, Janice, and Edward, certainly, a very inspiring and important discussion. My tours, as I’ve gone—please don’t go down yet, on the screen yet—but my tours around the world have included Greece, Japan, Serbia, and then I just wrapped up 10 years in China, four years in Beijing, from 2014 to 2018, and I left Hong Kong last summer, en route to Toronto. So, a lot of the discussion that we had today is absolutely very much germane to not only this report that has come out today, but really, the entire focus of the U.S. and Canada, as we’re trying to figure out these tremendous geopolitical discussions. So, as we discussed today, we do have challenges. The U.S. —and in this respect, the U.S.-Canada relationship is strong. I’m very confident that the U.S. and Canada relations will continue to grow, in the years ahead, and we will ensure that we’re deepening this friendship, built on our commitments to supporting our mutual economic prosperity, and our collective security.
Now, while we do have differences, as evidenced—well, not only software lumber, but we have objections, of course, to the implementation of Canada’s Digital Services Tax,—in this very challenging international environment we find ourselves in, these shared values are extraordinary commercial ties, and our shared border matter more than ever. I took a ton of notes on this discussion today, but really, the U.S.-Canada commercial relationship is one of the strongest between any two countries in the world. Every day, $2.5 billion in goods and services cross our shared border. And this is an exceptionally balanced trade relationship.
I was in China, as I mentioned, for the last 10 years. Our cross-border trade is basically equal, for every dollar of U.S. exports that go to Canada, we buy a dollar of Canadian imports—and this is from a country of 40 million people. By comparison, for every dollar we export to China, we’re importing $5 of Chinese goods. Canadian companies have invested over $683 billion in the United States, making Canada the United States’ second largest investor. Similarly, the United States is Canada’s largest investor, with over $451 billion in investment. A big part of this enormous trade and investment relationship is right here in Ontario. Ontario’s the number one export destination globally for 17 U.S. states, and the number two export destination for an additional 11 states. U.S. and Ontario supply chains, as we’ve discussed, immensely and massively integrated. That absolutely and truly matters. More than a quarter of Ontario’s exports to the United States contain U.S. import content. That matters. Ontario’s the destination for 40% of all U.S. exports to Canada, and it represents 40% of all Canadian tourism to the United States.
And I think this is being recognized just on the amount of interest we’re starting to see post-pandemic, the number of visits we’re getting. Just in the past four months, the province of Ontario has signed economic cooperation memoranda of understanding with Nevada, Indiana, Michigan, Illinois, and just last week, New Jersey. In the past seven months—and I’ve only been here a year—my team has organised investment promotion events for delegations led by the governors of Indiana, Illinois, and Minnesota. And just last week, we welcomed a delegation from New Jersey, led by Governor Murphy, making him the fourth governor to lead a major trade mission to Ontario this year. Kent and I have already had a discussion of ensuring the next governor that comes here speaks on this stage. So, these visits are from Blue states and Red states, and they reflect really true bipartisan appreciation for the trade and investment opportunities here in Canada.
In terms of recent developments in U.S.-Canada cooperation, I did wanna highlight—and I think the report reflects a lot of this—our shared efforts to combat climate change, and strengthen our bilateral supply chains for critical technologies. The United States and Canada are targeting net zero emissions by 2050, and we are seeking to lessen our dependence on China for critical minerals. One of the ways—and this was mentioned previously, by Janice—is the U.S. has made critical minerals a national security priority. Under the U.S. Defence Production Act, the DPA, it didn’t come from IRA, under the U.S. Defence Production Act, so far the United States, under the U.S. Department of Defence, has funded more than $250 million in funding for U.S. and Canadian companies, to mine and process critical minerals. So far, three Canadian firms have been awarded $30 million in grants, to support upstream and midstream projects, to speed the development of mining and processing of critical minerals like lithium and cobalt, that can help curb our reliance on foreign imports, particularly from China.
And as we’ve discussed, Canada has the resources. You have an incredible, massive amount of critical minerals, that are needed to produce all of the investments that are going to electric vehicle batteries in the EV transition. And we expect U.S.-Canada cooperation in the EV supply chain to continue to expand significantly, in the years to come. We just need a road up into that Ring of Fire, just get that built. GM is already building bright-drop electric delivery trucks, here in Ontario. Mining giant Vale recently signed a long-term deal to supply GM with battery-grade nickel sulfite from Quebec, and multinational giants Stellantis and LG have invested $3.7 billion for a battery production facility here in Ontario.
We also continue to work with our Canadian partners to facilitate the cross-border movement of people and goods. In this vein, we are particularly excited about the Gordie Howe International Bridge, between Detroit and Windsor, Ontario. Canada is contributing $4.7 billion to fund this bridge, which will make it the largest and most expensive infrastructure project between our countries, since the construction of the St. Lawrence Seaway. This bridge is an engineering and architectural marvel, and a fitting monument to the ties that bind our two countries. And when it opens for business next year, we’ll double capacity, and provide the first uninterrupted highway-to-highway connection, along this very, very busy trade corridor.
We’re also working to expand our airport preclearance program. For those of you who travel out of the city airport, we are hopeful that we can get this preclearance set up by next year. Please, go up a little more. I skipped ahead. Sorry, keep going up. Sorry, on the preclearance side, hopefully to get this up by next year, in advance of the 2026 World Cup.
And lastly, I’ll just note, Consul General Hunt, who unfortunately is not here today, he is up in North Bay, visiting areas further north, in Northern Ontario. But he recently spent a day with CBP and CBSA officials in the Niagara Region, and he was reminded once again of how fortunate we are to have such close government-to-government collaboration, in managing our shared border.
So, in closing, I’d like to thank our panel, and the Empire Club for hosting today, and I look forward to really digging into the report, and having a lot more engagement with all of you, as I continue my four-year tour here in Ontario. Thank you very much.
Concluding Remarks by Jenna Donelson
Thank you for those remarks, Bradley. I saw a few faces light up, when you mentioned expanded preclearance, so I think you’ve made a few people in this room happy. I’m going to invite our panellists to take their seats again, and use the opportunity to say thank you one more time for what an engaging and exciting discussion. I think it’s safe to say that Matter More is required reading, and for a few of us in this room, probably some additional research on Canada’s uranium production.
In closing, I’d like to thank and recognize our speakers, our sponsors, as we noted before, and of course, our Empire Club board of directors, staff, and all the members of our community. None of this would be possible without your work, your contributions, and your commitment, so thank you. I’d also like to recognize the students and young leaders in the room. I believe we have some students here from Humber College—I can see you—as well as some students from the Munk School. I myself am a proud Munk grad, and I can tell you that more than 10 years on, I am still in awe of the Janice Stein. Thank you all for being a part of our community, and for helping advance public dialogue on these topics that matter. It’s great to have you all in the room.
So, I assured you that we have exciting things in store this year. If you want to keep up, I encourage you to subscribe to our newsletter, which you can find on the QR code at the table, at your table. And as a club of record, all Empire Club events are available on our website to watch and listen to, and the recording of this event will be available shortly, and you will all receive a link to it.
I hope you will join us at our next event on September 26th, where we are hosting Marit Stiles, for an event titled “Leading with Stiles: Ontario’s Future Reimagined.” We’ll have a chance to hear directly from Marit, and also have her in conversation with Steve Paikin. Please visit our website for even more upcoming events. And finally, if you found yourself interested in exploring more of our history, including the very first speech regarding US-Canada relations, the Empire Club Foundation will be launching a new website on October 1st. The site, complete with an interactive Digital Library, will ensure that our history remains preserved and accessible.
With that, I want to thank you all for joining us today. I hope that we see each and every one of you through the new season. Until then, have a great afternoon. This meeting is now adjourned. Thank you.
