TRAN Committee Report

Bloc Québécois Dissenting Opinion on the Report

Improving efficiency and resiliency in Canada's supply chains

October 7, 2022

Introduction

First of all, the Bloc Québécois commends the members of the Committee and the staff of the Library of Parliament for their professionalism and work on this study, and thanks all the witnesses and citizens who have contributed to the debate on what needs to be done to make supply chains more resilient.

However, it is the opinion of the Bloc Québécois that this report not only fails to adresse the core of the problem, but also intrudes into the areas of jurisdiction of Quebec and the provinces.

Lack of vision

This report is the report of a committee that is unable to address the issue of supply chains in a broader way than just the transport of goods. These are such serious problems that they require a broad approach in order to solve them. Simply focusing on this segment is at best short-sighted, at worst willful blindness.

The reality is that the committee, in addition to looking at the problems directly related to transportation, should have considered the need to shorten our supply chains. The logic is simple: the longer the supply chain, the higher the risk that it will experience failures. The pandemic has amply demonstrated this, but we could also think of the bottlenecks that are forming in certain ports or the blocking of certain transportation routes.

It is therefore not viable for Quebec and Canada to continue to depend on such long supply chains, especially in a world where the just-in-time method reigns. It was therefore necessary to consider the measures to be put in place in order to shorten them, which unfortunately does not appear in the recommendations of the report.

Intrusions into Quebec and provincial jurisdictions

While the committee misses the mark on improving supply chain resiliency, several recommendations in the report are a direct invitation to the federal government to intervene in jurisdictions that are not its own.

Of particular note are the recommendations regardind the Immigration stream and the Transportation Training Program.

In the first case, economic immigration is the responsibility of the Government of Quebec under the 1991 Accord Canada-Québec relatif à l’immigration et à l’admission temporaire des aubains. Therefore, it does not have to receive such intervention from the federal government when the former is empowered to make decisions on its needs in the field.

In the second case, workforce training is an exclusive jurisdiction of Quebec. Therefore, the committee should not invite the federal government to interfere in matters that do not concern it.

We cannot endorse these recommendations or any containing this kind of undesirable intervention in Quebec’s business.

Once again, the Canadian parties are not shy about inviting the federal government to interfere in matters that do not concern it. This is a blatant lack of consideration for Quebec and the provinces, which are nevertheless best placed to understand what their needs are. This "Ottawa knows best" mentality is illegitimate knowing that Ottawa does not even properly manage what is its responsibility. It cannot therefore properly manage what does not belong to him.

Tackling the root problem

In order to really address supply chain issues, the committee should have focused on what is at least partly within its control: economic development and trade policy. There is a vast amount of work to undertake, as Hubert Rioux, researcher from the Institute for Research in Contemporary Economics (IRÉC), pointed out during his visit to the committee:

« Compared with western economies that are currently implementing very vigorous relocation policies, Canada has been rather modest. Since the 1980s, even despite the awareness the health crisis has brought, the Canadian federal government has persisted in fostering a more liberal and light-touch approach in economic development. It has not adopted any industrial policies per se. This is still true two years after Canada's Industry Strategy Council submitted its report. »

Thus, by refusing to adopt industrial policies and by refusing to put in place the measures necessary for the development of local production capacity, Canada has made itself dependent on imports and, by extension, on long and fragile supply chains.

If Canada is serious about making its supply chains more resilient, it must put in place the policies necessary for the relocation of certain strategic industries and that promotes import substitution. Major players in the industries of the future, such as Lion Electric, spoke to the committee about the importance of such policies, through Patrick Gervais, Vice-President, Marketing and Communications:

« […] It makes sense to bring in legislation that will foster product development and manufacturing in Canada. As we've always said, you have to build where you sell. That's really important to us.

We will certainly support policies that help foster green development. »

Among the necessary measures, we have singled out four that do not appear in the report: the imposition of carbon pricing on imports, the implementation of industrial policies focused on shortening supply chains, the imposition of local content quotas in public contracts and support for research and development in small and medium-sized enterprises.

These will all have the effect in one way or another of supporting the emergence of strong local production that will allow us to substitute significant shares of our imports.

Just take the case of carbon pricing of imports. This will have the double advantage of rebalancing the market between local productions from Quebec and Canada, which have a low carbon content, and imports that are much more polluting, but much less expensive, and of putting in place a major incentive to reduce the production of greenhouse gases. This measure received the support of several speakers on the committee, including that of Dennis Darby, President and CEO of Canadian Manufacturers & Exporters:

« Let me tell you that border carbon adjustment taxes on imports are something that would help level the playing field. It's a complex area, but I agree, it's an area that could help Canada remember that a third of our economy is exports, so we we have to be able to export our goods and materials and food products competitively. If we are able to do that with a lower carbon footprint than a substitute from another market, we certainly have a place within our whole greenhouse gas reduction and our whole competitiveness to look at those carbon adjustment taxes. I agree, it would then level the playing field and in some cases, like you said, it will provide an advantage to Canadian manufacturers—so yes. »

By implementing stringent environmental measures without taking into account that the rest of the world is not subject to these same standards, we put our companies at a disadvantage compared to foreign companies. It is therefore essential to put this measure in place to correct the inequities.

By implementing such a measure, as the European Union will do in 2026, the federal government would create the winning conditions for the relocation of production from abroad in important sectors. This would be an important step towards significant substitution of our imports. It is rather incomprehensible that Canada wants to tax carbon at home, but not that which comes from elsewhere. Could it be that the dogma of the blind opening of markets has permeated Canada’s dominant ideology to the point that it has come to surpass the fight against climate change as a priority? If so, that would be particularly disturbing.

The other measures we are proposing also point in the same direction and speak for themselves. Yet we don't understand why these aren't already in place here. Most countries in the world have such measures and yet Canada stubbornly refuses to use them. These are not revolutionary, just good measures to support our local producers.

As far as trade and industrial policies are concerned, the Canadian logic of not supporting local production still eludes us. Canada obviously does not realize that it they are the great naïve of international trade by sticking to a liberal policy while the vast majority of our partners and competitors have opted for several years to favor local products. Unfortunately, this is yet another example where Canada, through its action or inaction, is harming Quebec’s economy.

Conclusion

We therefore dissent from this report, because it is sorely lacking in vision and interferes with Quebec's jurisdictions. While we believe that it is essential to encourage our economic exchanges with foreign countries, we are of the opinion that free trade should not be done at he expanse of the national interest and the planet.

Canada therefore does not seem to have learned any lessons from supply disruptions during the COVID-19 crisis, where we saw many countries prioritize their interests before those of other nations. A completely natural phenomenon in times of crisis. Canada has suffered the full brunt of the consequences of its deindustrialization where it has passively let go of certain sectors that are nevertheless neuralgic. It seems surprising to us that there is no desire to remedy the situation for the future.

We were hopeful that the committee would understand the need for strong actions to make our supply chains more resilient while respecting constitutional jurisdictions. Unfortunately, we are once again proven that another day spent in Canada only brings another disappointment for the Bloc Québécois and Quebec.

Recommendations of the Bloc Québécois

That the Government of Canada commit to implementing carbon pricing on imports by the end of 2026, like the European Union.

That the Government of Canada, in favour of shortening Canada’s supply chains, implement industrial policies to financially support strategic economic sectors and to foster networks between local producers and suppliers.

That the Government of Canada revise its position on public procurement to impose local content quotas in public contracts.

That the Government of Canada implement measures to encourage and support research and development in small- and medium-sized enterprises.