Ottawa Update

Transportation Border Working GroupBuffalo, New York

April 9, 2014

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Overview

• Economic Update Budget 2014 New Building Canada Plan

• Transport Canada’s 2014 Priorities

• Transportation Issues

• Border Issues

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Economic Update• U.S. remains Canada’s largest trading partner but trade with the rest of the world

(ROW) is becoming increasingly important In 2000, 76% of total Canadian trade was with the U.S, but that share fell to

62% in 2012 as a result of much faster growth in trade with the ROW However, the second ranked nation, China, only accounted for 8% of

Canadian trade in 2012

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Economic Update (cont’d…)

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• Canada’s economy relies heavily on the export of goods to the U.S., which accounts for 19% of Canada’s GDP

* Using 2012 expenditure GDP from CANSIM #384-0038 at current prices to match trade statistics that have no price deflator.

• Cross-border truck traffic is down 28% from the 2000 peak but over 10 million trucks still cross annually• Truck activity at nearly all crossings has levelled off or declined since the early 2000s• No big rebound seen after the 2008 financial crisis• In 2012, the ten busiest road border crossings represented 82% of all truck border movements

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Truck volumes Rail volumes

Cross-border rail traffic declined by 25% in 2009 but rebounded strongly Cross-border traffic exceeded 2.1 million carloads for the first time in 2012 The top 4 rail crossings accounted for 75% of the total

Economic Update (cont’d…)

Economic Update (cont’d…)

• Oil and other resources are booming but automotive and other manufacturing are in steep decline Crude petroleum exports to the U.S. have trebled since 2000, while

manufactured exports have declined Auto vehicles and parts imports to Canada are sharply off since 2000 Structural changes in North American automotive industry have played a

major role in the decline in cross-border movement of vehicles and parts

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Budget 2014

• Budget 2014 was tabled by the Minister of Finance on February 11, 2014

• Total new funding announced for Transport Canada activities was $1.1 billion over two years, providing funding for major priorities, the Detroit River International Crossing (DRIC) and Montreal bridges

• Non-funding related references were also made to the World Class Tanker Safety Initiative, Northern Transportation, Ridley Terminals, Pickering Lands and the transportation of dangerous goods

• Overall, Budget 2014 reconfirms a number of broad federal initiatives that Transport Canada contributes to, including: Canada’s Trade Agenda; the Beyond the Border Action Plan; and, the Regulatory Cooperation Council Action Plan

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New Building Canada Plan

• The $53 billion, 10-year New Building Canada Plan, launched on March 28, 2014, is the largest and longest federal infrastructure plan in Canada’s history

• The New Building Canada Plan includes:

1. The Community Improvement Fund: consisting of the Gas Tax Fund (GTF) and the incremental Goods and Services Tax Rebate for Municipalities, to provide over $32 billion to municipalities for projects such as roads, public transit and recreational facilities, and other community infrastructure

• Communities will be able to use the renewed GTF towards a wider range of projects, including: highways, local and regional airports and short-line rail

2. $1.25 billion in funding for the P3 Canada Fund

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New Building Canada Plan (cont’d…)

3. the New Building Canada Fund

• National Infrastructure Component ($4 billion) to support projects of national significance: Eligible projects will be limited to those that provide the greatest economic impact under the following seven categories: highways and major roads, public transit, rail infrastructure, local and regional airports, port infrastructure, intelligent transportation systems (ITS), and disaster mitigation infrastructure.

• Provincial-Territorial Infrastructure Component ($10 billion) for provincial and local priorities:

$9 billion for provincial priorities; and $1 billion for projects located in communities of fewer than

100,000 residents

4. $6 billion in funding that will continue to flow this year and beyond under existing infrastructure programs

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Transport Canada’s 2014 Priorities

The departmental priorities for 2014 include:

• refining and strengthening TC’s safety and security oversight;

• contributing to the Government’s Responsible Resource Development agenda;

• improving Canada’s competitiveness and critical transportation infrastructure; and,

• ensuring that TC’s policies, programs and activities will meet the needs of the transportation system in the long-term.

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Transportation Issues

• Minister Raitt met with U.S Secretary of Homeland Security Jeh Johnson, for the first time, on March 25, 2014 in Washington, D.C. underscored Canada’s ongoing commitment to securing North America’s

transportation system and highlighted the importance of striking and effective balance and efficiency at our shared border

reiterated the support Canada is seeking from the U.S. on the DRIC/New International Trade Crossing (NITC)

emphasized the importance of bilateral cooperation in rail safety and the transportation of dangerous goods

• Minister also met with Victor Mendez, acting Deputy Secretary for U.S. Department of Transportation

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DRIC/NITC

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• The Windsor-Detroit Bridge Authority (WDBA) will oversee design, construction, operation and maintenance through a public-private partnership (P3)

• The WDBA is a Canadian Crown (government-owned) corporation

• Canadian Budget 2014 provides an additional $470 million over two years

• Canada continues to advocate for the U.S. to fund construction of the U.S. port of entry

• To ensure on-time delivery and value for money, Canada recommends the U.S. port of entry be integrated with all project components into a single P3

Transporting Grain by Rail

• Western Canada produced a record 76 million metric tonnes of grain in 2013 – 50% higher than the average crop

Risk of significant carry-over to next crop year, with negative implications for producers and users

• Government has taken action to clear grain backlog and reinforce strong, rail-based supply chain: March 7 Order in Council (OIC) sets increasing volume requirements for CN

and CP to a combined weekly target of 1 million metric tonneso Calibrated to move grain without impact on other commodities

Legislation introduced on March 26 o Extends OIC until end of current crop year (August 2014)o Amendments to Canada Transportation Act, sunsetting in August 2016,

authorize additional volume requirements if required; extension of interswitching distances in the Prairies from 30km to 160km, for all commodities; greater specificity to operational requirements in Service Level Agreements

o Amendments to the Canada Grain Act establish regulatory authorities to address non-performance by grain companies in their contracts with producers 13

Railway Safety UpdateOver the past nine months, TC has:

• issued Emergency Directive to enhance safety of existing railway operations and security of railway transportation

• issued Protective Directions requiring shippers/importers of crude oil to conduct classification testing, and rail companies to share information with municipalities

• approved revised Canadian Rail Operating Rules to strengthen operational safety requirements

• accelerated development of new regulations (e.g., grade crossings, DOT-111s)• launched review of current liability and compensation regime for federally regulated

railways (consultations formally closed on March 21)

… and continues to:

• work closely with key stakeholders (e.g., Federation Canadian Municipalities)• prepare responses to initial Transportation Safety Board recommendations

(required by April 23, 2014)• collaborate with U.S. colleagues (FRA, PHMSA, USDOT) to coordinate policy and

regulatory activities (e.g., improved tank car standards)14

Reorganization of certain Crown Corporations involved with International Bridges

• The Government of Canada is restructuring the Crown corporations involved with operating four international bridges in Ontario

• The Federal Bridge Corporation Limited will amalgamate with its two subsidiaries, the Seaway International Bridge Corporation and the St Mary’s River Bridge Corporation, and with Blue Water Bridge Canada

• The amalgamated corporation will be responsible for Canadian interests in: Blue Water Bridge (Sarnia, ON/Port Huron, MI) Seaway International Bridge (Cornwall, ON/Massena, NY) St. Mary’s River Bridge (Sault Ste. Marie, ON/Sault Ste. Marie, MI) Thousand Islands Bridge (Lansdowne, ON/Alexandria Bay, NY)

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Border Issues• Bruce Heyman has been sworn in as U.S. ambassador to Canada

• Progress being made on Beyond the Border initiatives: Border Infrastructure Investment Plan 2.0 currently in approvals Second annual Implementation Report released in December 2013 -

demonstrates solid progress on trade, travel and security

• Transport Canada and its U.S. partners have made good progress on the Regulatory Cooperation Council (RCC) Action Plan Phase I initiatives that deal with transportation (11 of the 29 initiatives) The focus now is on governance arrangements to ‘systematize’ future

collaboration aimed at aligning regulatory frameworks where there is agreement

A joint government-stakeholder event is expected to take place in Washington, D.C. in June 2014 – the RCC’s forward plan will be made public at that time

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Questions?

Tom Oommen

Director, Highway, Border and Motor Carrier Policy

Transport Canada

613-998-0674

tom.oommen@tc.gc.ca

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