Annette Gibbons, Director General, Surface Transportation Policy, Transport Canada April 18, 2012 OTTAWA UPDATE

TABLE OF CONTENTS 1. Budget International Relations 3. Beyond the Border 4. Key Current Files 2

BUDGET 2012 Federal budget tabled on March 29, deficit forecast of $21.1 billion, returning to surplus in IMF estimates Canada’s total government net debt-to-GDP ratio will be one third of G7 average by 2016 (33.3%). Canada has had strongest economic growth over recession and recovery among G7. Deficit Reduction Action Plan - Program spending cut by $5.2 billion (6.9% of review base of $75 billion). Over 19,000 fewer positions in federal public service. Implementation of Perimeter Security and Regulatory Cooperation Action Plans remains a priority. 3

BUDGET TRANSPORTATION Transport Canada (TC) budget reduced by 10.7% over three years ($61.8 million), to be achieved through efficiencies; back office streamlining and program changes. TC faces additional impacts due to previous strategic review, sunsetting programs and existing operating budget freeze. New funding:  $105 million for VIA Rail Canada’s operations and capital projects.  $27.3 million to support the divestiture of regional ports and continued operation of federally owned ports.  $5.2 billion to renew Canadian Coast Guard fleet. Affirmation of intent to modernize border facilities in Western and Central Canada as per Beyond the Border Action Plan. Affirmation that Government will continue to work with Michigan, the U.S. Government and Ontario on the Detroit River International Crossing. 4

NORTH AMERICAN LEADERS SUMMIT Three leaders in Washington, D.C. on April 2. Trilateral merchandise trade has surpassed USD 1 trillion (first time). Agreement to “complement trilaterally” the regulatory cooperation work on: certain vehicle emission standards; railroad safety; classification and labelling of workplace chemicals; and nano-materials. Commitment to enforce intellectual property rights in areas of criminal enforcement, border enforcement, civil and administrative actions and the Internet. Support for seamless energy flows on the interconnected grid and trade and investment in clean energy technologies. Announcement of North American Plan for Animal and Pandemic Influenza. Canada and Mexico signalled interest in joining Trans-Pacific Partnership (TPP). 5

CANADIAN TRADE STRATEGY Priority on implementation of Perimeter Security and Economic Competitiveness and Regulatory Cooperation Council Action Plans with U.S. In last six years, Canada concluded free trade agreements with nine countries: Colombia, Jordan, Panama, Peru, the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland), and Honduras. In last five years, Canada concluded foreign investment protection agreements with ten countries (China, Peru, Latvia, the Czech and Slovak Republics, Romania, Madagascar, Jordan, Bahrain and Kuwait) and is negotiating with ten others. Canada is negotiating trade agreements with European Union, India, Japan, Thailand and Mercosur group. Canada has signalled interest in joining TPP negotiations. Adoption of Joint Declaration on Trade and Investment with Association of Southeast Asian Nations (ASEAN). Air transport agreements have been signed with six Asia-Pacific countries. Canada’s Global Commerce Strategy to be updated following consultations with business. 6

BEYOND THE BORDER The “Beyond the Border: A Shared Vision for Perimeter Security and Economic Competitiveness” Declaration announced by Prime Minister Harper and President Obama in February 2011 Four key principles underpinning the Declaration: -Addressing threats early; -Trade facilitation, economic growth and jobs; -Integrated cross-border law enforcement; and -Critical infrastructure and cyber security. December 7, 2011, Action Plan established 32 initiatives to be implemented over several years, with annual progress report to Prime Minister and President 7

BEYOND THE BORDER – TRANSPORT CANADA 1.Border Infrastructure Investment Plan 2.Border Wait Time Measurement Technology 3.Preclearance and Pre-Inspection 4.Enhanced Domain Awareness 5.Framework for Swiftly Managing Traffic in Emergencies (Marine) 6.Mutual Recognition of Air Cargo 7.Integrated Cargo Security Strategy 8.Mutual Recognition of Outbound Checked Baggage 9.Increased Harmonized NEXUS Benefits 10.Single Window Initiative 8

Airport * Major Container Ports Prince Rupert Vancouver Asia-Pacific Gateway and Corridor Initiative Ontario-Quebec Continental Gateway and Trade Corridor and Trade Corridor Atlantic Gateway Montreal Windsor Halifax GATEWAYS AND TRADE CORRIDORS 9

Asia Pacific Gateway and Corridor Initiative  Beyond the Border pilot project at Port of Prince Rupert (and Port of Montreal) will test single screening of shipments from overseas transiting through Canada to the U.S. Ontario-Québec Continental Gateway and Trade Corridor  The Governments of Canada, Ontario and Québec developed the Continental Gateway Strategy in partnership with the private sector but have not yet launched it publicly.  In the mean time, the Government of Canada has advanced policy and regulatory measures to support the competitiveness of the transportation system, and has committed $4 billion to the improvement of the transportation system in Ontario and Quebec to support international trade. Atlantic Gateway and Trade Corridor  The Strategy was released on March 23,  Federal funding of $250 million leveraged more than $600 million from government and private sector partners for strategic infrastructure investments.  Additional competitiveness measures are planned, such as ITS, harmonization of regulations and international marketing. 10

FEDERAL MARITIME COMMISSION November 2011: U.S. Federal Maritime Commission (FMC) launched study of “diversion” of U.S.-destined containerized cargo through Canadian (and Mexican) ports. December 22, 2011: Canada submitted official response to FMC. January 2012: FMC Notice of Inquiry comment period closed.  Many Canadian and U.S. businesses submitted comments to the Commission; support for Canada’s position is strong. Late spring 2012: FMC will issue Final Report. Canada working to dispel myths (e.g., independence of Canadian ports and railways). Canada takes seriously any suggestion that a fee for harbour maintenance should be applied at the land border – the idea is at odds with the Beyond the Border Action Plan and its goals. 11

OTHER PRIORITIES Rail Freight Service Review –Six month facilitation process on service agreements and a commercial dispute resolution process between railways and stakeholders. Ballast Water –Canada applauds New York State for acknowledging the importance of shipping and withdrawing its unachievable state ballast water requirements. –However, New York State is now pressuring federal agencies to adopt unachievable national standards. Canada prefers a compatible binational approach that is protective of the environment and feasible. 12

Questions? Annette Gibbons, Director General, Surface Transportation Policy Transport Canada 13