Trade Zone: How the resource development conversation is shifting
Platform: The Trade Hub
In this week’s Edition: On the ground in Canada’s “Pinnacles of Progressiveness,” How Trump’s ‘big, beautiful bill’ could impact Canada, and what major projects might be on the government’s fast-track list
Noteworthy
By John Stackhouse
This past week, I was in Quebec and B.C. — Canada’s “Pinnacles of Progressiveness” — to gauge how the conversation is shifting around resource development, particularly oil and gas exports. Here are a few of my takeaways:
In Quebec, which has generally opposed fossil fuel pipelines and LNG, Premier Francois Legault is expressing more and more support for a national East-West pipeline.
A senior Quebec official told me that more public pronouncements in favour of gas may come in the weeks ahead.
B.C. is about to become a global LNG player, which is why Premier David Eby is headed to Japan and Malaysia in the first week of June.
I spent time with the province’s Energy and Climate Solutions Minister Adrian Dix who says B.C. will continue to expand its electricity to power more LNG plants.
The LNG industry believes as many as six more LNG plants could be built, which would meet about 20% of the world’s projected growth in demand.
But the clock is ticking. I keep hearing people say that Canada has about an18-month window to get these major projects going.
Week in numbers
1
Number of times the word ‘trade’ was mentioned in the joint statement made by the G7 finance and central bank chiefs following three days of meetings in Banff, Alberta this past week. There wasn’t a single mention of ‘tariffs’ in the statement.
400
Companies in the S&P 500 that mentioned ‘tariffs’ in Q1 earnings calls.
$1.5 billion
What Foxconn, Apple’s long-time supplier, is spending to build a production facility in southern India. Apple continues to shift production from China to India, which prompted Trump to end the week with a 25% tariff threat on iPhones not made in the U.S.
$3,500
One estimate on what an iPhone would cost consumers if it was made in the U.S. Another analyst landed on US$1,500, up about 25% from the current retail price.
View from Washington
Trump’s “One, Big Beautiful” Bill includes several policies affecting cross-border industries and supply chains that grew out of Canada-US trade talks under Biden.
LOSER: North American electric vehicles. Four years ago, Canada and Mexico successfully lobbied for an expansion of the Inflation Reduction Act’s EV tax credit to include North American products. The bill would end the US$7,500 credit (US$4,000 for used EVs), eliminating a major consumer incentive for a cross-border industry already grappling with tariff-related price increases. And the resulting consumer demand slowdown bodes poorly for Canadian EV supply chain projects.
WINNER: Continental defence spending. Canada has expressed interest in joining Trump’s “Golden Dome” missile defence program, which gets a US$25-billion injection if this bill passes. Canada could integrate the acquisition of U.S. defence products into a broader Canada-U.S. trade agreement. Trump is a proponent of using defence sales to rebalance U.S. trade relations and said this week that Canada will pay its “fair share” if it joins.
UNCLEAR: Canadian critical minerals. Critical minerals were a focal point of Canada-U.S. trade relations for several years; the countries even signed a Joint Action Plan on mineral supply chains in the final days of Trump 1.0. House Republicans have allocated an additional US$2.5 billion for critical minerals production. It’s too early to tell what impact that will have on Canadian critical minerals projects, which qualify for Pentagon funding through Title III of the Defense Production Act.
Major project list: What’s on the fast-track?
The upcoming discussions around a renewed economic and security agreement, and the broader imperative to diversify trade, cannot be advanced without expediting and realizing resource, energy and infrastructure projects.
A big part of June’s First Ministers meeting in Saskatoon will be identifying nation-building projects the federal government has promised to fast-track in collaboration with provinces and Indigenous Nations. Besides regional and political considerations, a project list must cut across multiple sectors, contribute to important strategic objectives (including energy and Arctic security), and build Canada’s economic strength.
The 19 projects below help meet many of those objectives. They represent more than $120 billion in capital costs, covering major transportation, critical minerals, oil and gas, nuclear, carbon capture, utilization and storage (CCUS) and Arctic security infrastructure. They span the regulatory lifecycle-from pre-feasibility to under construction. Most if not all will require Indigenous partnerships. And they bolster Canada’s clean and conventional energy, trade diversification and Arctic security capabilities.
This is the 50th anniversary year of the G7, and when its leaders meet in Alberta next month, many will wonder if the group has another 50 years in it.
Their finance ministers may have the same questions this week when they meet in Banff, asking if the champions of democratic capitalism can overcome a tariff war, threats of stagflation and growing concerns about the U.S. debt.
The fate of democratic capitalism may hang in the balance.
I spent part of last week in Ottawa, with a group called the B7, made up of business leaders from across the seven leading democratic economies, and didn’t come away feeling enthusiastic about the West’s great project. Since 1975, when the world was struggling with oil shocks and monetary crises, the G7 has helped maintain economic and financial stability. Most of the heavy lifting was done by the U.S., with assists from Germany and Japan, but the coordination of economic and monetary policy across the broader group was essential, too.
Now that’s fading. You just need to look at Donald Trump’s visit to the Persian Gulf last week to see how much capital’s centre of gravity has shifted. China and Latin America are laying claims, too.
And if trade follows geopolitics, we can expect more disruption to come.
So what can the G7 do? Perhaps develop new ways to generate, attract and reinvest capital.
For too many years, the public and private balance sheets of the leading democracies have focused on short-term objectives. Meanwhile, the non-democratic world has amassed capital for decades-long projects.
With their economies struggling and debts growing, G7 countries now face a $15-trillion infrastructure gap, to rebuild supply chains, expand production of critical minerals, develop capacity for AI-powered economies, and decarbonize energy systems.
Canada can help shift the alliance’s thinking to those longer-term needs. That won’t be easy given political tensions between the Trump administration and most of the G7 allies. But with U.S. engagement, the G7 can create new approaches for democratic capitalism, including:
coordinated investments across countries.
more institutional capital for priority projects.
preferential approaches to procurement.
joint approaches to procurement, especially of energy, advanced technologies and critical minerals.
shared standards, measurements and principles.
You can read the B7 group’s final communique here.
Seesawing trade relationships between the U.S. and China have brought critical minerals to the forefront. In fact, Rare Earth Elements (REEs), the 17 elements with physical and chemical properties that make them key inputs to some of the world’s most critical technologies, were China’s latest weapon in its trade arsenal against the U.S.
Following recent trade talks with the U.S., China expressed a willingness to walk back the REE export restrictions it announced in April. However, the threat re-emphasized the West’s collective dependence on China. In September 2020, the first Trump administration signed an executive order warning of the country’s critical dependence on China for REEs and called for increased domestic production. Even if the U.S.’s attempts at re-shoring supply are successful, its production will be a fraction of China’s, making international collaboration, including with Canada, a critical requirement.
Seven numbers tell the current state—and Canada’s potential role.
67%
Share of global REE mine production that comes from China. While the U.S. produces 11% of the global total, the second highest, it exports nearly all its production for further processing. The U.S. was once the world’s leading REE producer but has been losing share since the 1980s, with China dominating global production since. Canada has produced REEs in the past, but currently does not have any domestic mining operations.
99%
Share of Chinese control over Heavy REE separation and processing. Heavy Rare Earths, such as terbium, enable REE magnets to work in higher temperature applications without losing performance. China also controls 90% of Light REEs, including neodymium, which are also key inputs to magnets. Countries like Estonia and Canada have or are developing LREE and HREE separation and processing capabilities.
92%
Share of Chinese control of global REE magnet manufacturing. While REEs are used in various forms (e.g., as powders for polishing optical equipment, and as catalysts in petroleum refining), they are also used to make the world’s most powerful permanent magnets. These magnets are used in high-performance technology including military aircraft, submarines, and electronics and are difficult to substitute.
16
The number of U.S.-entities to which REE exports were banned by China in April, as trade tensions between the two nations escalated. Fifteen of these entities were linked to the manufacturing of defense technologies.
US$439 Million
How much the U.S. Department of Defense has spent since 2020 to strengthen its domestic REE supply chain.
$22 Million
What the U.S. has invested in Canadian REE processing companies since 2023. Canada is considered a “domestic source” of critical minerals under the U.S. Defense Production Act (DPA), so Canadian companies are eligible to receive investments under DPA Title III.
12
REE projects in Canada currently active in the exploration, resource estimation, or preliminary economic assessment phases. There are also three separation and processing facilities and two REE recycling plants. To capitalize on the opportunity, a few things could speed things along. 1/ Government investment: Provincial funding in Saskatchewan, for example, has helped bring REE processing facilities closer to commerciality. Government support could also help fast-track projects. 2/ Secure offtake for REE products: As discussed in The New Great Game, decades of focused industrial policy and technology development have left Western manufacturers competing with lower-cost products while being bound to tighter environmental standards. Guaranteed offtake at competitive prices could help Canada’s REE industry get a foothold.
Vivan Sorabis Senior Manager, Clean Technology, at the RBC Climate Action Institute
In this week’s edition: Carney picks his main trade and security team; trade signals from Trump’s Middle East tour; and what to expect during U.S.-China negotiations
Noteworthy
By John Stackhouse
I was in Ottawa this week for something called the B7—a gathering of business leaders from the constituent countries of the G7, whose governments will be meeting in Alberta in a few weeks.
The most divisive issue: trade.
The mood was largely bearish. Despite the May bull run on markets, there’s a sense the democratic—i.e. free-trading—world is growing more divided. “Trade follows geopolitics” was how one speaker put it.
Europe is turning more inward, with a focus on its own economic security. Get ready for more industrial policy and state investing, which won’t help trade.
Canada is at a crossroads, needing to ease up on U.S. trade and expand trade with other markets, even as other markets get tougher to deal with.
A new age of “plurilateralism” is emerging, in which constant and continuous dealmaking is the norm.
Some U.S. speakers urged Canadians to look beyond Trump’s attacks, saying the country is going through a bit of a mood adjustment.
But for now, at least, the U.S. is looking to show some Elbows Up, American-style.
Incoming ambassador Pete Hoekstra will give his first big briefing to POTUS next week and will highlight “outrageous” Canadian actions like removing American liquor brands and banning procurement from U.S. firms.
Expect some media donnybrooks between Hoekstra, a blunt-talking former Congressman from Michigan, and Ontario’s blunt-talking Premier Doug Ford.
New Industry Minister Melanie Joly may have to round out the line, as the three work to save the U.S.-Canada auto sector from further damage.
One suggestion: they meet at the Gordie Howe Bridge, in tribute to the OG of Elbows.
How things are shaping up on the all–important Canada-U.S. file
Carney has been clear that he’s the boss—and will run point on Canada’s relationship with the U.S. Still, his team will play a major role in a new economic and security agreement.
The Core 5: In selecting a main negotiating unit of Dominic LeBlanc, Anita Anand, David McGuinty, Francois Philippe-Champagne and Gary Anandasangaree, Carney opted for veteran ministers who collectively hold substantial clout and relationships in the Beltway. Expect this group to be supplemented by Melanie Joly, Minister of Industry, who holds considerable experience on the file, and will lead domestic negotiations with critical industries, including steel, aluminum and autos. And, in a lower-profile way, by Lisa Jorgenson, Carney’s recently appointed Senior Advisor on Canada-U.S. Jorgenson brings experience from Public Safety and Justice and will provide advice and behind-the-scenes coordination across political and bureaucratic levels.
Committee shakeup: Trudeau’s Canada-U.S. Committee is out. And the ‘Secure and Sovereign Canada’ Committee is in. Chaired by McGuinty and Anand, the new committee has a couple noteworthy inclusions. Maninder Sidhu, Minister of International Trade, who is tasked with diversifying Canada’s trade away from the U.S., a key Carney promise. And Rebecca Chartrand, Minister of Northern and Arctic Affairs, a nod to the importance of Arctic security, one of the three legs of the economic and security pact.
Diplomatic and bureaucratic shuffle: The tenures of a few high-profile ambassadors—Kirsten Hillman in Washington, Ralph Goodale in London, and Stéphane Dion in Paris—are expected to end soon. Carney will likely prioritize a mix of experience, relationships, and political muscle, especially in filling the role in DC, as Hillman, well respected in Ottawa and Washington, leaves big shoes to fill. As for the public sector, Carney’s right hands in the Privy Council Office are Clerk JohnHannaford and Deputy Clerk Chris Fox, who both hold a depth of experience on national security, energy and trade files. A broader public service shuffle could be in the offing as the PM looks for near-term results.
The week in numbers
7
Lawsuits filed against Trump and his administration challenging the ’emergency’ used to levy tariffs under the International Economic Emergency Powers Act. The U.S. Court of International Trade held a first hearing earlier this week.
150
Number of countries that Trump says want to negotiate a deal. Without the time to meet with them all, his administration will send letters to a list of leaders in the next couple of weeks simply telling them “what they’ll be paying to do business in the United States.”
1,000
Products marked as being impacted by tariffs at Loblaw. The grocery chain expects that number to climb to 6,000 in two months. Meanwhile, Walmart, which saw profits decline in Q1, announced it will be raising prices in the U.S. because of tariffs.
60 million
iPhones that Apple plans to produce from India for the U.S. market. While on his Middle East tour, Donald Trump blasted Apple’s CEO (“I had a little problem with Tim Cook”) for building iPhones in India despite committing US$500-billion in the U.S.
The view from Washington
Details of Donald Trump’s Middle East tour offer a glimpse into how ongoing and future trade talks, including with Canada, could play out:
Spend big on U.S. Defense products: Saudi Arabia ($142 billion) and Qatar ($3 billion) signed defense sales and procurement deals that range from general upgrades to information systems to new air and missile defense capabilities. The Trump administration might push the purchase of U.S. defense products in its future trade deals, which is particularly relevant for Canada given the White House’s record of criticizing Canadian defense spending. Trump could use the U.S.-Canada deal to push Canada to get to 2% defense spending more quickly through deals with U.S. defense firms.
Don’t ignore Big Tech: Trump announced a $20-billion investment by a Saudi firm in AI data centers and related energy infrastructure in the U.S. And Qatar pledged $1 billion for a joint quantum technology venture between American Quantinuum and Qatari Al Rabban Capital. Data centres are particularly interesting in the U.S-Canada context because of Canada’s potential to be a strong partner (available land, renewable energy capabilities, cooler temperatures).
Creating sector-specific funds: The U.S.-Saudi Arabia deal included the creation of investment funds for energy ($5 billion), aerospace and defense ($5 billion), and sports ($4 billion). Investments in areas of shared interest could arise in other negotiations. The U.S.-Canada deal could include shared funds for energy, border security or continental defense.
3 questions…on U.S.-China negotiations
With Jasmine Duan, Senior Investment Strategist, RBC Wealth Management, in Hong Kong
Q: How do you expect markets and Asian economies to react and perform during the 90-day negotiation window? A: It will likely feature a mix of optimism and volatility. Markets may seek specifics on the agreement, which could lead to short-term volatilities.
Q: What signals will investors be looking for? A: Investors will watch for what terms were finalized between the two sides and what concessions or incentives each party will offer. It would be a good sign if the negotiation focuses on trade-related issues like market access and goods purchase, not domestic topics such as fentanyl or politics.
Q: What structural changes will drive the U.S.-China relationship beyond trade and tariffs? A: The trade talks have not addressed many structural issues such as how will the U.S. revive domestic manufacturing and reduce China’s trade surplus. We think near-term resolution remains unlikely but progress in establishing bilateral mechanisms to address issues like technological competition, climate goals, and crisis management, will be important to fostering a sustainable relationship in the long-term.
In this week’s edition: How the U.S-U.K. deal sets the stage for the rest of the world; reading the signals from Washington’s trade talks with China; what Trump is looking for when making a deal.
Noteworthy
By John Stackhouse
It was a good week for Canada—and a better one for Britain. Next week may be another story.
Mark Carney got some fresh daylight on trade talks and managed to reposition negotiations with Donald Trump as much more than trade. Get ready for a new North American Security Partnership.
Neither leader threw Mexico’s Claudia Sheinbaum under the bus, but plenty of Mexican business leaders are for her lack of progress with Trump.
Britain secured its own deal with Trump that was neither big nor beautiful but is suddenly the template that the U.S. will use with other countries. Not unlike pattern bargaining in the auto sector.
The U.K.-U.S. arrangement is essentially a sectoral handshake. More British Land Rovers for more American cheeseburgers. (Cars for cows, in other words.) The end of the beginning, as Carney might say. But for Britain, it’s a competitive advantage against the EU, especially when layered on top of its much more comprehensive agreement.
British PM Keir Starmer is hoping to stop in Ottawa mid-June, enroute to the G7 in Alberta, and that’s where reality may bite. Canada-U.K. trade talks have been rocky for a few years, largely because of the farm lobby in both countries. Any bets on Carney serving British cheese, or Starmer sipping Canadian milk?
That leaves the two allies to focus on defence procurement. Carney has been keen to buy more BAE supplies, as an example, but he also has to keep options open with Trump, who wants Canada (and Britain) to buy more American planes and weapons systems.
Mark June 16-17 on the calendar for a G7 that will be as epic as the mountains around Kananaskis. Expect it to be largely about security (with a NATO summit to follow in late June), and whether the post-war pillars of democracy will trade with each other as they remilitarize or cut their own deals. Whether Canada and Britain stick together, or get wedged by the U.S., will be one signal.
79: Percentage of Americans who think the USMCA is good for the U.S. economy, according to The Chicago Council on Global Affairs latest survey. That includes 90% of Democrats and 72% of Republicans surveyed.
2,500: U.S. products, including olive oil and wine, that will have reduced tariffs under the U.S.-U.K. Economic Prosperity Deal.
100,000:British vehicles for which U.S. tariffs are lowered to 10% as part of the deal. Rolls-Royce engines will be able to enter tariff free.
The view from Washington
For a good hint as to how the U.S. is approaching its trade talks with China, consider who’s at the table this weekend in Geneva.
In: Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer
Out: Commerce Secretary Howard Lutnick and White House Trade and Manufacturing Counselor Peter Navarro
Sending Bessent and Greer, perceived as more moderate, indicates that practicality and progress will take precedence over maximalist political ideology. Of note: Bessent landed the leading role after delivering the long sought-after U.S.-Ukraine natural resources deal for the White House.
A few agenda items for this weekend—and future meetings:
Defence: Beijing’s use of export controls on rare earth and critical minerals target vulnerabilities in U.S. supply chains for semiconductors, fighter jets, submarines, and other products vital for the US defence industrial base.
Advanced tech: Chinese practices and commercial policies, specifically joint-venture requirements for operating in China and disclosure requirements for attaining licenses, force foreign firms to transfer sensitive IP as a requisite for accessing the Chinese market.
Shipping: U.S. shipbuilders and maritime workers have complained about Chinese practices that depress shipbuilding costs, specifically low-wage or forced labour and excess supply of shipbuilding inputs spurred by government subsidies.
What does Trump really want?
There will be a few recurring themes as Trump races to close 90 deals in 90 days:
Reducing tariffs and non-tariff barriers: Trump views the trade posture of many countries as unfair to the U.S. and seeks to reduce tariff and non-tariff barriers wherever possible.
Purchase agreements: Driven by the need to reduce the trade deficit, deals will likely include purchase agreements—take, for instance, China’s purchase commitment to buy US$200 billion worth of goods (which, ultimately, China did not meet).
Exemptions: Trump and his team are facing significant pressure to exempt goods considered strategic, necessary, or ones where the U.S. is heavily reliant on imports—from baby powder to car seats. Expect more exemptions blunting the impact of trade actions.
Investment commitments: Although inward investment will reduce the U.S. net international investment position, Trump likes to see foreign countries and companies invest in the U.S., akin to Taiwan Semiconductor Manufacturing Company’s Arizona semiconductor fabrication facility.
Exchange-rate corrections: Market observers have been bearish about a ‘Mar-a-Lago Accord’ to correct the trade deficit through coordinated weaking of the U.S. dollar. Not only would such cross-border coordination be unlikely, the biggest target for currency manipulation, China, is highly unlikely to appreciate the renminbi.
Welcome back to Trade Zone. Week Two. (Still in beta—so let us know what you think.)
Notebook
By John Stackhouse
It’s a big week ahead for shifts, in government and the private sector. Mark Carney is off to the White House on Tuesday, to reset relations. Expect some healthy talk about military spending, and how Canada can do more sophisticated investments for North American security. More drones. More cybersecurity. Can we make those future exports, too?
I spent part of the week in Vancouver—Canada’s gateway to the Asia-Pacific. The port looked to be thriving, thanks to massive shifts underway in supply chains:
Chinese and Vietnamese producers are moving goods and inputs to Canada, as they game the Trump tariffs.
A major B.C. agrifood producer told me his U.S. buyer has re-rerouted his company’s output to Singapore, and directed a New Zealand supplier to feed the U.S.
A major clothing producer explained how they’re making tariff-factored pricing decisions this week on Back-to-School products that will hit North American stores in August.
Another global firm told me they’ve been quietly reducing Chinese productions (now just 20%) but it’s a race to stay ahead of Trump negotiations with other markets like India.
Expect these shifts to continue.
The week in numbers
$900M is how much Apple says Trump’s tariffs could cost the tech giant this quarter. CEO Tim Cook said most iPhones for the U.S. market will now be made in India, not China.
60% fewer cargo ships travelled between China and the U.S. in April, according to one estimate. Softening demand has prompted some companies to use smaller ships.
750 jobs lost at the General Motors plant in Oshawa, Ont. The automaker has responded to tariffs by moving from three shifts to two.
Need to know
Before Carney goes to Washington, we have thoughts on what an economic and security deal with the U.S. could include:
Energy and economic security: Negotiators will want to address longstanding irritants (digital services tax, softwood-lumber dispute, strengthening rules of origin). Expect movement and strategies on gas, nuclear and critical minerals.
Defense and Arctic security: Everything from the plan to meet 2% defence spending targets, to NORAD modernization, dual-use accounting, social and economic infrastructure investments in the North, including an Arctic port, and expanding shipbuilding/icebreaker commitments.
Border security: Although Canada has made investments in border security, further collaboration, especially on money laundering, immigration and drug/arms trafficking, will likely come up during negotiations.
The big question
This week, we turned to Sue Noble, RBC’s Vice President Automotive Finance National Office, for the answer.
Q: What’s your main takeaway from Trump’s auto-tariff relief announcement this week? SN: While the relief may be seen as a positive move, there continues to be a high degree of uncertainty that makes it challenging for manufacturers and the industry. North American production varies by manufacturer and even by brand. Without certainty on a long-term strategy for tariffs, we expect car manufacturers to take a cautious approach.
Final word
“The American people–the businesses here in America, the consumers here in America–are better off with a more stable relationship with your biggest customer. It makes sense for Americans, and it makes sense for the people who have put the President into the White House, to have affordable products to buy, to have relationships where companies invest in their communities. Companies don’t invest when there’s instability.”
–Kirsten Hillman, Canadian Ambassador to the United States (The Atlantic on the Future event in Washington, April 29th)
The first 100 days for any new government are filled with a flurry of activity. For Mark Carney’s Liberal minority government that will include tabling a budget, trade talks with the Trump administration and hosting the G7 in June. Zoom out, and the key priorities come into focus. Here are five that RBC Thought Leadership has been keeping a close eye on and ones we believe will have Parliament’s full attention in the coming months—and beyond.
Securing an economic and security pact with the U.S.
During upcoming negotiations with the U.S., expect Canada to minimize concessions until duty-free trade is secured and the current trade agreement is honoured. The U.S., meanwhile, will seek to have a wide-ranging discussion that includes border and security concerns.
At a minimum, the agreement could include:
Energy and economic security: Negotiators will want to address longstanding irritants, including the digital services tax, attempting a resolution to the softwood-lumber dispute, and strengthening rules of origin. Expect movement and strategies on gas, nuclear and critical minerals, which dovetails nicely with the upcoming G7 meeting.
Defense and Arctic security: This includes everything from the plan to meet 2% defence spending targets, to NORAD modernization, dual-use accounting, social and economic infrastructure investments in the North, including an Arctic port, and expanding shipbuilding/icebreaker commitments.
Border security: Although Canada has made investments in border security, further collaboration, especially on money laundering, immigration and drug/arms trafficking, will likely come up during negotiations.
This won’t be the first attempt at a comprehensive continental economic and security agreement. In the mid-2000s, the Security and Prosperity Partnership of North America included the private sector in an effort to enhance continental competitiveness. While it didn’t come to fruition, many ideas—cooperation on infectious diseases, emergency management, and border security—have persisted. This attempt has a better chance of succeeding if it is targeted and time bound.
Address the housing affordability crisis
In The Great Rebuild, we outlined seven ways to address Canada’s housing shortage and affordability. When comparing the recommendations in our April 2024 report to the Liberal election platform, a number of key items line up:
Focus on prefab: Factory-built dwellings can be more time and cost-efficient. And the government has promised $25 billion in financing to prefab home builders—as well as a focus on sustainable building materials.
Cut red tape: Project approval timelines in Canada, as we noted, “can be among the lengthiest in the world.” Simplifying national building codes, streamlining regulations and leveraging standardized designs are all part of the Liberal platform.
Build affordable options: Government has pledged $10 billion worth of low-cost financing for lower- to middle-income Canadians.
None of this gets done, however, without shovels in the ground. We estimate that more than 500,000 additional construction workers are needed to build the homes required between now and 2030. The Liberal’s plan to incentivize companies to hire recent grads and offer apprentice programs is a start. But finding half-a-million construction workers requires more. Options include prioritizing construction skills of new immigrants, growing the enrollment of trade schools, and enticing older construction workers from retiring.
The affordability crisis has made it an imperative that Canada acts promptly and with more streamlined coordination across all levels of government.
Build Energy Corridors
Building out major energy infrastructure enhances economic resilience through the diversification of key commodity exports. In 2024, Canada’s major resource exports (minerals, metals and fuel) were among Canada’s largest, generating $175 billion in aggregate net exports–almost offsetting Canada’s global trade deficits across all other goods categories.
Success in taking projects from blueprint to buildout depends on policies directed at mobilizing private capital and reducing red tape. To date, existing key Liberal policies around Bill C-69, Bill C-48, the Oil and Gas Emissions Cap have not been conducive to large-scale investment. An ‘amended’ approach with a greater focus on pragmatism could establish a climate more conducive to attracting capital. Key focal points for Ottawa include:
Industrial carbon pricing: ‘Axe the tax’ likely shifts the burden of carbon pricing onto large industrial producers. A rising industrial carbon price likely remains, presenting competitiveness challenges relative to U.S. leadership focused on deregulation. A 50% carbon capture investment tax credit derisks capital costs, but projects need revenue certainty. To date, The Pathways Alliance, a consortium of Canada’s largest oil sands producers, has been unsuccessful in negotiating carbon credit guarantees from Ottawa. Of course, this comes at a time of competing fiscal priorities. Ottawa is already on the hook for 50% of CCUS capital costs (conservatively estimated between $60-75 billion). Contract for differences for Pathways would likely require tens of billions in additional funding (10-12 million tonnes at $125-150/t for 10 years).
Regulation/Permitting: Regulatory delays has led to drawn out timelines, leading to cost overruns and/or cancellation of key projects, as capital is ultimately redistributed to shareholders rather than towards growth-enabling infrastructure. Policies such as ‘One Project, One Review’ and declaring more energy projects as in the ‘National Interest’ are helpful. This is likely most beneficial to natural gas pipelines and LNG infrastructure, given the greater political alignment on the LNG file (B.C. and Ottawa).
Provincial trade barriers: East-west trade through greater use of interties yield a more resilient, flexible and efficient grid system—increasingly important given rising load growth over the next 25 years (up to 3x) and the need for cheap power for industry/manufacturing.
Safeguard federal finances
As RBC Economics wrote recently, a lot will be demanded of fiscal policy. A slowing economy and the risk of a greater trade-linked recession imply fiscal supports of varying degrees. And structural challenges loom–weak productivity, strained affordability, an aging population, export concentration, and shifting geopolitics could trigger more federal spending. Monetary policy has its limits—and won’t be able to address the areas of greatest need. As a result, Ottawa will need to keep the following in mind to keep the federal debt burden sustainable:
It’s not unlimited, but Canada has some fiscal space. Canada’s gross debt burden (debt-to-GDP-ratio) is high, but its net debt burden is the lowest in the G7.
Supporting the economy through a potential recession is expected by markets, and unlikely to raise red flags if sized and targeted appropriately. COVID-style supports that ‘bridge’ the economy is not the correct playbook in a trade shock where the economy, structurally, could look quite different in the aftermath.
Growth-positive investment is key to keeping federal debt levels sustainable. The more that each dollar of public spending delivers greater growth dividends, the more the federal debt burden will remain in check, even with higher spending.
Rebalance social and business investment measures. Canadians have benefited in recent years from an expansion in federal government spending on often broad-based social programs without absorbing the costs. Now, the feds have a new laundry list of to-dos, including kick-starting business investment. Non-spending measures like removing red tape help, but fiscal space will be needed for spending, as well.
Make social and other ‘must-do’ spending more growth positive. Major investment needs across the economy beg the question of sufficient capital and labour resources to achieve timely results without crowding out. Public spending in essential areas like housing, defence, and healthcare can promote efficiencies, innovation, and other growth drivers to ensure the economy can grow in multiple areas.
Transform AI into a productivity engine
Canada is rich in AI talent but short on the three things that can translate that talent into prosperity: modern computing infrastructure, large-scale deployment, and robust domestic demand. Only 26% of Canadian firms report having implemented AI—eight points below the global average—and the country continues to slip in AI-readiness indexes. With labour-force growth flattening and labour costs rising, closing the AI adoption gap is Canada’s most direct route to higher productivity, greater economic efficiency, and continued competitiveness.
Ottawa could pursue a three-pronged approach—acting simultaneously as facilitator, champion, and early adopter—to transform AI from a fragmented set of R&D bets into a nationwide productivity engine.
Facilitator: Treat compute capacity as critical infrastructure, marshalling patient capital, procurement guarantees, and partnerships with global players to facilitate access to GPU clusters. Further, government might consider targeted tax credits and grants favouring projects that embed Canadian IP and high-value jobs at home.
Champion: Ministers could become visible ambassadors for domestic AI successes, weaving them into every productivity, healthcare and defence announcement. Demand-side tools—procurement quotas that reserve, say, 25–30% of relevant contracts for qualified AI firms, first-reference-customer letters, accelerated tax refunds for AI pilots—have the potential to generate the domestic demand needed to keep promising startups from fleeing south.
Early Adopter: In the immediate term, the government could equip frontline analysts, auditors and service agents with secure co-pilots to yield productivity gains and build AI fluency. Longer term, the government could work to re-engineer programs around models that learn across departmental silos, enabled by a U.S. Department of Defense-style fast-lane tech funding agreement, a shared sovereign large language model stack, and performance incentives for senior bureaucrats who are able to effectuate AI solutions.
Contributors:
Cynthia Leach, Assistant Chief Economist, RBC
Varun Srivatsan, Director, Policy and Strategic Engagement
Shaz Merwat, Energy Policy Lead, RBC Climate Action Institute
Reid McKay, Director, Technology Policy Lead
Welcome to the first edition of Trade Zone. It’s in beta testing, so please let us know what you think. Every week, our team at RBC Thought Leadership will share what we’re hearing from governments, learning from clients and seeing in our research. We’ll also give you a cheat sheet on the week, to help you keep pace.
Notebook
By John Stackhouse
If Mark Carney’s Liberals are re-elected on Monday, as polls are suggesting, expect them to shift their focus South and West by the end of the week.
To the South, expect a crew of newbies across the bureaucracy, as well as PMO, with experience in the U.S. A call with Donald Trump will top the To-Do list, with more than trade on their minds. “Comprehensive partnership” is one term floating about—to cover border security, immigration, Arctic and defence issues. And yes, trade, even if USMCA may not be long for this world in its current form.
Expect to see a highly structured and strategic Canadian approach, colliding with a highly unstructured American approach. The Trump team had been telling Canadians to avoid working groups or outside “experts.” Side note: American negotiators are driving the Mexicans batty with demands for them to control tomato shipments before any deal is reached.
The Trump team has been losing in the courts and in the markets. If that continues, Canada may opt for the long game, following Napoleon’s advice: “Never interrupt your enemy when he is making a mistake.”
To the West, watch for outreach from Ottawa to Alberta and Saskatchewan, with a focus on diversification of exports. That will take a lot more than a new pipeline (which may be on the table), as our resource-driven provinces think about new markets. Dow Chemical’s bombshell decision this week to delay its Alberta plant is just the latest trade warning. (I wrote about the Big Pivot on our Trade Hub, drawing on conversations this week at Public Policy Forum’s annual Growth Summit, which is a bit of an Olympics for policy wonks.)
Caught between the Potomac and the Prairies is Ontario, but not for long. Doug Ford stole the show at the PPF Summit with a feisty attack on Trump (“Sometimes the cheese seems to fall off the cracker with that guy”) and a passionate shout-out for Progressive Conservatives. Ford seems ready to play bad cop to the next PM’s good cop. He may be warming up for another role, too.
Get ready to hear more about Europe as a new (old) partner, for military procurement, AI standards and, yes, trade. Those conversations will grow ahead of the G7 summit in Alberta in June, when we’re expecting LNG and data centres to be front and centre. If the Trump team shows up—no bets there—they’ll want to ensure some alignment on LNG finance, especially for emerging markets, and access to gas-powered electricity for their hyperscalers (the latest euphemism for Big Tech).
Climate is creeping back into the trade conversation, although not in North America. Europe is marching ahead with border carbon adjustments (just don’t call them carbon tariffs). Japan is also advancing an emissions trading system, including cross-border carbon credits and a surcharge on fossil fuels (just don’t call it a carbon tax). Expect Canada’s Balkanized industrial carbon pricing system to be part of a likely discussion on the G7 sidelines. (Did we tell you that will be in Alberta?)
Indigenous equity will be an important aspect of any new trade relations, much more so than even five years ago. We’re part of the big First Nations Major Projects Coalition conference in Toronto next week and expecting both Ford and possibly a new PM to use the platform to advance their investment strategies. (No investment, no trade.) Other key guests will include Indigenous leaders from Alaska and Utah— hello, Republicans—who may offer a different kind of cross-border relationship.
Need to know
➔ We estimate that $125 billion is at risk for Canada as U.S President Donald Trump eyes 5 strategic sectors.
➔ In a bid to escape tariffs and wait out the trade war, third-party sellers on Amazon and Walmart are shifting stock from China to tariff-free warehouses in Canada.
➔ Coke vs. Pepsi: Who’s the winner of the ultimate taste, er, tariff test?
➔ Where we see Canada’s debt ratio headed over the next three years in a worst-case tariff
Final Word(s)
“All eyes right now are on the Arctic. We are the gateway to the Northwest passage and at the forefront of the conversation when we’re talking about security and sovereignty.” —P.J. Akeeagok, Premier of Nunavut
“People are not going to race to build manufacturing in America. With the policy volatility, you actually undermine the very goal you’re trying to achieve.” —Ken Griffin, Citadel CEO
“The renegotiation of the USMCA included a very forward-looking digital-trade agreement. I think there is meaningful opportunity there, and that’s in contrast with what you have seen in some other countries, where data sovereignty has been more restrictive.” —David Schwimmer, CEO of the London Stock Exchange
“The EU is working on a targeted and measured response in case we cannot reach a deal [with the U.S.] rapidly.” —Eric Lombard, France’s Minister of Economy, Finance and Industry
The Public Policy Forum is one of Canada’s premier think tanks, and hosts an annual Growth Summit that tends to be at the pointy end of some pretty big issues.
This year’s summit, in Toronto, was all about what I’d call the Big Pivot — and how we can make our economy more independent and resilient. Great conversations about investment, Indigenous equity, AI-adoption and more.
Here’s a few of the questions I took away:
1. Do we need to win back investor confidence?
The answer seems to be yes. Too many of these conversations assume Canada is amazing in the world’s eyes. Rhetoric is cheap. Credit is costlier. Keep an eye on how money is priced for Canada in the coming months.
2. Can we increase competition while reducing reliance on America?
The U.S. tends to be the primary driver of competition, directly or indirectly. And there are not a lot of easy alternatives. European firms aren’t likely to add a lot of juice to Canadian markets, and Chinese entrants are probably a non-starter. Perhaps our new competition needs to come more from within.
3. Can governments play a more active economic role without wrecking the economy?
We have decades of mixed results but will likely give state corporations one more try, whether it’s to build houses or expand pipelines.
4. What the heck is “national interest”?
A lot of those government investments will be made in the name of an ill-defined national interest. We’re a nation of many regions, and one’s interests are often not another’s
5. Why do Canadians shy away from risk?
I was struck by the number of conversations that eschewed risk. No country clamours to “de-risk” like this one, as if the key role of government is to bear the risks of the private sector and of individuals.
6. How can we develop the Arctic without compromising it?
The summit included several key northern voices that stressed the need to not militarize the North the way we did in the 1950s and ‘60s. They’re eager to defend Canada, on the ground and in the sky, but not at all costs, especially to their culture.
7. How much do we want to exclude China?
Reducing our dependencies on the U.S. will require new markets and new sources of capital — and Europe won’t be the answer, not on its own. Yes, there are plenty of options. It’s a big world! But China is the biggest option, and one we need to develop a clearer relationship with.
8. How do we balance economic ambitions with climate commitments — and the world’s climate expectations?
We’ve become so consumed with All Things Trump that we seem to forgot how the rest of the world is not turning itself upside down. Indeed, climate remains a serious concern from Japan to Germany — the markets we now eagerly want to serve — and we will have to ensure we’re not misaligned.
9. How can we align our duty to consult Indigenous communities with our ambition to build more faster?
There may never be a formula for consultation and the resulting consent — but we may be able to establish norms that will be widely accepted. Watchwords: “speed and certainty.”
10. How can we pool institutional capital for major projects?
We can continue to let market forces determine what gets financed, with a range of government supports and incentives. I don’t think Canada will ever have a sovereign wealth fund. Or will we? Alternatively, can we move toward dedicated public-private investment vehicles that may draw inspiration from the Quebec model?
The next few years will be unlike any few years we’ve seen. So a lot of new thinking will be needed.
Canada could be on the verge of a historic investment boom. The trade war with the U.S., an increasingly divided global economy, concerns over Arctic security and an AI revolution that comes with enormous energy requirements—all point to the need for more economic and security infrastructure. But those diverse ambitions, from northern ports to West Coast LNG to critical mineral plants, have a common requirement: Indigenous partnerships.
Canada’s future growth and prosperity depends heavily on getting Indigenous economic reconciliation right. If not, the country’s ability to diversify our resource exports, enjoy independence and resiliency in strategic sectors, and improve productivity, which has lagged that of other countries for years, are all at risk. And that’s not the only thing at stake. As RBC Thought Leadership’s research indicates, 73% of the 504 major resource and energy projects planned or currently underway in Canada run through, or are within a 20-kilometre radius of, Indigenous territories—namely, treaty, title unceded and consultation lands. The value of the Indigenous equity opportunity of those projects alone is $98 billion over the next 10 years.
Canada can’t afford to miss out on the opportunity. Fortunately, examples of Indigenous economic reconciliation in action span the country, including:
In Kitimat, B.C., the Haisla Nation and Pembina Pipeline are working on the Cedar LNG project, a four-year partnership that will result in a $4-billion facility. Once operational, this majority Indigenous-owned facility is expected to generate $85 million in GDP annually.
In several Manitoba and Nunavut communities, the Kivalliq Hydro-Fiber Link seeks to provide clean energy through a proposed 1,200-kilometre energy and telecommunications corridor connecting Nunavut with Manitoba’s grid.
In the small southwestern Ontario town of Jarvis, the Oneida Battery Storage Project will be one of North America’s largest battery-storage facilities when it comes online. Partly owned by Six Nations of the Grand River Development Corporation, Oneida will provide much-needed capacity to Ontario’s strained electricity grid.
While these projects illustrate progress, more can be done. Centuries of treaties, Nation-to-Nation and business agreements, and case law have underscored the centrality of Indigenous peoples in Canadian decision-making, particularly in building up infrastructure and resource projects. The Constitution Act of 1982, particularly Section 35, recognized and affirmed Aboriginal and treaty rights in the Canadian legal and political fabric. Supreme Court cases, including Calder, Delgamuukw and Tsilhqot’in, further affirmed Aboriginal rights and title—the inherent right to use and jurisdiction over an Indigenous Nation’s traditional territory.
One of the key principles enshrined through the Constitution and case law is maintaining the Honour of the Crown—a legal concept characterizing the fiduciary duty imposed on the Government of Canada toward Indigenous peoples. One of the duties that this principle imparts on the Crown is the duty to consult and accommodate. When the Crown engages in an activity that could have a negative effect on an Aboriginal right or title, it must consult with the relevant Indigenous groups and accommodate these infringements. This duty has been affirmed through case law and is characterized in the Nation-to-Nation relationship between Indigenous peoples and the Government of Canada.
The United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) advanced the concept of free, prior and informed consent (FPIC). This is a pro-active means for governments (and businesses) to seek and achieve consent on developments occurring on Indigenous territories. UNDRIP is now law federally, as well as in British Columbia and the Northwest Territories.
Together, the duty to consult and FPIC provide the framework and requirements for the way governments and businesses engage with Indigenous Nations on projects happening on their lands or implicating their interests.
What’s needed now is bold, innovative thinking. And it starts by finding ways of unlocking three critical elements:
CAPITAL: Indigenous ownership in major projects requires a mix of private and concessional financing tools, including loans, loan guarantees and grants. Without access to capital, a historic challenge for Indigenous Nations, many equity opportunities, and indeed, entire projects, may not get started.
CAPACITY: Rights-based negotiations, along with commercial and legal discussions around major project development, are complex and requires investing in capacity for everyone at the table—Indigenous Nations, governments and business—to ensure project success.
CONSENT: The constitutional duty to consult and accommodate, UNDRIP, case law, and decades of legal and political developments have cemented how important free, prior and informed consent is to project development. The downpayment needed to seek and achieve FPIC is long-term, trust-based relationships across all parties, which requires going beyond transactional project discussions.
Advancing all three elements—capital, capacity and consent—in parallel is necessary to bringing Indigenous Nations along as true partners in economic development. Through a collective call for action, led by Indigenous Nations and closely supported by businesses and governments, there is an opportunity to generate shared prosperity—and get Canada building at speed and scale.
Capital
Access to affordable capital is a persistent challenge for members of Indigenous communities, caused in part by institutional barriers set up by Canadian governments. Risk premium for Indigenous borrowers is impacted by rating agencies, and by extension, financial institutions’ risk and liability considerations. This is partly due to First Nations communities being unable to collateralize reserve land under Section 89 of the Indian Act; Metis communities being unable to leverage a land base and access federal funding; and Inuit communities finding it challenging to secure project funding in remote, rural areas. As we outlined in previous reports, loan guarantees and other financing tools can help address access to capital and risk issues.
Historically, the speed of implementation and scaling of these tools has been slow, while capital needs are only growing. This ranges from an infrastructure capital gap of up to $270 billion1, a $30-billion gap in critical minerals2, and a $60-billion gap related to climate-aligned investments in carbon capture, electricity and renewables3. The support of both private and public lenders is needed to meet demand.
The Canada Infrastructure Bank (CIB) stepped up recently, committing $1 billion to its Indigenous Equity Initiative. CIB’s equity grants, ranging from $5 million to $100 million, have a 15-year repayment target. And in early 2024, the money started to flow. That’s when CIB issued its first Indigenous equity loan, committing up to $18 million to Wskijinu’k Mtmo’taqnuow Agency Ltd. (WMA), a limited partnership owned by 13 Mi’kmaw communities. The financing allowed WMA to take an equity stake in the Nova Scotia Energy Project, Canada’s largest planned battery storage initiative.
Another important source has been the First Nations Finance Authority (FNFA), which has enabled First Nations economic development through a pooled borrowing facility. By issuing debentures on behalf of First Nations (certified by the First Nations Financial Management Board for a clean balance sheet and good financial management practices), the FNFA has borrowed $3 billion for its members toward critical, revenue-generating projects—creating an economic output of $6.3 billion.
These aren’t the only examples of progress when it comes to unlocking capital. Last year, three loan-guarantee programs were announced. One at the Federal level (recently increased from $5 to $10 billion) and two at the provincial level—B.C. ($1 billion) and Manitoba ($500 million).
The various access-to-capital tools currently available amount to about $20 billion. And based on the amount of private investment these concessional financing tools have crowded-in, there is potential to mobilize close to $48 billion in Indigenous equity investments. This leaves a concessional financing gap of $20.7 billion and a private financing gap of $28.7 billion4.
While gaps remain, there’s more capital flowing than ever. And it’s leading to action. Between 2022 and 2024, 111 Indigenous communities announced that they had acquired an equity stake in an infrastructure project, according to a report by the Toronto-based law firm Fasken Martineau DuMoulin LLP last April. More than a quarter (26%) of those were in Alberta, home to the $3-billion Alberta Indigenous Opportunities Corporation Loan Guarantee Program. Wind generation projects resulted in a spike in Nova Scotia (23%). And B.C. rounded out the top 3 with 18%. And that was before the launch of the province’s loan guarantee program noted above5.
From a private financing standpoint, approaches to risk management need to accommodate unique Indigenous concerns, with banks recognizing that if project economics are sound, Indigenous borrowers should have an opportunity to be treated on equal footing to other market borrowers.
For existing and announced access-to-capital tools, prioritize speed to implementation, a risk-accommodative approach, and broader sectoral scope, spanning not just resource and energy projects, but infrastructure, transportation, agriculture, fisheries—essentially, any sector with a nexus between Indigenous interests and a national economic imperative.
Capacity
The added complexity of major project development requires capacity building on all sides. This includes education and training required for businesses and governments to better understand Indigenous histories, economies, cultures and priorities. For Indigenous Nations, this can include everything from financial, legal and engineering capacity required for commercial negotiations, to the environmental, historical and legal support needed to participate in regulatory and rights-based discussions. It is important to recognize that Indigenous capacity has always existed, whether through trade networks, economic systems, governance models and traditional knowledge that Indigenous Nations have built up over centuries.
Two (imperfect) measures of fiscal and economic capacity are the ability of Nations to be able to raise own-source revenues (revenues not generated through governmental transfers) and maintain financial and governance controls. We assume two proxies for these measures—own-source revenues greater than 25% of total revenues in a First Nation, and a First Nation receiving the Financial Performance Certification. The FPC is a voluntary, independent assessment by the First Nations Financial Management Board certifying good financial health and ability to borrow from the First Nations Finance Authority.
Our research indicates that capacity gaps put 85% of projects that pass through First Nations territory at risk. That’s an estimated $83.6 billion in project value.
Project Rocket, a partnership between 23 First Nations and Metis communities and Enbridge, resulted in capacity building that benefits all parties. The partnership involved the creation of Athabasca Indigenous Investments, the special-purpose vehicle behind the Indigenous Nations taking on an 12% equity stake—valued at $1.1 billion—in seven pipelines. In addition to the potential economic benefits, the dealmaking process provided technical, legal and commercial capacity for Indigenous Nations, as well as the proponents and financial intermediaries. Agreements that include multiple Nations, like this one, allow better resourced and experienced Nations to share their expertise, ultimately making it more replicable and scalable.
Indigenous-corporate partnerships, including secondments, knowledge sharing, and leader-to-leader forums can help hone capacity.
By bridging corporate and Indigenous Canada, organizations such as the First Nations Major Projects Coalition and the Canadian Council for Indigenous Business enable relationship and capacity building, and uplift Indigenous businesses and governments. Organizations like FNMPC and CCIB are positive models to emulate and scale across the country, to provide mentorship, skills-development, environmental and economic tools, procurement strategies and project-level negotiation support for and with Indigenous Nations.
Capacity building with lending or M&A teams for proponents and financial institutions must be prioritized. This can help ensure lending team members are educated on Indigenous history, economic-development priorities, and the lens through which teams must engage with Indigenous Nations.
An important consideration for businesses is whether to build capacity internally—through targeted hiring and training—or to enhance capacity through acquiring existing organizations with the right mix of commercial knowledge and Indigenous community-level expertise.
Governments should consider dedicating 2-5% of grants, loans and guarantee funds toward capacity, to empower Indigenous Nations with the right information and ability to negotiate agreements with better-resourced private-sector counterparts. Between 2% and 5% is a guideline based on past transactions.
Consent
The nature of consent varies from community to community, and project to project. Getting to a shared understanding of consent is challenging and intersects with constitutional (Section 35 and the duty to consult) and international legal obligations (UNDRIP). However, there are some necessary, but not sufficient, conditions for achieving and maintaining consent, which include engaging early and often, economic partnerships, and inclusion of Indigenous Nations in the regulatory process.
A big part of getting projects built is the permitting and regulatory process. Part of the process is seeking informed Indigenous engagement, and, where required, consent. The Government of Canada has a duty to consult and accommodate Indigenous groups when its actions may impact potential or established Aboriginal or treaty rights—a duty that has been affirmed by the courts and the constitution. As such, expediting permitting timelines, although an important objective to speed up project development, cannot be done in a vacuum without the Crown discharging its duty to consult. Proponents have an important responsibility and role to play in building deep trust-based relationships with Indigenous Nations, and through that process, seek and achieve consent.
The Cedar LNG project illustrates how federal, provincial and Indigenous Nations can expedite the permitting process. The federal government, through a process called substitution, eliminated the duplication of two assessments for a single project. And the B.C. government worked in close partnership with the Haisla Nation to identify and mitigate environmental, social, health and economic impacts—a process that was accelerated in no small part because Haisla Nation is a co-owner in the project—resulting in a shorter and less contentious permitting process (notwithstanding ongoing concerns of the project by other Nations).
While equity ownership by the Haisla Nation on Cedar LNG likely moved things along more quickly, average assessment timelines in B.C. are, generally, some of the shortest in the country. This is partly due to proponents engaging early and often with Indigenous Nations, and provincial regulators increasingly empowering Indigenous Nations to lead assessments. The B.C. Environmental Assessment (EA) process, can integrate Indigenous-led assessments through substitution, delegation or other mechanisms. It yields a process that is 5 to 15 months shorter than the average timelines of two long-standing federal regimes and the U.S. permitting process. Federally permitted projects, particularly those that cross provincial boundaries, are complex, requiring longer permitting times. Still, the B.C. experience suggests a permitting process that incorporates Indigenous views, processes and knowledge can facilitate trust and social license.
The Eskay Creek Consent-Based Decision-Making Agreement, and the Squamish Nation Environmental Assessment Agreement both provide blueprints for how consent can be operationalized through the environmental assessment and permitting process.
The agreement, pertaining to the reopening of the Eskay Creek gold and silver mine in northern B.C., was set up under section 7 of the Declaration Act (B.C.’s legislation aligning its laws to UNDRIP). As part of the deal, the modified EA process seeks consensus through a collaboration team between the Tahltan Nation and B.C., a Tahltan risk assessment, free, prior and informed consent on the final decision, and independent dispute resolution. The agreement provides a unique model for joint decision-making, a shared environmental assessment and sustaining social license.
The Squamish Nation EA process involving the Woodfibre LNG plant and export terminal in B.C., was the first-of-its-kind legally binding, Indigenous-led EA process in Canada. A framework agreement enabled the Squamish Nation to set up a process outside the provincial and federal EA regimes. What enabled success was a parallel process of environmental and socio-economic information collection and analysis, with the final decision-making resting with the Squamish Nation Chief and Council, enabling accountability at both the technical and political levels. Buy-in for the Indigenous-led EA from federal and provincial governments, and the proponent, was crucial. And all three parties could be confident that the review addressed Squamish Nation’s concerns and interests—important for consistency of social license and support.
These approaches are not without challenges—as other Nations may seek to assert jurisdiction over those that are leading the EA process, or substantially support project development. Furthermore, this does not obviate the opposition of other interest groups, such as environmental or social groups. Nonetheless, they provide useful models of operationalizing consent through a collaborative assessment process.
Some key principles for businesses and governments when seeking and maintaining consent:
Indigenous-led assessments is one way. So is including Indigenous legal orders, traditional knowledge, values and priorities into the regulatory and assessment process through a co-assessment of projects, or the meaningful delegation of certain aspects of a project to Indigenous governments.
Relationships take investment—both time and money. Governments and businesses cannot engage on project-related issues without meaningfully building relationships to maintain consent, trust and social license for project development.
Information sharing and transparent discussions between proponents, government and Indigenous Nations is imperative.
This is challenging as it depends on both legal definitions on which First Nations the government has to discharge the duty to consult and accommodate, as well as relationship-based measures that can provide an indication of which Nations to consult. Building strong and lasting relationships with Nations, regardless of having to discharge the duty of consult, is a best practice.
Moving forward: Considerations for Canada
The geopolitical tensions with our closest ally have exposed the fault lines of Canada’s economic strategy. Trade diversification, massively building up our resource and infrastructure base, resolving internal trade once and for all, and moving up the product value chain have all become economic imperatives. Advancing Indigenous economic reconciliation is a keystone to meeting these goals. Other considerations that will drive the conversation in Canada in the months ahead will include:
What’s on the fast-track list: Both major political parties in Canada have promised to speed up development, permitting and financing of certain trade, infrastructure and resource projects in the national interest. Virtually all of the projects that will be fast-tracked will impact Indigenous interests and run through Indigenous territories. Fulsome Indigenous engagement and partnerships will determine the federal government’s ability to move at speed and scale.
The renewal of the continental security agreement: The incoming federal government will likely enter discussions with the U.S. administration on renewing the economic and security framework between the two countries. The investments needed will include surveillance, domain awareness and trade infrastructure to strengthen the North. Beyond trade and security, the social infrastructure, including housing, education and healthcare facilities, need to be built up. These discussions need to happen in close collaboration with territorial governments, Inuit birthright corporations and communities in the Inuit Nunangat.
The impact of the geopolitical contest between the United States and China: As we have explored previously, critical minerals have emerged as a key element in the new great game between the two superpowers. Canada’s ability to step in as a pinch-hitter on critical minerals mining and processing will depend on our ability to tap into mineral-rich regions such as the Ring of Fire in Ontario and the Golden Triangle in B.C. The Tahltan Nation, whose traditional territories cover 70% of the Golden Triangle, have been supportive of mineral exploration. But Indigenous claims and partnerships are yet to be resolved in the Ring of Fire—a question that will challenge other mining regions in Canada.
Generational changes in the global trading system: Changes in international trade and investment flows have countries seeking sources of economic resilience. That includes diversifying markets, but also reshoring parts of their value chain. Canada is no less immune. While these changes take effect, it is useful to remind ourselves that Indigenous Nations, as our youngest and fastest-growing population, are a source of strength and comparative advantage.
Our ability to move fast depends on our ability to move collectively. As the late Murray Sinclair, chairman of the Truth and Reconciliation Commission, said at the release of the Commission’s final report: “We have described for you a mountain, we have shown you the path to the top. We call upon you to do the climbing.”
4. Financing gap calculations are based on the capital cost of projects implicated under treaty, title and title-like, and unceded lands, multiplied by average debt-equity ratios by sector, and industry-specific assumptions on the ratio of capital that would be Indigenous-owned. The aggregate figures across sectors are multiplied by the ratio of concessional to private capital through existing loan guarantee programs, to arrive at the concessional and private capital gap. It is important to note that of the $17 billion in concessional financing tools, about $11.5 billion has not yet been implemented.
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