Christian Dea
Christian Dea spoke 71 times across 1 day of testimony.
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Christian Dea, DG (GC-TC)
The Bible will be...
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Christian Dea, DG (GC-TC)
Yes. My name is Christian Dea, D-E-A.
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Christian Dea, DG (GC-TC)
Yes, I have.
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Christian Dea, DG (GC-TC)
Yes, as well.
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Christian Dea, DG (GC-TC)
Yes. My name is Christian Dea. I'm the Chief Economist and the DG, Director General, of the Transportation Economic Analysis Unit at Transport Canada. My role and the role of my group at Transport Canada is to monitor the performance of the transportation system and to conduct economic assessment on any disruption affecting the transportation system. And in doing so, I'm providing the advice and the result of the analysis to the senior management, including the deputy and the minister.
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Christian Dea, DG (GC-TC)
Yes, it’s correct.
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Christian Dea, DG (GC-TC)
Yes. Well basically my group is responsible to monitor and track any disruption on the transportation system. And of course, you know, with what happened in the previous years, in terms of the rail blockade, for example, but also other events, you know, we develop expertise and knowledge about, you know, how to assess these different disruptions on the Canadian Transportation System, but also in the Canadian economy.
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Christian Dea, DG (GC-TC)
Yes. For any kind of economic impact assessment, we follow a very vigorous framework to make sure that we’re using the best data, but also that we validate that with industry. So we always start our analysis by having a good assessment of the context and what is happening. And in order to do that, we use the best data available. For example, in the context on the issue on the cross-border, we’re using Statistics Canada data to get a good sense in terms of the nature of the trades that are affected at different border points in terms of the magnitude, but also the type of the merchandise that were affected by the reduction or the blockade of the bridge. We’re also using other sorts of information, for example, information from CBSA about daily movement at the border, just to get a sense in terms of the fluidity and the capacity of the movement at the different borders. We were also using direct information and data from the industry to get a sense from them in terms of how they have been impacted and the impact for the operation overall. So based on this data, we’re getting a bit of a portrait of what is really happening. And following that, we always validate this information directly with industry. So I was having, or my colleagues or my group were having daily calls with the different sectors affected by the blockade on the borders, in order to validate, again, the data that we have, but also get a better insight from them about how they have been affected and what might be the implication for them in terms of production, in terms of issues for investment, for example, which was also a real threat for the auto sector, for example. And it’s ---
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Christian Dea, DG (GC-TC)
Yeah. Yeah.
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Christian Dea, DG (GC-TC)
Well when you look at the Ambassador Bridge, for example, this is a very significant, you know, I would say corridor to exchange basically merchandise between us and the United States. The magnitude is important. It represents, just by itself, about 26 percent of the value of the export that Canada is moving to the United States and 33 percent of the imports that Canada is making the U.S. is going through the Ambassador Bridge. So in terms of the strategic importance of this bridge, it was very, very clear. It’s clearly also very strategic in terms of the sector affected. In the south of Ontario, the auto sector, the manufacturing sector was clearly affected directly and quickly, because they are all now in adjusting time, you know, kind of a production schedule. So any delay, or reduction, or not accessing the equipment that they need in order to produce had a direct -- almost a direct impact ostensibly in terms of their activities. But there are other commodities that have been affected as well that are important for the Canadian communities, like, you know, the basic medical equipment, pharmaceutical equipment, as well furniture, food. So there is a lot of movement of merchandise through the bridge that clearly had a direct and simultaneous impact in terms of not only the manufacturing sector, but also the Canadian communities about accessing some of the goods that are important for them.
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Christian Dea, DG (GC-TC)
Well there’s no official definition of the critical goods right now, but we can probably extract to and get an agreement saying that when it touches the health and the food security of community, for example, these are very critical to the day to day needs of the community and Canadians. And there is also another element of the critical aspect, when it’s also affecting the economic activities. And again, coming back to the manufacturer sector, not having access to the different equipment that was needed in order to produce had a direct impact on them in terms of their capacity to basically conduct their activities. So we have seen reduction and stoppage of the production in the auto sector and other sectors following, you know, the block at the Ambassador Bridge, for example.
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Christian Dea, DG (GC-TC)
You know, when you look at the composition of the imports and the exports, they are both very important. They are important for our colleagues in the U.S. as well, because we do export some of these critical goods as well, and not only for the community, but also to ensure that they can, on their side also, you know, produce what they need to produce in terms of sustaining the economic activities in the auto sector, for example. And the auto sector is a bit particular in the sense that the two economies are very integrated overall in terms of economic activity, but the auto sector is probably one of the most integrated. And the way they manage all the supply chain, it’s really integrated. It’s not a U.S. supply chain, it's not a Canadian supply chain. It’s an integrated North American supply chain. So any disruption in terms of the movement of what is needed on the supply chain is affecting, you know, both sides of the country very, very quickly on that.
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Christian Dea, DG (GC-TC)
If I remember correctly -- let me see. Yeah, I think it’s correct.
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Christian Dea, DG (GC-TC)
Exactly.
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Christian Dea, DG (GC-TC)
Well, given the magnitude and the importance of the value and the importance of these commodities, yes.
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Christian Dea, DG (GC-TC)
Yes. Again, you know, it’s based on, first of all, getting good data and statistics from Stats Canada and other sources about the situation there. But again, data is not always reflecting what is really happening right now, so that’s why we have different, you know, engagements with the industry in order to get a sense in terms of how they have been affected by the different reductions of the movement at the border. And we have been in contact with -- here we have a short list of the key, you know, auto producer, but we have had a comprehensive engagement with also other sectors as well that were affected just to get a sense in terms of how the different sector were affected by the blockade of the -- at the border.
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Christian Dea, DG (GC-TC)
Yeah. We implicitly take that into consideration because I was saying at the beginning, the first element is to get an assessment about the -- how the movement at the border’s affected, so we had a good understanding based on Statistics Canada about the magnitude of the export and the import and the value of that. And at the bridge, it was about 390, 93 million per day that are affected by the blockade there. And after that, we’re trying to translate that in terms of how much of these movements at the border will lead to a real issue in terms of economic cost and loss of economic activities. And in order to do that we’re using, well, what we think state of the art economic model in order to look at the impact of a reduction of the movement of the merchandise of the -- at the border and get a sense in terms of what are the sectors that will be the most affected and how they will be affected. And these models allow us to get a good picture, a good portrait of what happened on that side. And it’s with these models, again, validated with the industry, that we’re developing a kind of a net economic assessment of the impact of the blockade.
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Christian Dea, DG (GC-TC)
Well, this -- well, there’s three elements to consider here. First of all, it was during the winter. It’s always more of a challenge to move perishable, you know, products during the winter so you have to work in a window that, you know, it’s already really more narrow. And after that, we had a good information that in terms of how much these industries on both sides of the border were affected. And of course, for them it’s real time. You know, if you’re not taking the fruits, vegetables, the flours, the other, you know, perishable goods and even if there’s a delay of one day or two, it means that they are losing basically some of the business or their business on that side. So they were very, very concerned about, you know, not having predictability on their side about when they can move their products and where. And again, even a delay in terms of the transportation on either side were not only adding costs, it was sometimes, you know, causing a problem of not being in a situation of delivering their products to their client.
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Christian Dea, DG (GC-TC)
Well, it’s through, you know, conversation we have had with different, you know, shippers on that front in order to get an appreciation of the challenges that they were facing.
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Christian Dea, DG (GC-TC)
Yes. This is basically a table summarizing what I just mentioned, so we’re, of course, monitoring the situation at the different border crossings in terms of what is happening there. And using, you know, Statistics Canada trade data, we had basically statistics about the value of the import and the import that was affected for specific days. And this table is just trying to provide -- again, contextualize in terms of the value of the exports and the imports that were affected by the different blockades in the different border crossing.
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Christian Dea, DG (GC-TC)
Exactly.
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Christian Dea, DG (GC-TC)
Well, the trade impact is basically looking at the trade per day that are affected times the number of days of the blockade. So this is giving you a bit of an estimate of the value of the exports and imports that are affected or have been affected by the blockade in different border crossings.
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Christian Dea, DG (GC-TC)
No. No, this is -- again, we’re starting to get a sense in terms of what is affected first and in order to derive the net economic cost, we’re going through this validation process and through economic modelling, we can generate basically the loss of economic activities that were associated with the blockade at the different border crossings.
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Christian Dea, DG (GC-TC)
Well, the numbers here refer for the full amount, but given the data that we’re getting on a daily basis from CBSA, we were in a position to look at, you know, the impact of the blockades at the different border crossing points. And I think my colleague on CBSA this morning presented some of these tables where you’re showing a significant reduction, if not, you know, a total closure of the traffic in the different border crossings. So we were -- we were in position with this information and the validation with industry to get a good sense in terms of what was really stopped or reduced at the border crossings in terms of traffic.
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Christian Dea, DG (GC-TC)
Of course we were -- at that time we were in an environment that was under stress, I would say, economically. And for the transportation sector with the COVID situation, there were some challenges in term of the global supply chain and the domestic supply chain. But, you know, looking at historical average was giving us a bit of a benchmark. So -- and usually when you’re doing this kind of analysis, you’re using different benchmark just to ensure that, you know, your assessment is robust enough. And here in the paragraph we’re referring to the previous year, but we use, you know, different time period just to make sure that, you know, our benchmark was robust enough to get a sense about the impact of the blockade of the bridge.
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Christian Dea, DG (GC-TC)
I don’t have this information with me, but you can assume that, you know, depending of the composition of the -- you know, the movement of the trucking, that probably most of the commodity that I have highlighted at the beginning were affected. How much, it’s very -- we don’t have this information.
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Christian Dea, DG (GC-TC)
Well, in our analysis, and using, again, daily information from our colleague on CBSA about the movement on the different crossing border, we were in a position to see if the traffic were redirect, at least partly, to other border crossing.
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Christian Dea, DG (GC-TC)
And in some part, yeah, the traffic has been redirected to other border crossing point, but it’s -- it was never a perfect, you know, rerouting of the traffic from one bridge or one areas to the others; they were always a net cost or a net loss of traffic. And there were also, even though if the traffic was rerouted, there were some cost issues in term of adding time, adding cost, adding capacity in another area, and causing problem in terms of the just-in- time kind of production in the different sector that were affected. And depending of the region, on the -- I focus a lot on the manufacturing sector, giving the south of the Ontario challenges, but on the western side, their focus was more on, you know, live animal products, agrifood products, for example, or mining. And, again, there were some specific problematic there as well in terms of a -- you know, not being in a position to timely deliver these products to the different markets.
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Christian Dea, DG (GC-TC)
Well, what was possible to do first is to -- given the shock, and we had good information about the value of these export and import that are affected, that were affected by the different blockade. It was relatively straightforward to translate that through modelling and validation, in term of net economic cost for the different region. We have done the analysis for the Ambassador Bridge, for example, and we come with an estimate of the net economic cost. In term of the attribution of the overall other factor that is happening, that’s where it was getting difficult for us to assess the role of vaccination, COVID, global supply chain challenges, and/or challenges in term of, you know, shortages of workers due to COVID or other, you know, issues. It's really difficult to make an assessment about the exact contribution of each of these factor when you’re doing a global and a macroeconomic impact assessment.
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Christian Dea, DG (GC-TC)
Well, because, you know, for the reasons that I just mentioned; we were in a position, in the context of the blockade, to know exactly what was affected, in term of the traffic of the merchandise on the exportation and the importation. So that was -- it was clear about, you know, the sector affected, so we can use, basically, and we have used this information through our modelling to see how the Canadian economy and the regional economy and the sectoral economy were affected by the reduction, for example, of the traffic on the Ambassador Bridge. And that was a clear, you know, assessment of the impact of the reduction of the importation and the exportation at the Ambassador Bridge. So for this one it’s really clear. It’s when you’re trying after that to look and get, I would say, a kind of overall perspective about how the Canadian economic growth was affected for the different other shock, and how can you attribute, you know, the reduction of economic growth, for example, in a specific areas, then it’s getting more difficult to make sure that you can -- well, that you can do the causality or the attribution for the global shock versus domestic shock, health-related shock, or any other shock. But in the context of the Ambassador Bridge and the blockade on the crossing border, because we had information about the nature and the magnitude of the export and import affected, we were in a position to derive a net economic cost estimate.
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Christian Dea, DG (GC-TC)
Yes.
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Christian Dea, DG (GC-TC)
Yes. Again, the first key messages was basically to highlight the trade that was affected at the Ambassador Bridge; again, using Statistics Canada data that was available there. And we were in a position to highlight that about 390 million of trade daily were affected, which again represent 26 precent of the export of the country to the US, and 33 percent of the merchandise imported from the US by road. So we were looking at data now, and the next bullet, the next point was to say, “Okay, how this translate into economic loss in Canada?” In order to do so, we have used, you know, a modelling that we have right now in our group, and this model are state of the art model; they are giving you a snapshot based on Statistics Canada of the whole economic structure in Canada, giving you the detail by sector, so -- which allow us to look at, you know, not only at the macro level but at the very sectoral level and regional level, the nature of the impact of the reduction of the import and exported order.
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Christian Dea, DG (GC-TC)
And when we do that we got -- we got an estimate of about 45 million of economic loss per day. But we were using -- giving, you know, that they are modelling tools, giving some uncertainty about how the different sector might have been affected at the beginning of the reduction of the activities. In order to bring a bit more certainty about the magnitude of the impact, we wanted the strategist to the right scenario. And the second bullet there present three different scenarios of all the reduction of the trade at the border impact the economy. The first one, assuming that the main factors affected will be transportation sector and the manufacturing sector, and more precisely, the auto sector. And again, this was informed partly by also the conversation we were having in -- with industry. And when you will look at, you know, this impact, the modelling is giving you an estimate of about 45 million of net economic loss, which means that the industry are producing less or stopping their production. It means that they are losing income and salaries. And this is less expenditure in the economy, less economic activities, and the 45 million there is capturing the direct impact of the reduction of the trade on the transportation and the auto sector. The other element were more to explore, you know, assuming that other sector might have been also affected by the reduction of the trade activities at the border. The 86 million refer to a scenario where it was not only the transportation and the auto sector; it was the full manufacturing sector in the south of Ontario that was affected, and then the estimate then rise from 45 million to 86 million a day. And the last one, which is more, kind of an extreme case for us, is to look at, okay, what is happening if all the sector are instantaneously affected by the reduction of the export and import at the border, and then you’re getting this estimate of 161 million.
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Christian Dea, DG (GC-TC)
The 45 million scenario is assuming that, again, looking at what is the traffic at the border that is affected. So we’re shocking, basically, the economy saying -- if we’re saying these export and import are affected, what will be the impact for the transportation and the auto sector first. And that’s where you’re getting the 45 million estimate.
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Christian Dea, DG (GC-TC)
Well, we’re assuming -- given that we’re assuming that the others -- the -- only the transportation and the auto sector were affected, we’re assuming that all the other sector of the economy; the food sector, the resource sector, the furniture sector, for example, they find a ways to get access to the material that they need to maintain their economic activities. And through -- by redirecting some of their, you know, traffic, or their import and export from trucking to rail or other mode, for example, or they were in a position to have and sustain economic activities because they had some inventories to allow them to do so. So that’s why the 45 million for us was a kind of a conservative estimate of the impact because we’re assuming that more or less all the other economic sector find ways to continue to produce, to continue to operate with minimal disturbance.
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Christian Dea, DG (GC-TC)
Yes.
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Christian Dea, DG (GC-TC)
Exactly.
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Christian Dea, DG (GC-TC)
Yes, we do -- first of all, we have to acknowledge that when we’re doing this kind of analysis, there’s a lot of exchange with other department as well, just to, again, validate if they have any information that we don’t have access to. But also making sure that we collectively play this challenge function together in order to make sure that we’re getting the best advice to our respective Minister. And there have been exchange throughout this process with the Department of Finance, at different level, at my level and at the working group level as well, in order to make sure that their assessment, the way they are conducting their assessment, to get a sense in term of if they can share any of their insight was. And we’re sharing a bit of their insight. On their side, they are using more -- it is my understanding that they are using more macroeconomic, you know, modelling tool to derive impact. And on our side, we’re using other set of tools that is giving us a lot more sectoral details about the nature of the shock and how the different sector are affected. So we always, in that regard, trying to collaborate, and collaborate effectively, to make sure that what were coming, in term of economic assessment, were consistent in the way to move forward. And if they were some question about, you know, some of the result from the different tools that we’re using, we’re trying to get a good assessment together about how can we explain the difference between the two. But in the context of the work with the Department of Finance, they have used our assumption about the trade impact or the shock in their model. And they were shocking the economy using their macroeconomic tool, and they got some result; and, on our side, we’re doing the same. And this email is in that context; to exchange information about, you know, the preliminary estimate of the impact from their side and our side. So we had agreement, or were very consistent in term of the way to get to the first element of this -- the impact, which is referring to the scenario 1, at 45 million per day. But they were questioning, in term of how far and solid are -- were the other scenario that we were doing. And we -- the email was just to exchange and provide them with more information about what we’re trying to capture in scenario 2 and scenario 3, in term of the sector affected but also the dynamic aspect of the shock on the trade in the Ontario economy.
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Christian Dea, DG (GC-TC)
Yes.
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Christian Dea, DG (GC-TC)
We -- the shock are assuming that it's a pure shock for the sector, but that's why we're also looking at them coming to that in the different response later in term of how can we, you know, capture the dynamic element associated with the rerouting as well. And that's why we were using every day, you know, the information that were coming from CBSA about, you know, the movement of the traffic, or the perceived movement of the traffic to other bridge to get an appreciation about, okay, if, you know, our shock was still reflecting what was happening on that side.
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Christian Dea, DG (GC-TC)
The scenario one does not consider any redirection of the traffic at the day of the shock and on that front, yeah.
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Christian Dea, DG (GC-TC)
Well, implicitly, you know, the short answer to your question is that the model is already capturing the potential substitution of the rerouting to a certain level. And this was already embedded in the modelling that we had have, because we can't see in term of how economy needs to be moved, and it was moved in the past. And all the past behaviour was captured that -- there in term of the way to get access to these element. And they have been shocked in the past as well. That was affected also some of the manufacturing sector that will giving us some benchmark about the dynamic element of the rerouting. What the model was not capturing though is the day-to-day change that we were seeing with some redirection of the traffic from Ambassador Bridge to the other bridge. And the model was not allowing us to capture also the cost associated with this rerouting, because rerouting doesn't mean that, you know, it's basically reducing the overall cost, the net economic impact. It might be a bit of a reduction associated to that, but there is also cost associated with rerouting about time, additional cost, loss of economic opportunities and we mentioned previously the perishable good, the food sector, where basically, you know, delay means for them that they are losing economic production and activity. So in order to fully capture that, we had to basically play a little bit more with the model or qualify a bit more the result of the model to see how we can take that into consideration.
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Christian Dea, DG (GC-TC)
Yeah.
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Christian Dea, DG (GC-TC)
That's the daily data that we're getting from CBSA.
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Christian Dea, DG (GC-TC)
This was not fully factored in the scenario. But the reason why we use the scenario one was precisely for that reason. We haven't shocked all the sector of the economy. And implicitly, by doing that, we're trying to take into consideration that there will be some rerouting, and it's not all the sectors that won't have access to all the equipment that they were looking for. So that's why we're quite, you know, prudent with the scenario one. We're saying the sector that has been affected, it's mainly transportation sector and the auto sector. All the others, you know, were continuing basically to produce business as usual almost. And this is the attempt to try to capture that, to say that, you know, all the others will find ways to get access to their input, their equipment, to continue the production. So we did explicitly use these number, but the fact of restricting the shock to the transportation sector and the auto sector was more or less to capture these element that, you know, a lot of the other sector will be in a position to access, maybe not on a timely basis, but access what they need to continue to produce.
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Christian Dea, DG (GC-TC)
Well, you have to refer that the date of this email as well. We're talking about ---
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Christian Dea, DG (GC-TC)
--- February 14, so we weren't -- you know, we have started to do these estimate at the beginning of the blockade, so in early February when we're starting to see some issues in term of the blockade, we were starting this estimate, not knowing exactly what kind of rerouting would happen and how it will happen. And I think this email was on the February 14 because ---
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Christian Dea, DG (GC-TC)
Yeah.
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Christian Dea, DG (GC-TC)
Yeah.
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Christian Dea, DG (GC-TC)
And it was exchanged within the Department of Finance between the analysts there. We had a lot more information at that time about, you know, what happened over the past few days in term of rerouting, and that's where they were focussing a bit their element, saying, maybe now the scenario two and three, giving what we know right now, were probably a bit more on the high side in the way to look at the economic impact of the situation. And they were more in line with us with, you know, the scenario one as a prudent and a conservative estimate of the -- to assess the net economic impact on that regards.
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Christian Dea, DG (GC-TC)
Well, again, it's -- we were all trying to infer maybe some behaviour in term of the economy there. I think on the February 14, we had a bit more better understanding about, you know, the nature, the magnitude of the shock and the return to that. And I think there -- this exchange there was more or less to capture now or better reflect this information. But again, it was more to say that giving what we know right now and giving the current situation on February 14, maybe a scenario 2 and 3s were more on the upper bound of economic impact.
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Christian Dea, DG (GC-TC)
Could you repeat your question, please?
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Christian Dea, DG (GC-TC)
Well, I think this is based on monthly data that they’re providing, yes.
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Christian Dea, DG (GC-TC)
We agree with the statement where they were saying that they were declined in terms of their data on the trade and, at the same time, that they have seen some realignment of the traffic.
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Christian Dea, DG (GC-TC)
I have seen the document before.
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Christian Dea, DG (GC-TC)
I don’t remember exactly the date. Well, it’s clearly before the day of the -- they produced the document or the following day.
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Christian Dea, DG (GC-TC)
Well, there’s always a lag in terms of the data. You know, I don’t know the date. If you can look at the date of the publication of this document.
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Christian Dea, DG (GC-TC)
Well, there’s a point. So you know, our estimate was done in early February with the information that we had at that time.
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Christian Dea, DG (GC-TC)
And as I was mentioning this morning, we were monitoring the situation on a daily basis. This is not an economic impact assessment.
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Christian Dea, DG (GC-TC)
This is just a review ---
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Christian Dea, DG (GC-TC)
--- of the monthly trade data pattern.
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Christian Dea, DG (GC-TC)
Excuse me, would it be possible to take a two-minute break?
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Christian Dea, DG (GC-TC)
If it’s possible. Sorry.
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Christian Dea, DG (GC-TC)
Thank you. I appreciate it.
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Christian Dea, DG (GC-TC)
Yes.
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Christian Dea, DG (GC-TC)
Yes. Well, first of all, the reports were just, you know, the monthly report released by Stats Canada about the evolution of the trade overall. Secondly, the point that I was referring is that, you know, in the Stats Canada report, which was published in April as well, they were very consistent with what we're saying when we're doing -- conducting the assessment in February. So they were saying basically that, you know, they have seen some rerouting, which was part of the assumption that we were using in trying to capture with the scenario one on our side. And in the Stats Canada report, the purpose of this report is just to release information on the trade evolution. It's not to provide an economic assessment at sectoral detail level about the blockade that happened during, you know, the month of February -- January and February in some areas.
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Christian Dea, DG (GC-TC)
No.
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Christian Dea, DG (GC-TC)
It -- no. It was very difficult to assess at that time.
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Christian Dea, DG (GC-TC)
And that's precisely why we took the approach of scenario as well, just to try to identify a spectrum of potential path in term of the impact and the potential risk associated with that.
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Christian Dea, DG (GC-TC)
Yeah, usually, the dynamic on the economic side is you're starting by the most affected sector. And if it lasts, you're starting to see cascade effect and then direct impact through the rest of the other sector as well. And this is amplifying basically the net economic loss associated with that.
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Christian Dea, DG (GC-TC)
Thank you.