The “Freedom Convoy” blockades at the Canada-U.S. border risked causing “irreparable harm” to the trading relationship with the United States, Deputy Prime Minister and Finance Minister Chrystia Freeland warned on Thursday.
Testifying before the Public Order Emergency Commission, the finance minister said her concerns went far beyond the immediate economic harm the protests against COVID-19 public health measures was causing to Canada.
“It wasn’t just the immediate harm. It wasn’t, oh, you know, this plant loses four days of operation,” Freeland said.
“The danger was, were we in the process as a country of doing long-term and passive, early, irreparable harm to our trading relationship with the United States?”
The protests came at a sensitive time for the Canada-U.S. trade relationship, Freeland explained. U.S. President Joe Biden’s administration was in the midst of a protectionist push, she said, and was analyzing its supply chains for potential vulnerabilities.
“I could see really for the first time ever, the Americans having this amber light flashing in Canada — and this amber light that said to them, you know what, the Canadian supply chain could be a vulnerability, too,” Freeland explained.
In an email with the department of finance’s most senior public servant, Michael Sabia, on Feb. 11, Freeland relayed details of a conversation she had just had with Brian Deese, who is the director of the United States’ National Economic Council.
During that conversation, Freeland said in the email, Deese had relayed that the United States was “very, very worried” about the ongoing border blockade at the Ambassador Bridge in Windsor, Ontario.
“If this is not sorted out in the next 12 hours, all of their north eastern car plants will shut down,” she wrote.
“He said that he supposed that this proved the point we had made previously to them about how closely integrated our economies are. (He did not seem to see this as a positive).”
Freeland said this conversation was a “seminal one” for her.
“It was a moment when I realized, as a country, somehow, we had to find a way to bring this to an end,” the deputy prime minister told the Emergencies Act inquiry on Thursday.
Convoy protests came at sensitive economic time: Freeland
The “Freedom Convoy” protest came at a time that Canada was dealing with a number of complex financial issues, Freeland told the inquiry.
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In addition to grappling with increased U.S. protectionism, the impact of the COVID-19 pandemic was still being felt across the Canadian economy, and Russia was increasingly signaling that it intended to invade Ukraine.
Freeland said that Canada was preparing a potential retaliatory tariff list to be ready to respond, should the United States move ahead with its planned protectionist electronic vehicle incentives. The finance department was also preparing another pandemic-era budget, and was looking at preparing preemptive sanctions to lob at Russia.
“It was a really challenging time for the Canadian economy,” Freeland told the inquiry.
When the Ambassador Bridge blockade began, Freeland said the government was “coming to that conclusion — we have to figure out something to do.”
The government weighed using tools it had through FINTRAC, Canada’s financial intelligence unit, and the Bank Act. But Freeland said it quickly became apparent that “everything that could be utilized, was being utilized.”
“So then we thought, well, is there a need to legislate?” Freeland told the inquiry.
“The legislative timeline was not appropriate to the scale and speed with which the damage was mounting.”
As a result of the economic measures enacted using Emergencies Act powers, around 257 accounts of people and businesses involved in the protests were frozen by financial institutions, according to the RCMP.
Speaking before the inquiry on Thursday, Freeland said she would have “preferred not to have had to do this.”
“I regret that that happened to those people. I really do,” she said.
“But in my mind, I weigh that against what I really believe is the tens, hundreds of thousands of Canadian jobs and families that we protected.”
Assistant RCMP Commissioner Michel Arcand told a finance committee in March that the accounts were frozen to encourage protesters in Ottawa to leave and to discourage others from joining the protests.
He said the special measures in the Emergencies Act freezing accounts were useful and “did encourage people to leave.”
On Thursday, Freeland said the “ideal outcome” would have been “if everyone had left that night and if none of the measures had actually had to be used.”
A summary of a call between Freeland and Canada’s bank CEOs during the “Freedom Convoy” protests, which was made public as evidence during the inquiry, also showed that the heads of Canada’s financial institutions were deeply concerned about the reputational damage the demonstrations were wreaking on Canada.
One bank CEO, whose name was redacted in the document, told Freeland during the call that Canada’s “reputation” was “at risk.”
“Just spent a lot of time in the US last week, and we were being called a ‘joke’ by people. I had one investor say ‘I won’t invest another red cent in your banana republic in Canada.’ This adds to an already tough investment perspective on Canada,” the CEO said, according to the readout.
Multiple times in the call, the CEOs asked Freeland to designate the convoy protesters as “terrorists” so they can “act quickly.”
Freeland also fielded concerns from the bankers about Canada’s strict COVID-19 restrictions, which the executives said were some of the most stringent in the OECD, and shared their preoccupation about being seen as an arm of the government.
“I am very concerned about the banking system being seen as a political weapon of the government,” said one banker, whose name was redacted.
“We can’t politicize the banks.”
The deputy prime minister attempted to assure the bankers that she was taking the situation seriously.
“All options are on the table,” Freeland said.
Freeland ultimately became the lead on emergency economic powers given to banks and other financial institutions to freeze the accounts of participants in the “Freedom Convoy.”
The Public Order Emergency Commission is scrutinizing the events that led to the federal emergency declaration Feb. 14, weeks into protests that gridlocked downtown Ottawa and halted Canada-U.S. trade at several border crossings.
Freeland is the seventh cabinet minister to testify this week before Prime Minister Justin Trudeau closes out the public hearings on Friday.
Three of Trudeau’s senior staffers, including chief of staff Katie Telford, are expected to take the stand after lawyers finish questioning Freeland.
Commissioner Paul Rouleau is expected to present a final report to Parliament early next year.
— With files from The Canadian Press