Letters May 22, 2024

A rail strike would threaten Canada’s economy and trade relations

Goldy Hyder – President and Chief Executive Officer, Business Council of Canada

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Letter to The Honourable Seamus O’Regan, Jr., Minister of Labour and Seniors, The Honourable Pablo Rodriguez, Minister of Transport and Quebec Lieutenant, and The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance regarding a potential rail strike of Canada’s Class I railways.

Dear Ministers,

On behalf of Canada’s leading employers, I am writing to express our deep concern over a potential rail strike affecting both of Canada’s Class I railways.

Canadian business leaders support the collective bargaining process and recognize that the best agreements happen at the negotiating table. However, any breakdown in negotiations and a resulting country-wide railway strike would cause devastating economic disruption by stopping the flow of essential goods, raising prices for consumers and businesses, putting jobs at risk, and threatening Canada’s reputation as a reliable trading partner.

Railways are the lifeblood of the economy, providing Canadians and our closest allies with the products they need to sustain a high quality of life. Businesses of all sizes and in all sectors also rely on railways to deliver goods that sustain their operations and employ millions of Canadians. Concurrent strikes affecting both of Canada’s Class 1 railways would be disastrous.

Last month, your government tabled a budget focused on helping Canadians navigate the significant affordability challenges they are facing. A national work stoppage would mean Canadians have access to fewer goods and essential products, driving up prices and exacerbating their affordability challenges. A failure to act swiftly would also jeopardize the jobs of millions of workers.

Moreover, more than 60 per cent of Canada’s GDP is driven by trade. Roughly $380 billion dollars worth of goods travel across our national railway system, with more than half of the country’s exports moved by rail each year[1]. A work stoppage would paralyze our trade-dependent economy at a time when the country desperately needs revenue.

Critical imports and exports through major ports across the country will effectively freeze while the impact to shippers and their operations will be profound and long lasting. We remind you that real GDP per capita in Canada has declined in five of the past six quarters and is currently near 2017 levels.

Canada’s reputation as a reliable trading partner is also at stake, especially with our principal trading partner, the United States. Earlier this year your government announced a “Team Canada” approach to prepare for the U.S. presidential election and to strengthen Canada’s negotiation position in advance of the renewal of the Canada-United States- Mexico Agreement (CUSMA) in 2026. A prolonged rail strike would undermine those efforts, perhaps irreparably.

In the last three years our trading relationship, and the resilience of our supply chains, has been tested due to labour disputes at the ports of Montreal, Vancouver, and the St. Lawerence Seaway. A shut down of our continentally integrated railway system threatens to tarnish Canada’s reputation with the United States and weaken its credibility as a signatory to CUSMA.

The Minister of Labour’s recent referral to the Canada Industrial Relations Board to assess the impacts of a potential railway strike to the health and/or safety of the public has introduced significant uncertainty with respect to the expected timing of a potential work stoppage. This additional uncertainty is causing further damage to the reliability, stability, and confidence of Canada’s supply chains. Railway networks are designed to move all commodities without priority of one over the other. We urge you to do everything in your power to act in the public interest by restoring clarity rapidly and ensuring that the Canadian economy is not held captive to another labour disruption.

In 2022 in the United States, the Biden administration worked across parties to intervene with legislation and prevent a railway strike that could have devastated the American economy. In his remarks, President Biden said he was compelled to act because a work stoppage “without a doubt would have been an economic catastrophe” and that legislation “was the right thing to do at the moment to save jobs, to protect millions of families from harm and disruption and to keep supply chains stable.”

The President’s words underscore the severity of what could be at stake in Canada. We ask you to act with similar resolve to work across party lines and explore all measures to prevent a work stoppage from occurring.

Regards,