Good afternoon, everyone.
We're going to have a busy afternoon. We have a lot on our agenda. We have some future business and we have some wonderful guests here today making submissions.
We're continuing with our study on the bilateral and trilateral trade in North America Between Canada, the United States, and Mexico. It looks like we have all the MPs here. We also have the witnesses from Rogers Communications, BCE, and Alberta Barley. Welcome, folks.
For those who are here for the first time, we appreciate it if you can keep presentations to around five minutes or shorter. Don't worry, there'll be lots of room for dialogue later on in the questions and answers portion.
Without further ado, we'll get started and start off with Rogers Communication. Pamela Dinsmore, please go ahead. You have the floor.
Good afternoon, members of the committee. My name is Pam Dinsmore and I'm the vice-president of regulatory cable for Rogers Communications.
Thank you for the invitation to outline Rogers' views regarding the ongoing North American Free Trade Agreement renegotiations.
Rogers is one of the largest Canadian telecommunications and media companies. We provide Internet and telecommunication services on both a wireline and wireless basis. We are also creators and distributors of content. We operate two over-the-air local television stations, City and OMNI, a number of speciality channels, including Sportsnet and FX, 55 radio stations, a suite of digital publishing brands, including Maclean's and Chatelaine, and cable systems in Ontario and Atlantic Canada. We employ over 25,000 Canadians. We have a broad perspective and a profound interest in the outcome of these trade negotiations.
In my remarks today, I will address three key areas: copyright, telecommunications, and the cultural exception. I will start with copyright.
A number of issues emerged out of the United States trade representative's process, with recommendations that Canada be required to make changes to its copyright legislation through the NAFTA renegotiation. We are concerned that the scope of the renegotiations could be broadened to include copyright issues that were not addressed in the existing agreement. These issues include replacing the made-in-Canada “notice and notice” infringement complaints system with a “notice and take down” regime, providing U.S. over-the-air broadcasters with exclusive retransmission rights over their freely available signals, repealing or amending the Copyright Modernization Act's personal use and intermediary exceptions, and/or taking away the protections granted to Internet intermediaries, such as ISPs and search engines.
The 2012 Copyright Modernization Act was carefully developed by Parliament over many years and is designed to serve the interests of all Canadians in its balance between rights holders and users of copyrighted works. We are concerned that a trade renegotiation, where copyright issues are used as bargaining chips, could endanger this delicate balance. In our view, any changes to our domestic copyright laws should be made through the upcoming five-year review of the Copyright Modernization Act, not through the NAFTA renegotiation.
In the area of telecommunications, I would like to comment on two of the USTR's objectives for the telecommunications sector set out on July 17. The first is the objective to promote a competitive supply of telecommunication services by facilitating market entry through transparent regulation and an independent regulator. Canada has an independent regulatory agency, the CRTC, which is transparent in both its rules and its decision-making processes. In fact, its processes and procedures are very similar in nature to those exercised by the Federal Communications Commission in the U.S.
Also, the current Canadian foreign ownership rules already permit market entry by foreign firms into the telecommunications sector. Canada's Telecommunications Act exempts companies with less than 10% of the Canadian telecommunications market from foreign investment restrictions measured by revenue. The U.S. and other foreign companies can enter Canada today, either as a start-up or through acquisition. As an example, the Zayo Group acquired Allstream in early 2016. If the rules were changed to permit U.S. companies to acquire Bell, Telus, or Rogers, this would not promote a more competitive supply of telecommunication services, but instead would simply replace one large provider with another.
The second objective I will comment on is the desire of the USTR to secure commitments to provide reasonable network access for telecommunication suppliers through interconnection and access to physical facilities and scarce resources. This regime is already in place. The CRTC has implemented well-established rules of regulated access, including mandated tariffs for telecommunication suppliers to interconnection services, as well as access to essential physical facilities. This regime is used today by literally hundreds of foreign and domestic telecom service providers operating in Canada. Zayo is an example of a U.S. company that uses these rules and has participated in their formulation by the CRTC.
Lastly, I would like to voice Rogers' support for the emphasis the minister for Global Affairs Canada is placing on the maintenance of the cultural exception in NAFTA. Some parties in the USTR process called for the liberalization of foreign ownership rules as they pertain to broadcasting, as well as modifications to section 19.1 of the Income Tax Act.
Others went further and asked that the cultural exception be modified to improve market access for U.S. goods or be eliminated altogether. In our view, section 19.1 of the Income Tax Act, as well as the foreign ownership rules that flow from the direction to the CRTC regarding ineligibility of non-Canadians, are important components of the cultural exception. The foreign ownership rules exist in part to ensure that, as section 3 of the Broadcasting Act stipulates, “the Canadian broadcasting system shall be effectively owned and controlled by Canadians”. This enables the various players who contribute to the health and success of the system to fulfill cultural policy goals for the benefit of all Canadians.
With respect to section 19.1 of the Income Tax Act, we believe it should be strengthened to also apply to foreign digital players, not eliminated.
Good afternoon, Mr. Chairman and honourable members of the committee. My name is Robert Malcolmson. I'm senior vice-president, regulatory affairs, at BCE. Thank you for your invitation to provide Bell's views on NAFTA.
Bell is Canada's largest communications company, employing over 50,000 Canadians and investing over $4 billion annually in advanced networks and media content alone. These investments allow us to provide services that form the backbone of Canada's digital and innovation economy, including the country's fastest high-speed Internet and wireless networks that are among the fastest in the world.
Our world-class telecommunications system has been built through facilities-based competition among domestic players overseen by an independent regulator, the CRTC. We urge you to keep in mind that, in renegotiating NAFTA, we should not jeopardize what's been achieved by agreeing to trade outcomes that reduce the discretion of the independent regulator or grant subsidized access to our networks to foreign players.
Instead, the focus should continue to be on facilities-based competition. Bell is equally a key supporter of Canada's cultural and democratic system, investing more than any other broadcaster in Canadian content, and operating the largest networks of both local TV and local radio stations across the country, ensuring there are reporters with boots on the ground everywhere.
Again, as you navigate the waters of a new NAFTA, it is essential that our cultural sovereignty be preserved and supported.
There is no doubt that our system is in a time of transition. As content from all over the world becomes available, audiences fragment and activity moves online. We are responding. At Bell Media, we've launched CraveTV, a made-in-Canada, over-the-top service that delivers premium TV content to anyone in Canada for just $7.99 a month. Meanwhile, Bell TV has launched Fibe Alt TV, an application-based TV service that delivers all the content consumers have come to expect from a traditional cable service without the need for a traditional receiver.
We're also investing in a new era of Canadian content with award-winning Canadian programs like Letterkenny, which was produced exclusively for CraveTV and is its most watched show, and Cardinal, which is one of the top new programs in Canada, averaging more than a million viewers each week, and is now broadcast in markets around the world.
As the Canadian broadcasting system reorients itself toward online and global markets, we urge the government not to lose sight of this framework, reflected both in the original free trade agreement and subsequently in NAFTA, that has led to our success so far.
We have three specific proposals on how to make NAFTA work better for Canadian culture in the digital economy.
The first is tax and regulatory fairness for online services and digital advertising platforms. Canadian-owned services like Crave collect and remit HST on behalf of the government, but foreign video providers like Netflix and foreign digital advertising platforms like Google and Facebook, despite competing in Canada and earning millions of dollars in revenue from Canadians every month, pay no sales tax at all. This is obviously not tax fairness. Canada must maintain the ability to address this inequity with new modernized tax laws. In negotiating NAFTA, the government should ensure its ability to apply the same regulatory rules to all online services.
The second is copyright enforcement. U.S. interests have long complained that widespread online copyright infringement here in Canada is limiting the growth of the digital economy. In fact, many of the most prominent global players in the piracy ecosystem operate out of Canada as a relative safe harbour. Canadians made 1.88 billion visits to piracy sites last year. We recommend that the government commit to stronger intellectual property enforcement by having an administrative agency dedicated to such enforcement and by prioritizing enforcement against digital pirates.
Canada should also create a criminal provision for any infringement of copyright, including facilitating and enabling piracy where it's undertaken for a commercial purpose.
Finally, Mr. Chairman, there's local television. There is no doubt that local TV continues to face a crisis in Canada. Private local TV stations produce more than 900 hours of local programming every week and remain among the most popular TV stations in the country. Yet despite the success in serving Canadians, private local TV stations have lost more than $500 million in the last two years. Despite their valuable content, local TV stations cannot charge subscription fees because of section 31 of the Copyright Act. In renegotiating NAFTA, Canada should preserve its ability to address the crisis in local TV either by removing section 31 of the Copyright Act or making a second revenue stream available to local Canadian stations.
Finally, it's also essential that Canada commit to preserving simultaneous substitution. Simultaneous substitution enables U.S. copyright holders to receive value for their copyright and it protects the integrity of the exclusive program rights that Canadian broadcasters purchase. Simultaneous substitution and other domestic measures should continue to be protected under NAFTA's existing cultural industries exemption.
Thank you for the opportunity to provide our views. We're happy to answer your questions.
Thank you, Mr. Chair, and members of the committee.
Good afternoon, and thank you for the invitation to appear today. I am here on behalf of Alberta Barley's 11,000-plus members to offer our support for the modernization of the NAFTA and to provide our views on what we believe the negotiations need to achieve.
Barley is an excellent example of how integrated the North American agricultural market is. Together, the U.S. and Mexico accounted for 21% of Alberta's barley exports in 2016. Every year Alberta exports more than 190 million dollars' worth of barley and value-added products to the U.S. Most of that is for malt and for meat, both of which are value-added barley products.
Western Canada produces the highest-quality malting barley in the world. Thanks in part to NAFTA, Alberta farmers grow malting barley and have it trucked to malt houses on the Prairies where it's processed and then shipped into the U.S. There it is used by large-scale and craft brewers alike to produce a beer that satisfies the U.S. consumer's thirst for quality craft and adjunct beer.
Apart from the malting sales, Alberta farmers sell the majority of their barley as feed to livestock producers. The beef industry is a core customer for Alberta barley, and we need Canadian beef ranchers and processors to have that seamless border with the critical U.S. market in order for the demand for our feed barley to stay strong.
Like the vast majority of Canadian farmers, Alberta barley growers rely on open markets for a positive bottom line. In comparison with other barley-growing regions in the world, Alberta's barley growers have benefited significantly from the NAFTA through tariff-free trading. Canada's volume share of barley imports into the U.S. is over 90%. Our priority for the renegotiation is to make sure that this competitive advantage is not eroded in any way.
We encourage negotiators to keep most of the agreement intact, including the existing duty-free access, the treatment of non-tariff barriers in chapter 9, and the text on rules of origin. We also see great potential to make improvements related to the non-tariff barriers. Alberta Barley recommends that a modernized NAFTA contain the following items, which I will expand on momentarily. Our list includes an improved chapter on sanitary and phytosanitary, or SPS, rules; measures to more closely harmonize pesticide regulations and to remove maximum residue limits related to trade barriers; an agreement on the treatment of new plant-breeding techniques; and a mechanism for co-operation on plant biotechnology in the low-level presence policy.
While NAFTA's SPS chapter provides a good foundation, a renegotiated NAFTA should include stronger SPS measures in line with other recently negotiated free trade agreements, or FTAs. The trans-Pacific partnership SPS chapter serves as a very useful example and should be a starting point for the negotiations.
On MRLs, or maximum residue limits, the NAFTA renegotiation presents a unique opportunity for Canada, Mexico, and the U.S. to come together to completely remove trade barriers related to pesticides and crop inputs. Including text on a harmonized or trade-facilitating approach to pesticide regulations will reduce barriers at the border and be a useful model to carry forward in other negotiations.
A framework to manage the new plant-breeding techniques emerging across North America would also be of tremendous value. We would ask that negotiators put forward text within the agreement to facilitate the approval and trade of new plant-breeding techniques among NAFTA partners.
Finally, Canada, the U.S., and Mexico have a long-standing collaboration for removing biotech-related barriers to trade. The fact that no new biotech trait in plant products has ever been approved by one NAFTA partner regulator and then rejected by another underscores the need to formally recognize one another's approvals. At the very least, a common, low-level presence policy should be a fallback objective for negotiators in a modernized NAFTA.
Growers are in the middle of harvest right now, and our collective thoughts are focused on realizing a successful year for our businesses and families. I hope my presence here demonstrates how critical we barley farmers believe the NAFTA talks are to our livelihood. We ask that this committee seek to enhance our market access and trade-related regulatory collaboration with the U.S. and Mexico through its recommendations on these negotiations.
Thank you, and I look forward to answering any questions you may have.
That's not necessarily so. As you know, right now we have the 10% cap on foreign telecom providers coming into Canada. Today, Verizon could come in, as could any start-up. What they can't do is buy Rogers, Bell, or Telus, because they can't buy an existing player that has greater than 10% of the overall revenue, which all three companies do.
Verizon could come in today, if they wished to, with less than 10% market share and they could build up their business here. They could offer that type of plan, but what they can't do is take over an existing player.
The idea that an existing player would come into Canada and necessarily provide the same type of pricing that they do in the U.S. is probably flawed for a number of reasons. The first is that we have very different geography than the United States. It's very densely populated down there, whereas we have a very large country to cover with our networks, which allows them potentially to provide lower prices than we do up here. Secondly, we have very high-quality networks, so if any of these providers come up here, they're going to have to maintain those networks and maintain the quality that Canadians have come to expect.
We do offer low-cost options. Rogers has a $10 talk and text plan and a $25 talk, text, and data plan, so we already are providing options at the lower end of the spectrum that are affordable for Canadians.
On the face of it, it looks very attractive. However, first, these players haven't come, and they can. Second, if they did, we don't think they'd offer the same low-cost offers that they offer in the U.S.
The reason we brought it up in the context of NAFTA is that this is actually an issue where Canadian interests and U.S. interests can be somewhat aligned. By that I mean, you've seen the submissions from some of the U.S. broadcast groups, such as the National Association of Broadcasters, who represent U.S. over-the-air border stations that spill into Canada. They've long complained that they're carried by cable distribution systems in Canada for free, so they're not paid for their signal in Canada.
Similarly, we operate over-the-air stations in Canada, and cable companies can pick them up and distribute them and we're not paid for that content. That's completely unlike other channels. If you take, for example, TSN or Sportsnet, those channels have two sources of revenue. They have advertising revenue and they have subscription revenue. Every cable subscriber in Canada pays a fee to their cable provider, and a portion of that goes back to TSN or to Sportsnet. It's not true for over-the-air television stations, all of which are carried on cable.
The reason that oddity exists is section 31 of our Copyright Act, which gives cable systems the right to retransmit over-the-air signals for free. We could solve the U.S. problem and the Canadian problem if we eliminated section 31 of the Copyright Act and simply allowed over-the-air stations to negotiate with cable companies the fair value of their signal.
That regime exists in the U.S. It's called a “retransmission consent regime”. NBC Buffalo negotiates with the local Buffalo cable company and they come to an agreement. If they don't come to an agreement, the signal isn't carried. We would like that opportunity for our stations in Canada. That will give us access to the same revenue stream that our competitor channels have and it would give us fair remuneration for what's a very valuable product to Canadians and allow us to continue to fund local news and employ Canadians in local markets.
I'll tackle one specific issue first that you should think about.
As the dissemination of content moves online—as you say, we're moving out of the traditional ecosystem—we've launched an online product called CraveTV, which is our answer to Netflix. It's been very successful in its own right, although not on the scale of Netflix. Netflix has five million subscribers in Canada. It charges $10.99 a month and doesn't charge or remit HST. Crave, on the other hand, just using Ontario as an example, operates at a 13% cost disadvantage in terms of its pricing. You asked how we can facilitate the strengthening of domestic content disseminators here and now in an efficient manner. One way to do that would be to require the Netflixes of the world, the Googles and Facebooks of the world, to charge and remit tax on the same basis that Canadian entities do. That's one.
Then, again, you asked about the opportunities for export. As Canada's largest broadcaster, we're very enthusiastic about those, but the domestic ecosystem needs to be fixed first. I referred to local TV. Local TV needs help, and there are ways to help it. As I said, allowing it to charge a subscription fee would be one way, and at the same time—in the context of NAFTA—that might be of appeal to your American partners. Their border stations could charge as well.
Those are two quick, efficient fixes. Pam may have other views.
Thank you very much, Mr. Chair.
I appreciate this opportunity to speak to a fellow barley grower and a neighbour from my part of Alberta.
Basically, Jason, some of the things you talked about—non-tariff barriers, maximum residue levels, issues like that—kind of get thrown into the mix. Not a lot of people understand unless they're in the business, so that's part of it with regard to non-tariff barriers.
Other advantages and opportunities that we have are plant-breeding techniques and trying to be able to work those into a North American context. Of course, in order to do that, you have to have a certain scale so it can take place. Then there are the biotech barriers as well. We have chemicals that we should be able to purchase coming across from the U.S., but of course, we have all these regulatory barriers that exist. I think trying to get into that sort of harmonization is a critical part.
I know when you responded to Ms. Ramsey earlier, you said you would bring a report in. However, I think it's important that people who perhaps aren't necessarily in the business have a little bit of an idea of what some of the concerns are, because, as you said, looking at the beef industry, it eats the barley that we grow. They may wonder why we only sell 21%, but it goes in the form of protein in a different way.
Could you expand on some of that in the bit of time the chair has allowed me?
We're going into our second round now. We have three groups of witnesses.
For those who have just joined us, we are continuing our study on future trade between Canada and Mexico and the United States.
We have, via video conference all the way from Montreal, Quebec, the Council of Canadians, with Ms. Dey. As well, we have with us the Canadian Federation of Independent Business, with Corinne Pohlmann, and Scott Vaughan, from the International Institute for Sustainable Development.
We'll go right to the video conference first in case we have glitches. It's better to do that first, I find.
As the presenters here know, we try to keep it to five minutes or under, if you can. If you see my red light on that means the time is up. Then we'll have dialogue. If there's something that you didn't get in or you want to add, you can always add it when we get into the Qs and As later on. Without further ado, we'll go to the Council of Canadians.
Ms. Dey, you have the floor.
My name is Sujata Dey, and I am in charge of the international trade campaign at the Council of Canadians.
I will make my presentation in English, but I could answer your questions in French.
Today we are coming full circle. The Council of Canadians was founded to fight the Canada-United States Free Trade Agreement, which later became NAFTA. While there is much that has changed over the 30 years, many of our basic concerns about NAFTA have not.
While some say that NAFTA is a win-win for the three countries, in reality it's been more of a win-win for the corporations of the three countries. During NAFTA, inequality in the U.S. and Canada has risen. Mexico, which started in NAFTA with a 58% poverty rate, still has a 58% poverty rate. Environmental policies have been threatened by chapter 11 lawsuits and by energy proportionality clauses. It is impossible for the government to talk about progressive trade, we feel, when there are no plans to remove these clauses.
Today, there are many pundits who will say that NAFTA is now too big to fail—where have we heard that before?—and that we must live in fear and dread about NAFTA's possible demise. Unfortunately, this logic puts Canada at a severe negotiating disadvantage. It locks us into accepting any demand at the negotiation table.
Instead, NAFTA negotiation must set the course for a very different type of deal. If Canada does not achieve an ambitious deal that protects Canadians and the environment, we must simply walk away.
This is not just me saying that; it's the C.D. Howe Institute. There are many people who have been saying the same thing. We are not the only ones. An overwhelming majority of the people we polled agree. We commissioned a poll with EKOS Research, which we just launched today, and 76% agreed with this statement, “In the event that NAFTA negotiations result in a bad deal for Canadians and the environment, Canada should walk away from the deal.” This statement was supported regardless of political affiliation by 69% of Conservatives, 77% of Liberals, 80% of the Bloc Québécois, 81% of the NDP, and 90% of Greens.
In addition, we surveyed people on what they think of different prescriptions in NAFTA.
Eighty per cent said that clauses in NAFTA that make water vulnerable to export and privatization should be removed. Remember that NAFTA's annex lists water as a tradable good. If any province allowed water exports, we'd be obligated to export water. Furthermore, with a proportionality clause, we would be forced to meet water export quotas. Our honorary chairperson, Maude Barlow, former senior UN adviser on water, has devoted many decades of her life to this issue.
In our poll, 70% said that we must remove energy proportionality provisions that lock Canada into maintaining energy export quotas to the United States. These energy quotas make it hard for Canada to transition away from fossil fuels and the tar sands. It makes it harder for us to meet our Paris climate change commitments.
Lastly, we asked people what they thought about chapter 11, the clause that allows corporations to sue states over policy changes. They were clear that they did not want tweaks to chapter 11. They did not want the CETA investor court system. They wanted it eliminated. Sixty-three per cent said that chapter 11 provisions that allow corporations to sue states should be eliminated from the deal. Therefore, we think that the U.S. trade representative's proposal for an ISDS opt-in option looks promising, since they can effectively disarm chapter 11. It is one that Canada should welcome.
The results of our online poll are available on our website. As you will see, it's very consistent in terms of region, age group, and political leaning.
We should not live in the fear of a Trump tear-up, nor should we put up meek and unbinding projects that do not substantially change the deal. People are asking the government to make major changes in NAFTA, and they need to be heard.
You can find out more about our campaign fact sheets and videos on our website at canadians.org/nafta.
Great. Thank you so much.
Thank you for the opportunity to be here today to present CFIB's perspective on NAFTA. You should have a slide presentation in front of you that I just want to walk you through very quickly.
CFIB is a not-for-profit, non-partisan organization that represents more than 109,000 small and medium-sized businesses across Canada. Our members represent all sectors of the economy, and are found in every region of the country. It's important to remember that Canada's SMEs employ 90% of Canadians who are working in the private sector, and they're responsible for the bulk of job creation in Canada. Addressing issues of importance to them can actually have widespread impacts on job creation and the economy overall.
Canada is a trading nation. Every year, billions of dollars of goods and services flow through our border, and many jobs depend on the vitality of our trade relationships. To better understand our members' perspective on NAFTA, we conducted a survey in May that got almost 4,400 responses.
Of the survey respondents, 63% had experience importing from the United States and 28% had experience exporting to the United States. As well, 3.5% had experience importing from Mexico, and 5% had experience exporting to Mexico.
As the U.S.A. is our largest trading partner, changes to NAFTA have the potential to seriously impact how we do business. Uncertainty in this area makes it difficult for Canada's SMEs to plan for the future. In fact, more than one in four businesses are already looking to alter their trade plans, with another 42% not yet knowing if they will. Only 30% were confident that their trade plans would continue as they are.
This reaction should not come as a surprise, as getting involved in trade, even when there is more certainty, is not easy for smaller firms. There are almost always challenges that smaller businesses must try to overcome. Some, such as currency fluctuations, will not be solved by trade agreements. Others however, such as the cost of shipping, duties, and taxes, and understanding rules and regulations can certainly be addressed to some degree by successful trade agreements. These are among the areas we are seeking governments to address in this renegotiation of NAFTA.
It should be known that most get involved in exporting because they see a growing market demand for their product or service, because they want to expand their business, or because they see a good potential market opportunity. However, more than one-third also cited favourable free trade agreements as having an influence on their intention to export, so addressing SME trade priorities could encourage even more to engage in trade.
Our survey garnered more than 100 pages of comments on how NAFTA could be improved, and many common themes emerged. These slides provide a summary of the most important priorities to address in these NAFTA negotiations to assist small and medium-sized businesses. They include having a chapter specifically addressing the needs and particular challenges faced by small businesses. It could include a series of commitments and principles that all parties agree to, and we have suggested a few in a submission that we've also circulated to the committee members.
We also think we need to ensure that the current range of duty-free goods within North America remains as is, or is expanded. Many small business owners stated how important the agreement was in making them competitive, and losing this advantage would be devastating to their business. A focus on simplifying the rules, with the aim of reducing the overall administrative burden for small businesses involved in trade is another area.
Our submission outlines some very specific examples raised by members in our survey that could be addressed. Sometimes, the toughest issues that small businesses face are the myriad of taxes and rules at the state and provincial levels of government. We would encourage governments to find ways to include sub-national levels of government when working towards regulatory co-operation of tax and regulatory systems across all those multiple levels of government.
We would also strongly discourage changes that would complicate or tighten the rules of origin. Many expressed alarm that the NAFTA renegotiations could further complicate what is already a very daunting task for many SMEs. Rules of origin should be easy to understand, clearly communicated, and include solid examples of what is required.
Some of the most frustrating aspects of trade are the paperwork and the processes businesses must follow to get people or products across borders. Making border processes easier should include better customer service, easier and timelier access to information resources, and quicker response times to business inquiries.
Also, truck transportation is vital. It's a vital aspect of free trade in North America. While we understand the importance of safe and secure borders, NAFTA should look at ways to improve the speed at which trucks are able to cross those borders. This could include looking at how well trade facilitation programs such as the FAST program serve their intended purpose, and ensure that they are easy to access and more tailored to the needs of small firms.
Many small businesses also told us that there is a lack of clarity as to what visa may be required or not required for various types of labour to cross the border. This is often compounded by the uncertainty as to how the CBSA or the U.S. Customs and Border Protection will react to those. Even when their paperwork is in order, there are sometimes complications that cause delays in what should be an otherwise simple and straightforward process. The federal government should ensure that the free flow of labour remains an important component of NAFTA, and work to improve and clarify labour mobility rules.
Finally, we need to look at ways to modernize NAFTA.
E-commerce may be best to illustrate a technological advancement that should potentially be included as part of any free trade agreement. However, any new provisions related to e-commerce should be balanced with the needs of “bricks and mortar” businesses that have to compete with those online businesses. There is much more information on each of these items in the submission that we provided to you here today, as well as many member comments, and I'd be happy to answer any questions that you may have.
Mr. Chair, and honourable members, thanks very much for inviting me. I wanted to make three brief points.
First, in 1994 NAFTA and its environmental side agreement, at that point, broke new ground in aligning trade and environmental issues, and at a minimum, those environmental provisions that currently exist within NAFTA and its side agreement should not be weakened with backsliding in the renegotiations.
More importantly, these negotiations also offer a window to craft a new NAFTA for the next quarter-century. We live in a different world from 1994. The science of global environmental change is robust. The economics of the cost of pollution and the benefits of avoided ecological damage are extensive. International markets and international trade in green, low-carbon goods and services as well as e-commerce are rapidly expanding, and the engagement of the financial services sector in climate issues is—as an investment bank CEO said yesterday at the World Economic Forum in New York—at a tipping point.
Much of these actions are taking place under the umbrella not only of the Paris climate agreement and the sustainable development goals, but other commitments such as the UN Declaration on the Rights of Indigenous Peoples. NAFTA can and should be a catalyst to advance these commitments.
My second point focuses more specifically on climate change. We applaud the Government of Canada’s commitment to include climate as a core NAFTA objective. The European Union recently made a similar commitment to link trade, Paris, and the sustainable development goals, primarily through trade-related standards.
Some may argue that trade is not and should not be connected to climate issues. However, the International Monetary Fund and the World Economic Forum have identified climate change as the most pressing economic challenge of the 21st century, and the biggest risk to business stability today. We need to reform core economic policies, including trade, in order to reduce climate risk and scale-up joint action.
With that in mind let me identify a couple of entry points. One is disciplining environmentally damaging subsidies. The WTO, and the GATT before it, had talked about rules to reduce environmentally harmful subsidies for well over two decades. A new NAFTA ought to include disciplines to eliminate fossil fuel subsidies in accordance with G20 commitments.
Another is carving out a NAFTA climate environmental goods and services list, either in a new energy chapter, or through other chapters. The OECD, WTO, APEC, and others have identified lists of traded goods and services as well as their tariff lines. NAFTA has a chance to accelerate trade in clean technologies through not only zero tariffs but, more importantly, eliminating non-tariff barriers within Canada and between Canada, the U.S., and Mexico.
Linking the financial services chapter with climate finance options include climate disclosure; supporting innovative financial instruments like green bonds, climate bonds, sustainable development bonds that the World Bank has just issued; as well as cross-border clean power purchase agreements and energy purchase agreements to scale up North American-wide renewable and energy efficiency activities.
Another is establishing a North American climate-forest sink and offsets system. Frances Seymour, who was in Ottawa last week, reminds us that our forests represent the only proven carbon capture and storage option that is affordable and known. Therefore, North America could be a leader, which would also help our important forestry industry.
Finally, there's scaling up a North American climate adaptation focusing on supply chains, trade corridors, and related vulnerable areas. The more frequent and severe extreme weather events that we see today, literally today, are becoming the new norm for tomorrow.
Mr. Chair, I wanted to make a brief comment as well as about investment. The current chapter 11 was flawed from the outset by emphasizing investor rights without investor responsibilities. There have been several investor-state disputes that raised fundamental concerns with regard to the democratic right to regulate. NAFTA needs to reform. The CETA investment chapter provides a good basis. Moreover, the UN Commission on International Trade Law is discussing right now possible changes to investor-state dispute settlement.
For more than 20 years, IISD has been actively engaged in trade and investment issues, beginning under the leadership of David Runnalls. I would be glad to share the work that we've done related to our NAFTA analysis with the clerk.
Thank you to our witnesses. It's so excellent to see just how engaged Canadians are, as well as our witnesses who represent their members, and the amount of work they've done. I think that speaks to the maturity of NAFTA, 23 years, and what it's meant to Canada, to the United States, and to Mexico.
But over those 23 years many things have changed. We've entered this digital era, and we're looking at more progressive trade agreements. The types of questions that come about with NAFTA are somewhat different from what we experienced as we were going through our consultations with TPP.
It was good to see, Ms. Dey as well as Ms. Pohlmann, that you had done a number of surveys with your members, and many are asking for the same things. Some of the surveys we've heard say that what Canadians want is not just a trade deal. They want a fair trade deal, and they are looking for a progressive trade deal. That's what we want. We heard from the . The minister says we will not sign just any deal, but we will sign a deal that is good for Canadians. That's why a number of our priorities are progressive, such as the chapters on environment, labour, or indigenous matters.
I'd like to hear from Ms. Dey. Speaking of those three areas and those who are negotiating at the table, can you put in priority what you would want to see on the environment, on labour, on indigenous issues, what we would lead with?
One of the things that's really important is that a lot of what happens in trade agreements can often be more symbolic. The most important thing I would put on the top of my list is “binding and enforceable”. For example, having the Paris climate agreement within the environment chapter of NAFTA would be a very important thing, but it would also be something that's binding. For example, when we look at CETA there are many promises and there are many different claims about CETA, but nothing within the environment or sustainable development chapter in CETA is binding at all. In fact what it says is that we recognize the Paris climate agreement. Recognizing it is very different from saying there will be a penalty if you do not subscribe to it.
The other thing we noticed in these chapters, in the TPP as well, is that they will often say things like we recognize that we will not change our standards, but we don't actually set what those standards are. Obviously the reason is that we don't want to say to other countries that this is what they should do, but on the other hand there has to be some kind of mechanism, for example, to say to the country that is not meeting a certain minimum standard that we're going to add tariffs to it. We'd say, “Go ahead, keep your standard, but there are definitely going to be prices to pay for that”.
It's the same thing with indigenous issues. The UNDRIP has to be part of this and part of an enforceable mechanism.
Another thing we should also talk about is governance, because within these trade agreements we're now shifting governance from sovereign parliaments toward a trade agreement. There has to be some kind of mechanism in it that our parliamentary standards as Canadians are actually part of those agreements.
I just want to take something apart that I hear a lot. I hear many people say CETA is the most progressive agreement ever. Certainly there are some interesting points in CETA, but I think what you have to remember is that a lot of what is in CETA that people refer to as progressive is in the interpretative declaration that was made after the agreement was signed. That is an agreement that sounds very nice, but the problem is that it's not part of the agreement. It's only when there is something that's not clear in the agreement that it interprets that. So it is something that is actually quite fluid, right?
A lot of those principles are wonderful—for example, recognizing the precautionary principle in trade agreements—but none of that is actually enforceable. I think the key for progressiveness is enforceability.
It's very much so. That's an interesting question, because you have to remember that water is becoming a multi-billion dollar industry. There is even trade right now on futures of water. It has become an investment vehicle. Those are very important.
In NAFTA's annex, water is a tradeable good. Right now, there is relatively no danger, because all the provincial laws are pretty harmonized. They don't allow exports of bottled water, but if any one jurisdiction did, then we are obligated. It's a good, so we're obligated to do that, and not only obligated, because we have energy proportionality in the agreement. That is also very dangerous, because we are then obligated to give a certain percentage of exports, according to a formula.
The other problem is that water is now becoming an investment vehicle. That means if we have an ISDS with chapter 11 in it, we could have a chapter 11 suit based on our control of our water resources.
We're the most sued developed country in the world, with 39 suits, and a lot of them over our environmental policies. We have to remember that we are a resource economy. We have a lot of resources, so as we try to protect our resources, we will get more and more suits as we change laws and policies, especially when it comes to indigenous people who are going to try to take control of their resources. This is a very important Trojan horse that could destroy a lot of our attempts to do good in the world, and that's what we feel Canada wants to do.
However, when you get to the CETA chapter of the investment court system, you have to remember that it's a very controversial mechanism because it's still making the primacy of law over the investor rights. The investor rights are still given there, and are higher than our other rights. Inequality is a major problem as we go into environmental issues because the problem in this world right now is not that investors don't have enough power. The problem is that people and the environment don't necessarily have enough power. When we look at CETA, there are a few changes. There are judges, but there are the conflicts of interest of the judges serving as judges and then serving as lawyers. There's still an incentive, because this is a very lucrative industry. It's $4 million a case to offend, to put those cases in. It's still a very potent tool for corporations against the public interest. That's very important.
There's a very interesting proposal on the table from the U.S. trade representative to have an opt-in to chapter 11. That would effectively disable chapter 11. It would mean that any country that didn't want it didn't have to do it. We could totally do that. That would set a wonderful precedent. You have to remember, this is not some crazy Council of Canadians radical statement. Australia has trade agreements with the United States without ISDS in them. That's a developed country. Brazil does not have any agreement with ISDS. A number of countries are pulling out of their ISDS agreements.
We're talking about being ambitious as Canadians. Maybe that's an ambitious point where we can do something.
It's probably no surprise what my question might focus on. Thank you very much, all of you, for your presentations today.
Certainly, yes, the border is an issue, as we've heard from a number of witnesses. Similar to Ms. Ramsey, I represent an area that is on the border. I am also fortunate, and sometimes unfortunate, in being very involved with small businesses. We have two in the riding, and one of them is directly impacted by exports.
When we look at a smarter, more efficient border, my colleague talked about the use of technology. Certainly the current NAFTA agreement is nowhere near keeping pace with current technology. I wonder, Mr. Vaughan and Ms. Pohlmann, if you could speak to the potential impact and opportunity for e-manifest and pre-clearance of goods and services, but also people, so that we can reduce the delays at the border. The theme I want to push here is a stronger, not weaker, North American market.
Absolutely, technology is definitely a tool that could be used much more effectively at the border than it currently is. The issue we sometimes run into, however, is that often these tools are built with the big businesses in mind and the large amounts of goods that cross the border, and not so much the little independent that is only going to be sending a small amount across the border. In terms of the paperwork, even if it's going to be electronic, you still have to figure out how to fill out all the forms. That's where we need to rethink a bit how border processes affect smaller companies versus larger ones.
If you're trading the same product but you're only doing it once a month, why do you have to fill out the same forms every single time, multiple times? That's what we're trying to get at, trying to think differently about how smaller firms use the border processes versus large-volume companies that are using it. Too often it's all built for the big companies and not thinking about the impacts on the small ones. They still have to fill out the same forms and it just takes a lot more time and a lot more effort, even if they are electronic.
I agree that technology could be used much more effectively than it is today, and labour mobility is a key area. There it's a lack of understanding of what the rules are and inconsistency in how the rules are applied. Using technology might be one way to bring more consistency to that, because the way it is today, anecdotally, we hear that you get one answer from one border guard and a different answer from another and it's really confusing. They try to find other ways to work around it, which is not ideal either. Technology could potentially help alleviate some of that and just make it a lot clearer. That's what we're hoping the NAFTA negotiations can do.
Very briefly, I was at a meeting yesterday in New York talking about exactly this with the OECD, the International Trade Centre, and the World Trade Organization.
There's a report I'd recommend that ITC came out with in July 2017. Right now, e-commerce represents about 12% of global trade, so it's trillions of dollars, but in terms of the connectivity gap, as Ms. Pohlmann said, large-scale companies are better suited. For small and medium-sized enterprises, this connectivity gap remains a real issue, but the potential, then, and what ITC has shown, is that deploying greater e-commerce, especially business-to-business opportunities, has also closed gender gaps within trade. Young entrepreneurial women, when they're using e-commerce, have more success in crossing borders than if they're doing it in person, particularly in developing countries.
Again I'd just agree with you that NAFTA could actually lead the world in connectivity.
Just adding to that as well, in terms of a stronger North American region, there is an opportunity here certainly to modernize. Some of the themes we've heard today we also heard in the U.S., when we were in Washington, Chicago, and Detroit in early June, encouraging the interest and focusing on the environment. One of the suggestions before the House ways and means committee was to potentially look at NAFTA as a bit more of a nimble opportunity in terms of being able to make changes in the case of the use of technology, perhaps not an entire chapter on technology but looking at the agreement with a technological lens.
Ms. Pohlmann, the other area I want to speak with you about is labour mobility. That was also raised as something to look at in the United States. When we look at small businesses, access to labour is an issue. What I hear even in my region is that on any given day there are about 300 vacancies in businesses just in one of my counties. In terms of trying to take greater advantage of NAFTA, CETA, or the Ukraine agreement, could you speak to the challenges you hear about from your small businesses on the need for enhanced labour access?
Welcome back, everyone.
Welcome to the table panellists. I'm sorry, but we had some future business that we had to discuss right away. As you know, our study is on future trade with the U.S. and Mexico, and we have a serious situation in Mexico, as many of you know. We were planning to go there Saturday, but everything has changed. We had to deal with that business. Thank you for your patience.
As many of you who were here before know, we usually try to keep each presentation under five minutes. Then we'll have good dialogue with the MPs.
We have with us today Fertilizer Canada, Smart Prosperity Institute, and Chicken Farmers of Canada.
Maybe we can start off with Fertilizer Canada. We have Mr. Graham, senior vice-president.
Go ahead, sir. You have the floor.
Thank you, Mr. Eyking and members of Parliament.
Thank you for the introduction. Thank you also for inviting Fertilizer Canada to speak with you today in relation to the state of trade among Canada, the United States, and Mexico. We are pleased to appear before you and to provide the committee with information about our association's mandate as well as to present our recommendations in the context of the North American Free Trade Agreement's negotiation.
I am Clyde Graham, senior vice-president of Fertilizer Canada.
Fertilizer Canada represents the manufacturers and wholesale and retail distributors of potash, nitrogen, phosphate, and sulphur fertilizer and related products. Collectively, our members employ more than 12,000 Canadians and contribute over $12 billion annually to the Canadian economy through advanced manufacturing, mining, and distribution facilities nationwide. As the foundation of Canada's agri-food sector, Fertilizer Canada continues to make changes that positively impact the environment, the economy, and the social fabric of Canadian life.
NAFTA is of significant interest to our members and their farm customers. Farmers in agribusinesses on both sides of the 49th parallel depend on imports and exports of fertilizer in an integrated North American sector.
Fertilizer Canada has consistently supported regional and bilateral free trade agreements, including the Canada-European Union Comprehensive Economic and Trade Agreement and the proposed trans-Pacific partnership. We're also engaged in the exploration of China and other agreements that are potentially in the works.
We certainly support an expanded and modernized North American Free Trade Agreement to protect and enhance free trade within North America. We would like to bring forward several key recommendations to support the Canadian government's goal to modernize and strengthen NAFTA. In essence, while we support an enhanced NAFTA, I think we would certainly like the Government of Canada to take a “do no harm” approach. What we have is pretty valuable, and we'd like to sustain it and make it better.
Foremost, we need to protect the interests of our farmer customers in Canada, the United States, and Mexico, who depend on access to cost-effective fertilizer products and services. Canada is the world leader in potash fertilizer production and export, accounting for 52% of global potash reserves. Canada is also the ninth-largest producer of nitrogen fertilizer in the world. Almost half of the nitrogen fertilizer produced in Canada is exported to the United States and its farmers.
Additionally, the United States exports between $800 million and $900 million in fertilizer products to Canada each year, mainly phosphate and nitrogen fertilizers, including monoammonium phosphate and urea. Canada maintains a significant trade surplus in fertilizer with the United States—about 4:1. Maintaining or improving integrated supply chains within the United States and Mexican markets is imperative to Canadian manufacturers during the NAFTA renegotiations.
Fertilizer Canada also recommends that we support regulatory harmonization and co-operation. A consistent science-based approach will prevent the creation of protectionist trade barriers under the guise of environmental, health, and sanitary or phytosanitary rules. Strengthening regulatory co-operation will reduce regulatory approvals required for products produced and sold across the region.
To achieve this, we recommend modernizing customs procedures and expanding the range of skilled workers and professionals for free movement within NAFTA. That is certainly an area we would like to recommend strongly, as executives, other professionals, and skilled workers move within companies that are integrated in North America in the fertilizer industry, and that's an important value for the entire North American economy.
Last, we recommend that the following provisions be maintained or adopted during the NAFTA renegotiations.
Maintain the current zero duty rate on fertilizers and chemical commodities listed in the harmonized tariff schedules for chapters 28 and 31. Maintain the exemption of the merchandising processing fee on imports of NAFTA declared goods. Maintain current tariff shift rules of origin for fertilizers and chemicals listed in the harmonized tariff schedule, chapters 28 and 31 to avoid unnecessary administrative burden, and adopt a chemical reaction rule for the qualification of chemicals to align NAFTA with other modern free trade agreements and provide administrative efficiencies.
Thank you very much, Mr. Chairman. I am with the Smart Prosperity Institute at the University of Ottawa. We're a clean economy think tank with a research network of academic researchers across the country in this area.
You might be asking yourselves why a trade agreement should concern itself with environmental issues. You've had three environmentalists today, more or less. Isn't life complicated enough without making the poor trade negotiator's life even more difficult by adding in something else?
I was involved with the original NAFTA. I'm old enough to have done that. Clyde was actually involved with the creation of the GATT, so we're both ancient in all of this. I was right there at the WTO. We asked ourselves the same question, and the answer is still the same. Under sustainable development, the environment and the economy are joined at the hip. Policies in one sphere that ignore the other are bound to fail. We have all sorts of examples at hand to illustrate this mutual interdependence. Think pipelines. Think the management of natural resources.
Canadian industry has learned a great deal about environmental performance since the beginnings of NAFTA. We're now among the world's leaders in forest management. Our mining industries continue to improve their performance. Our fisheries management practices are vastly improved. The Canadian brand is now a trade advantage in all sorts of commodities markets, potentially.
NAFTA was a pioneering agreement with its environmental side agreement. The environment is now a staple of every major trade agreement and now a common topic at the WTO, so we welcome the stated desire of all parties to bring the environment into the main text of the agreement and to strengthen it. It's a side agreement now. It's now much more modern to put the environment into the main text of the agreement.
I want to talk about two things. One, which you've heard about already, is chapter 11, the investor state dispute resolution mechanism. The second is Canada's obligations under the Paris agreement on the road to a clean economy.
You probably all know about chapter 11, but in brief, it gives investors the right to take governments to an arbitration tribunal, should they feel they've been mistreated by any level of government in the three countries. It was included in the original agreement to reassure investors in Mexico that they would be compensated in the event of expropriation. Canada was indifferent, but the U.S. and Mexico were strongly in favour. It has since become a very blunt instrument. It has in it phrases like “fair and equitable treatment” and “expropriation”, which have been very broadly construed by the panels. We're the victims of this. There have been 39 claims against Canada. We've lost almost all of them. It's cost the federal government $215 million. The majority of the claims have been based on environmental issues, in many cases effectively challenging the rights of government to regulate. These are international arbitrators in a system that's used for commercial arbitration, contract disputes. They are now deciding whether or not the Government of Saskatchewan, or Alberta or Ontario, has the right to regulate on a particular issue.
Gordon Ritchie, who's no softie, who was one of Canada's top negotiators on the original Canada-U.S. deal, described it the other day as an unbelievable intrusion into sovereignty.
What to do about chapter 11? It seems as if the government's preferred position is a regime similar to that constructed under CETA. It is more structured. It has appointed members who serve without the conflict of interest common under the present system. It has an appeals body, and perhaps most importantly, it contains a clear statement on the ability of governments to regulate as they see fit. If this doesn't work with the other two countries, Canada should at least insist on a clarification of the terms “expropriation” and “fair and equitable treatment”, or we'll be beaten over the head with this thing forever.
Turning to Canada's climate strategy, Canada's greatest challenge over the next 30 years or so will be twofold: to move toward an economy that is far less carbon dependent than it is now, and continue to support a robust energy sector. That is not an easy task. This transition to a lower-carbon economy will present unprecedented opportunities for the clean-tech sector in particular, and will require a complex set of government actions to bring it about.
President Trump's decision to withdraw from Paris, and the actions of his EPA director in denying the basic science of climate change, and relaxing many of the main environmental laws and regulations, presents Canada with a set of difficult choices. Here, again, I think there are two potential NAFTA strategies.
One of them would be to basically begin to move toward a North American clean economy strategy— in fact, NAFTA could be used to do that—which would include a discipline on fossil fuel subsidies, harmonizing product energy efficiency, and the institution of a North American clean economy commission. There's already a NAFTA Commission for Environmental Cooperation in Montreal. It works. It functions. This would be a good job for it to do.
If that doesn't work, then Canada, de minimis—to use that phrase again—will have to insist that the new NAFTA includes language that ensures that no provision restricts Canada's WTO rights under article 20 to take environmental measures, and we should seek to have the UN Framework Convention on Climate Change included in the list of multilateral agreements that are under NAFTA. That's fairly common practice, but it's not there. Otherwise, our industry could find themselves in considerable difficulty when it comes to pursuing the pan-Canadian climate change framework.
Thank you, Mr. Chairman. I'm sorry to have gone on a bit.
Thank you very much, Mr. Chair, members. Thank you for inviting us today to speak on NAFTA.
At the outset, let me say that NAFTA, as currently structured, has been positive for both the Canadian and the U.S. chicken industry. With the stability provided by supply management, the Canadian chicken industry has been able to focus on growing demand for Canadian-grown chicken. Since the implementation of NAFTA, we've grown our industry from 600 million kilograms a year to almost 1.2 billion kilograms a year.
As a result, today, our 240 hatching egg producers, 40 hatcheries, 125 feed mills, 2,800 chicken farmers, and 191 processors sustain more than 88,000 jobs, contribute more than $7 billion to our economy, and pay more than $2.2 billion in taxes. It isn't just 2,800 chicken farmers who are engaged in this industry.
Our supply management system is much more than just stability. We've levered our regulations to implement mandatory third-party audited on-farm food safety and animal care programs. We've reduced the use of the most important antibiotics to human medicine, and we aren't stopping there. We're investing in innovating for the future if our strong growth continues. To expand our capacity, all members have made significant capital investments in the last few years, and are continuing with planned investments in new barns, new hatcheries, and new processing plants right across the country.
In its submission to USTR, the U.S. chicken industry stated:
||The benefits of NAFTA to the U.S. poultry industry stand in stark contrast to our experiences in other countries where comparable agreements were never achieved.
Canada is the second-largest market for U.S. chicken exports after Mexico, in both volume and value. When considered on a per capita basis, we import three times as much as Mexico does. We imported 142 million kilograms of chicken from the U.S. in 2016, all of it duty free.
The United States also enjoyed a consistent, positive balance of trade, $300 million a year. Because NAFTA access is tied to our Canadian production, it has increased every year. In fact, since they implemented NAFTA, U.S. access to our market has gone up 406%, while total U.S. exports to Canada are up 166%. There's no issue here from the U.S. Thus, NAFTA as currently structured is positive both for the Canadian and the U.S. industry.
That doesn't mean some modernization and tweaking can't be done. A couple of regulatory misalignments that we would focus on include antibiotic classification.
Of particular importance to us is bacitracin, which is a key antibiotic that we use. It's classified as “not important to human medicine” in the U.S., while Canada and the World Health Organization say that it is. Furthermore, the U.S. definition of “raised without antibiotics” allows them to use ionophores, if approved by USDA and labelled.
While we've done a good job in having the U.S. repeal country-of-origin labelling for pork and beef, it hasn't been done in chicken. It's still on the books, and we're not aware of any national on-farm food safety or animal welfare programs in the U.S.
Another concern that we've had, that we've raised with you in the past, is fraudulent spent fowl imports. These illegal imports represent the loss of about 2,700 jobs in Canada on an annual basis. It's also a food safety issue. Because this is fraudulent product, we've broken the chain of traceability. If there's a food safety recall in the U.S., in Canada, because we've broken that traceability chain, we won't know where it is, and we put Canadian consumers at risk.
The U.S. must commit to finding a means of ensuring that their exports of spent fowl—and we're not trying to stop them—are indeed spent fowl and not fraudulently labelled broiler chicken meat.
We believe NAFTA modernization should create regulatory alignment on the issues. Chicken farmers are proud of the role we play, but we don't think we should be put at a competitive disadvantage because we've been willing to shoulder these additional burdens.
What would we recommend?
Again, in terms of context, the U.S. is 17 times the size of our industry, 18 billion kilograms to 1.2 billion kilograms. Their exports are three times the size of our total production. We sit beside an elephant, in terms of our industry. That magnitude makes it important to keep the system that we have. We need the over-quota tariffs that maintain the level of access to what we've negotiated. Any reduction in the over-quota tariff would jeopardize the stability of our industry and put it at risk.
Second, in terms of the access, we've negotiated 7.5%. That makes us the second-largest importer from the U.S. and the 14th-largest importer of chicken globally, and it will go up every year. There's already a built-in escalator clause in terms of our access, so we don't believe there should be any additional access given from a per cent of our market.
Third, we have to preserve our rights on animal agricultural special safeguards.
Finally, there are the regulatory misalignments around COOL, fraudulently labelled spent fowl, antibiotics....
We appreciate the support that you have provided to us over the years. We think we can come out on a positive basis in these negotiations if we stand firm across Canada on what's important.
I look forward to your questions. Thanks.
Mr. Graham, on the Fertilizer Canada side of things, I am a farmer and understand the sorts of things you require as far as fertilizers are concerned. I know the different types of feedstocks that you require, especially when you are looking at nitrogen fertilizer.
We've been told that with the added costs that are coming from the carbon tax, the margins, as far as being able to take our Canadian product into the States, are going to be so small that we may well lose that market. We've also been told that China will take up that market, and they base it on coal, so we are not looking at the unintended consequences, perhaps, with some of these. There are issues that exist there.
When you look at the kinds of things that we should be keeping in mind as we look at the fertilizer industry, that should be one of them as well. I don't know how that ties in to NAFTA, but these are issues that.... The fertilizer industry is going to be there, and your main point was how we are going to maintain security for farmers. If we care about Canadian farmers, this is one of the issues that we should be looking at.
You talked about the chemical reaction rule and having that align with other agreements. Could you just give a quick update as to what you're looking for there?
There's an optimistic strategy and a pessimistic strategy. I mentioned them quickly at the end. The pessimistic strategy is that we have to make sure we protect our rights and Mexico's rights to honour our obligations under the Paris agreement from actions that penalize Canadian producers and Canadian companies that have actually obeyed Canadian law.
Normally, in trade agreements, the international environmental agreements are listed by name, and in NAFTA, the Framework Convention on Climate Change is not listed. At the very least, Canada should make sure it is listed, because if it's there, then Canada pursuing its obligations under that convention is non-actionable in trade terms.
The more optimistic one that I explored very briefly is that the future of a clean economy in North America is an enormously optimistic one, which could provide jobs. It could provide all kinds of employment opportunities and all kinds of technological opportunities. We're really at the stage now where Bloomberg New Energy Finance reckons that by 2022 it will be cheaper to build a solar power plant from scratch than it will be to operate an existing gas-powered plant in the United States, so the economics are changing very rapidly.
The Trump administration may be looking for some sort of an out on climate change. They're not going to sign up to Paris again, but they may be looking to try to improve their reputation a bit. The administration is under enormous pressure now from governors. There's a list of 30—mainly Republican—governors, who wrote to the president saying, please don't mess around with renewable energy; our states are very dependent on it.
Large companies like Walmart are investing tons of money now in renewable energy. It's an idea that's coming, and it's going to come no matter what the president does. If they're looking for a way to begin to leaven the effects of what they've said about climate change, to be in favour of the growth of the clean-tech sector and of a cleaner economy would be a very good way to do it. There are ways in which we could modify NAFTA to permit tariff-free and barrier-free entry to environmental goods and services.
We can do something about fossil fuel subsidies, which all the parties in this House and all the G20 members—including the United States and Mexico—have committed to eliminate. We could also do something about this funny little commission in Montreal, the Commission for Environmental Cooperation. Instead of seeing it swept out the door, which it will be if you bring the environmental provisions into the treaty, it could in fact be a clean economy commission. It could give advice, which could begin to create discussions, which could help to harmonize regulations on energy efficiency, for example. You'd get the three countries talking about something that wasn't climate change. They'd actually be talking about clean energy, which is a big employer and a very profitable enterprise.