Thank you very much, Madam Chair.
Thank you, members of this committee. I'll make a few introductory remarks and then I will be happy to answer your questions.
I'd like to acknowledge that we're gathered on the traditional territory of the Algonquin.
Let me start with very great pleasure by introducing the outstanding Canadian public servants who are here with me today and without whose hard work, dedication and intelligence this pivotal new agreement would not have been possible. I'm going to introduce the two people sitting next to me. Let me just say that they lead an outstanding team of Canadian professional trade negotiators. At a particularly rough moment during the negotiations, one of our negotiators said, “We think of ourselves as the Navy SEALs of Canada”. I think that is a very appropriate way for all of us to think of our outstanding professional trade negotiators.
With me is Steve Verheul, chief negotiator of NAFTA and assistant deputy minister of trade, and Kirsten Hillman, our acting ambassador to the U.S., as well as a trade negotiator of some renown.
I'm very pleased to speak today in support of Bill , the act to implement the new NAFTA, the Canada-United States-Mexico agreement.
Canada is a trading nation. Indeed, with the world's 10th largest economy, trade is the backbone of our economy. Trade is vital for the continued prosperity of Canadian workers, entrepreneurs, businesses and communities across the country.
Our government champions an open, inclusive society and an open global economy. These fundamental Canadian values transcend party and region. In fact, each of Canada's three major, recently concluded, trading agreements—the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and now the new NAFTA—were the outcome of efforts across party lines.
Canadians support free, fair, and balanced international trade, based on mutually agreed rules. These rules provide predictability and stability in how goods, services and investment are carried out between Canada and our major trading partners. We have seen remarkable success in this area.
In 1994 NAFTA created the largest free trade region in the world. In 2018 trilateral merchandise trade between the U.S., Canada and Mexico reached nearly $1.2 trillion U.S., a fourfold increase since 1993.
Today the NAFTA region comprises almost 490 million consumers and has a combined GDP of more than $23.5 trillion U.S. Our three countries together account for more than one-quarter of the world's GDP, with less than 7% of its population. This record of growth is a tribute to all Canadians, to our entrepreneurs and our workers across this country. Trade between the NAFTA partners has helped us build a continental network of supply chains across a range of industrial and agricultural sectors. It has made Canada more competitive globally. It has created good jobs for Canadians and has fostered job-creating direct investment between Canada and the United States.
The new NAFTA helps ensure we maintain this vital relationship, and that we maintain predictability and stability in our commercial relationship with the United States—our closest, and overwhelmingly our largest, trading partner—and with Mexico.
The negotiations to modernize NAFTA were unprecedented in their intensity, scope and urgency. At the outset we faced a barrage of protectionist trade actions from the United States and the very real threat of a U.S. unilateral withdrawal from NAFTA altogether. Team Canada stood firm and team Canada stood united. Guided by strong support for free trade from Canadians across the country, at all orders of government across the political spectrum, from business to labour leaders to indigenous leaders, we sought advice and consensus and we acted in a united way.
I would today like to particularly thank the NAFTA council for its hard work. Together we worked tirelessly to modernize NAFTA for the 21st century and to extract further benefits for Canadians from a trading partnership that has been a model for the world, and that is exactly what we accomplished.
The new NAFTA preserves Canada's tariff-free access to the United States and Mexico. It restores and strengthens the predictability and stability of Canada's access to our largest market, and crucially, it does so in the face of rising protectionist sentiment south of our border and around the world. The new NAFTA improves on and modernizes the original agreement.
Allow me to highlight some of the key tangible benefits for Canadians.
First, this agreement protects $2 billion U.S. worth of daily cross-border goods and services trade between Canada and the United States. This means that 99.9% of Canadian exports to the United States are eligible for tariff free trade.
The new NAFTA preserves crucial cross-border auto supply chains, and provides an incentive to produce vehicles in Canada.
The agreement also commits all partners to comply with stringent labour standards, and strengthens labour obligations to help level the playing field for Canadian workers. Mexico has also undertaken specific commitments to provide for the protection and effective recognition of the right to collective bargaining.
I would add that our government is working in collaboration with the Mexican government to help Mexico implement its labour reforms.
Throughout the negotiations, Canada was confronted with the American tariffs that were unprecedented, unjust, and arbitrary with respect to Canadian steel and aluminum. We were able to avoid an escalation, however, without backtracking. We stayed focused on defending Canadian workers, their families, and their communities.
We succeeded, and those U.S. tariffs have been lifted.
There was an additional U.S. threat to impose a section 232 tariff on Canadian autos and auto parts. For Canada, that threat was lifted on November 30, 2018, the day we signed the new NAFTA and the day we signed a binding letter on 232 autos and auto parts with the United States. As a result, Canada's auto industry now has the stability to seek investment for further growth and innovation.
The new NAFTA also preserves elements of the original NAFTA that have been essential for Canada and were under threat.
It maintains chapter 29 regarding the dispute settlement mechanism for trade. This is a fair and impartial mechanism, which had been included in the original agreement thanks to the hard work accomplished by Canada. This mechanism has been beneficial for our forest sector workers well over the years, and has protected their jobs from unjust trade measures.
The new agreement preserves NAFTA’s cultural exception, which contributes to protecting more than 666,000 jobs in Canada’s cultural industries and is so pivotal to supporting the artists who tell our stories, in both official languages.
Critically, the new NAFTA maintains tariff-free access to the U.S. market for Canadian ranchers and grain farmers. We should never lose sight of the fact that the starting objective of the United States in the NAFTA negotiations was to abolish Canada's system of supply management.
We did not accept that. Instead, we stood up for Canadian farmers and preserved supply management for this generation and for those to come.
The agreement includes an enforceable environment chapter that requires NAFTA partners to maintain high levels of environmental protection, as well as ensuring sound environmental stewardship. In addition, it recognizes and supports the unique role of indigenous peoples in safeguarding and preserving our environment.
The new NAFTA contains ambitious and enforceable labour obligations to protect workers from discrimination in the workplace, including on the basis of gender.
In conclusion, the new NAFTA is good for continued economic growth and prosperity in Canada. It restores stability and predictability for exporters and for the hundreds of thousands of Canadian workers in our export-oriented industries. It allows us to put the uncertainty of recent years in the past.
Most importantly, the new NAFTA is pivotal in securing the future of good-quality Canadian jobs across our country as market access to the United States and Mexico will be assured—will be guaranteed—by the new NAFTA for years to come.
I want to be clear. We have come a long way. However, until this agreement is ratified by all three countries and enters into force, there continues to be risk and uncertainty, which will inevitably grow with the passage of time. This agreement has already been ratified by the United States and Mexico—our two other NAFTA partners.
Debate in Parliament, including at committees, is very important in our democracy, but the risk to Canada is also real. It is imperative we lock in the gains we have made with this agreement, the security we have achieved and the market access we have fought for by ratifying the new NAFTA without undue delay. That is what Canadians expect all of us to do and it's the right thing to do.
Thank you very much.
I'll be happy to take your questions.
I want to thank the minister for being here this morning and accommodating the committee.
Minister, I get that the process and the timing is so important. I understand the risks that are sitting there. We don't know what the may say today or tomorrow while he is seeking a UN security seat and how that will impact our relationship with the president. We saw that during the negotiations and how that created problems during negotiations. We know that timeliness is important.
One of my frustrations arises when I look at the U.S. system and how they went through the approval process. They had the agreement in April. We actually talked about this committee doing a pre-study in April and it was declined. We could have started then. In fact, I made the motion to do that and it didn't happen. We asked that Parliament be recalled in November or December, when we could have dealt with this. It wasn't done. We've looked for other opportunities to bring it forward sooner with no response.
I will also look at the fact that Lighthizer was talking to Nancy Pelosi almost on a weekly basis down there on the USMCA and how they could get it through the House, their Senate and to fruition. Their talks were ongoing between the government—the White House, in that scenario—and the Democrats, even during the impeachment process, to get this done. Yet we still haven't had a call from the to our leader to say this is urgent.
I know you're doing the best you can with the tools you have in your tool box and doing anything to get this done, and we will. We will do everything we can. If you want us to sit later, we'll sit later. If you want us to sit on weekends, we'll sit on weekends. If you want us to sit during the break week, we'll sit during the break week.
There are a lot of people who are impacted by this agreement. We need to understand what those impacts are. We need to understand if there's anything we can do in implementation to mitigate those impacts. We need to know what that is. We need time. I'm concerned that, with the rush to get this done and the pressure to get this done, those people won't get heard. That's one of my concerns.
I guess when I look at that I see there are things that we needed to do when we looked at previous trade agreements, for example, TPP. We did two cross-country studies. Then we came back here and studied it again when the legislation came forward. Nobody is proposing that. We want to get it done as quickly as possible so it's moved forward and our traders can take advantage of this agreement, but we do need time. I hope you understand that we need time and we're doing our best to get it through without shunning the people who are impacted by this.
When we look at the agreement, we see that we need to get a better understanding of some things. I was with the aluminum producers this last week. I went down to Mr. 's riding. We talked about green aluminum. They talked about implementation. I talked to the primary producers of aluminum. I talked to secondary users. While they're not happy, they understand the importance of getting this agreement done, but they are looking for a mitigation program for them.
Have you thought through, for example, in the aluminum sector, what that may look like?
How do we go to these sectors and give those who are negatively impacted by this agreement a path forward?
Thank you, Madam Chair.
Deputy Prime Minister, thank you so much for the work you and your team have done. On behalf of the people of Nepean, and indeed on behalf of all Canadians, I would like to thank you and your team.
This is a good agreement. A lot of members of Parliament from all sides of the House have worked hard for a long time to protect the interests of the automotive sector, the steel sector and the aluminum sector. They have worked very hard on these things.
However, the economy is changing worldwide. We are going to a global knowledge-based economy. Here in Canada the economy is changing so much. To give an example, a non-trade one, international students were contributing very minimally 10 years back. Today we have 500,000 international students contributing $21 billion to the Canadian economy. I'm told that is bigger than the automotive sector here.
The steel industry and the aluminum industry have not seen any new greenfield projects, new capacity added, in 10 to 15 years—I may be wrong. Ten or 15 years back, we were second or third in the world in our aluminum capacity; however, during the last 10 to 15 years, I have not seen one new smelter set up in Canada.
I don't know whether this agreement is going to solve the problem, but the point is that the economy is changing and trade is changing, and 10 or 15 years down the road, will this agreement be good enough for the changing trade requirements in the new knowledge-based economy? I would like to know your views on that.
Thank you very much, Mr. Arya. That is an excellent question. It points to something about the new NAFTA that is not fully appreciated by Canadians.
Something we have discussed often with the negotiators is that in many ways the negotiation around the new NAFTA was almost a two-level negotiation. There was the very high-profile set of issues, often about Canada's pushing back against unprecedented protectionist demands from the United States. That was what was most visible to Canadians, what Canadians were quite rightly most concerned about. Then there was a negotiation on what we sometimes have referred to as the set of bread and butter trade issues. These are the kinds of issues trade negotiations are more routinely concerned about, and they're where some of the greatest gains of NAFTA were won. Let me talk about a few of them.
One is that this agreement has very successfully removed a lot of the red tape associated with cross-border trade. In the consultations we did before and during the negotiation, one of the things we learned, and that we heard most urgently from Canadian businesses engaged in trade in the NAFTA region, was that their greatest issue was all the red tape involved in trade. We heard from a surprising number of businesses that simply didn't bother to claim their NAFTA preferences because the red tape was so overwhelming. Think about that. The weight of the red tape was greater than the value of the tariff-free access that NAFTA offered.
One of the real pluses of this agreement is that, working together with the United States and Mexico, we have done a very good job of cutting back a lot of the red tape by using some of the technologies that the 21st century allows to make it easier for people to trade. That is one of the things we did with NAFTA. It doesn't make a great headline, but it will make life easier for a lot of Canadian businesses and will make them much more competitive.
In terms of the 21st-century economy more broadly, that was another part of this that was beneath the sea level, if you think of an iceberg. There was the tip of the iceberg, the very visible struggles, and then there was all the rest of the iceberg. That was another part of all the rest of the iceberg of the negotiation: a stated effort where we had real agreement between Canada, the U.S. and Mexico to modernize this agreement, to make it relevant to the shape of the 21st-century economy, relevant for the service sector and for sectors of the economy that are based much more on intellectual property than on physical goods. I think we achieved a great deal there.
I would like to make one final point. When it comes to certainty in the future—and to me, this is a very important element of the new NAFTA, something that I hope we in Canada will be able to replicate—after an arduous process of negotiation, we have achieved an agreement that has strong cross-party support in both the U.S. and Mexico.
Mr. Hoback referred to the fact that the U.S. managed to ratify this agreement in the heat of the impeachment struggle in the U.S. We have, in the new NAFTA, an agreement that both Nancy Pelosi and Donald Trump support. I struggle to think of anything else those two important American leaders both support. It's important for Canada that they both support it, because that gives us a real guarantee for the future.
Madam Chair is asking me to wrap up, but let me just conclude by also referring to our guest from Mexico, Mr. Seade. He represents a government that was not in office when the bulk of this agreement was negotiated. I would like to thank and acknowledge the work of Ambassador Seade, and also of President López Obrador. They did a difficult thing, which was to take an agreement that was negotiated by their predecessors and political opponents, take ownership of it and get it across the finish line. That's a real show of national unity in Mexico.
I think it would be great if we could accomplish the same thing here in Canada.
In terms of the agreement overall, I would like to start by saying that I am convinced that it is a good agreement for Canada and for Quebec. I am convinced of that because there were long consultations and discussions with entrepreneurs, workers and leaders in Quebec. As you are well aware, Premier Legault has said openly and clearly on a number of occasions that he and the federal government agree that this agreement is very significant and good for Quebec. I agree with Mr. Legault.
I have also observed, both in the negotiations on NAFTA and in those on CETA, that Quebec is one of the provinces in Canada that understands the importance of international trade very well. Quebec has negotiators with a lot of experience and we worked in close collaboration with them.
As for agricultural and dairy producers, it is important to understand the context. As I said in my remarks, the United States began with a clear demand, to completely dismantle the supply management system. To me, that is an astonishing demand. As you are well aware, that has been what the United States has wanted for a number of years. Once again, they tried to completely dismantle our supply management system.
I believe they thought it would be possible. I am very proud that our government stood firm in its response. We said that it would not be possible and that we were going to keep our supply management system.
You are right when you say that, in the negotiations, we gave the United States a little more access to our market, as the previous government had done in the negotiations on the Trans-Pacific Partnership (the TPP) and CETA. I agree with you and with the dairy producers of Canada that, as a result, it is essential for our government to provide fair and equitable compensation to Canadian dairy producers. I hope that all political parties will support that measure. Throughout the negotiations, I had long discussions with Canada's dairy producers. So the producers are well aware of everything that Canada has done.
I would like to take this opportunity to thank the producers in the dairy sector for their support and collaboration. People in the sector are well aware that Canada lives in a world of international free trade. We need open markets, but we have to preserve a part of our own market by protecting our supply management system.
It is complex, it is difficult, and producers in the sector stood with us throughout the process. After the agreement is ratified—which I hope will be done quite quickly—it will be time to provide those producers with fair and equitable compensation.
Thank you very much, Minister, for appearing here today. You probably [Technical difficulty—Editor
] on the committee that the NDP has often been a critic of the model of free trade, in particular in the original NAFTA debate. The NDP led the charge against that. Within that agreement the items of particular concern, not exclusively but of focus, were the ISDS provisions in the original NAFTA and the proportionality clause.
We recognize that in this version those aren't there. That creates an opportunity for reflection on our part. We've certainly been deliberating on that, but you'll know also, from a letter that I sent you in December, that a concern of the NDP on the trade agenda has been, for a long time, the process by which Parliament, and by extension Canadians, are included in the trade process.
We heard earlier today the ways, depending on the deal, that can unfold. Parliament has been included in different ways at different times for different deals. In the last few weeks I've been talking about ways that we might come to some understanding about a meaningful first step we can make in this Parliament towards having a more codified trade process that would better articulate the role of Parliament and get Parliament involved a little earlier, which would address some of the concerns we heard earlier.
I wanted to share some proposals with you and get your feedback on those proposals.
In particular, as a good first step, we think it would make sense for the government to table a notice of intent, when it is intending to enter into negotiations, at least 90 calendar days prior to the commencement of negotiations. It would be tabled in the House and then referred to this committee or its successor for study. Then within 30 calendar days prior to the commencement of negotiations, the government would table its objectives for the negotiations. We think it would introduce another level of accountability to have the government state its objectives clearly, so that the deal can be assessed in light of those. Also, an economic impact assessment would be tabled in the House of Commons coincident with the introduction of the implementing legislation so that parliamentarians would have the economic data at the same time at which they have the changes to the laws they're being asked to contemplate. We've heard some debate about this at this table already with respect to CUSMA.
I'm looking for your feedback on those measures as a first step towards having a more concrete trade process here in Canada.
Thank you very much for those questions, Mr. Blaikie, and also for the very detailed, professional conversations you and I have been having in recent weeks, and that have also involved our excellent trade officials who, I believe, have forgotten more about trade than any of us will ever learn.
I'd like to respond in two parts, first, talking about overall trade and progressive Canadians, and then second, about your specific proposals.
One of my objectives from the outset of this negotiation has been to achieve a truly progressive trade agreement, a trade agreement that Canadians, who perhaps traditionally have had doubts about the virtues of free trade, could support. That is why, among other things, we made a real effort to include union leaders, and I'd like to single out Hassan Yussuff, who I know has been speaking with you a lot as well, for his participation in the NAFTA council and for the advice he has offered throughout the negotiation.
Mr. Blaikie, you've pointed out two issues that progressives in Canada...and actually Mr. Manley has long been concerned about one of the issues you mentioned, ISDS. However, you mentioned concerns that progressives have long had with free trade agreements in general, and the new NAFTA in particular: ISDS and the proportionality clause. Two of the things I am the proudest of with the new NAFTA is that we have gotten rid of ISDS completely—a huge victory, a real benefit to Canada and a powerful precedent—and we have gotten rid of the proportionality clause.
I would also mention, as an element of the progressive trade agenda that we have not only articulated but done in the new NAFTA, the unprecedented protections for labour. Mexico—and again thank you very much, Ambassador Seade—as part of this agreement, has implemented historic labour reforms giving Mexican workers the right to organize. This agreement critically makes that commitment by Mexico enforceable. That is a huge win for workers in Canada, the United States and Mexico. The same is true of labour value content provisions. It is also true with our unprecedented environmental protections and protections for indigenous people and on the basis of gender.
Now I want to get to the second part of your question. I also would like this agreement, the entire negotiation process, ultimately, the ratification, to give us certainty in our trade with the U.S. and Mexico, but also to solidify the national consensus around Canada as a trading nation. I agree with you that transparency is a good thing. In the process of the NAFTA negotiation we have sought to be very transparent and very consultative with Canadians, but I agree with you that it would be a good thing to seek to formalize some of the things we have done. When it comes to the 90-day notification, let me simply say that Canadians had far more time than that to know we would be entering into a NAFTA negotiation, but it's a good thing to let Canadians know when we're contemplating working toward a trade agreement.
On the statement of objectives, we launched the NAFTA negotiation with a pretty long speech that I gave here in Ottawa, stating at some length what Canada's objectives would be. I think that was important for Canadians to hear. Again, I think that we would look very favourably at the notion of finding some way to codify that effort, likewise when it comes to sharing with Canadians our assessment of the economic impact of a particular deal.
I'll try to get through this as quickly as I can.
Minister, I think we're all in agreement. You mentioned that there's a certain amount of risk and uncertainty as time passes. I just want to be clear that from this side we're going to do the best we can, use all the tools we can, to make sure we do this efficiently. However, you did promise that we'd be moving in lockstep with the Americans and the Mexicans, and we do have a constitutional obligation to review the agreement.
We're hearing from families, businesses and sectors that may be negatively affected, and we want to go through our obligation to do this study and give witnesses an opportunity to get their comments on the record.
Mr. Hoback was.... We didn't quite finish with that, the American process, but if we actually look at the timeline and the process in the U.S., we see that in April of 2019, the Americans were open and transparent. They gave an economic impact study to their legislators and lawmakers ahead of time so they could actually review it. As you quite rightly said, there were some amendments made, and I think around the table here we could say the amendments made the agreement better all around.
My concern is that, here on the Canadian side, we weren't given the same courtesy, and perhaps we could have made the agreement a little better, if it were considered by all parties.
We've been asking you in the House, over and over again, about economic impact studies. I'm hearing from people saying, “Well, what does she have to hide?” Basically, I'd like to give you the opportunity. Why has the government been so unco-operative? It is so frustrating that it hasn't given us any of the information about the economic impacts of the study, as we move forward on designing some supports for these families and businesses and sectors that are negatively impacted, yet that knowledge is out there.
Let me, first of all, thank you, Mr. Dhaliwal, for the hard work that you have done throughout this negotiating process. I know this agreement is important to you personally, and to your constituents. It's been a pleasure to work with you on it.
I'd like to start by being a little more precise on the times when, throughout the agreement, I have appeared before committee. I believe that I have appeared before committee to talk about NAFTA four times already. Those were August 14, 2017; February 8, 2018; June 19, 2018; and May 28, 2019—that's for House committees. We'll give you more information in due course about Senate committees. I did refer to previous committee appearances and I wanted to be precise about that.
When it comes to women and girls, that is actually one of the lesser-known successes of this trade agreement. In this agreement, we were able to achieve new—much greater than we have in the current NAFTA—protections for Canadian women and girls, and protections for Canadians when it comes to labour issues in particular, such as that Canadians and their gender identification should not be a cause for discrimination.
As I mentioned in my opening remarks, we were also able to achieve unprecedented protections for indigenous people, including the special role indigenous people have when it comes to protecting our environment.
These are really some new areas for trade agreements to codify. It's part of what I was speaking about with Mr. Blaikie, of the progressive trade agenda that our government has sought to put forward. We had put together in the trade team an entirely new group of officials who, for the first time, were working together specifically on the indigenous issues. It is really new ground for Canada. There is a lot more to be done, but I am pleased that we were able to move the puck forward when it comes to protections for women, protections for girls, protections for LGBTQ people and protections for indigenous people in this landmark agreement.
When it comes specifically to the protections for indigenous people, I would like to thank, by name, Perry Bellegarde. He was a member of our NAFTA council. He worked very hard with us on all aspects of the new NAFTA but in particular on the indigenous issues, and he worked with indigenous partners across North America. I think this is an area in which, going forward, when it comes to trade agreements, Canada will need to continue to do more work. With the new NAFTA, we have laid what I believe are some really important, really valuable foundations.
The protections for indigenous people, for women and girls, and for LGBTQ Canadians are part of the labour and environmental chapters where, overall, we have made some really great progress, both in the specific content of those chapters and also.... Again, I'm turning to Mr. Blaikie as well, because this has long been a concern—I'll finish, Madam Chair—of progressive people thinking about trade. It has been to do better on labour and the environment, but also to do better when it comes to enforceability. I think one of the very strong features of the new NAFTA is much greater enforceability on the environmental chapter and particularly on the labour chapter.
Madame Chair, committee members, thank you for the invitation to take part here today in your consultations on Bill .
The Business Council of Canada represents the chief executives and entrepreneurs of 150 leading Canadian companies in all sectors and regions of our economy. Our member companies employ 1.7 million Canadians, account for more than half the value of the Toronto Stock Exchange, contribute the largest share of federal corporate taxes and are responsible for most of Canada's exports, corporate philanthropy and private sector investment in research and development.
It almost goes without saying, and I've said this many times before in front of this committee, that trade with the United States is absolutely critical to our prosperity. The Canadian economy depends on international trade, clearly, and the U.S. is by far our largest trade and investment partner. Trade of goods and services represents around 64% of Canada's gross domestic product, with the U.S. the destination for 75% of our goods exports last year.
The Business Council strongly supports CUSMA/USMCA and calls for the swift passage of Bill , for four critical reasons.
The first is that the agreement protects market access. When negotiations were first launched, we had one overarching recommendation for government and for our negotiation team, and that was to do no harm. To avoid damaging employment, trade and investment, Canadian, American and Mexican businesses need to retain their preferential access to markets and commercial opportunities in each respective country. By this measure, CUSMA is an overwhelming success. The resulting agreement is based upon reciprocal access and treatment, and no Canadian company will face new tariffs or other market access barriers in North America as a result of this deal.
Given recent reports that the White House is considering raising its WTO bound tariff rates, the importance of quickly ratifying this agreement is even greater. I just might add that, at the beginning of these negotiations, the overarching U.S. objective was to “[i]mprove the U.S. trade balance and reduce the trade deficit with the NAFTA countries.” In other words, the U.S. wanted to restrict imports, not liberalize trade, as is usually the objective in a trade agreement. Given that this is where we started, the final deal achieved the number one objective for the Canadian business community by protecting our market access and doing no harm.
The second reason that we strongly support this agreement is that it removes uncertainty from the Canadian economy. The ratification of CUSMA eliminates significant trade uncertainty. According to the Bank of Canada, protectionist trade measures around the world right now are estimated to reduce global gross domestic product by about 1.3% by 2021. Given that the U.S. remains the key market for Canadian firms that are planning to grow and invest abroad, reducing uncertainty in this critically important relationship will be a boost for the Canadian economy at this time.
The third reason is that the agreement modernizes NAFTA, and this tends to get overlooked at times. CUSMA will improve the trade relationship by modernizing long-outdated elements of NAFTA. The agreement is largely based on the text of the trans-Pacific partnership, which is our most modern trade agreement. For example, there are chapters on digital trade that prohibit customs duties and other discriminatory measures from being applied to digital products, while ensuring that data can be transferred across borders. This is a significant improvement on NAFTA and something to be applauded.
The fourth reason is that it enhances North American competitiveness. CUSMA includes new chapters and provisions that will help us develop a more productive and mutually beneficial relationship, including a chapter specifically on competitiveness and one on good regulatory practices. We call on government to take advantage of these new mechanisms by developing a robust committee work plan.
Before I conclude, I'll just say a word on timing. The U.S. and Mexico have moved to ratify this agreement in their respective legislatures. While we have every right to review and assess the deal, I caution against unnecessary delays. Given all the challenges facing the Canadian economy right now, including rail blockades, coronavirus and our deteriorating relationship with China, the last thing we need to add into that very concerning mix is a delay on this deal with our most important trade partner.
I'll conclude with that, and I look forward to your questions.
My name is Sujata Dey, and I am responsible for the Council of Canadians' international trade campaign.
Thank you for giving me the opportunity to speak to you about the Canada—United States—Mexico Agreement, or CUSMA, from outside the country. As you said, I am in Guadalajara where this agreement is known as T-MEC. But you have my word that I am here by chance.
With more than 100,000 members, the Council of Canadians was founded on the heels of the debate over the first free-trade agreement between the United States and Canada. It was THE major topic of debate in the elections of 1988.
As many have said, a number of things have changed since 1988. At the time, our organization, just like the Liberal Party and the NDP, in fact, was concerned about Canadian sovereignty. Nationalism was the issue.
Decades later, many of our concerns are the same as they were in 1988: downward pressure on our social protections and regulations, privatization and deregulation of the public sphere, and the way these deals contribute to lowering conditions for workers and the environment.
It is not just about Canadian values. It is about how free trade, as codified in these agreements, protects the interests of multinational corporations rather than those of people and the planet. As Maude Barlow, our chairperson, wrote, “The most important thing both the FTA and NAFTA did was to create North American economic integration...and the country origin of these companies meant less and less. So it was less about where the company originated than the way it used these trade agreements.”
Often when these trade agreements are conceived, they're framed very strictly: winners and losers, industries and markets. Yet, these agreements reshape our democratic rules and our societies, not just our global markets.
With President Trump's renegotiation of NAFTA, we inherited the same model. Again, the bulk of the conversation was on supply chains and trade volumes. While there were attempts to involve civil society, this was not the central part of the agreement. Neither were MPs, our democratic representatives, implicated in the hatching of this agreement. Indigenous partners were not on the same level as states.
As such, we have an agreement that may contain some improvements, but that is still sorely lacking in many areas. That is sad because this is happening at a time when we have global problems such as growing wealth inequality, which is leading people to choose the path of dangerous populism. There is a very real climate crisis, and these issues should also be addressed in trade agreements, not undermined by them.
When I spoke to this committee in 2019, just before the federal election, I noted that we were very happy to see a few important changes. Over 35,000 of our members wrote to MPs asking for some of them.
ISDS, or the investor-state dispute settlement mechanism, has been taken out of the agreement, at least for Canada and the U.S. This investment chapter gives corporations the right to sue governments over their policies. NAFTA made Canada the top ISDS target: It became the developed country with the most cases against it. As most of these cases were focused on environmental regulations, this hampered Canada from taking bold climate action.
All over the world, ISDS is becoming more unpopular. From now on, Canada must not accept this clause in any of its agreements, whether in CETA—where it is very contested—in the CPTPP or in any similar mechanism proposed at the WTO. It is simply too dangerous.
As well, the mandatory energy proportionality provisions that mandated us to export a quota of energy to the U.S. have been removed from the new NAFTA. That will give us more policy room to meet our G8 and Paris commitments.
The cultural exemption has been strengthened and now applies to the digital industry. The Council of Canadians and le Réseau québécois sur l'intégration continentale wrote an open letter in defence of this principle. The letter received support from Margaret Atwood, Susan Swann, Jane Urquhart, Ronald Wright and Jack Stoddart. In Quebec, support has come from France Castel, Dominic Champagne, Philippe Falardeau, Pierre Curzi, Micheline Lanctôt, Yann Perreau, Lorraine Pintal and Michel Tremblay, among others.
Indigenous artists like Marco Collin and Tantoo Cardinal are among those who support the principle.
In the spring of 2019, there was a panic to ratify the agreement as soon as possible. In June, Council of Canadians members wrote to their MPs urging them to wait for the Democrats in the U.S. Congress before they finished improving the agreement. Our members were also concerned about the biologic provisions that would make drugs more expensive. This would add to the cost of an eventual pharmacare program. Luckily, those provisions were removed in the democratic process. Labour provisions were also strengthened, so we feel it was definitely worth the wait, but there are still serious problems with the agreement.
The chapter on regulatory cooperation may appear harmless, but it is not. It actually allows private interests to participate in a process parallel to the parliamentary and democratic process. That imposes new requirements on those responsible for the regulation in terms of defending the new policies. If that process is not adequate, states can challenge the regulatory measures through the dispute settlement regulations.
CETA has a similar voluntary co-operation chapter that is much less stringent than the one in the new CUSMA. Together with foodwatch, a European advocacy group, this week we revealed documents under an access to information provision that showed just one of the meetings of this regulatory co-operation committee. It showed that Canadian regulators were successful in challenging sometimes higher European Union animal and plant legislation, as well as legislation on pesticides and herbicides. They were also using this committee to attack the precautionary principle, which is used in the EU.
In this committee, Canada has regularly done regulatory co-operation with the U.S., but now the new CUSMA codifies it. The documents showed that in many cases Canadian regulators were unwilling to discuss the issues with the EU because they were very concerned about harmonization with the U.S. This is alarming for citizens, because it suggests that these committees, rather than protecting our human and animal safety, protecting us from toxins and trying to prevent harm, are using this chapter to weaken regulations. We need checks and balances in this implementing legislation, including parliamentary oversight of these eventually industry-created committees.
On farming, much has been said about attacks on supply management and quotas for American dairy products entering the Canadian market. At the Council of Canadians, we're also worried about the standards of additional U.S. milk coming over the border. In the 1990s, we successfully campaigned to end the licensing of bovine growth hormone here in Canada. This hormone makes cows produce 25% more milk, but at the expense of cow health. BGH is used in the U.S. and is not labelled. We must ensure that the labelling of BGH happens or that there are restrictions on milk produced with BGH and sold in Canada. This will be particularly challenging because Canada and the U.S. have already successfully used the WTO forum to challenge European bans on hormones.
As well, we've often mentioned the environmental chapter. Yes, it's binding, but it doesn't even mention climate change. It doesn't do much on pollution, and it does nothing to prevent corporations from shifting to places where regulations are laxer. UNDRIP is not part of the agreement, nor is water protected.
We're here now to get a better agreement. To get a better agreement, trade must be done differently from the start. Citizens and parliamentarians must be let in. Having worked on trade agreements with NGOs in Europe and the U.S. for the last five years, I've noted that their processes are more debate-oriented and there's much more consultation. This has not occurred by accident, but by design. In Canada, the amount of participation is at the discretion of the federal cabinet. There's no requirement for anyone to be consulted until the implementing legislation, the point where we are now. The result is that these agreements are more tilted away from democratic oversight and into back rooms.
In both the U.S. and Europe, the negotiating objectives are published and debated by lawmakers. In the U.S., the negotiating objectives are in the trade promotion authority fast-track law itself. At several stages of the process, NGOs and stakeholders are mandated to participate, through the committee process or even their own negotiating round. Lawmakers are also involved in the negotiation process, and the negotiating texts are shared. In both the EU and the U.S., economic impact studies are conducted before the process is completed.
In Canada, there is no mandatory economic analysis; it is rarely done. As a result, in two of our agreements, with South Korea and—
Madam Chair and committee members, before I start, I would like to thank you for inviting me to appear before you in order to present some viewpoints from the west. They are not just about NAFTA, because everyone is well aware of how important it is.
Instead, I'd like to talk about some of the things that need to be considered in our framework for understanding the agreement and in going ahead as the committee debates and, indeed, as the country looks on and debates participation in the new agreement.
The Canada West Foundation, as I'm sure the committee is well aware, was created 50 years ago to lend a voice to the western provinces, to facilitate the participation of the west and to facilitate the contributions of the west to the making of a strong Canada. A strong west is a strong Canada, and today, 50 years later, we realize that some of those debates have never gone away, and the Canada West Foundation remains engaged in them.
We are also one of the organizations most implicated on the trade file, given the importance of trade for the west. You will have seen our work on issues such as Bill . Before it was a national issue, Canada West was there. You will have seen our work in forming the changes to the legislation.
On trade, we modelled the impact of the trans-Pacific partnership trade agreement on the Canadian economy before the federal government did. We continue this advance work. We are modelling the impact of the CPTPP on our trade infrastructure. Even though the government did this for CETA and has chosen not to do it for the CPTPP, the Canada West Foundation has stepped up to do this because of the importance of the agreement for the country, not just for the west.
On NAFTA, I have three points to consider quickly. These lead to my recommendations for action, about which I won't go into detail, because you have them in writing.
First is the rush toward normalcy in thinking about our relations with the Americans simply because we have an agreement. We have seen, time and time again, from the election of Donald Trump through his handling of diplomacy to his conduct of trade, a complete destruction and remaking of how the U.S. does foreign policy, diplomacy and trade policy.
Let me give you one example with this agreement itself. It's usually the process, with a trade agreement, to improve conditions of trade. Parties agree that there are things that can be done to improve conditions of trade, and they agree to meet, either starting from scratch or building on an agreement. We did this in North America. We updated the North American trade agreement to modernize it, to bring it into the 21st century, to take care of labour issues and intellectual property. We had a win-win situation, where all parties made concessions, and all parties were happy with the results. When Donald Trump came in, that was ripped up and we were told that win-win no longer works; what works is “I win, you lose.” Starting from this point is unprecedented in trade negotiations. We had no choice, and the government did the best it could—I think the best that anyone could. Hats off to the government for the job it did under those very difficult circumstances.
That is just one indication of how upended the world in which we are now trying to function is on the trade front. We see the U.S attacking the World Trade Organization. We can't proceed with our old ways of thinking, or our old frameworks, when looking at this agreement. Every witness you have has to tell how the agreement, and their interpretation, fits into this new reality.
Let me give you one example of something we are worried about. Yes, we have an agreement, and Brian is absolutely right: for those areas where the President does not pay attention, or pull the rug out from under us, or change the rules, the agreement will work. It is much better than not having an agreement. The modelling of the trade agreement done by others shows that the agreement is a net economic welfare loss for all three countries. The only thing worse is not having an agreement, which is an even greater economic and GDP welfare loss. I suggest you call in Dan Ciuriak, the modeller here in Ottawa. He does the modelling for Canada West. He used to work for Foreign Affairs. He can fill you in on the details of the modelling. That's a conversation I would strongly urge you to have, to get to the bottom of the modelling numbers and what they show.
Moving on to the statutory authority of the President, we have never seen a president exercise the four or five statutory provisions that the president has to manage trade. These are provisions delegated to the president from Congress.
We saw the steel and aluminum tariffs, Canadian steel and aluminum declared a national security threat. This is not the worst of what the President can do. There is more.
At the end of May, we woke up to see the following from the White House, and this is the White House statement:
As everyone knows, the United States of America has been invaded by hundreds of thousands of people coming through Mexico.... Mexico's passive cooperation...constitutes an emergency and extraordinary threat to the national security and economy of the United States.... To address the emergency...I am invoking the authorities...[in] the International Emergency Economic Powers Act. Accordingly, starting on June 10, 2019 [less than a week after this announcement was made], the United States will impose a 5 percent Tariff on all goods imported from Mexico.... If the crisis persists...the Tariffs will be raised to 10 percent on July 1 [basically three weeks or 21 days later].... Tariffs will be increased to 15 percent on August 1, 2019, to 20 percent on September 1, 2019, and to 25 percent on October 1, 2019.
This is the threat that hangs over us should the President decide to ignore the rules and use the statutory power he has. This is something that really needs to be taken into consideration. We need to realize that the signing of the agreement is not the end of our fight on trade with the Americans and trade in North America. It's not even the end of the first period.
This is going to be a long-term game. We are going to have to step up the extraordinary efforts we made to build alliances in the States to prevent this type of situation. We do not fight this in Ottawa with the ambassador. We fight this in Boise. We fight this in Springfield. We fight this in Sacramento. We fight this at the state level where premiers work with our counterparts as governors, and MLAs work with their counterparts at state legislatures. It's imperative that we not drop the ball and think of this as mission accomplished.
The second point, very quickly, is that there are parts of this agreement that I think we really don't understand. I would highlight article 32.10, the article dealing with negotiating with non-market countries. The provision itself isn't problematic. We announce when we are going to negotiate and we have to share as much text as we think is possible—these are not onerous or unusual provisions.
But what is a non-market country? What did we agree to when we agreed that we would give the Americans these powers with non-market countries? We think it's China, but the Americans have a list of 11 countries—10 plus China. Who else is on that list? Well, Vietnam was on that list, and we dodged a bullet by getting the TPP done with Vietnam before the Americans were able to use this for mischief. Again, I would urge the committee to look at article 32.10. Do we fully understand it? Can the government fully explain it?
Regarding cultural exemptions, we've granted the Americans the right to impose countervailing duties should we invoke our abilities under the cultural exemptions. Michael Geist just had a long piece on this. I would urge you to call Michael, Wesley Wark and others, to really go into that.
As for the points I raise in the recommendations, we have to help the provinces do their job in terms of defending our interests in the States. During the negotiations, the Clerk of the Privy Council and the Prime Minister asked the provinces to do more. They stepped up.
The government gave money to ACOA to help the Atlantic provinces do more vis-à-vis the States. We haven't gotten the same in the west, and the west could really use the support. In a time of financial constraints, in a time of budget cuts, we are being asked to do more, and we don't have the resources, so we really could use the feds to step up.
There are also possibilities to engage the Americans on a bilateral basis for things that we couldn't do with the Mexicans at the table. The greatest failure of this agreement was not to advance provisions for moving business people. We can engage the Americans bilaterally, especially at the state-provincial, the regional level.
In terms of an infrastructure bank, the infrastructure idea is one where the Americans really need help. We can step forward and offer them help, and in so doing create a permanent institution with the Americans to avoid the vicissitudes of political changes and the changing political climate, and have a permanent institution focused on the North American border.
I will leave it there for questions.
Thank you very much.
Thank you, Madam Chair.
Thank you to the witnesses for coming today.
Let me just start by saying that, as far as we're concerned, rest assured that we are the free trade party, and we certainly do not plan on holding anything up. We want to get this and see it through to the end, and we're certainly excited to do that.
I think it's also important to understand that we need to do our due diligence, and my questions for you today are going to be a little bit different from what I've been hearing around the table. It's regarding implementation and what you specifically heard from the government, because, to some extent, we don't get all the information that we need. Specifically, it's about the implementation and how the CBSA is connected to that. Have you spoken to other companies that do a lot of cross-border trade? That's kind of where I'm going with this.
I'll start off by letting you know that my riding of Essex is literally a neighbour to the border at the busiest international trade crossing in North America, so I'm very much up to speed on that front, and I also spent 25 years with a company that did international trade. I used to type in all the wonderful little tariff numbers, so I'm quite up to speed on this file in that regard.
As a little bit of background, for those who don't know, the CBSA is the agency that oversees the secure entry and export of goods to and from Canada. The CBSA will be the agency that implements much of the CUSMA agreement as goods pass through the 1,200 points of entry and exit across Canada, and the terms of CUSMA are set to come into force on the first day of the third month following the last notification of ratification between the parties.
I have just a couple of quick questions and then I'd love to hear any thoughts you have on that.
I'm hearing from industry that they're concerned about the implementation, particularly about the 90-day transition period. Given that the CBSA is the agency that will implement much of the CUSMA agreement, and given that in the mandate letter for the Minister of Public Safety and Emergency Preparedness there is no statement on the implementation of CUSMA specifically—there are five points on gun control but nothing on the implementation of CUSMA—do you have any concerns that the CBSA is not going to be ready for the first day of the third month? Have you heard any concerns about whether they're going to be ready to meet that?
Madam Chair, I would like to speak to my motion.
When I brought this forward, it was in good faith, because in the past we've taken this process forward for bills of extreme importance. We had no idea at that time how many witnesses we were going to have. In order to give the witnesses who were concerned about this bill an ability to tell parliamentarians how it's going to affect them, I did make these recommendations.
I was extremely upset this morning when I read an article from CBC in regard to my motion. It was a matter of poor faith. I'm going to quote it because the quoted my motion. The reporter wrote, “A contentious motion Justin Trudeau characterized as a 'near miss' will come to a vote”. Trudeau said, “There are certain messages that could be passed to some parties that might be playing some challenging games around delaying NAFTA”.
First, I want to tell my Liberal colleagues how upsetting that is to read, when I was not even given the courtesy of being in the story. Second, the Liberals brought forward a very similar motion today. I want to read this into the record because it says how the Liberals were surprised. This comes from the House on February 6, when , one of our MPs, asked:
Mr. Speaker, when Bill C-4, an act to implement the agreement between Canada, the United States of America and the United Mexican States, is referred to committee, could the government commit to supporting a proposal at committee to have other committees, in addition to the trade committee, study the provisions of Bill C-4 and the impacts within their respective mandates in the same manner that budget bills have been considered at committee in recent years?
Now this is what the said in the House, on record. Pablo Rodriguez said:
Mr. Speaker, the government is supportive of adopting the process that has been used in the past for budget implementation legislation. Under this process, the chair of the Standing Committee on International Trade would write to the other committees and invite them to do a subject matter review of the relevant provisions of the legislation, as long as the motion contains a fixed date and time for the start and end of clause-by-clause consideration of the bill.
That's basically what I was trying to achieve. The was aware of what the said. I'm just curious, and maybe the can comment on this. Was the House leader trying to play politics here, or was the Prime Minister trying to play politics with this, because that certainly wasn't the intention from this side of the House?