I call the meeting of the Standing Committee on International Trade to order.
Pursuant to the order of reference of Thursday, February 6, 2020, we are continuing are study of Bill , an act to implement the agreement between Canada, the United States of America and the United Mexican States.
For witnesses in this segment we have, from the Canadian Agri-Food Trade Alliance, Brian Innes, vice-president, and Claire Citeau, the executive director; from the Canadian Cattlemen's Association, Bob Lowe, vice-president, and Fawn Jackson, manager, environment and sustainability; from the Canadian Labour Congress, Hassan Yussuff, president, and Chris Roberts, national director; and from the United Steelworkers, Ken Neumann, national director, and Mark Rowlinson, executive assistant to the national director.
Welcome to all of you. Thank you for taking the time to appear before the committee today.
We will start with Ms. Citeau.
Despite this incredible success, we're facing unprecedented uncertainty. Predictability has been eroded, and governments are putting in place tariffs and non-tariff measures that blatantly contradict trade rules. It's happened here in North America, and it's happening abroad.
Last spring, CAFTA released a prescription for what's required from trade agreements in this new environment. Realizing Canada's export potential in an unpredictable and fiercely competitive world outlines what is required for Canadian agri-food exports to continue to set records.
CAFTA's first recommendation is to preserve and enhance access to key export markets, which is exactly what ratifying and bringing CUSMA into force as quickly as possible would do. We understand the nationalist noises swirling around. We saw them firsthand when we attended the negotiation rounds for CUSMA in all three capitals. It's why we applauded when Canada concluded talks last fall. It's why CAFTA welcomed the end of aluminum and steel tariffs. We appreciate the value of tariff-free markets because, for the agri-food industry, tariff-free access has been incredible for our sector.
Over the last 25 years Canadian agri-food exports to the U.S. and Mexico have nearly quadrupled under NAFTA. They've gone from $9 billion in 1993 to $34 billion in 2019. Today, the U.S. and Mexico are our first- and fourth-largest markets, representing about 55% of all of our agri-food exports.
We at CAFTA support CUSMA because it will build on the success of NAFTA. It will preserve our duty-free access to North American markets, and it's this duty-free access that is the foundation of the success of our sector.
Our members, including the hundreds of thousands of farmers, ranchers, food processors and agri-food exporters across the country, rely on trade for their livelihood. We're very pleased that the Canadian government is taking steps to ensure that CUSMA is brought into force.
Our members emphasize the following outcomes as key benefits of the new CUSMA.
The agreement contains no new tariffs or trade-restricting measures. All agricultural products that have zero tariffs under NAFTA will remain at zero tariffs under CUSMA. Maintaining predictable, duty-free access to the North American market is a major win for Canada's agriculture and agri-food exporters, which will help strengthen the supply chains that have been developed for the past generations across North America.
The new agreement includes meaningful progress on regulatory alignment and co-operation. In particular, I would note the establishment of the working group for co-operation on agricultural biotechnology and the creation of a new sanitary and phytosanitary committee, which will help ensure that regulations are transparent and based on science, and that trade in North America flows freely, fairly and abundantly.
Another key benefit for our members is the preservation of dispute resolution provisions that are vital to ensuring that fair and transparent processes are in place when disagreements arise. Preserving chapter 19 in its entirety and much of chapter 20 from the previous NAFTA are important wins for our members.
Market access improvements for Canadian agri-food exporters include increased quotas for refined sugar and sugar-containing products as well as some gains for some processed oilseed products like margarine. These are all welcome wins.
All these advances will help consolidate the gains of the original NAFTA and provide certainty in the North American market, which is really essential to the success of Canadian agri-food manufacturers and exporters.
In closing, CUSMA represents a meaningful upgrade to NAFTA for our members by keeping our trade tariff free, establishing processes that help remove remaining technical barriers to trade and maintaining vital provisions to deal with disputes.
We look forward to working with the government to bring CUSMA into force as soon as possible so that our members can realize its benefits as quickly as possible.
Thank you, and good afternoon. My name's Bob Lowe and I'm a rancher and feedlot operator in southern Alberta. I'm also the current vice-president of the Canadian Cattlemen's Association, the national voice of Canada's 60,000 beef operations.
I'll just add a little correction. With me is Fawn Jackson, who has gone through the environment portfolio and is now the senior manager of government and international affairs with the Canadian Cattlemen's Association.
The CCA has long been an advocate for free trade, and today I'm here to encourage all parliamentarians to swiftly ratify CUSMA. Under both NAFTA and CUSMA, the beef industries of Canada, the United States and Mexico have and will enjoy reciprocal duty-free trade between our countries. North America is the largest market for Canadian beef, and the integration of our markets makes us more competitive internationally.
The next generation is involved in my family farming operation, and I can tell you that I'm excited for their future. Last year, following the implementation of the CPTPP, Canadian beef saw an impressive demand bump. Our exports overall grew 19% in value and, specifically, 68% in value in the Japanese market. I bring this up because a similar demand increase happened following the implementation of the original NAFTA.
Under NAFTA, Canadian beef exports to the U.S. grew 340% in total value, from $500 million in 1995 to $2.3 billion in 2019. Similarly, beef exports to Mexico grew over 30-fold in value from $3.7 million in 1995 to $127 million in 2019. All of this is to say that trade agreements are not only fundamental to the viability of farming and ranching operations from coast to coast, but are also the foundation for growth of Canada's agricultural sector.
For my cattle operation, having American buyers in the Canadian market for live cattle means that I can rest assured that I have a competitive market to sell my cattle into. Today, we are seeing an example of this in eastern Canada, where cattle producers are struggling financially, as a technical issue has essentially removed American cattle buyers from their market. This has resulted in significantly depressed prices and is an unfortunate example of just how important having an open and competitive North American cattle market is. Having North American buyers participate actively in the Canadian market is imperative to the financial well-being of Canadian farmers.
Good afternoon, Madam Chair and members of the committee. My name is Hassan Yussuff. I'm the President of the Canadian Labour Congress. My colleague Chris Roberts is the director of our social policy department.
The CLC speaks on behalf of three million unionized workers, men and women across the country. It's a pleasure to join you here this afternoon.
Canada has always been a trading country. Exports are vital to the Canadian economy, our communities and thousands of jobs. Our steel and auto manufacturing, forestry, agriculture and resource industries depend on trade, and Canadians of course support a fair trade agreement that preserves good jobs, protects labour rights and preserves the ability of the government to regulate in the public interest.
I participated on the government advisory council, providing input during the renegotiations of NAFTA. Canada's unions welcome the important gains for workers continuing in the updated Canadian-U.S.-Mexico agreement. These gains include the elimination of chapter 11, the investor-state dispute settlement, the IDS provision in NAFTA; the enforceable labour rights provisions that are incorporated in the CUSMA as a standalone chapter; the inclusion of a provision restricting the import of goods produced by forced labour; increased North American content requirements for vehicles and a new labour value content requirement in auto manufacturing; the elimination of the NAFTA energy chapter, including the proportionality clause; the strengthening of NAFTA's general cultural exemption in its expansion to include digital industries; and a clear and general exception for indigenous rights. This exception means that nothing in the agreement prevents a North American government from fulfilling its legal, social, economic, cultural and moral obligations to indigenous people.
We're also pleased to see that section 232 tariffs on steel and aluminum imports have been removed. These unfair tariffs caused significant hardship for Canadian workers.
The elimination of chapter 11 is an important step in protecting our environment. Too often, the NAFTA investor-state dispute settlement process allowed investors to sue Canadians and Canada over legitimate measures taken to prevent and limit damage to the environment. The environment chapter in CUSMA includes new commitments to address environmental challenges. These address air quality, endangered species, ocean-depleting substances, conservation for biological diversity, marine pollution, illegal wildlife trade, illegal fishing and the depletion of fishing stocks.
We regret the fact the U.S. negotiators blocked any mention of climate change in the agreement. As a result, CUSMA contains no reference to the Paris Agreement, despite the addition of a number of multilateral environmental agreements in the updated text.
The CLC welcomes the important improvements in CUSMA negotiated last year by the House Democrats and the U.S. Trade Representative. These improvements include restrictions on the ability of the responding party to block the formation of a dispute settlement mechanism panel; changes to strengthen the prohibition of goods produced by forced labour; changes to strengthen the protection of workers from violence and physical intimidation; the introduction of a bilateral rapid-response labour mechanism to respond to the violations of freedom of association and collective bargaining rights; the removal of a provision requiring a 10-year market protection for biologics; and the reversal of the burden of proof on labour and environmental violations—this language now presumes that labour and environmental violations affect trade or investment between the parties unless the responding party can demonstrate otherwise.
Some areas of CUSMA continue to provide cause for concern among Canadian workers. CUSMA makes concessions in Canada's supply management of agriculture by opening markets to more U.S. dairy, egg and poultry products. These concessions will add to the pressure on Canadian producers resulting from market access granted under CETA and the CPTPP. Budget 2019 committed to providing up to $3.9 billion in support for supply–managed producers. However, workers in these supply-managed industries are not offered any protection in support if they lose their income or work due to the ratification of the CUSMA, CETA or CPTPP. We recommend that the government take steps to ensure that these workers are not disadvantaged by the implementation of CUSMA.
The CUSMA facility-specific rapid-response labour mechanism represents an important step forward in labour rights. However, there are few stipulations that unnecessarily limit the responsiveness and scope of a modern mechanism. These include a provision requiring the complainant to first ask the respondent to conduct its own investigation of a potential labour rights violation at a facility covered by the mechanism. Only once there is a disagreement over the findings can verification by a panel of labour experts be invoked. These facilities covered by the mechanism are limited to priority sectors that include manufacturing, service and mining, but exclude agriculture, forestry and the fishing industry, etc.
To summarize, the gains achieved in CUSMA are notably significant. In our view, ratification of the agreement is critical to Canadian interests and the well-being of workers in Canada. Parliament's scrutiny of Bill is an important and necessary part of the legislative process. However, we urge the parties to pass Bill C-4 without undue delay.
With that, I welcome any questions the committee might have. Thank you very much for allowing us to present here today.
Thank you, Madam Chair and committee, for the invitation to speak with you here today.
I'm here as the national director of the United Steelworkers. I am representing the hundreds of thousands of Canadian workers who are members of our international union. Across North America, we represent more than 800,000 men and women who work in every sector of the Canadian and U.S. economies, many of whom work in trade-exposed industries. We also have formal links with organizations in Mexico. Our interest in ensuring that fair trade in the Canada-United States-Mexico agreement is very obvious. With me is my chief assistant Mark Rowlinson, who will help answer any questions you may have in both official languages.
First, let me say that the final version of this agreement is an improvement to both NAFTA and the original version of CUSMA signed in 2018. Our written submission goes into greater detail, but for the few moments I have before you now, I want to focus on what remains unfinished business on this file and what pitfalls may lie ahead if shortcomings are not addressed going forward.
In terms of the vital domestic steel industry, United Steelworkers applauds the requirement that 70% of steel used in vehicles must be melted and poured in North America. This represents a step forward for the Canadian steel industry. However, in my view, the seven-year timeline for this to come into place is just too long. The delay will allow the continued use of too much offshore steel in the auto supply chain, which will limit growth in the Canadian steel industry.
Our union also represents the vast majority of unionized workers in the aluminum sector, most of them in Quebec. We're very disappointed that similar provisions requiring aluminum to be smelted and poured in North America are not part of this final agreement. Prior to the conclusion of the final agreement, we outlined our position in November 2019 with a letter to , urging her to ensure that aluminum articles that enjoy CUSMA benefits must be produced in Canada, Mexico or the United States from primary aluminum that's smelted and poured in these countries. Instead, the final deal contains weak language that the parties shall consider this given issue again 10 years from now. This is simply not good enough. As a result, CUSMA fails to ensure that high-quality aluminum produced by workers making community-sustaining wages will be used in automobile production in North America. Of particular concern is the growing reliance by the Mexican auto industry on scrap and billets from low-cost offshore producers due to the lack of primary smelting capacity in Mexico. As the main aluminum-producing country in CUSMA, it was incumbent on Canada to insist on this protection for Canadian aluminum producers and its workers. It's disappointing that Canada's government failed in this regard.
The USW was at the forefront of the fight for a full cancellation of the U.S. tariffs on Canadian steel for the bogus national security reasons that were put forth. Unfortunately, CUSMA side letters still leave open the possibility for future section 232 tariffs. We believe the government must continue to push for a full and sustained commitment from the United States that it will not deem steel, aluminum or other products from Canada a threat to their national security. Canada has also collected $1.2 billion from the tariffs imposed in retaliation for the U.S. section 232 measures. That money should be invested in the Canadian steel and aluminum industries, particularly into training our workforces to meet the demands of the 21st century industrial economy.
Let me now ask you to look at the forest industry. Chapter 10 of CUSMA, under “Section B: Antidumping and Countervailing Duties”, will not protect our forest sector because it does not prevent the U.S. from applying duties to softwood lumber. This dispute has never been resolved. Canada has once again missed the opportunity to permanently settle this issue before us. Meanwhile, our union represents more than 20,000 forestry workers, who have experienced layoffs and uncertainty because of this failure.
What is needed to sustain this vital industry is a combination of trade and domestic measures that promote value-added manufacturing.
As I said at the outset, the steelworkers stand in solidarity with independent Mexican trade unionists. While CUSMA improves the prospects of free collective bargaining in Mexico, the proof will be in the enforcement and remediation for suspected violations of free collective bargaining, as set out in chapter 30.
As we told this committee in the last Parliament, the labour chapter should have included core conventions of the International Labour Organization. These should be included in any future trade agreements that Canada negotiates. We are also concerned that article 23.9 is not strong enough to protect workers from discrimination.
More generally, the labour chapter will achieve its stated goal of raising the labour standards in North America only if all three governments take their role of enforcing these rights seriously. This means putting in place mechanisms that will ensure that Mexico, the U.S. and Canada are living up to their labour commitment under CUSMA.
We are disappointed that there is no gender chapter and no reference to the United Nations Declaration on the Rights of Indigenous Peoples. All three of our countries should have committed to this 21st-century obligation to righting the wrongs of colonialism.
On procurement, our union is also concerned about allowing increased U.S. access to Canadian agricultural and dairy markets. In contrast, Canada did not make any gains on obtaining access to the large U.S. government procurement market.
A significant misstep, in our view, is the provisions of chapter 28, which allow advance notice to corporations of any impending regulatory changes that affect food safety, rail safety and workers' health and safety, amongst others. Using gentle words like “harmonization”, this provision undermines the ability to regulate in the public interest by providing corporations with the right to challenge the implementation of these regulations. This is unacceptable and, frankly, when we look back at events like Lac-Mégantic, very dangerous.
The environment has not been given enough consideration in CUSMA. Although some improvements were made to chapter 24, there is no commitment to the Paris Agreement on climate change. Nor is there any reference to combatting climate change. This is out of step with everything that we have come to understand about the climate crisis in the 21st century
In closing, our union will continue to advocate for a fair and progressive trade system. Rather than periodic piecemeal progress in individual trade deals, we seek a trade regime that puts working Canadians at the forefront. This means agreements that do not hamper the ability of our government to ensure high labour and environmental standards and that do not make it easy for unfairly traded goods to enter our markets from countries with poor labour and environmental standards.
Despite the improvements to CUSMA, this deal is insufficient on its own to revitalize the Canadian manufacturing industry. We must use policy measures to promote domestic manufacturing and the use of Canadian-made products in infrastructure projects. We must protect our market from dumped goods from offshore by continuing to improve our trade remedy system, including allowing unions to initiate trade cases and not merely to participate. We also demand a more meaningful analysis of the sectoral and employment impacts of trade agreements, including real consultation and collaboration.
Thank you for the opportunity. Mark and I are happy to answer any questions you may have.
Thank you very much for all your testimony today. It's very important as we undertake this tremendously important trade deal for Canada and for my riding of Sault Ste. Marie. We are a steel town but we're also a border town, and a lot of that trade comes right through my riding.
When we talk about the section 232 tariffs, we were on the front line of that battle. We've travelled down to Washington with the trade committee, the industry committee, the steel caucus. The steelworkers, both on the Canadian side and the American side, played a critical role. Our good friend Leo was referenced by many of our American friends down there about lobbying.
One of the things I wanted to ask about was the significant changes we've made to our trade regime over the last five years, including in 2016 the length of time a penalty would remain on a bad player and some consultation. Then there was anticircumvention, antiscoping, etc. The one piece was union participation. Having heard from the steelworkers who testified here at the CIIT hearings—and the representations they made were significant—we won cases because of that particular testimony. I think that was critical.
In particular to your presentation, Ken, how could the steelworkers launch a case successfully, as they've done with union participation?
Given the limited time, I'll be very brief.
As you know, under the previous agreement, there were a number of complaints filed under the old NAALC, which is part of the current agreement. Not a single one of them has ever been resolved in a satisfactory manner. It's been a complete failure. First of all, it was a side agreement with no real commitment to its being enforced. Mexico never lived up to its obligations. I think this time around at least the labour chapter is incorporated into the agreement. There's a clear commitment to apply sanctions if the countries can't live up to that obligation.
I think the enforcement side of this agreement is really critical. Certainly there was a new government at the national level in Mexico that made a strong commitment. They want to, of course, meet their obligations, because workers never really benefited from decades of the old NAFTA. If you look at their wages and working conditions, they have not risen, and most importantly, workers didn't even have the right to choose their own union. More importantly, when they met with violence, it was sanctioned by the national government.
This is an opportunity for Canada and the United States to hold the Mexican government's feet to the fire to enforce this agreement. Of course, in that commitment to do so, they're going to need help. There are thousands and thousands of agreements that have been negotiated under what is called “labour protection”. The workers never participated in these agreements. They never chose the union, and the agreements are still in existence, so how do we eliminate those agreements? How do we give the workers a fair chance to choose their union democratically, in a fair way? More importantly, how do they negotiate an agreement so they can benefit from the products they're producing in that country?
Canada has an obligation because we promised to provide Mexico technical assistance, and also financial assistance. I think it's critical that Canada gets as much broad advice as we can from the labour movement here, but equally hold Mexico accountable for the commitment they have made in this agreement. When they don't live up to it, we should impose whatever sanction is necessary to bring them into compliance. That never happened under previous agreements. The provisions in this agreement allow for that to happen.
To what Hassan said, the fact is that this was the line in the sand. The American labour movement and the U.S. Congress basically said that that was one reason they weren't prepared to move the CUSMA ahead, and they basically got the amendments they thought were appropriate.
Our union is very much engaged with Mexico. You've heard of Napoleón Gómez, who is the president of the miners and steelworkers in Mexico. He was in exile in Canada for 12 years. The steelworkers harboured him. He's now back in Mexico, and he's a senator.
First of all, the labour chapter is very important. As Hassan mentioned, if you look at the labour rights, they've not lived up to them, and there are protectionist contracts.... There are a lot of workers in factories that belong to the union and don't even know it. Those are deals that are made that undercut the legitimate trade union movement. In fact, if you look at the salaries and the other things that are taking place, you see that these also affect us. Now that we have a mechanism in place, it's very important they be given the infrastructure to do it. This is why I said in my submission that Canada and the United States and Mexico have to be serious about it.
I was led to believe that if you look at the current labour law in Mexico, you see that they have some of the best labour laws in the world. The fact is it's not enforced. If it's not enforced, it's worthless. This is the mechanism and we have an obligation, because if you want to continue to see their auto sector grow from 1.2 million to 3.3 million vehicles—it has surpassed Canada's—it's going to continue to grow at our expense because we can't compete. The big companies would gladly go to Mexico and build their auto factories there.
We have an opportunity now to enshrine some mechanisms to enforce the labour laws, and that's what's crucially important. I see that as something like a watershed with respect to moving this in the direction. It's now up to all governments, in particular Canada and the United States, to make sure that this mechanism is enforced.
Thank you very much, Madam Chair.
I want to thank the witnesses for being here.
Ken, I'd like to ask you a question, because you brought up some things that are close to my heart. You brought up the automotive industry, and you know that in Oshawa this deal wasn't enough to save our plant, but the whole idea of competitiveness and value added are big issues, I think. When we're moving forward with this agreement, if there's something that we could do to support industries that may be negatively affected, I think would be so important.
Gerdau Ameristeel is in the Durham region, and they work mostly as a recycler, but you mentioned something about the buy American provisions. I know that our government under Mr. Harper was able to get an exemption from those provisions. Could you comment on how that's going to affect your members, not having that same exemption that we used to have?
The other thing about the value added is that we have this huge Kitimat LNG project. I think it's a $22 billion project, and my understanding is—and correct me if I'm wrong—that the government gave the Chinese an exemption on that as far as making certain components is concerned.
Could you expand on the value-added statement you made? Right now the whole idea of trade with China is a conversation. The Americans have completed what they're calling phase one of their U.S.-China deal.
I know I've asked a lot of things in this question, but maybe you could address the question about value added, the buy American clauses, and what we can do as a committee to help support the people who will be negatively affected by not having that exemption in the deal.
Perhaps Mark will answer some of that. Let me just deal with the China situation and the big project that's taking place in British Columbia.
You may have read some of our press releases. We're very disappointed with regard to the fact that it's a huge project that will create thousands and thousands of jobs and that will have steel coming from China. It will be shipped over in modules and then shipped up into the north. If you want to talk about the cost to the environment, if you want to talk about the jobs, it makes absolutely no sense. To me, if we're going to produce something in Canada, we've got the ability to do it, and we should do it with our members. We should do it with our steel.
Look at the Gordie Howe bridge. I was involved in that with Leo Gerard, my counterpart at the time. We made sure that the Gordie Howe bridge was going to be built from North American steel, and it was. We're talking about the bridge that's now going to be built in Surrey. Procurement is very important. This is what I said in my submission, that the government made no inroads in getting into some of the government contracts. That's something that needs to be on the radar. I'm still livid at the fact that somehow the United States used section 232 to say that Canada was a national security threat. You can't find a better neighbour than us. That's something we need to monitor. The fact is that it has an effect. We've seen it. You have the Champlain Bridge and some of that steel. Tell me why the steel has to come from China. You have a bridge that was built in British Columbia. Why does the steel have to come from China when you have the industry here?
The thing that we should all remember is that if you look at the aluminum industry or the steel industry, there ain't a single Canadian-owned company. These are all foreign companies. We deal with these companies, be it at negotiations or at.... We have to fight. We have to fight tooth and nail for investment. We want them to anchor, be it in aluminum or in steel, to make sure that those jobs are preserved. When we're competing with Arcelor, do we invest in the Soo, do we invest in Hamilton, or do we invest in some third world country? Those are the kinds of complications. If we don't have the support of the governments and make sure they're fighting on our behalf in regard to the U.S. to get access to their procurement....
Canada's steel capacity has shrunk. Now we have the issue with aluminum, which I'm very much concerned about. The powers that be somehow think they're going to be able to monitor that and see how that works out. The proof will be in the pudding on that one.
Thank you, Madam Chair.
My intervention will be in sequence in both official languages, if I may.
I'd like to thank you for giving us the opportunity, as part of these consultations, to share the viewpoint of the industry we represent, Canada's primary aluminum industry.
I'll start with a few figures. Some 8,700 people work in our nine plants producing 3.2 million tonnes of low-carbon aluminum, nearly 90% of which is exported to the United States. Although our region-based production generates about $7 billion in exports, the activities that form our industrial fabric, ranging from research to processing, represent nearly $15 billion annually.
Since we export 90% of what we produce, mainly to the United States, free trade is woven into our DNA. That is why we unconditionally support the swift ratification of the free trade agreement between Canada, the United States and Mexico. That is also why we unconditionally supported the other two major trade deals: the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, and the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA.
At a high level, the parameters that govern trade under these agreements increase the predictability needed by an industry with such highly integrated value chains as ours. Our planning and investment decisions depend on our ability to anticipate changing market needs within a stable and predictable business environment.
We believe the agreement lays the foundation for modernizing our trade relationships, by providing a framework that can lead to industry improvements in the months and years ahead, with a view to creating value for all three countries, as well as our industry, workers and host communities.
Now I'd like to debunk some myths. Certain things that have been said about the agreement's repercussions on the aluminum industry are worth a closer look. In recent weeks, comments have come to light regarding the so-called repercussions of the ultimate agreement, including job losses and the cancellation of expansions and investments. For the past decade, we've been experiencing a depressed price environment, crippled by the Chinese presence, and just recently, we endured a slew of events that disrupted our main market, the United States.
Make no mistake: although it is true that projects have been scrapped in recent years, it is not accurate to claim that the outcome of CUSMA negotiations is putting jobs at risk or resulting in cancelled or delayed investments. The postponement of expansion projects is not related to the agreement negotiations or framework agreement. The fact of the matter is that investment decisions are based on, and greatly affected by, three fundamental elements.
The first is the price of the metal. Since 2008, we have been in a long stretch of depressed prices, largely caused by China's exponential growth in the market. The Chinese government subsidizes production costs, which has the effect of keeping the world price low. We are being paid a 1990 price, but we have 2020 costs, thereby reducing our margin to less than 44% of what it was in 1990.
Tariff uncertainty is the second element. That refers to tariffs on competition from countries that export to the American market. Ironically, the tariff—which makes the American market the one providing the best price for aluminum in the world—preserves market volatility because no one knows when one or more countries might be exempted, which would change the price dynamic. That's another element of uncertainty we have no control over.
The third and final element is construction costs, in other words, our capital expenditures, which are four to five times higher than in China. What's more, our construction time frames are three times longer. What takes us three years to build, China is able to build in 12 months at a quarter of the cost. When we build a single plant here, the Chinese build three and do it for cheaper.
You can see that these three basic reasons alone are enough to scrap any major project. We don't need to add any more reasons.
What are the benefits of CUSMA for the aluminum industry? In the short term, Canada and its aluminum industry benefited from a full tariff exemption, making it the sole significant primary producer in the world with unfettered access to the U.S. market.
While the old NAFTA had a 62% regional value content for most parts, CUSMA takes us further ahead. In the long term, the agreement globally increases the overall regional content for the automotive industry through increased RVC, bringing the threshold all the way up to 75% in certain cases. By naming aluminum within this context, it sends a clear signal to the automotive industry as to the importance of and expectations regarding the use of this metal.
We also understand from our meetings with government officials that these multiple layers of regional content requirement thresholds for key components with significant aluminum content will incentivize OEMs towards using regionally produced metal. We are thus far from where we were with the old NAFTA.
How do we make this happen so that Canada reaps the full benefits of this agreement? Our recommendations are as follows.
First, to protect free and fair trade between the three countries, we need a shared approach to metal import monitoring in order to ensure that unfairly traded aluminum does not enter the region. While Canada added aluminum products to its import control list as part of a commitment with the United States to prioritize trade monitoring and enforcement, we need Mexico to do the same. Canada, with the United States, must ensure that Mexico adopts an import monitoring system for aluminum imports into its territory as robust as that implemented by Canada on September 1, 2019.
We must maintain our unfettered access to the U.S. market and benefit from the growth in demand in the transport sector without being subject to market erosion stemming from surges in imports of unfairly subsidized Chinese aluminum. A trilateral mechanism should enable industry, alongside governments, to monitor progress toward the joint monitoring of metal and non-market behaviours from third countries.
Next, we must harmonize tariff codes with the United States and Mexico to better track flows and protect the region against unfairly traded aluminum.
Finally, the integrity of our low-carbon and responsibly produced metals must be preserved through traceability as it enters the U.S. market as a CUSMA Canadian origin metal, not to be confused with others. With the help of the Quebec government, industry has been working with modern traceability tools on pilot projects tracing the metal from smelter to border. As we conclude our pilots, the next step will require the help of the Canadian government to ensure full implementation in a timely fashion.
I would like to conclude with the following, Madam Chair.
After Canada's ratification of CUSMA, the following months will provide an opportunity to further develop the rules for regional content, thereby sending additional signals for the realignment of value chains. We believe that this step remains crucial in order to help the automotive sector achieve the full value of CUSMA for the economy as a whole.
We'll continue to work with the government to ensure that the rules of origin benefit the entire North American value chain, including Canadian primary production, so that our low-carbon footprint aluminum contributes in innovative ways to the transformation of the North American vehicle fleet of the future.
Given the current price environment, our fragile markets and the effects of the rail crisis on our operating costs, we must rely on the financial assistance and co-operation of the Canadian government if we want to fully benefit from this agreement for our employees and communities and for our shareholders.
Madam Chair, thank you for having us before the committee. I have to give you a quick shout-out for all of your decades of work on behalf of the auto industry. You've been one of the most approachable members of Parliament in terms of auto issues. I should probably give a shout-out as well to the member from Oshawa, Mr. Carrie, who's been equally accessible on automotive issues over the years. It's a pleasure to be here.
I'm very pleased to be here representing the car dealers association. We have 3,200 members across the country and 160,000 employees. We're the largest employer in the auto sector. Our employees have well-paying, stable careers in every community across Canada. As I look across the ridings that are represented here around the table, I think most of you will know your car dealers, and if you don't, you'll get to know them over the next four years.
I'd like to start off by thanking the . I'd also like to thank the , and really, all MPs of all parties for the non-partisan push to get this trade deal on the table. As we watch the activity coming out of the United States, we see that the auto sector was very much in the targets with the automotive trade tariffs. I think the work done on a non-partisan “team Canada” approach was really quite spectacular. Also, I think the deserves a shout-out for the work he did helping promote the concerns of our sector when we raised the automotive tariffs' impact on communities.
I'm just back from Toronto, where I spent time touring the auto show floor. The Toronto international auto show, for those of you who don't know, is the largest consumer trade show in the country, dealer-owned. made an announcement there, and I had the opportunity to show him around the car show and work with him. Both he and Premier Ford attended the show, Premier Ford for a separate announcement on the project we're doing on jobs and youth skills training. We had conversations with both of them, which I think shows the non-partisan nature of this. They both stressed how this is really a team Canada approach, and that we all have to be behind making sure we have good long-term relations with the U.S. and that we get these elements over the goal line.
The trade deal in itself was hugely important to the auto sector. We're one of the most integrated sectors there is. In our view, if the tariffs that were threatened by the White House had been brought into place, they would have been devastating, and according to the analysis of our economics team led by Mr. Dicko, they would have cost about 120,000 jobs.
It's worth highlighting that the automotive trade between Canada and the U.S. is worth $150 billion per year. That's more than $400 million per day. It's important, again, to underline that 80% of Canada's automotive trade and production each year is destined for U.S. consumers, and Canadians each year buy a similarly large proportion of vehicles coming from the States. The seamless traffic of automotive parts—automotive manufacturing—is important not just to the parts-manufacturing sector. It's critical for dealers and consumers in this country.
We reached out to our counterparts, the National Automobile Dealers Association, during these negotiations. We made sure we talked to them directly to get them on the same page about delivering a unified message in Canada and the United States that auto tariffs are bad for consumers, bad for the economies and certainly bad for car dealers, and that we needed automotive free trade. I think it's tremendously important that every association that deals with their U.S. counterparts delivers that message on both sides of the border to put Canada first.
I'm going to turn to a little bit more negative commentary now with respect to things that we should spend some time being concerned about. The agreement is a terrific first step, but we sit on what's known as the Canadian Automotive Partnership Council, which is a committee of industry and government put together. is a key player in that, along with his Ontario counterpart, Minister Fedeli. This body was formed to help increase investment in Canada and for Canada to get a better share of automotive investment. The bad news for Canada is that we've been getting only 7% of automotive investment since 2009. That's clearly not sustainable from the point of view of maintaining a competitive footprint here. We need both federal and provincial governments to really help reduce the cost structure to get these investments and build a strong base across Canada, which is pivotal to the economy. It's good for the economy, obviously, but it's good for dealers and it's good for the whole supply chain and for consumers ultimately.
I'd also like to spend a couple of minutes talking about another potential trade irritant that's on the horizon. Members will know about the proposed luxury tax on automobiles over $100,000. It's poised to affect about 1% to 1.5% of automobiles. We've negotiated one free trade agreement and we've negotiated another free trade agreement with the Europeans. This particular proposed tax has the potential to disrupt trade with the Europeans. Ninety per cent of the vehicles targeted by this are from European destinations, and it really contradicts the spirit of free trade with those countries. This really isn't a theoretical example. Australia and the European Union are struggling over this very point of a special tax imposed in Australia.
I would also point out that the biggest problem with these taxes is that they don't work. The U.S. tried a luxury tax whereby they imposed a luxury tax on vehicles over $100,000, on boats, planes and automobiles, and it had to be repealed by the Clinton administration in the nineties because people either buy around it or hold off on their purchases or make different purchases, so it doesn't raise revenue. In Canada we have the perfect example, which I'm sure Mr. Dicko would be glad to answer questions about. The provincial luxury tax in British Columbia has added another 20% on top of the purchase price of vehicles. We've seen a sharp decline in luxury sales in that province because people just hold off, don't buy or buy elsewhere. We've also seen job losses reported in that province. We're on a downtrend in terms of overall sales in the car industry, so it's just not the time to make that happen.
In conclusion, I would like to say thank you again to this committee for having us in. My appreciation goes to the last Parliament, and of course this Parliament, for all the hard work in getting this deal in what was a very difficult circumstance.
Thank you, Madam Chair.
Madam Chair, thank you for the invitation to appear before the committee today regarding the CUSMA implementing legislation. Given the critical importance of this agreement for Canadian businesses, I'm really delighted to be here. I'm joined by my colleague Mark Agnew, who leads our international trade work.
The members of the committee will certainly be familiar with local chambers of commerce in their communities. At the national level, the Canadian Chamber of Commerce represents over 200,000 businesses in all sectors and all regions of the country. Our membership encompasses not only chambers of commerce but also sectoral associations and companies, including everything from small to large multinational organizations.
The Canadian Chamber of Commerce was actively engaged throughout the CUSMA negotiations. We attended the negotiating rounds and mobilized our network of chambers, associations and companies through our “keep trade free” coalition. We also work closely with our counterpart business associations in the United States and Mexico.
With respect to the legislation currently before the committee, this trade agreement and its associated implementing legislation are critical for the Canadian economy. North America is, and will remain, our most important trade and investment partner. Businesses across the country have suffered from significant disruptive uncertainty since President Trump came to office. Although the CUSMA is not a panacea for the erratic trade policies emanating from the White House, it is crucial that we turn the page and lock in the new arrangement to provide certainty for our Canadian companies.
It's in that spirit that we urge the expeditious passage of Bill . Every trade agreement involves trade-offs, and no agreement is perfect. However, our trade negotiators did an extremely commendable job with their efforts, during a very difficult set of circumstances, to deliver the agreement that is now before Parliament for consideration.
Now I'll highlight some of the particular benefits of CUSMA, from our perspective.
Foremost is maintaining the original NAFTA's benefits with respect to tariff-free market access for goods, given the volume of cross-border trade. The importance of the certainty this provides has been underscored by media reports earlier this month, stating that the U.S. is considering raising its WTO bound tariff rates.
CUSMA's goods market access has been complemented by customs and trade facilitation provisions to help ensure that products can move more easily across borders.
Shifting to the services sector, the retention of the labour mobility provisions from the original NAFTA will help to ensure that companies are able to attract the best talent. While we certainly had hoped to expand the list of covered sectors, enhanced labour mobility under the U.S. administration was realistically a bridge too far.
We also welcome the inclusion of digital trade provisions, which will help play a key role in setting global standards on issues such as cross-border data flows. More specifically, these types of provisions are helping to shape the ongoing WTO e-commerce negotiations.
Crucially, CUSMA preserves the NAFTA's dispute settlement provisions for anti-dumping and countervailing duty cases, and strengthens the panel process for state-to-state disputes.
Last, the side letters on section 232 measures provide a degree of protection for Canadian exporters. However, we cannot afford to be complacent under either this or a future U.S. administration.
As I noted a moment ago, the chamber gives its full endorsement to the passage of Bill , and Canada completing its CUSMA ratification process in a timely manner. However, the clear message is that we do not want to see this process as the end of the road when it comes to ensuring Canadian businesses remain competitive while attempting to access opportunities in the North American market.
A perennial concern for us is buy America provisions at the federal and state levels, which attaches conditions to require the use of American-manufactured products. This considerably limits the ability of Canadian firms to participate in many U.S. infrastructure projects, and more specifically, the ability of Canadian companies to use their Canadian-based operations to participate in those contracts. The prevalence of buy America provisions risks creating incentives for companies to move manufacturing jobs to the United States. Unlike NAFTA, CUSMA does not cover U.S.-Canada procurement, and there is a risk—we understand from the media reporting—that the Trump administration may withdraw the United States from the WTO GPA.
Another concern is softwood lumber. Canada's softwood lumber industry remains in a challenging period due to a range of factors including market access and issues with the U.S. The government should continue its efforts to reach a resolution in the softwood lumber dispute in collaboration with our exporting companies.
Finally, regulatory barriers and border frictions continue to create problems for Canadian companies seeking access to the U.S. With the CUSMA negotiations now concluded it is important for the government to ensure the regulatory co-operation council works in partnership with industry-led initiatives such as the Beyond Preclearance Coalition. These types of initiatives may not provide a photo opportunity but they are absolutely critical for companies that move goods across the border.
While these three issues are not ones that we expect to be resolved in CUSMA negotiations, they are crucial to our members and should be priorities for the government now that the CUSMA negotiations are concluded. However, as I mentioned at the outset, we urge the committee to move ahead with its study as expeditiously as possible so that we can complete our domestic ratification procedures and refocus our energy on these outstanding issues.
Thank you, once again, for the opportunity to appear before this committee.
I look forward to your questions.
Thank you, Madam Chair and members of the committee.
Thank you very much for the opportunity to be here today. My name is Catherine Cobden. I'm the president of the Canadian Steel Producers Association and it's my honour to share the perspectives of our members on Bill , an act to implement the agreement between Canada, the United States and Mexico.
I'm here today representing member companies, which produce approximately 15 million tonnes of steel pipe and tubular products annually and support 123,000 direct and indirect jobs in five provinces, from Saskatchewan through to Quebec.
Canada's steel sector plays a strategically important role in the North American economy. We are advanced manufacturers of 100% recyclable and enduring product. We are a critical supplier to other key Canadian and North American sectors, including the automotive, energy and construction sectors and many other general manufacturing applications. We're also a sector that knows first-hand how critical it is for our business success to have strong and productive relationships between Canada and the United States and Mexico.
We operate in a highly integrated marketplace with steel moving back and forth across the Canada, U.S. and Mexico borders as it is transformed into additional products. In this capacity, we thank you all for this agreement and we welcome it wholly. We urge all members of the House of Commons and the Senate to support this bill and ratify it without delay. We see immediate advantages of the new agreement that strengthen NAFTA in several important ways both for our country and certainly for our steel sector. The agreement also creates more certainty in our markets, a much needed and necessary condition for driving increased investment.
Now let me step you through some of the key advantages for steel that we see in this new agreement.
First, the automotive rules of origin incentivize the use of Canadian and North American steel. This means that more North American steel will be used over foreign, non-North American steel. It sounds obvious but it deserves to be said. The new requirement for a 70% North American steel content is a significant gain for the North American steel sector. NAFTA did not have any such provision, so that's a significant development.
Today the North American automotive sector is a valued customer for our technically advanced and high-quality steel, with approximately 25% to 30% of all Canadian steel supplying this sector. That equates to about three million to four million tonnes annually. This is an extremely important development for us and for our steel industry colleagues in the U.S. and Mexico. Indeed, we were quite engaged working together on this and other aspects of this agreement.
Furthermore, the increased North American value content requirements for vehicles and vehicle parts are also important and improve the original NAFTA agreement significantly. As Jean has already mentioned, in some cases it has moved the content requirement from 62% to roughly 75%, which is a tremendous increase.
In the case of steel, we also welcome additional definitions coming into effect in seven years' time that strengthen the rules of origin by ensuring North American sourcing. This is important for our sector. We face severe global overcapacity. It's severe. The OECD estimates that approximately 440 million tonnes of excess capacity exists globally. This excess capacity equates to about 30 times the entire Canadian production. That's steel out there that's looking for a home, that's trying to cross both the Canadian and the North American borders.
Beyond the rules of origin, I want to point out that the new agreement also improves market access for Canadian steel and allows the use of effective trade remedies against unfairly traded imports. That overcapacity, which I mentioned, often results in unfair and injurious trade practices.
The new agreement contains important provisions that will promote increased co-operation and information sharing between North American governments to address circumvention and the evasion of trade remedy orders. This is critical for us. This increased co-operation is essential for the North American steel marketplace because we face a relentless flow of unfairly traded goods due to the global overcapacity I mentioned.
I remind the committee that last May we celebrated the establishment of the Canada-U.S. understanding on trade that resulted in the lifting of the very damaging tariffs on Canadian steel. This did not come easily to our nation, but it came as we worked as one against the difficult tariff situation. For us, CUSMA takes us further along the path of working with our North American trading partners on what we refer to as the principle of a North American perimeter to trade that strengthens the competitiveness of the North American region, that addresses global steel overcapacity and that aims to deal more readily with unfairly traded steel imports.
Madam Chair, please let me end with a call to all, once again, to come together as team Canada, as you have deftly done in the past, and get this deal done as quickly as possible, with my thanks.
I'm happy to take questions.
Thank you, Madam Chair.
Thank you very much to the panel, the witnesses, for coming here this evening. We certainly appreciate it. All the input we can get will help us to get this moved along in a very timely manner. I know our side certainly wants to get it ratified.
The first question I have I did bring up earlier, but I really think it's important to ask both Mr. Williams and Ms. King. It's with regard to CUSMA, specifically with regard to the implementation side of CUSMA. I too was at the Toronto auto show last week, which was quite amazing, to say the least. I went there on behalf of my riding, of course, but also in my capacity as chair of our auto caucus committee. Of course, my riding is a place called Essex, which is right next to Windsor, so I have a lot of reasons to have a very keen interest in that.
My question again is specifically to both of you, please. I'm hearing from industry representatives that while they support ratification, there are concerns about the implementation, particularly the very short 90-day transition period between ratification and implementation. Can you briefly explain, first, the changes for your sector under the new NAFTA and, second, any concerns your sector has about the implementation issues on day one?
We have expressed our disappointment to that effect. We think we have to build from here on the basis provided by the USMCA global agreement and its protocol. We are asking the Canadian government to ensure, first of all, that Mexico sets in place a robust import control monitoring system, as Canada has provided as of September 1 of last year. Basically of the three countries that have agreed in their May 17 joint statement with the United States to set up such a monitoring system, only Canada has delivered the goods. I certainly salute Madam Freeland under her former responsibility and her department, which was able to come up with such a system within two months prior to the election.
Canada is the only country right now that has a system like this. We have asked the Canadian government to export that expertise to the U.S. and Mexico. We understand that in the budget announced by the White House a few days ago, somewhere hidden in the thousands and thousands of pages, is a line item to provide funding for setting up such a system within the commerce department. The U.S. is engaged with Canada to get Mexico to follow suit. That's one part of the equation.
The other part of the equation is the need to have a joint approach to monitoring the transit of metal. When you look at CUSMA, you look at a trading space where Canada is the only significant primary metal producer. The U.S. is the big market, not only for North America but for the whole world. Everybody is shipping to the U.S. because it's the highest net back. It's the highest price paid for aluminum in the world. The pressure is very strong to access this market, and as much as possible, to access it through either Canada or Mexico, which are duty free.
Mexico is the easy way in. Why? Because they're a buyer. They buy scrap from the U.S. and they buy billet from whatever the world wants to offer at the lowest price possible. They have been known—and it is documented—to let metal come in that has been rejected in the U.S., such as wheels most likely, that have been under a section 301 measure in the U.S. The same wheels have found their way into the continent through Mexico. We're talking about big numbers here.
We want administrations to ensure that no illegally traded metal finds its way in. We don't mind about competition on a level playing field. We do mind about illegal competition.
Thank you very much, Madam Chair.
I want to thank the witnesses for appearing here today. I particularly want to thank the Canadian Automobile Dealers Association for bringing an economist here, because since December 14, we've been asking the minister to provide some economic impact studies. She's been very unco-operative. I think today everybody saw that we had to pass a motion. Hopefully we will get some of that information, because nobody believes that the minister and the would sign on to an agreement of this magnitude without having some type of advice and economic impact studies in front of them.
Mr. Dicko, I'm going to put you on the spot, and I hope you can give us a little information. We heard about the rules of origin. I believe that currently it's 62.5%, and for some of it, that may be going up to 75%. Coming from Oshawa, where we used to build cars but we are going to be building parts and doing some type of manufacturing, I think people see this as a good thing for the short term. In other words, we're going to be able to move some of that manufacturing—or keep some of it—here.
I was wondering if you guys have done any analysis of the short term versus the long term. I've read some analysis that says that because of these new rules of origin, there's going to be increased red tape here, and that's actually going to increase the cost of building products here in North America. We all know there's that tipping point, at which manufacturers, instead of building cars here, just say, “You know what? Forget it. There's too much paperwork and too much for us to be competitive. We may just build that car offshore, pay the tariff and bring it in.”
That's my first question, whether you have done any analysis on the short term and long term.
Also, we heard about the labour part of this agreement, such that these products had to be produced in factories paying at least $16 an hour. I believe the idea was to push some of the manufacturing from Mexico north. I can see that happening. However, is there anything in this agreement that would favour a manufacturer investing in Canada rather than in the United States? Mr. Williams was quite correct with his work on the Canadian Automotive Partnership Council, which said that we're getting only about 7% of new investment. Is there anything in this agreement that would actually say to Ford, GM and Chrysler, “I want to make that investment in Canada versus in the United States”?
That's quite a bit to go through, so could you just do your best to answer that?
I'm going to save the economist by just giving one quick answer to Mr. Carrie off the top, to give him time to do his math.
One of the things you really highlighted there, which you picked up from my presentation, was the 7% going to Canada. Committee members will know that investment numbers mirror the production value over time. As we have greater investment, obviously, we have greater production. It's very troubling when investment numbers start to decrease because that starts to affect the long-term future of production.
The most important thing to underscore in terms of your question is that in Canada we have to make a decision. Are we trying to attract investment? Are we being very aggressive about it, or are we going through the motions?
I sat through CAPC meetings with various ministers. This was an initiative started by Minister Flaherty, when he was in Ontario, and Minister Rock when he was Minister of Industry, in a joint production, and I just think that we have to get serious as a country, because the stories like those of Oshawa and elsewhere just aren't good for the economy. We have to make sure that we have a better competitive offering.
Over to you, Mr. Dicko. Good luck.
Voices: Oh, oh!
Thank you very much for all your testimony on the importance of this trade deal.
Catherine from the Canadian Steel Producers Association, you highlighted the importance of the team Canada approach in the face of the section 232 tariffs, and I acknowledge the work of the United Steelworkers who testified before you. As well, the Chamber of Commerce played a very significant role on a national level, but at a local level, including Rory Ring from the Sault Ste. Marie Chamber of Commerce, we all marched arm-in-arm in this trade war—a lot of them don't call it that but it was—with the chamber, unions, businesses, individuals, local politicians, so many to name. I think that was critical, because some trade pundits had said that Trump wouldn't use those tariffs, but he did. He hit steel with 25%, and aluminum with 10%. We found that the President likes to use them, because with the stroke of a pen, he can introduce them.
Again, some trade pundits are saying now that the United States has signed this agreement—both the Democrats and the Republicans have come together to sign this, and Mexico has signed it—if Trump thought that Canada was not moving forward expeditiously, as some people have said, or quickly, he could reinstate tariffs on steel and aluminum. What impact would a reinstatement of these tariffs on the steel and aluminum industries have for your industries if that were to happen, and not only the 25% or 10%? As you've seen with China, he ratchets up.
I'll take comments from you first, Catherine, and then I'll move to Mr. Simard.
As I said earlier, I appreciate the question.
I think that our production levels are matching our consumption levels, and there are reasons to be optimistic about that. However, taking the long-term view, the most important thing is the value to the economy. I mean, certainly car dealers are affected by that as the economy goes, but not having a sustained manufacturing sector focused on the auto industry becomes a huge problem for Canada.
Certainly there have been automotive analysts who have talked about Canada taking on more of the intellectual high-end, high-tech sector, and from the member for in the Windsor area, we've seen investments in the Windsor area, the University of Windsor and elsewhere.
We have to continue to focus on that high level of expertise. At the end of the day, if we don't have a successful car industry in this country, it's going to hurt everybody across the economy, and dealers feel it, too. That connection to successful manufacturing bases makes our voice in those product decisions and everything else more and more relevant.
Thank you, Madam Chair.
I would like to thank all of the presenters. You have already answered many of the questions that were asked by the members.
Madam Chair, I want to bring up the working hours for next week. Before I do this, I want to thank all the members of this committee, not only the Liberals but the Conservatives, Bloc and NDP, for putting in extended hours to get this done before February 28.
I have had discussions with the members and I propose these hours. On Monday the 24th, the committee sits from 3:30 p.m. to 8:30 p.m. On Tuesday the 25th, the committee sits from 9 a.m. to 2 p.m. and again from 3:30 p.m. to 8:30 p.m. On Wednesday the 26th, the committee sits from 3:30 p.m. to 8:30 p.m, and on Thursday the 27th, the committee sits from 9 a.m. to 2 p.m.
If we can get the witnesses done on the 24th, 25th or 26th, then on the 27th we can do clause-by-clause. If we still have witnesses to come forward on the 27th, then we'll do the clause-by-clause on the 28th.
I talked to the Bloc and NDP members, because it's a long time frame and members might have other duties, and no motions will be entertained unless everybody is present.
I call the meeting back to order. Pursuant to our order of reference, we're studying Bill .
Welcome to our witnesses. We appreciate your coming during this late part of the afternoon. Excuse us for trying to.... For members, this is their lunch, dinner and the rest of it. We've been working very hastily, trying to deal with all the issues of NAFTA.
Appearing as individuals, we have Michael Bose and D'Arcy Hilgartner. From Canada's Buildings Trades Unions, we have Robert Kucheran, chairman of the executive board. From the Canadian Trucking Alliance, we have Lak Shoan, director, policy and industry awareness. From the Dairy Farmers of Canada, we have Christopher Cochlin, and from Vermeer's Dairy Limited, Jake Vermeer.
Welcome to all of you. As I said, thank you for making the time.
We'll start with you, Mr. Bose.
First, I'd like to thank the committee for inviting me here. When I first got the invitation, I wasn't quite sure why anybody would want to hear what I have to say. I'm just a farmer. I'm not a lobbyist. I'm not an expert in any field other than raising turkeys.
I'd like to thank all the committee members for the time they put in. I know that your jobs are very difficult. The work on this agreement has been very difficult, and it has been for many years.
I'm a fourth-generation farmer, fourth-generation Canadian. My family started in Surrey in 1891. We continue to farm. The fifth generation is at this moment wanting to take over the farm. We started in dairy. We suffered the ups and downs of an unregulated industry. My great-grandfather saw it stabilize through supply management. My father in his sixties went on his own. He started a turkey farm and was part of the group that started the supply-managed sector for turkey in B.C. We've seen the ups and downs. This industry is important.
I know that the gentleman to my left is not going to agree with everything I have to say.
This is like death by a thousand cuts. First we had the TPP. In those negotiations on turkey, we gave up our growth for 12 years. Now we have the CUSMA, which gives up more growth. It's developing an unstable environment for our industry to continue in this province. I don't think enough consideration has been given to the effects of this on our industry. First, it's a fact that for every kilo of breast meat imported into Canada, we lose four kilos of farm gate production—four kilos of production through the processing plants. We just shipped a flock of turkeys. I did the math, and we're back to 1980 to 1990 prices, yet we're paying the expenses of 2020. Without a stable, secure marketplace for our poultry, it will be impossible for the next generation to pick up and take over from where we will leave off. This will end my family's history, in Surrey, of farming.
I know it's difficult, but we need to find a way. This agreement will be ratified. We all know that. We're not kidding ourselves. We need the government to negotiate compensation for the turkey industry as they have negotiated for the dairy industry. We need some form of stabilization for the farmers. We also need funding put aside for market development so that we can regain market share against our competitors.
I know this is about free trade, and I support free trade. There are segments of agriculture that will benefit hugely by the three agreements we've already signed, but the supply-managed industry supplies Canada. We cannot supply the U.S. with Canadian product, because we'd be entering a subsidized market and our product just would not be competitive. We can't sustain any further cuts to our bottom line, our revenue. It's imperative, if we're going to sign this agreement, that there's support to continue the industry. The supply-managed industry is very important to Canadian agriculture. It supplies the critical mass that sustains the infrastructure for all the rest of agriculture to compete and exist.
With that, I'll cede my time to the gentleman to my left.
Thank you, Madam Chair.
I would like to start by thanking the committee for the opportunity to speak to you this evening. As a Canadian farmer I'm acutely aware of the importance of international trade.
I'll give you a little background about me. I come from a family farm outside Camrose, Alberta, which is 85 kilometres southeast of Edmonton. Along with my brother, our spouses, children and parents we run a farm that produces cereals, wheat and barley; oilseeds, canola and flax; and pulses, peas and fava beans. We do have some cattle as well to extract some value-added out of land that is not suited for crop production. We are currently managing about 8,000 acres for ourselves and do custom work on an additional 1,000 acres. Like many family farms, our hope is to one day pass our operation down to the next generation, so much of what we have to do is look through the lens of improving our operation, the soil we depend on and the crops we produce to increase the sustainability and profitability of our farm, leaving it in better condition than when we started.
Farming is a tough business. As many say, if it was easy everyone would do it, but it's not so we try to be as efficient as we can, managing the variables within our grasp. We can't control the weather, but we can use reduced tillage to maximize the moisture and heat we receive. Cropping inputs are a huge part of our operation and expenses in costs can fluctuate year to year, so we do our best to buy when prices are within our budget and use technologies like variable rate seed and fertilizer and GPS guidance to make sure we are using these items judiciously, not only for our bottom line but for the consumer, who is ever increasingly concerned about how their food is produced.
Canadian farmers are amazing at producing high-quality, sustainably produced crops in large abundance, and with a relatively small population that means we need foreign markets. Seventy-five per cent of our wheat, 90% of our canola and up to 75% of pulses are sent to global buyers. In some sectors, like pulses, we are the largest exporter in the world. One in two jobs in the crop production sphere depend on these exports, so trade is key. Global prices will always fluctuate with supply and demand, a reality of the system farmers can deal with. But it's the artificial barriers—tariffs, restrictions and regulations that may not be based on scientific assessments—that may be difficult to manage.
Bilateral and multilateral agreements between countries help to facilitate that flow of goods. They eliminate many of these barriers and provide a dispute mechanism to deal with future issues. Trade agreements are very important, especially with our closest countries and their large populations.
The NAFTA agreement has worked well for my industry since coming into effect in 1994. Since its inception our trade with the U.S. and Mexico has grown dramatically, creating a highly integrated supply chain among our countries. In my own community it has created an economic environment to build a canola crushing facility. Though oil and meal are shipped by rail—maybe not this week—the oil is heading to Asian markets and the meal is heading to dairies in California.
When the U.S. government made it known that they wanted to reopen the agreement, that was a concern for many sectors, especially knowing the unorthodox negotiation methods that the current U.S. administration has undertaken with other global affairs. For most farmers this negotiation in the grain sector was more about retaining what we had already established. Duty-free access to the U.S. and Mexican markets was key, but the agreement was also 25 years old and there was room for improvement.
Biotechnology and plant breeding, including techniques that were just in their infancy or didn't exist in 1984, were missing. There was room for regulatory harmonization in food and crop products, especially in the areas of crop production, protection products and developing maximum residue limits. Low-level presence with biotech crops had become a challenge to our ability to detect a substance and move from parts per million to parts per billion. Zero tolerance was no longer achievable and standards needed to be set. For cereal crops like wheat, the current legislation created inequity with our U.S. farmers, delivering registered varieties into the Canadian market that Canadian farmers were not subjected to. As well, canola-based, value-added products like margarine and shortening were subject to tariffs, making it less competitive in the U.S. market.
After a little over a year of negotiations, we had a deal on the table, the Canada-United States-Mexico Agreement, CUSMA.
The key component is the retention of duty-free access into the U.S. and Mexican markets. This is by far the most important part for the sector and for me. The continuation of stable and reliable trade with the U.S. and Mexico is vital. As well, it addressed many of the areas of concern I mentioned earlier, with chapters on biotech, regulatory harmonization, provisions for low-level presence events and removal of tariffs on items such as margarine. As well, U.S. wheat grown with varieties registered in Canada would receive a Canadian grade, which is no different from Canadian-produced.
Do I have concerns with the agreement as it stands? I have a few. Chapter 32, which requires the U.S. and Mexico to be notified when we enter into trade negotiations with a non-market country, as well as for us to supply the agreement for review before signing, does seem to push the boundaries of national sovereignty. The use of words like “encouraged” and “important steps forward” in regard to modernization of procedures and harmonization of regulations in various areas tends to be viewed with cynicism within the agricultural community. The hope is that these will not just be words but will have concrete actions to go along with them.
Canadian farmers are currently facing substantial global trade issues with countries like India and China, where we have developed markets but lack significant trade agreements. Such agreements offer rules and procedures to handle disputes. We know dispute settlement processes are long and less than perfect, but they're a starting point for negotiation.
The eyes of the world are upon us. Global traders are looking for high-quality, consistently produced and reliably delivered agricultural products. Farmers in Canada are up to the task in the areas of production and quality. We look to the government and this committee to focus on those impediments to trade that exist not only in the world market but right here at home.
Events of recent weeks have had a huge effect on investor confidence in our country, and they concern global buyers as to our ability to deliver products in a timely manner. As a grain farmer from central Alberta, I find CUSMA to offer subtle changes over the current NAFTA agreement, but for my farm and those of producers across the country, having a stable and reliable supply chain integrated with our neighbouring countries is key to our economic growth. We need more trade, not less.
We appreciate the work of this committee. A part of good governance is oversight and analysis to make sure that agreements that this country enters into are in the best interests of Canada and Canadians, but I look forward to the ratification of this agreement so we can focus on the next challenges ahead.
I thank you for your time and look forward to your questions.
My name is Robert Kucheran. I'm the chairman of the executive board of Canada's Building Trades Unions. We're the voice of over 500,000 skilled Canadian construction workers, members of 15 international unions who work in more than 60 different trades and occupations. Construction is one of the largest sectors in the Canadian economy, representing about 14% of Canada's GDP.
Although the Canada-United States-Mexico agreement, CUSMA, does not have a direct impact on the CBTU or the construction we represent, its efforts to improve labour standards among the three countries have a direct, positive impact on our sector. Therefore, the impending ratification of the updated CUSMA offers us an important opportunity to voice support for this vital trade deal.
As mentioned, CUSMA includes a comprehensive labour chapter fully subject to the dispute settlement provisions of the agreement, which aims to raise and improve labour standards and working conditions in all three countries by building on international labour principles and rights. Labour standards and working conditions have always been a priority of the CBTU as well as our affiliates. We realize that these improvements are targeted to our trading partners, but that's a testament to the level of labour standards and working conditions we have in Canada and continue to advocate for and strengthen in this country. Specifically, the chapter on labour includes an annex on worker representation in collective bargaining in Mexico under which Mexico commits to specific legislative actions that would provide for the effective recognition of the right to collective bargaining. We applaud and support the Government of Canada in its goal of levelling the playing field on labour standards and working conditions to ensure that parties do not lower their levels of protection to attract trade or investment, but rather raise them to the higher standard.
Canada's Building Trades Unions are pleased about the added provisions that provide commitments to ensure greater protection for fundamental principles and rights at work, including prohibition of the importation of goods produced through forced labour; enforcement of obligations related to discrimination, such as discrimination based on sex, sexual orientation and gender identity; addressing violence against workers for exercising their labour rights, such as single instances of violence or threats thereof; and ensuring that migrant workers are protected under these labour laws.
Canada's Building Trades Unions supports these commitments, believing that stronger labour rights will lead to stronger health and safety laws not only for construction workers, but also for all workers. Along with stronger labour provisions, we believe that increased trade leads to stronger economies. This new agreement will reinforce the strong economic ties between the three countries and support the well-paying middle-class jobs that will strengthen the economies of all three countries.
We also support the significant gains that have been achieved for Canadian workers in general, as described earlier in the day by the Canadian Labour Congress in their submission.
Some of the highlights are the elimination of chapter 12, the investor-state dispute settlement provisions under the old NAFTA, which prioritized the rights of foreign investors and corporations over the rights of sovereign governments; the increased North American content requirement for vehicles from 62.5% to 75%; and the new labour value content requirement that stipulates that 40% of material and manufacturing costs in automobiles and 45% in trucks will have to originate in facilities where direct production workers have an average hourly wage of at least $16 U.S.; elimination of NAFTA's energy chapter, including the proportionality clause that required Canada to export a fixed share of energy production to the U.S., even in times of energy shortages; the strengthening of NAFTA's cultural exception, which is expanded to include digital industries; and a clear general exception for indigenous rights, which implies that nothing in this agreement prevents North American governments from fulfilling their legal, social, economic, cultural and moral obligations to first nations.
Canada's Building Trades Unions, along with our affiliation with North America's Building Trades Unions, welcomes the vital improvements to CUSMA that were negotiated early in 2019 between the House Democrats and the U.S. trade representative, and recently passed in the U.S. Senate. Some of these include the removal of language that allowed a responding party to block the formation of a dispute settlement panel; a reversal of the burden of proof on labour and environmental violations; the removal of language in article 23.6 that rendered unenforceable the prohibition of goods produced in whole or in part through forced and compulsory labour; the removal of language in article 23.7 that stipulated that parties only have to address cases of violence against workers that are occurring “through a sustained or recurring course of action or inaction”; the introduction of a bilateral rapid trade labour mechanism that allows for an independent investigation of potential violations of freedom of association and collective bargaining at specific facilities and, where violations are found to be occurring, the imposition of penalties on goods that are not produced in compliance with these obligations; and the removal of provisions requiring 10 years of market protection for biologics.
There's an area that still needs some attention. Canada’s Building Trades Unions would like to have seen greater access for qualified construction workers between Canada, the United States and Mexico. With similarities in training and accreditation for these skilled trades in both Canada and the U.S. specifically, we believe labour shortages in our countries can have a North American solution. We understand that Canada's negotiators attempted to include this in the negotiations, but ultimately it didn't get to the final text.
We thank our negotiators for listening to the CBTU and our affiliates who strongly advocated for this. We stand ready to consult with the Government of Canada to offer our expertise in areas of mutual benefit. Canada’s Building Trades Unions supports Bill C-4, . We urge all parties to pass Bill C-4. We believe that the provisions and commitments included in CUSMA will continue reinforcing the strong economic ties between the three countries and well supporting middle-class jobs into the future.
I want to thank the committee for allowing us the opportunity to present.
Thank you, Madam Chair and members of the committee, for having me here today.
The Canadian Trucking Alliance is here today to strongly endorse the ratification of the CUSMA. Canada's total trade, including imports and exports with all partners, is close to a trillion dollars. Almost half of this trade, or just over $500 billion, is with the United States. Our second largest trading partner, the EU, comes in at a distant second at $94 billion.
Who moves this trade? Measured by value, the trucking industry moves close to 70% of the trade with the U.S., which reflects the integrated nature of our economies. Typically, over 10 million trucks cross the Canada-U.S. border each year, with the value of goods increasing since 2011.
Over 40% of Canada's GDP is dependent upon trade with the United States. Some of the top import and export categories in 2018 included mineral fuels, vehicles, machinery, and plastics, all goods that can be transported by truck.
Canada is the United States' second largest supplier of agricultural imports, leading in categories such as snack foods, meats, vegetable oils, and processed fruits and vegetables. Canada is the United States' largest buyer of agricultural products, where again, trucking dominates as the mode servicing this trade category. Some of the leading agricultural import categories include fresh fruits and vegetables, snack foods, and non-alcoholic beverages. Some of Canada's top trading partners south of the border include Michigan, California, Texas, New York, Ohio, Illinois, and Washington.
CTA firmly believes that the Government of Canada has delivered the best deal possible for Canadians. With the U.S. being by far our largest trading partner, CTA welcomes the certainty of a trade deal.
CTA's analysis of certain sections of the agreement identified some positive changes on how goods cross the border by truck. Once ratified, CTA looks forward to working with the Government of Canada on the following potential items under CUSMA: potential revisions to the temporary admission of goods as they relate to movements and transit; changes to promote trade facilitation through electronic submissions, which will reduce burdensome paper processes; establishment of a single window system that would enable the electronic submission of data for all countries through a single entry point, which would reduce redundancies and simplify trade; potential changes to the administration of customs penalties and how they are imposed, including the treatment of clerical or minor errors; and lastly, facilitation of trade through programs designed to improve the movement of goods, including, if feasible, alignment of hours of service requirements, joint customs inspections and shared customs facilities.
CTA would like to close our statement by recognizing the commitment of the Government of Canada to continuing to make budget investments to make our border work from both a safety and trade perspective. This investment must continue to address physical infrastructure, IT systems, staffing at the border and developing policy to allow compliant and secure trucking companies to carry trade with the U.S. in the most efficient manner possible.
Good evening. My name is Jake Vermeer, and I'm a proud first-generation Canadian from Camrose, Alberta.
I am humbled to be given the chance to speak before you today on behalf of an industry that I am so passionate about. I want to begin by telling you about our farm, to help provide you with context regarding the people who are impacted by the CUSMA agreement.
In 1991, local Dutch officials notified my father and grandpa that their land was going to be placed under an expansion ban for the purpose of diverting a local waterway through their land. This capped the number of cows that our family could milk and thus the farm could no longer sustain two families. This was a massive blow because, for generation upon generation, my blood lines have milked cows and tended the land together.
Farming is a lifestyle before it's a job. My grandpa told my father that if he was set on farming he would need to find a new place to start over. My parents were in no financial position to relocate in Holland, so they decided to come to Canada as exchange students and experience the tall tales of Canada that they had been hearing. Those tales of large parcels of land, genuine people and the opportunity to sustain a family did not disappoint. My parents, at the ages of 24 and 28, decided to immigrate and bought a small 40-cow dairy and 160 acres of land. They spoke little to no English and came to Canada with a strong work ethic, a desire to milk cows and a hope for the Canadian dream. Shortly after making the most significant investment of their young careers, the first NAFTA agreement was signed and talks of ending supply management circled the dairy industry. My mother remembers my father coming home from an Alberta milk meeting and saying, “I think we made a huge mistake.” However, stronger heads prevailed and the Canadian government was able to negotiate a fair deal for its dairy farmers, and they were able to prosper. They were relieved and continued to grow the farm.
The story of my parents and the farm legacy that they began is one that showcases true perseverance, hard work and progressiveness. It was with that market stability and fair compensation offered by supply management that my parents turned that small 40-cow dairy into the 600-cow dairy it is today. We employ more than 15 local Camrose residents, and our farm generates a considerable amount of economic prosperity in a shrinking rural Alberta. Our farm, and many farms like it across the country, locally source grains, veterinarians and processing plant. It is not hard to see that dairy farms are a large contributor to rural and urban economies. In fact, across Canada we contribute nearly $20 billion toward the GDP and sustain about 200,000 jobs.
Times are changing, however. Countries have negotiated new trade deals with Canada, and our governments have slowly passed out our domestic dairy market shares. In CUSMA alone, we will lose 3.9% of our market, as well as the elimination of class 7, an integral part of meeting the butter demand of Canadian consumers. It's important to note that the 3.9% is in addition to the current access already granted through the World Trade Organization, the Canada-European Union Comprehensive Economic and Trade Agreement and the CPTPP. The combined access for all the agreements totals 18% of the Canadian market or $1.3 billion of Canadian producer revenue. Each of these deals delivers a crack to the foundation of supply management. There are deep local economic ramifications of these concessions. The projected loss for Alberta regarding the market loss is $16.13 million. The elimination of class 7 and restrictions on exports/surcharges ranges from $4.8 million to a staggering $29.66 million. We can assume those impacts will have a ripple effect, starting in rural Alberta with those that our farms rely on most and then have the potential to affect urban areas. This agreement will send an end to nearly 40 farms in Alberta and far more across Canada.
The negative effects don't end there. As a Canadian and a Canadian dairy farmer, I find one of my main concerns with the CUSMA agreement is the new American oversight on dairy policy in Canada. The oversight clause undermines Canadian sovereignty and its ability to develop and manage Canadian policies without U.S. intervention. These transparency provisions are contained in the annex in a series of clauses. For example, Canada must inform the U.S. of any milk class modification. The U.S.A. will not need to provide similar levels of transparency into its system. This approach is yet another example of how the CUSMA removes our competitive advantage and ties the Canadian dairy industry's hands to American decision-making. This should not be understated and will have a lasting effect on our domestic dairy sector. Our anthem proudly states “true north strong and free", but this new American oversight is far from it.
The Canadian government has continuously handed out market shares in every new trade deal, and this has left our dairy processors in a state of uncertainty. With a lack of investment, our processors are now aging and unable to meet the demands of our market. We need market stability in order to garner proper investment in the processing industry in order to compete against the foreign milk that is invading our market. Without this investment, farms like mine won't be able to continue to grow and contribute to the economy.
My final point comes from my grandparents, who still live in Holland. They notified us about a debate that is taking place in their parliament regarding CETA.
In the last CETA agreement with Europe, Canadian beef farmers were given a new market share to export beef. We were told that this exchange was necessary for dairy access. However, the debate that is occurring is whether Europe feels that our Canadian beef meets their standards to be allowed into their supermarkets. If we have to make an import concession to create a new export market, should we not then allow our trading partners to close that market after the deal has been struck? Otherwise, what was the point of our dairy concessions? Now, both our beef and dairy farmers are no better off for it. There has to be a better way.
Dairy farmers in Canada have always been cherished as family farmers who produce the highest quality milk and take great pride in taking care of their herd. However, every time a new trade deal comes around, we are forced to sacrifice a portion of our market to complete the trade deal. We see very little in return for our sacrifice, and while we are appreciative of the compensation packages, we would much rather earn the money by supplying consumers with the dairy products they deserve. As a young producer looking forward to the future, I don't see the same thing my parents did 25 years ago.
As foreign governments demand my market shares and I see my costs rising for producing the same litres of milk, I worry about the sustainability of my livelihood, because farming isn't just a job, but a lifestyle.
I am proud to have been able to share with you the viewpoint of our family farm. My parents and I are still extremely proud to live in Canada, but we rightfully worry about the future and that of my kids. CUSMA will have a significantly negative impact on our dairy farm and on thousands across the country, not just now, but in perpetuity. I stand here feeling what my grandpa must have felt when his land was annexed so many years ago. Despite our best intentions, with 3:30 wake-ups, 14-hour days, and supporting our local communities, my farm will now struggle to grow, and I worry about our future.
Our farm has always had a saying: “If you're standing still, your going backwards.” It's time for this government to let us move forward. I appreciate the opportunity to speak today, and I hope I was able to put a face to the negative impacts of signing this agreement and the impacts on dairy farms across Canada.
I want to thank you all for coming out here.
Though I come from Surrey—Mr. Bose is here—and I represent a very urban riding, Surrey Centre, it's one of the largest trading cities in the country. It has a large border with the U.S. It also has dairy farms, including one right across the street from my house. It probably has one of the largest trucking logistics hubs in North America, and it's the second-largest city. It's also home to three trades schools from your local branch of B.C. trades. What you have said is a cross-section of what happens in Surrey. It's great to know.
I'd like to assure Mr. Vermeer, based on what Mr. Hilgartner said, that having certainty helps a lot. You don't always get exactly what you want. We heard our chief negotiator last week, who let us know that the very first thing the Americans wanted was supply management; that was their main target. I am proud to say that we were able to defend 96.1% of that. Yes, there are some sacrifices, but we're hoping that we can work with your sector and perhaps come to methods that can help relieve it.
You should be proud that Canadian milk is some of the best milk in the world. I think that's our competitive edge, and you need to market that, with whatever help the government can provide. I ask that you do that.
On that same note, I want to ask a question of Mr. Bose, whose farm I drive by as I go home. It's a household name, the Bose farms in Surrey. How can the government help the turkey or poultry sector, in your particular case, to sustain itself, to increase itself? I know it's always had a challenging time, but with this agreement, how can we help you?
I'm going to do this committee a favour and probably not even use it all. I'll try to get us back on track, but I make no promises.
My question is for Mr. Shoan. I'm not going to keep repeating myself, but this, again, falls right in line with what I've been preaching all day. My riding is Essex, which is very close to the new, hopefully soon to be built, Gordie Howe International Bridge. As a matter of fact, just last week I got an update on that bridge, which for all intents and purposes is trending in the right direction, although it's never quite quick enough. Also in my riding, the transport industry is huge, as you are well aware, be it for shipping grain or for the auto industry. Another huge one for us is the produce industry. We are one of the largest ridings “under plastic” so to speak—the greenhouse industry. It's huge for our area, so I've kept myself relatively up to speed on that.
One interesting thing that came out of my update meeting about the Gordie Howe Bridge was specific to what you mentioned about the electronic process. I understand the paperwork process dearly, because for many years with our business, that's what I did. Friday afternoons were just lovely. What was worse was Monday mornings when I would get a phone call at three, four-thirty or five o'clock in the morning saying, “Chris, your temporary import bond doesn't go through.” I'd have people waiting to go to work who are sitting at the border. The reason I continue to bring this up today is that I know how many years I did it for, how many times things changed and how many of my owner-operators were less than pleased with the situation many times.
My question to you is this. Notwithstanding the fact that we—the government, so to speak—are very much going to the electronic process and getting away from the paper, at the end of the day it's of my belief system that unless our CBSA border officers are taught properly and are knowledgeable of the new tariffs, unless it's the people like me who sit at the desk and write all these new tariffs out, eventually it's going to fall in the lap of the person who's spending the most time away from home, the owner-operator. They're stuck at the border. What kind of provisions and/or concerns from your association have been brought up, and if not, do you think it's a good idea that we bring that forward?
Thank you very much, Madame Chair.
I want to thank the witnesses for being here.
Mr. Vermeer, Mr. Hilgartner and Mr. Bose, when you say you're just farmers, well, I'll tell you, for all of us around the table here, without you we'd not be eating, and Canadians rely on the work you do. We want to make sure with this agreement.... The concern that we've been bringing forward is that this is going to affect families, businesses and sectors, some of them negatively. Earlier today the committee heard from the minister, and again, we've been asking for economic impact studies since December 12th—over two months—and we're still not getting them.
The minister's mandate letter says that she wants to maximize the implementation of...I could probably read it to you here. It's CETA and CPTPP, but it doesn't mention in there maximizing the benefits of the new NAFTA. The agreement was actually being discussed just as the mandate letters were being sent out.
So I believe it was you, Mr. Vermeer, who talked about CETA and how the Europeans are actually trying to change things there, and we're concerned. We just want to make sure that Canadians such as you have an opportunity to come to committee because we want to make sure that, if there are going to be negative consequences, we've got the proper support programs in there, even though you would ideally want to continue doing exactly what you're doing.
So my question to you is this. What does the government need to do to make this right? I've heard of challenges with the implementation dates that we need to have a look at. You mentioned the compensation package.
Could you comment on how they're doing with the CETA and CPTPP agreements as well, if you have that knowledge?
Mr. Vermeer, you brought that up and so maybe you could start off.
Thank you, Madam Chair.
Thank you to all the witnesses for coming to the committee and sharing your thoughts with us. I come from beautiful Surrey and so does Mike.
Mike, you have worn many different hats with your family being the pioneer family in Surrey, as you mentioned. Also in agriculture, you have seen your crop base changing from time to time. Now blueberries outstrip every other aspect of farming. You have also worn the hat in charity, and volunteered in many different organizations. Last but not least, your great-grandfather was the mayor Uncle Bose, and you have put your name on the ballot previously. I am sure you will do that in future as well because you've been involved on the ground.
You mentioned the turkey industry and how it's going to impact you and your farm. You have asked how the government can offer support.
If we look at the overall scheme of things, Surrey being the fastest-growing municipality in Canada, and you yourself always being in the forefront of public service, do you see the benefits that CUSMA will bring when it comes to small businesses, including women who are running the majority of the small businesses in Surrey, and the trucking industry, which is another key, and lumber, going back and forth to the U.S.
Can you give me your thoughts from a Surrey perspective?
Mr. Vermeer, I know we heard earlier from my Liberal colleague, Mr. Arya, that Canadians are paying high prices for milk. I think the evidence suggests otherwise, that Canadians pay a fair market price for their milk. The difference is that we're able to support our producers doing it, and where other people are paying comparable prices, they're not necessarily able to support an industry in the way that Canada has been able to do.
He also talked about opening up export markets. What I find odd, if you take milk, for example, is that the world has a number of countries with systems that produce massive quantities of milk, to the point where, in some cases, producers can't stay in business. I understand that for Canada, where we're particularly good at growing grain, for instance, that's a natural export market, because Canadians aren't going to eat enough grain to keep grain producers in business. Correct me if I'm wrong, but it seems to me that the model doesn't work for milk. If everybody becomes a massive milk exporter, then we're not going to be able to sustain producers and people aren't going to be able to make a buck.
It seems to me that there's something wrong with the free trade model we're trying to push across the world, which says that everybody should be overproducing and bringing the price down to the point where the producer can't make a buck. What does the future of the industry look like if the idea is that everybody is supposed to become a low-cost exporter instead of producing to meet demand?