Thank you, Madam Chair, and good afternoon.
As you heard, my name is Michael Geist. I'm a law professor at the University of Ottawa, where I hold the Canada research chair in Internet and e-commerce law. I'm also a member of the Centre for Law, Technology and Society. My areas of specialty include digital policy, intellectual property, privacy and the Internet. I appear today in a personal capacity, representing only my own views.
As you know, the typical approach before committee on a bill study is to examine the bill and identify provisions to support and areas for amendment. In this case, however, what really matters is not what is in the bill, but what is not. Indeed, the most notable issues from a digital policy perspective won't be found in Bill . Rather, they are found in the new NAFTA itself, and they typically limit Canada's policy options for future reforms rather than require immediate legislative action. I think this raises a significant challenge, since the flawed aspects of the deal cannot, to my knowledge, be fixed in Bill C-4. Rather, they require change in a trade agreement that has been largely presented as a take-it-or-leave-it deal.
I'd like to briefly discuss four issues along these lines: copyright term extension, the cultural exemption, privacy and data protection, and Internet platform liability.
First is copyright term extension. The intellectual property provisions in the agreement raise some significant concerns, but none more so than the requirement to extend the term of copyright from the international standard of the life of the author plus 50 years to life plus 70. The additional 20 years is a reform that Canada rightly resisted for decades. By caving on the issue, the agreement represents a major windfall that could run into the hundreds of millions of dollars for rights holders and creates the need to recalibrate Canadian copyright law to restore the balance.
The independent data on copyright term extension is unequivocal: It results in less access to works, higher costs for consumers and no incentive for new creativity. In the words of Paul Heald, one of the leading researchers on the effects of term extension, it effectively represents a tax on consumers to the benefit of publishers with no obligation to benefit the public.
The copyright review that was conducted by the industry committee in the last Parliament included an extensive review into the issue and concluded that extension should only occur as part of a trade agreement ratification. In such a circumstance, it recommended establishing a registration requirement to obtain the additional 20 years of protection to mitigate against the disadvantages of term extension and increase the overall transparency of the copyright system.
Copyright term extension does not appear in Bill because the government, I think, smartly negotiated a 30-month transition period to address the issue. The government has not rushed into term extension, and it should take full advantage of the transition period to follow the copyright review recommendation by establishing the registration requirement for the additional 20 years. That would allow rights holders who want the additional protection to get it, while also ensuring that many other works enter into the public domain after their term has expired, after life plus 50.
Second is the cultural exemption. Now, much like the copyright term extension, there is no reference to the cultural exemption in Bill , and that's because the cultural exemption doesn't require legislative reform. However, I'd argue that the exemption is one of the most poorly understood aspects of the agreement. Consistent with the government claims, the cultural exemption covers a broad range of sectors, with a near complete exemption for Canada.
However, while the government has emphasized its broad scope, it rarely speaks of subarticle 32.6(4), which comes immediately afterward. That provision was the price of the exemption, and it permits the U.S. to levy retaliatory measures of “equivalent commercial effect” where Canada relies upon the exemption. The retaliatory measures provision means that the U.S. is entitled to levy tariffs or other measures that have an equivalent commercial effect in response to Canadian policies that would otherwise violate the new NAFTA if not for the exemption.
Since the provision does not limit the response to the cultural sector, the U.S. can be expected to target sensitive areas in the Canadian economy, such as dairy or steel, in order to discourage the use of the exemption. That was the U.S. strategy when it recently responded to a French plan to levy a new digital tax: The U.S. planned to levy $2.4 billion in tariffs against French goods such as wine, cheese and handbags.
How could that play out in a Canadian policy context? The recent report of the broadcasting and telecommunications legislative review panel, the so-called Yale report, contains what I view as many ill-advised recommendations on regulating the Internet and online news services, such as news aggregators.
Should the government adopt the broadcast panel recommendations on content, the U.S. would have a strong case for permitting retaliation with measures of equivalent commercial effect. Panel proposals that may violate the new trade agreement include requirements to pay levies to fund Canadian content without full access to the same funding mechanisms enjoyed by Canadians, licensing requirements for Internet services that may violate NAFTA standards, and discoverability requirements that limit the manner in which information is conveyed on websites and services.
I'll emphasize that I think this is bad policy that should be rejected. However, for the purposes of this review of the new NAFTA, note that the policy flexibility to enact reforms in this area is severely limited by the agreement, which establishes the possibility of retaliatory tariffs for cultural policy.
Third is privacy. The limitations of new Canadian policy also arise in the context of privacy and data protection. Unlike the cultural exemption, which permits violations of the treaty subject to potential retaliatory tariffs, on the issue of privacy Canada would run the risk of being offside of its commitment under the new NAFTA.
Note, again, that there is no provision on point in Bill . There is no need for one, since the new NAFTA prohibits certain privacy-related provisions, rather than requiring them.
For example, the new NAFTA includes a provision that prohibits data localization, which refers to measures requiring the data to be stored in Canada. The new NAFTA actually features a more restrictive provision than the one found in the CPTPP. There are some general exceptions that build in GATS-related rules, but the Canadian government will clearly be restricted in its ability to establish localization requirements under the agreement.
The implications of this limitation are far-reaching. With respect to data right now, consider the wide range of policy issues we're grappling with, whether that's Canada's digital charter and the proposals for privacy and data reforms, concerns around data sovereignty, AI-related issues, or fears about the competitiveness of Canadian businesses in relation to Canadian data.
It's notable that the Canadian government itself has established localization requirements as part of its cloud computing policy. Indeed, there is a recognition that data localization may be needed in some circumstances. Yet under this agreement, Canada is severely limited in terms of its ability to implement such requirements.
The same is true on the issue of data transfers, as the new NAFTA limits our ability to restrict them as well. As we enter into discussions with the European Union about the adequacy of Canadian privacy laws, there are concerns that the data transfer provision could put Canada between a proverbial privacy rock and a hard place, with the EU demanding certain restrictions on data transfers and the new NAFTA prohibiting them.
Finally, there is Internet platform liability. A similar dynamic arises in the context of Internet platform liability, which raises the question of what responsibility lies with Internet companies for third party content hosted on their sites. This issue captures large players, such as Google and Facebook, alongside anyone who offers user comments or content. Once again, there is no provision on this issue in Bill . The reason it isn't there is that the new NAFTA restricts policy in the area rather than requiring a new provision.
The new NAFTA includes a legal safe harbour for Internet intermediaries and platforms for content posted by their users. The rule is designed to provide the platforms with immunity from liability both for the removal of content and for the failure to remove content. Contrary to some claims, the rule doesn't mean that “everything goes”. Sites and services are still subject to court orders and the enforcement of criminal law. Intellectual property rights enforcement is also exempted.
However, there are some who argue that the responsibility of Internet platforms should go further, with potential liability for failure to act even in cases of harmful, albeit legal, content. That position raises important freedom of expression concerns and questions about how to balance free speech safeguards with protection from harm.
The issue for a review in Bill is not to debate where Canada should land on the issue. For example, the broadcast panel recommended liability for online harms, even if the content is legal. Others, including myself, would argue that liability should rest with illegal content, but to create liability for legal content is to render Internet companies judge and jury over what remains online, thereby further empowering those large Internet companies, as well as limiting competition and freedom of speech.
The key point here is that there is a policy debate to be had. Under the new NAFTA, Canada has effectively already committed to a position, one that restricts our ability to establish liability for third party content.
I look forward to your questions.
Thank you, Madam Chair and members of the committee.
I would like to share the views of Canada's sugar industry on the implementation of the new NAFTA, the Canada-United States-Mexico trade agreement. The Canadian Sugar Institute strongly supports timely ratification of the new agreement but is also seeking assurances from government that vital Canadian export administration procedures are in place when CUSMA enters into force this year.
The CSI represents Canadian refined sugar producers on nutrition and international trade affairs. The industry has three cane sugar refineries, in Vancouver, Toronto and Montreal; a sugar beet processing plant in Taber, Alberta; as well as two further processing, value-added, sugar-containing product operations in Ontario, one in Belleville and one in Scarborough.
Canadian refined sugar and sugar-containing product exports remain constrained by U.S. quotas that were established in the 1980s. These quotas were not liberalized under NAFTA or the WTO. In fact, those agreements further restricted our access to the U.S. market rather than liberalizing it. Our industry suffered the pain of that through the closure of the Winnipeg sugar beet factory in Manitoba, as well as a cane sugar refinery in Saint John, New Brunswick. The CSI strongly supported the renegotiation of NAFTA as a new opportunity to perhaps restore some of that access and gain some new, more flexible rules.
Unfortunately, CUSMA did not achieve the industry's objectives of substantial market access gains, but it did preserve existing access. Of course, during this negotiation we often weren't sure whether we would lose ground rather than gain it, and it did create two new small quotas.
The existing access that has been maintained includes 10,300 tonnes of beet sugar from Alberta, processed from Alberta sugar beets, and just over 59,000 tonnes of sugar-containing products. These are products high in sugar, such as tea mixes and other drink mixes, hot chocolate, gelatin desserts, those kinds of products. Those products are produced in eastern Canada, with sugar refined in Montreal and Toronto. These quotas are very small in relation to the 11-million-tonne U.S. sugar market, but they are critically important to an industry that's constrained by foreign trade barriers.
The two new U.S. quotas that are in CUSMA include a 9,600-tonne sugar beet quota, which is exceedingly important to southern Alberta, approximately doubling the current access; and a new 9,600-tonne quota for sugar-containing products. That's small in relation to the existing 59,000 tonnes, but it does bring with it more flexible rules that will allow the volume to be fully utilized.
The problem with the existing quota is that their restrictive rules of origin and end-use limitations haven't kept pace with changes in the marketplace. That quota utilization has been reduced by about 25% since 2006. The Canadian sugar refining and sugar-containing product operations in eastern Canada have suffered this loss, in the order of $11.5 million and 10,000 tonnes.
Coming back to administration, the value of these quotas to Canada depends on the method that Canada chooses to manage the export administration. Export controls are the firmly established method for managing access to restricted high-value markets in NAFTA and, for example, in CETA. They are necessary to provide predictability to enter into supply contracts with U.S. customers, to maintain supply chains and to justify ongoing investment in those further processing sugar-containing product operations.
We have consistently advocated for export controls alongside our market access objectives in CUSMA trade negotiations, as we did in the prior TPP negotiations. We have now received assurances that Canada will implement export controls. The issue will be a question of timing. It's important that these procedures be in place before CUSMA is implemented; otherwise, the value will not transfer to our industry.
A public consultation has been planned. We have been informed that this will be an omnibus consultation that will extend beyond CUSMA quotas to existing U.S. quotas as well as the CETA origin quotas. Of course we support public consultation. Our concern is that this not delay the necessary implementation of export controls and allocation to companies for the new CUSMA quotas.
We're seeking further assurances that there isn't any unnecessary delay, that Canada notify the U.S. immediately upon ratification of CUSMA, and that Canada will use export controls, because there is a requirement in CUSMA that Canada do so 150 days prior to U.S. acceptance of those export permits at entry. There won't be border enforcement this year, but, at the very least, it should be in place by the beginning of the second year, in 2021.
There is no need to consult on the beet sugar quota, because the only sugar that qualifies for that is produced and processed in Alberta. For the sugar-containing products, which are the key issue for our industry, the quotas should be allocated to those companies that have made and sustained investments in Canada, that have historically and actively participated in those quotas, and that have suffered the volume and financial losses. Essentially, that's the members of the Canadian Sugar Institute who do the sugar refining and the associated sugar-containing product operations. Right now 92% to 95% of the U.S. quota is filled by our members.
Thank you very much.
Please, I'll explain. When we were first invited, we also asked if Hector could join us and split our time. That's what we've decided to do. We'll do five minutes and five minutes, and that will make up Unifor's time. I only learned about the extra 10 minutes today, so it was too late to fill in the blanks on the comments. I'll go first, if you'll indulge me; then we'll go to Hector.
Good afternoon, Madam Chair and members of the committee. As was said, my name is Angelo DiCaro. I am the national director of research for Unifor.
Unifor is Canada's largest union in the private sector, representing more than 315,000 workers in nearly every industry, from coast to coast to coast.
I want to thank the committee for the invitation to speak today on Bill and the implementation of CUSMA, and I bring greetings from our national president Jerry Dias and national secretary-treasurer Lana Payne.
I also want to thank the committee for allowing me to share my time with Hector de la Cueva, a friend and an ally of our union, who is with us on video conference from Mexico City. Hector is the general coordinator of Mexico's Labor Research and Trade Union Advisory Center, and he has been a key point of contact for us throughout these NAFTA negotiations.
I want to open my remarks by stating what's probably the obvious. NAFTA has been a very challenging deal for working people, with many negative effects over time.
lt was an agreement built to limit democratic controls over trade and investment and tie the hands of government policy-makers. lt was one of the first agreements to establish private tribunals that investors could use to challenge Canadian regulations and potentially sue governments for unlimited sums of money. lt conceded sovereignty of Canada's energy production to the United States. And despite the obvious competitive pressures that “free trade” would put on workers in all three countries, NAFTA and its negotiators simply paid no mind.
A generation later, we have seen the outcome: a manufacturing trade deficit with Mexico that has ballooned from $3.5 billion at its onset to more than $27 billion today—half of that in the auto sector alone, including parts.
We've seen a workforce pressured by wage cuts and threats of job loss to low-wage right-to-work states or Mexican export processing zones. If you want examples, you don't have to look too far, considering the recent struggles we faced at Nemak, in Essex, and of course our fight with General Motors assembly operations in Oshawa.
These job dislocations happen largely because of NAFTA. They happen because businesses have unconditional access to markets. lt's why companies can sell here but have no obligation to build here.
In light of that, it's almost impossible for our union to be fully satisfied with the outcomes of CUSMA. Unifor members in Kitimat and in Saguenay, for instance, are rightly upset about the unequal treatment the aluminum sector received regarding aluminum content rules for automobiles. It's a problem that needs addressing.
Our members in the softwood lumber industry are still disadvantaged by unfair duties on exports, deepening our already challenged forest industry.
But while we are paying close attention to these concerns, there are, without a doubt, important advances in this deal, led by and her team, that deserve support.
ln CUSMA, for the first time, tariff-free auto trade is now conditional on high-wage production. It's not a silver bullet, but it is a new tool to help stop the bleeding of investment to low-wage factories and an attempt to incentivize an upward pressure on low-wage production.
ln CUSMA, for the first time, Canada has scrapped its investor-state dispute settlement system, or ISDS. This is very good. Frankly, we would encourage the federal government to go one step further in its implementation efforts and direct the removal of ISDS from all other trade agreements that Canada currently has.
CUSMA also reclaims our energy sovereignty. lt maintains our cultural carve-out and reverses course on certain bad cultural policies enacted under the Harper government.
Most importantly, it establishes important fixes to pre-existing language and groundbreaking new provisions that address workers' rights—provisions that have been made even stronger, thanks to recent changes outlined in the protocol of amendment.
CUSMA's labour provisions not only exceed the terms of the original NAFTA, but they exceed provisions in any trade agreement negotiated ever since—provisions that I, personally, would have thought impossible to achieve even three years ago.
Now, we are not so naive as to think that CUSMA, by itself, fixes the deeply entrenched anti-worker practices in Mexico. If anyone thinks that, then they don't have a clear read of the problem in Mexico.
The implementation of this agreement must come with clear commitments that Canadian officials will work with their Mexican counterparts to finance rights-based community support projects and fully resource a proactive investigative approach to the rapid response mechanism.
All of this must be done in consultation with trade unions and worker advocacy groups in Mexico, like Hector's.
With that, I will pass the rest of my time over to Hector for his comments.
Thank you, Angelo. Thank you to the chair and members of the committee for having me speak today.
I have travelled to Canada many times, but it is very cold, especially in winter, so I appreciate you allowing me to communicate from Mexico City, where it is much warmer. Spring came early for us.
I have spent much of my life working with the independent trade union movement here in Mexico. I have seen the damage caused by a system of undemocratic trade unionism and fake collective bargaining. In Mexico, under NAFTA, real wages have fallen over 25 years, despite major advances in productivity and trade.
I share the concern raised by Unifor. There is a lot in the new CUSMA that reflects the old NAFTA, an agreement that aimed to exploit my country for its low-wage workers and its natural resources, and reproducing inequalities between the countries and inside the countries. Mexico's relationship to North America is as a low-cost supplier of goods and services. That keeps more than 50% of Mexicans living in poverty. While Mexicans suffer, Canadian workers suffer too, with job losses and threats of low wages.
In NAFTA, workers do not win. I will say, like Angelo, that there are important advances in the new CUSMA on labour rights. This is perhaps its positive aspect. The new agreement has already had an immediate consequence on promoting long-overdue labour reforms in my country. This includes provisions to ensure democratic participation in trade union organizing and collective bargaining.
In Mexico, many workplaces are controlled by so-called “protection contracts”, which are collective agreements established by employers and supported by unelected unions. In Mexico, these powerful, unelected union officials are installed as worker representatives on tripartite committees, like arbitration boards, guaranteeing that workers have no voice.
The new rapid response mechanism for monitoring compliance is stronger than any measure we have seen before, and we hope it will allow us to better challenge this system of corruption that breeds unfair trade. However, these enforcement tools should not be used only as a weapon to attack Mexico. Instead, they should apply fully to all parties of CUSMA, including Canada.
In Mexico, the main problem we face has not been our national laws or ratification of international agreements. Having strong laws designed to protect workers and preserve human rights means nothing if states or corporations simply ignore them. The new CUSMA enforcement measures include significant penalties for corporations that break the rules. That is encouraging. That is something we have not seen before, but sometimes U.S.- and Canadian-based companies are the ones that ignore their obligations to labour and human rights, and that must stop as well.
To be truly effective, the labour provisions in CUSMA must be used as a tool to attack corporate injustice and social inequality, not simply to attack Mexico.
I was very pleased to come and meet with Canada's chief negotiator and other officials during the negotiation process. If you can believe it, we had an easier time arranging meetings with Canadian officials than with our own trade officials here in Mexico. I want to thank those who spoke to us, and who heard our concerns, for their openness.
Thank you again for allowing me to speak. I would be happy to answer any questions.
Thank you very much.
Thank you, Madam Chair.
As is customary, I'll begin by thanking you all for being here. Thank you for coming. We are very glad to have you. Despite your no doubt busy schedules, you've made yourselves available to answer our questions.
Your presentations dealt with very different sectors. They were certainly diverse.
In discussing this agreement, we haven't heard much about the sugar industry or the digital sector. My question, then, is for Mr. Geist. Our interpreters do a great job, but it's not always easy given the fast pace of the discussion in many cases. I'd just like you to clarify something for me.
We've heard about various data collection scandals involving different companies. We know that, despite everything, the trend is towards liberalized digital trade, which is what you talked about in your presentation.
If we take a closer look at digital giants such as Google, Amazon and Facebook, we realize that their workforces are actually quite small, much smaller, in fact, than that of the automobile sector at one point in time. Nevertheless, the digital issue goes way beyond those who work in the digital sector outright. All companies have now made the digital transition.
Given the trend towards data collection and liberalized digital trade, can you tell us whether the current agreement favours increased data collection by big companies?
That's a really interesting question. I think that especially in the digital environment this touches on a range of different issues, including on the digital trade chapter and on copyright.
On copyright, I would say that the work we did back in 2007 leading up to the Copyright Modernization Act in 2012, as well as the copyright review that was conducted extensively by the industry committee last year and into that period, gives us pretty good sense of where Canada stands. I actually think Canada has been pretty innovative when it comes to some of our copyright rules. They meet international standards, but at the same time many of them have been fairly forward-looking.
The issue around term extension is an interesting one, because it's bipartisan, in the sense that we had successive Conservative governments and, later, Liberal governments that all rejected the notion of extending the term of copyright. The Canadian position was that we needed to meet the minimum international standard that's established through something known as the Berne Convention. This is something that we do.
The U.S. has long pressured us to extend the term of copyright. That extension in the United States is often referred to as the Mickey Mouse term extension, because Disney actively pressured for that term extension to keep Mickey out of the public domain. We took a look at that issue in Canada and said that we wanted to ensure that our artists are well compensated, and we also wanted to ensure that consumers don't overpay. We wanted to ensure that there are appropriate levels of access in trying to strike that balance. Not extending the term of copyright was how we tried to do that.
I can't put myself into the negotiating room to know why it was that after decades of saying no to term extension we finally agreed to it in this agreement. What I do know is that the best way to try to at least salvage a difficult and I think bad situation with respect to term extension is to take advantage of this transition period that the government did negotiate.
At least with respect to some kind of registration requirement, I think it offers up the prospect that for a small number of works, for those works where there are rights holders who say they want to be competitive and want to ensure that they have as long a period of time as possible for protection, they'll make that registration. They'll get the extra 20 years, but for an enormous amount of Canadian heritage, for other works, those will enter into the public domain in accordance with the international standard.
As for what we ought to be doing, I think this committee ought to leave things alone in terms of where we are right now and recommend the registration process in keeping with what the industry committee said in the copyright review. We need to spend the next 30 months developing a registration process, which, much like some of the other issues we dealt with many years ago, other countries may look to and say that Canada provides a good example of how to strike that appropriate balance.
I'm calling the meeting back to order.
Pursuant to the order of reference of Thursday, February 6, 2020, we are studying Bill , an act to implement the agreement between Canada, the United States of America and the United Mexican States.
With us on this panel for the next two hours are the Automotive Parts Manufacturers' Association, Flavio Volpe, president; the Association of Home Appliance Manufacturers Canada, Meagan Hatch, director, government relations, and Kevin Girdharry, manager, policy and data analysis; HTC CO2 Systems, Stephen Beasley, vice-president; IPEX Group of Companies, Veso Sobot; and Teamsters Canada, Phil Benson, and Christopher Monette, director, public affairs.
Thank you all very much for making the time to be here today.
Mr. Volpe, we'll start with your comments, please.
AHAM represents manufacturers of major, portable and floor-care appliances in Canada and the United States. Our membership includes over 150 companies. The industry supports 40,000 jobs in Canada, including manufacturing, sales, distribution and retail. In Canada the economic impact of the appliance industry is close to $6 billion annually.
AHAM supports the rapid adoption of Bill and CUSMA.
Canada is a net importer of home appliances, with the U.S. and Mexico being the predominant trading partners. Manufacturers design appliances for a single North American market. This larger market increases consumer choice, drives down costs and maximizes economies of scale.
We support chapter 11 and chapter 28 of the agreement, which aim to reduce technical barriers to trade and increase regulatory alignment. We also support annex 12-D, which is specific to our industry and calls for energy performance standards and test procedures to be harmonized. It also encourages the use of voluntary programs such as Energy Star, noting that they contribute to improving energy efficiency for a range of products.
This is why we'd like to raise an issue that is of great concern to our members both in Canada and the United States. The Liberal Party has put forward a commitment to make Energy Star certification mandatory for all home appliances by 2022.
If all home appliances are required to be Energy Star, almost half of what's available in the market today will vanish, and in the future that could rise to 75%. Although implementation has not started, this has created great uncertainty in the market for both manufacturers and retailers. If the government moves forward with making Energy Star mandatory, Canada will be going against the intent of CUSMA, but more importantly, Canadians will experience a significant reduction in products available on the market. In fact, a staggering 41% of what is currently sold in Canada today will no longer meet these requirements. Because of the sharply limited model selection, it is likely that low-income Canadians will end up paying more for entry-level models. A price rise could be made worse by the greater cost of manufacturing such products, since more efficient components may be costlier, and in some cases, more fundamental construction changes will be needed. Unfortunately, in certain cases minor energy savings would be achieved.
This is because overall, today's home appliances are very energy efficient, and the cost to further improve efficiency could be significant, depending on maturity of the existing technology.
Both NRCan and the U.S. Department of Energy set mandatory minimum energy efficiency standards that all appliances must meet, and these have become more strict over time. Home appliances have undergone several standards changes. Some products are nearing maximum efficiency under available technology, and in some cases, the basic laws of thermodynamics.
Energy Star is a voluntary program. The purpose is to make it easy for consumers to identify higher energy efficiency products. It is intended to highlight the top 25% to 30%, or best in class, of energy efficiency. This competition motivates manufacturers to find new innovation. Manufacturers, in turn, make significant investments to qualify for the program.
If the Canadian market is limited to Energy Star products, this competition ends and the mark loses meaning. If the government mandates that everything be Energy Star, then it renders the brand meaningless. Article 12.D.5 of CUSMA clearly states its support for voluntary programs such as Energy Star to promote energy efficiency. This is in direct contrast to the government's proposal to make the Energy Star program mandatory.
Another rather significant issue with the Liberal commitment is that the Energy Star brand is not owned by the Canadian government. The brand is owned and trademarked by the U.S. Environmental Protection Agency. The U.S. government administers the program and sets the levels that manufacturers must meet in order to qualify for the designation. The Energy Star brand is highly praised by both NRCan and industry alike. The brand is recognized by 85% of the public, and the logo is used around the world. We want it to continue.
The Energy Star commitment is also inconsistent with the Liberal approach to energy efficiency over the last four years. In Canada the federal, provincial and territorial governments all have important roles to play in setting energy efficiency standards. In 2016 the FPT governments developed a framework encouraging market transformation through collaboration on energy efficiency standards. The framework states that when federal, provincial and territorial governments are not coordinated, manufacturers may have to test an identical product more than once to sell it across Canada. This can lead to unnecessary costs, reduce the product choices available in the market and create barriers to internal trade between provinces.
Making Energy Star levels mandatory is also in stark contrast to the government's approach to energy efficiency harmonization with the United States through the work of the regulatory co-operation council.
In 2018, Canada and the United States signed a memorandum of understanding to formalize the RCC and reaffirm the importance of regulatory co-operation. At the time, the president of the Treasury Board noted that aligning energy efficiency standards through the work of the RCC was the best way forward because it would save Canadians about $1.8 billion in energy costs by 2030. This is exactly why CUSMA commits to regulatory harmonization and supports voluntary programs like Energy Star.
Canada has historically been slow to adopt the stricter energy efficiency standards introduced in the United States. Since 2016, under this government, the two countries have made significant strides towards harmonization and alignment through the work of the regulatory co-operation council. Canada is now finally aligned with the United States. This process took over 10 years. It would be a shame to throw it all away.
Regulatory alignment is critical to avoid unnecessary double testings and barriers to trade, and it maximizes consumer product choice. Instead of making Energy Star mandatory, the government should continue to adopt the regulatory framework that can more quickly update its standards. Bill and CUSMA create a structure for this harmonization to thrive.
AHAM has been a strong advocate for advancements in energy efficiency standards, but making Energy Star mandatory will have negative consequences for middle-class Canadians.
Good evening, ladies and gentlemen and Madam Chair.
I want to thank you very much for giving me the opportunity to appear and give testimony to this committee on behalf of myself and on behalf of Regina's HTC Extraction Systems. They are a superlative carbon capture company that I'll tell you more about in just a second.
It's been my previous honour to testify to the Standing Committee on the Environment regarding Canada's greenhouse gas strategies, and on behalf of the Government of Canada to the U.S. Department of Energy on developing resource energy conservation technologies. I'm considered an expert in a field of science referred to as gas treating. I'm a proud second-generation oilman. I've dedicated my career to creating superb environmental technologies that have been installed on five of the world's continents.
Ladies and gentlemen, I'm absolutely delighted that our Canadian political leaders have expended significant effort to bring this massive potential of continued free trade between Canada and our friends in the United States and Mexico. With this initiative we're truly blessed, but we can never forget that we live next door to the largest, most competitive economy on the planet. They are 10 times our size and their economy exceeds that by an order of magnitude. When it comes down to it, we also have to be very mindful of our Mexican friends. As we heard in the previous testimony, they have a skilled workforce and are prepared to work for wages that are half of what ours are.
If we, the Canadian people, are to truly gain from this free trade relationship, we must think and act strategically. We must reflect on the consideration of public policy and taxation strategies that perhaps our trading partners have no intention of adopting. We must consider the impact on our ability to compete. Our economy, our municipalities and our businesses must be competitive in order to fully benefit from this free trade relationship. We must create foundations so that we can effectively compete.
Ladies and gentlemen, we need to talk about the elephant in the room, which of course is Canada's global warming concerns and our nation's strategies and their potential impact to this competitiveness. We must find an effective balance; indeed, I know we can. and have recently stated publicly that even if we eliminate all sources of carbon from coast to coast in this country, we will not move the dial internationally. I believe they're both absolutely right. I believe that the best Canada can do is to develop and fully perfect technologies that the rest of the world can confidently adopt.
Canada has provided this leadership before and it was a glorious success in both our environmental and our trade relationship with the Americans. There's some grey hair in this room and there's some not-so-grey hair, but some of us will remember yet another existential threat to our well-being and the environment. It was the threat of acid rain. In the 1970s, this environmental threat was truly horrific and it was immediate. In essence, pollution from industrial factories was causing acidified rain, which was rapidly killing North America's lakes and water bodies. At that time, the Canadian government, together with the United States, created public policy through clean air legislation, which mandated industry to fix this problem. They did fix the problem. They turned this environmental threat into a technical and entrepreneurial success story. Most importantly, this was accomplished rapidly and without punitive harmful policies that harmed society's competitiveness. Our free trade agreement must consider this.
The analogy then is the exact analogy today, in terms of solving these problems. At the end of the day, as a society, I know we can do it.
Bear with me. On February 12, a press release announced that the United States led the world in carbon dioxide reduction while, at the same time, it became the world's leading hydrocarbon-producing nation. They accomplished this environmental miracle without punitive taxation. We must consider similar strategies.
If Canada were to focus its efforts on the creation of public policy that would unlock the technical and entrepreneurial capacity of our nation, there is nothing that we could not accomplish. We could cure cancer. We cured polio. We could cure Alzheimer's and we could most certainly create superlative environmental technologies to solve the environmental challenges without harming our economy. As a result, we could be competitive in this North American free trade agreement that we're considering today.
I also believe that we cannot solve these problems at the household level. In the same manner by which acid rain was solved, we must look at this from an industrial perspective and we must engage our free trade partners in the pursuit. Indeed, we can profit from this under free trade and we can lead the world in environmental technologies.
This is one example of many. On December 2, 2017, the Saskatchewan government signed an accord with the governors of Montana, Wyoming, North Dakota and South Dakota for the further development of its CCS EOR initiative. This initiative has removed three million tonnes of carbon dioxide, which is the equivalent of taking 750,000 automobiles off the road. President Trump referenced this in his 2018 state of the union address.
With respect to free trade and our environmental commitments, it was announced on November 8, 2019, that United States shale oil production has peaked. That production miracle had allowed them to become the world's largest crude oil producer. They are now in decline. What that means is that Canada's oil and gas are about to become strategic to the United States again, and that will happen sooner rather than later.
Our oil and gas resources represent one of the greatest sources of wealth our country has ever been blessed with, and we must embrace this for the benefit of all Canadians. We understand that there are some in society who feel this is directly opposed to our environmental commitments. Ladies and gentlemen, nothing could be further from the truth. We've shown leadership before. We can do it again and we should do it again.
I previously worked with SaskPower on the CCS EOR project, and I'm currently working with Regina's HTC technologies. Our team has some of the most dedicated individuals you'll ever meet. We are creating superlative technologies that capture CO2 at an industrial level. We've been selected by the Alberta government in its quest for the world's best carbon-capture technology, and we're proud to be part of the team that is vying for the environmental XPRIZE.
Free trade between Canada, the United States and Mexico truly represents a glorious opportunity for all regions of Canada, but for it to truly work for all of us, we must think and we must act strategically.
Ladies and gentlemen, I want to thank you very much. I would be remiss if I didn't mention this. We must—while we're looking at North American free trade—have a commitment to fully ratifying section 121 of the Canadian Constitution, which, of course, is dedicated to interprovincial free trade. This is a major strategic problem for Canada that must be fixed. I would say that this should be the first priority, rather than a free trade deal with the United States and Mexico. We have to get our own house in order so we can compete in the world.
Ladies and gentlemen, thank you very much for your time.
Thank you. It's a pleasure to be back here, Madam Chair and members.
Where are we, and how did we get here?
We're discussing the attributes of the new NAFTA, having negotiated at an unprecedented speed and with a heretofore unseen bellicose and belligerent trading partner. This partner, our celebrated best friend, the United States, was bent on disrupting the global trading order with little regard for precedent or consequence.
It's important to understand context. We're not debating an academic study written in a vacuum to be picked apart by subject matter experts. We're here to discuss what happened in the real world from 2015 to 2019 to get us to where we are today. Members of this committee will be among the only ones tasked with voting to ratify the new agreement, or not. There is no vehicle for renegotiation, adjustment or request for discussions with the two other trading partners. You are faced with an up or down vote through no fault of your own or of the government that negotiated it.
It is what it is, and there are no surprises in it. The text of the agreement signed in October 2018 has been available online since November 2018. The text of the revisions negotiated between parties as a condition of U.S. congressional support was signed in November 2019 and available online since December 2019.
From August 2017 through September 2018, parties met in Washington, Ottawa, Montreal and Mexico City repeatedly, and I was present at every single round, including the December 2017 “this isn't really a round” round. I met with officials before, during and after every single round, and I did more than 600 on-the-record media hits on what we were looking for and what we needed to see. There were no surprises.
For the third time in the lifespan of these negotiations, I'm here again at committee to share candid thoughts and positions that probably every one of you knows I hold.
In June of 2015 at the infamous Trump Tower escalator speech where he announced his candidacy for Republican nominee for President of the United States, Donald Trump said this about the Ford Motor Company investment in Mexico:
...every car and every truck and every part manufactured that comes across the border, we're going to charge you a 35-percent tax...and that tax is going to be paid simultaneously with the transaction, and that's it.
We were in the middle of exhausting TPP negotiations that resulted in a flawed document in October later that year. In a New York Times piece that described the TPP as “subject of future political battles in the United States and elsewhere”, I was quoted as saying, “Anybody who is championing gains or who is forecasting losses is way ahead of themselves.”
In February 2016, Donald Trump declared that, if he won, he would extract the U.S. from it and its status as the defacto NAFTA update was put into question. In July of 2016, when challenged that his tariff plans would not pass WTO muster and his TPP withdrawal threat would be costly, candidate Trump said, “Then we're going to renegotiate or we're going to pull out”. Lumping in NAFTA he said, “These trade deals are a disaster. You know, the World Trade Organization is a disaster.”
We were warned in plain sight what a President Trump would do and mean for our trading relationship. Still, no one thought he would win at that point, thinking he was at best an ill-informed soon to be former candidate.
I took his election threat seriously. In September 2016, I led a delegation of Canadian automotive suppliers to Capitol Hill in Washington to speak to senior senators and staffers about the implications of a Trumpian reset on trade. I met with the USTR on his threat to pull out of TPP, which I had hoped for because it reduced the regional value content on automotive suppliers to as low as 35%, from NAFTA's 60%.
At an event at the prestigious Press Club on September 28, 2016, a month before the election, I delivered an address that said Canada was the smallest of the three NAFTA partners and that it needed to clearly target large, new, advanced manufacturing commitments from foreign automakers to keep pace with Mexican and U.S. growth.
All the tariff threats and angst were clearly on the minds of the industry and were the central focus of our pre-election activity that year.
In September 2016, in an Automotive News piece on the tariff threat, I said that Canada and other countries look to the U.S. to set an example, and that recklessness on the part of the U.S. would encourage other countries to disregard world trade rules.
My quote conceded that there was some merit to the Trumpian complaints, but cautioned that a U.S. overresponse would even be more harmful:
Some of the rest of the world does cheat on these obligations.... But the solution isn't for the global trading leader to drop its standards in response.
It's a tough spot to be in. But you're there for a reason. It's like Superman getting into a bar fight. Why?
Canada, its largest trading partner the United States, and Mexico have agreed to the CUSMA to replace the existing NAFTA. This is the first trade deal between major auto-producing nations since the original NAFTA that sees the regional value content for automotive production go up in the region. A higher RVC in vehicles means that, if an automaker wants to sell to a consumer in the three countries, it needs to source more of its content in those three countries.
Since the original NAFTA moved RVC on vehicles up from the Canada-U.S. Free Trade Agreement from 50% to 62.5%, we've seen a succession of trade deals where Canadian governments have progressively negotiated Canadian automotive suppliers' considerations downwards: Canada-Korea is 55%; CETA RVC is 50%; CPTPP is 45%.
In the CUSMA, the vehicle RVC level rises from 62.5% to 75%, a 20% notional increase. That means more local activity and jobs. To get to the NAFTA RVC, an automaker has to track local content in 29 parts categories. To be eligible, the RVC of those automotive parts must only be 60%. The CUSMA expands the list of categories by almost double and raises the automotive parts RVC as high as 75%, an increase in some cases of 25% notionally through the supply chain.
The North American automotive market is approximately 21 million units annually and is the most sought-after consumer market in the automotive world. Raising the thresholds to access it benefits companies that have invested in plants and in people within the CUSMA.
While the cost of an automobile may increase marginally if the manufacturers are required to source supplies from within the NAFTA region rather than from the cheapest global sources, the benefit will be more investment in Ontario, Quebec, B.C. and in many U.S. and Mexican states, and less in the places that sell to us but do not buy from us, like the members of the CPTPP, CETA and Korea.
In automotive, the CUSMA addresses the protectionist needs of the U.S. administration but wraps in its purview Canada and Mexico as primary partners.
Side agreements for exemptions on tariff threats were a major challenge, but Canada and Mexico achieved an insurance policy on this that's worth noting. As detractors here at home decried the side agreements, I told The Economist magazine that, normally, trade agreements are self-reinforcing but that this one is being held together with threats. This is the context that we are working in, not some respectful bargaining between partners with equal leverage.
All vehicles in the CUSMA will now need to meet a minimum threshold of 40% being made by workers making at least $16 an hour. Canada will benefit; Mexico may suffer.
This provision was created during the final course of the negotiations in bilateral U.S. and Mexican discussions that caused a stir with Canadian commentators who said Canada has no role in those talks. Meeting frequently with U.S. and Mexican negotiators during that period, I didn't share that opinion. I told a Wall Street Journal front page report that the labour value content proposal “disproportionately affects Mexico” and that we were “advising Canada not to comment or take a position until the Mexicans do.” That's what Canada's negotiators did.
The U.S. is committed to raising the cost of importing automotive goods from overseas. In June 2019, I told this committee that the U.S. was using the section 232 steel and aluminum tariff threat to bully its partners and intended to use the WTO process to raise the 2.5% most favoured nation tariff dramatically. On February 12 this year, Bloomberg reported from Washington that the Trump administration is mulling a plan to increase those long-standing tariff rates at WTO. This is a move that is aimed at rewriting its relationships with major trading partners.
Importantly, Canada negotiated section 232 exemptions from the U.S. at production levels that materially outpace export growth models to the U.S. over the next five to 10 years. Specifically, Canada will be permitted to ship 2.6 million vehicles annually and $32 billion in automotive parts to the United States tariff-free, up 40% from today.
Ending the fraught negotiation process with a deal that increases investment and more competitive market access for Canada is extraordinary. Unlike the Houston Astros hitters, nobody hit the garbage bins for us. We had to react to pitches on skill with no warning, and we won.
We enjoyed unprecedented access to the Canadian negotiating team. In addition to this, I sought and received in-person access to the White House, USTR and the Mexican president and his negotiation team.
I will write a book one day chronicling the behind-the-scenes actions. Chapter one may be the USTR reaction to my November 2017 Canadian Press headline lampooning their silly materials-tracing proposals: Do we need to know where the dinosaurs died?
Today I want to give full credit for our success on CUSMA to , Steve Verheul and their team of tireless officials who consulted constantly with the Canadian automotive industry all over the continent. They deserve specific credit: Martin Thornell, Karen LaHay, Andrei Marinescu, Aaron Fowler, all of team Canada and the Government of Canada. It was a non-partisan, public-private effort and it was amazing. I was proud to be a footnote in this history's chapter.
My name is Veso Sobot. I am an engineer with IPEX. We manufacture plastic pipe for construction. If you take a look under your sink when you go home tonight, late at night—my goodness, you guys have stamina—you'll see black pipe under there. It's probably our stuff. We make the grey electrical pipe at the side of your house, the blue water main pipe out in the streets and the green sewer pipe.
We were founded in 1949 in Toronto. Our founders escaped Estonia and got to Toronto. They started making hula hoops at night and selling them during the day. Within three years, they made their first million dollars. Our founder said, look, this hula hoop thing might be a fad, so we'd better diversify. They straightened out the hula hoop, and that's how we got into the pipe business. Today we've made enough pipe to go around the world about 200 times.
Of course, very important to us is the U.S. trade relationship. We have 15 plants in Canada, five in Ontario. We now have 10 plants in the United States. In 2009, when President Obama signed the American Recovery and Reinvestment Act, which called for “buy America”, we were shut out of the U.S. market for probably 12 months. It was devastating to us. We lost long-standing customers. We've never been able to regain them. We also lost some logistical chains that we had access to. It took about 12 months for Canada to negotiate a Canadian exemption to buy America.
Here's my bottom-line recommendation to the group: Please pass USMCA, or CUSMA, as soon as possible. Lock in the gains that we have, but please understand that there are no protections in CUSMA against America doing buy American again. They can cut us off tomorrow and we won't be able to ship into the United States tomorrow. You might say, well, you have 10 plants in the States, so you should be okay, but the truth is that a lot of those plants have specialties. We ship product amongst ourselves. Product that's made in Chicago or in Michigan comes back to Toronto for certain products. Products that are made in North Carolina come back to Toronto and vice versa. Although we have some flexibility, we don't have huge flexibility.
My bottom line there, Madam Chair, is that if your folks could consider some sort of fund just in case America cuts us off again, some sort of fund that would help Canadian manufacturers if they were injured because America decided to implement buy America again, that would be wonderful—sort of like how you did for steel and aluminum, which was very effective and appropriate. It gave a little bit more security to Canadian industry.
I would add one more thing. In the new NAFTA, article 32.11 talks about Mexico's exemption to certain buy America issues. We don't know exactly how this will all play out. It would be wise of us to take a close look at article 32.11 and check to see whether Mexico has a bit of an advantage on us or not. If the article doesn't give them an exemption on buy America, that's great. It will prevent Canadian companies from moving their plants to Mexico and shipping back into the U.S.A.
As our bottom line, please pass USMCA as fast as you can. Let's lock in the gains, but let's also continue to work to see if we can make this better as time moves on.
Good evening. Thanks for having us here.
My name is Phil Benson. I'm a lobbyist with Teamsters Canada. With me is Christopher Monette, director of public affairs.
Teamsters Canada is Canada's supply chain union, representing more than 125,000 workers in all sectors of the transportation industry, and in all sectors of the economy, from film and food and beverage to dairy. The International Brotherhood of Teamsters represents 1.4 million workers.
Teamsters Canada supports CUSMA and Bill 's timely passage. lt is not the best deal, but it is a deal, an achievement, given America's approach of bargaining in the best interests of its businesses, predicated on national security interests. Gains were made. However, not understanding that the fundamental nature and substance of negotiating trade agreements have changed left opportunity off the table.
Trade is important for many teamsters' jobs. lt is a reason why Teamsters Canada participated in every bargaining round during CUSMA's negotiation. The Liberal government made the right decision to include labour unions, NGOs and civil society in the process. The practice of negotiating trade deals in secret is a factor in the growing disaffection of workers. Opening the door let in new perspectives, leading to a better outcome. Unfortunately, some departments did not get the memo. We were not a “client” in their mind, and they often treated us as an afterthought. We anticipate that this will change and will not happen again.
The clearly appreciated and encouraged our activities in building support and consensus in Washington and Mexico City. Working with our colleagues and allies was helpful in achieving gains. It helped build support for a deal. Our International Brotherhood of Teamsters colleagues in Washington led the fight to make the improvements that led to a successful conclusion of the process in the United States. Those changes and the elimination of ISDS provisions are a win.
During the Mexican round, we joined a civil society conference at the Mexican Senate and met with independent trade unions. Workers in the auto supply chain, in a closed-door session, told of unhygienic, inexcusable working conditions and gave testimony of violence and sexual assaults. I am proud of how teamsters and labour are fighting for workers rights everywhere and of a government that got it. Trade agreements must include protection of workers, women, the environment and indigenous peoples, and Bill is a start in the right direction.
The negotiators' liberalization trade-bargaining blinders in seeking “ambition” lost the opportunity to protect Canadian jobs—for example, some jobs in rail and road transportation. It's a loss. Buy American and the imposition at whim of tariffs left unchecked is a push bet. The six-year review and sunset clause is counter to why trade deals are entered, a confirmation that negotiating trade is no longer all about “ambition” and does offer potential future risk and opportunity.
The provisions of NAFTA are not used by many sectors. The rules of origin are more expensive to comply with than paying the cost of low or zero-based tariffs. We do not believe that will change. As such, the NAFTA negotiations were driven by the goal of the United States to protect American-based auto manufacturing and to dismantle Canada's supply-side management system.
Good afternoon, ladies and gentlemen.
While many may know the Teamsters as Canada's largest transportation union, it is less well known that we are also Canada's largest dairy workers' union.
We represent 5,000 workers in dairies across the country and more than 500 workers involved in bulk milk and dairy transportation from Vancouver Island to Newfoundland and Labrador.
As such, our union supports supply management, and we recognize our government's efforts to protect the supply management system. It is a win to repel the American push to dismantle supply management. It is a loss that greater foreign access to Canada's dairy market was granted.
One cannot examine CUSMA's potential impact on dairy workers in isolation. Canada has repeatedly tossed the dairy sector under the bus in an effort to secure trade agreements. The impact on the sector of CETA, the CPTPP and CUSMA is cumulative and severe. Close to 10% of the Canadian dairy market has been sacrificed on the altar of these free trade agreements—this, at a time when domestic demand for milk has been steadily falling.
As a result the government recognized the need to compensate the dairy industry. Let me be clear: We are in complete solidarity with dairy farmers, and we are not opposed to companies in the dairy processing sector receiving money either. The problem we call to your attention is that actual dairy workers are getting nothing—no money for training or skills upgrading, no enhanced EI or severance for workers who lose their jobs.
They are getting absolutely zero.
This year Saputo announced it will lay off 300 workers, after receiving $7 million from the dairy processing investment fund. These laid-off workers will receive nothing from a government that has seen fit in recent years to give billions to literally every other player in the industry. Worse still, the government's subsidies might not even create or secure other jobs in the sector, as the funds can be used to automate production lines, potentially causing even more job losses.
Trade agreements are viewed as one cause in the rise of the disaffection of workers. What do you think dairy workers and everyday working-class Canadians in general might think when industry is given billions and workers get nothing?
Our thinking at this stage is that a program for the 25,000 workers employed in the dairy processing sector could cost less than 1% of the $3.9 billion earmarked in the spring 2019 federal budget for sectors affected by recent trade agreements. The good news is that Teamsters Canada has held some discussions at the departmental level. They are at an early stage and came only after years of effort.
We ask that the committee support our initiative. As a matter of policy, we should no longer assume money given to an industry will automagically trickle down to workers. It is a sound position that when a government decides it must compensate an industry due to the effects of entering into a trade agreement, compensation must include a package for actual workers.
That said, we'd welcome any questions the committee might have.
Thank you very much.
It certainly isn't ambitious.
One of the problems is that dairy was thrown down the tubes. It's not a trading issue. The government decided to pony up $3.9 billion, and according to the , if I heard her right, listening to her testimony when she was here, she said that they're going to do that for CUSMA as well. It's just the workers who are left behind.
The problem with ambition is that, working with our partners and allies in Mexico and the United States, we're working on a deal between Mexico and the United States that Canada can sign on to. Some are on rail issues, some are roads, some minor, some larger, but Canada wouldn't go there because it wasn't ambitious. We're negotiating with somebody who is looking after their own interests and the interests of their nation.
I talked about the blinders. We're just asking that they take those blinders off and realize that we're not negotiating under some theoretical construct of a university professor in an ivory tower. These are real issues dealing with real jobs, real people. To discount things and ignore things because it doesn't fit into your theoretical notion of ambition in this modern world that we're moving into is just sad.
Somebody asked a question about fear. I've done a bit of bargaining, and I smelled fear. The fear was—at least at some level—the negotiators did not want to raise issues because they did not want in any way to upset the apple cart to get a deal. Congratulations, they got a deal. We need a deal. We support the deal. All in, it's a good deal, but these are lessons we have to learn. It's a message to Global Affairs and a message about how people bargain these deals, to realize that if you like the old way of doing things in secret, in silence, for 30 years....
I started with FTA. In that time, we had full access to everything. It was amazing. This is a little bit better. We're cracking the door, but just look what happened. I support Hassan Yussuff's statement yesterday. That's why we didn't' go over all of that again.
You have people coming here from labour, and NGOs and others, saying that, all in all, it's a deal. Maybe in six years we get to review it with somebody else. Maybe we can clean some of these things up and get a better one. The risk is having it there. That's what ambition in all about. It's not an insult or slam. It's just that the world has changed. Please take the blinders off.
We're working on Mercosur now and FTA. There are a few others we're actually working on. It's the same thing. Some I think might be very exiting, very supportable. Sometimes you have to take them off and make sure that people like Mr. Sobot here, and other companies.... Maybe don't be scared to stand up, or stand up for us in labour to protect our interests. It's okay to do it. Everybody else is doing it, especially America. Why shouldn't we too?
Absolutely, Mr. Shields, and thank you very much for the question.
It was on February 12, 2017, that there was an accord between the Saskatchewan government—SaskPower—and the governors of Wyoming, North and South Dakota and Montana to proliferate technology that was actually within the Quebec pension plan, technology called Cansolv. It was the first attempt at massive carbon capture from a coal-fired power plant. At the end of the day, this became very interesting to the world, because they took that CO2 and injected it into depleted oil reservoirs. They were thus not only removing massive amounts of CO2 from our environment but were turning it into enormous wealth.
As I mentioned in my presentation, they set a record late last year and have captured three million tonnes, which is the equivalent, ladies and gentlemen, one more time, of removing 750,000 vehicles from the road. This isn't putting a 40-watt light bulb in your house. This is major step change in terms of improvements to our environment and to airborne emissions.
The United States are not going to adopt Paris. They have no intention of doing so. They've made that clear. This does not mean, though, that they have any less commitment to the environment. What I'm trying to get across to this panel today is that perhaps what we should look at is following the Americans' example. Let's work on this from a technological perspective. Let's perhaps expand these types of relationships into other areas. Let these be the directions we're going to go in to solve the environmental problems we believe we have in society.
Mr. Shields, with that announcement—Donald Trump apparently referenced that agreement in 2018 in his state of the union address—they also put $2 billion from the U.S. EPA into this strategic initiative. The Americans are now embarking upon some of the largest carbon capture projects in the world by far.
Canada originally had that. It was originally developed at Suncor Energy up in Fort McMurray, Alberta, and by golly, that's the leadership that Canada can show.
Carbon taxation...? All it does is hobble us. Let's look at the examples of the past: acid rain. Let's look at public policy that deals with this at the megatonne level, rather than at the level of a 40-watt light bulb in your home.
Does that answer your question?
I think I know who you're talking about.
The original agreement happened at a time when about 80% of the vehicles made in North America were made in the Great Lakes region. There was the idea that for Great Lakes states, if we opened the door to Mexico or Canada, there was going to be some erosion. That's why he voted against it.
This time, the agreement raises the regional value content but also turns around specifically on vehicle parts, on a section called core parts, and says—and these are the six most added-value parts, the ones you think they are: engines, transmissions, suspensions—if you're going to use steel to make those parts, or you're going to use aluminum to make those parts, 70% of that has to be sourced regionally.
Simply put, if he is representing a district that's in the automotive-manufacturing sector or in steel, this agreement favours those regions. Specifically with the provision for labour value content, if you make a car in a facility that pays less than $16 an hour—that's the wage, not the fully-loaded cost of labour—then 40% of that car has to come from parts facilities that pay $16 an hour. Presumably, if they're making those core parts, they're making them with 70% local steel.
It's a really simple binary decision for anybody who is in a manufacturing district or riding. For automotive steel and aluminum, this agreement guarantees more content than the one it replaces. For any of the three signatory countries, it is the first one in 25 years that raises that number.
Thank you very much, Madam Chair, and to all of our witnesses.
I'm going to address this to Mr. Volpe.
Sir, I listened very keenly to your opening remarks. They were very well done. You had a lot of quotes and a lot of dates.
In my riding down by Essex—of course, I continue to say it—we're so entrenched in the automotive industry. It is very close to our border, the busiest international border in North America. I was listening, again with keen interest.
One quick date that I would bring to your attention, sir, was back in April of 2019. That was a date that the United States lawmakers received an economic impact study to help them make decisions with their new NAFTA trade agreement. That's one study that at least this side of the table has not seen as yet. We're very sure it's coming, but we haven't seen it as yet. I just want to bring that one date to your attention as well as a couple of quick quotes. I got this from the CBSA website.
The CBSA website currently states, “The CBSA, at this time, will not be seeking additional resources to implement and administer the CUSMA.”
It goes on to read as follows:
The CBSA will have to update policy and standard operating procedures, as well as identify new system and operational requirements. Should the implementation of new CUSMA benefits to the trade community add pressure on CBSA operations, resources needs will be reassessed to inform future recommendations to the Minister, as appropriate.
It sounds to me as though it's a little bit after the fact.
I acknowledge your enthusiastic support for the new NAFTA, sir. There certainly does appear to be good news for the auto sector, and that, of course, is good news for workers and businesses in my riding of Essex.
The focus of my questioning has not been on whether to ratify, but rather on implementation, the concern being that there is a very short 90-day window between ratification and implementation, which will be handled by the CBSA. The committee was advised that one of the most complicated elements of this agreement are the rules of origin, particularly in the auto sector. There are much more stringent rules in terms of content, as well as the labour value content threshold, which companies will now have to track throughout their supply chain.
In your opinion, sir, does the CBSA have the tools and the training to make sure they're ready to go on their front, and, further, that our Canadian businesses and manufacturers, the ones who literally feed our families, aren't interrupted along the way? I suppose In your opinion, have those tough questions been asked of our businesses and the government?
When we look at the analogy of how we solved the acid rain problem, as a government we created public policy that stated to industry that there were guidelines they must meet. We gave industry the appropriate amount of time to work on the problem to solve it, and we gave them the patience of our understanding that, along that technological development way, failure will happen.
When goals are worthwhile, we use the lessons learned of failure and we continue to go forward and march forward, and eventually those failures will lead to success. This is exactly what happened when we had a very serious existential threat to our well-being within North America, which was acid rain. What we created were tax policies. I believe government has no business making technological decisions. I believe that those with the best bona fide interest are industry and the technical representations of those industries, together with universities and trade associations.
What we would be able to do is.... If we were to create public policy that unlocked that, unleashed that and encouraged industry, I'm comfortable saying that great things would happen. If I use the analogy of the west, some people may have the impression that oilmen don't care very much about the environment, that we care about drilling wells and perhaps producing oil and gas. Nothing could be further from the truth. For the last 30 or 40 years, some of the best oilmen have been working on both sides, improving the ways to improve our energy intensity per barrel produced.
Back to your direct question, the best thing we should do from a public policy perspective is to create the playing field, not make technological decisions. We don't need to make these investments. The investments that industry would make would be investments that would make them money together with solving those problems.
I guess what I would suggest, if you were to ask me specifically, is an expansion of the scientific research and experimental development potential. If we had generous status that industry could count on.... Let them make the decision, but let them be able to monetize their losses on the way to success. Great things would be accomplished in our society. I have no doubt about that.
I would say it should come in two forms, mainly.
First, before dairy workers lose their jobs, it's important to make money available for training and skills upgrading so they are familiar with the latest technology and able to meet all of the industry's needs.
Take, for example, a warehouse worker who loses their job in a dairy processing plant because their employer needs to find other types of workers elsewhere. Given the current labour shortage, especially in Quebec, finding those workers will be a challenge. If, however, funding were available, the employer could re-train the worker and keep them.
Granted, it probably won't be possible to save every job, so when layoffs have to be made, funding for enhanced employment insurance benefits and severance is a must. Some workers have family members who are diabetic or have other serious illnesses, and it's not as expensive as you might think to extend coverage under the employer's group insurance plan to make sure those families don't fall through the cracks.
Lastly, older workers should be able to buy a few years of pensionable service so they can retire earlier. Buying a year or two of pensionable service isn't as expensive as you might think either. Across the sector, the cost varies between $5,000 and $10,000.