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View Greg McLean Profile
View Greg McLean Profile
2020-02-06 12:51 [p.1017]
Madam Speaker, I am here today to speak about the current round of free trade negotiations between Canada, the United States and Mexico. We call it CUSMA now, and it used to be called NAFTA.
I bring a bit of perspective to this because I was around for the negotiations way back in 1989 when we started this. In 1988 we negotiated a deal, initially with the United States of America, which became the Canada-U.S. Free Trade Agreement. We expanded that in 1994, and it was ratified by bringing Mexico into that pact and creating what was then called NAFTA. Some people are still calling the new agreement NAFTA, or NAFTA 0.5, NAFTA 0.7 or the new NAFTA, but I will call it CUSMA going forward, as it is a good name for it.
It was time for an update to the agreement. A quarter of a century has gone by since 1994 and the world has changed. We have a lot more of a technology industry at this point, as does the United States. The way we interact with that technology industry across our borders needed to be reflected in our trade agreements, so accepting that we had to update this agreement was a given.
Negotiations involve give-and-take. We have to recognize that in 1988-89 and 1993-94, people in the government of this country arrived to make a serious agreement with other people in other countries. Negotiations are about give-and-take, and I will remind the members what we gave in 1988-89.
Few people remember this, but at that time, the United States of America was an energy-insecure country. One of its main asks for us at that point, as a partner in a trade agreement, was for limited access to our energy resources. We negotiated a proportional access agreement with the United States, which was reflected in the FTA and again in NAFTA.
That proportional representation meant that if we had to cut back the actual export of our resources to the United States by, say, 10%, we would have to curtail ourselves in the same way. There was a sharing that would have to happen once the U.S. became dependent upon us as a customer for our resource. That was a good ask because, if the U.S. was to become dependent on us, we needed to be presented as a serious supplier to the United States.
When I heard the Minister of International Trade suggest that one of the wins in these negotiations was taking that proportional sharing off the table, I shrugged and said that it must have been the U.S. that took that off the table this round because it longer need it. The U.S. no longer need it because we have become a captive seller to the United States market. That is a result of failed government policy.
I suggest this in this debate because it is very relevant to why we are suddenly a price taker in the U.S. market and what its negotiating strength is versus ours as a supplier. There are lots of terms in this agreement that are important, but it is not a win when the other side says it does not want that part of the agreement anymore and our federal minister takes it off the table. It is actually a loss for the country.
The government's short-sighted policies in constraining our oil and gas resources in particular are reflected in the regulatory environment. This policy misdirection is not increasing our ability to export our resource to markets besides the United States of America, so we are a captive seller. We are, as we say in financial markets, a price taker.
Let me quantify this statement. In 2018, Canada's oil and gas industry exported 80 billion dollars' worth of oil to the United States. That number is representative of 3.5 million barrels of oil a day. Those are big numbers. The big number that is not included there is that it should have been, by world prices, about $21 billion higher over the year. That is $21 billion that we are forgoing as a Canadian economy because we do not receive the world price for our resource. We do not receive it because we do not have access to other foreign markets. Those markets are needed to diversify.
There is an inability to diversify those markets because of government policy. That government policy is reflected in the fact that it cancelled or caused the cancellation of any other pipelines that were going to lead our resources to foreign markets beyond the U.S., particularly the northwest pipeline through Prince Rupert.
Canadian petroleum products are some of the best resources we have. If we think about how much of the economy it represents, it is significant. The flip side of this equation, of course, is the way the United States refines these produces and then sells petroleum products back to Canadians in other parts of the country at world prices.
Who is really winning in that equation? The United States companies that are making windfall profits and the United States government, which is making more corporate tax revenue. We are receiving less and they are receiving more.
Make no mistake, we are entering into negotiations with parties that know how to look after themselves. This is not a benevolent negotiation. This is a real negotiation and we need to take these negotiations seriously as a country. My first recommendation for the government has always been to get serious about these negotiations.
Let us also accept that being prepared for these negotiations and being serious about it meant arriving with an agenda on what we needed in this equation. Canada did not arrive there with any solid takeaways required from the Canadian economy's perspective, particularly a softwood lumber agreement, which has been an ongoing trade irritant between our two countries since the NAFTA negotiations started. We do need to come to some agreement on that. Nothing of that nature is reflected in this agreement. I anticipate these disagreements will continue for the life of this agreement.
We could have and should have anticipated the U.S. coming in and trying to get a portion of our dairy quota onto world markets. We had already ceded a portion of that dairy quota in recently completed negotiations through the trans-Pacific partnership. Our largest trading partner should rightfully have said that if we could do it for the rest of the world, why could we not allow U.S. companies a portion of the market as well? Arriving with that position might have been an easy trade-off at the end of the day. I am happy to see that trade-off. If we looked at it from another perspective, it was going to happen one way or another.
What I do not understand is our giveaway of the milk products that seem to be capped to all foreign buyers in this agreement. We are saying to our dairy sector that we will take away part of its quota, but we are also going to constrain it in the way it gets to grow in foreign markets on key products. That is a surrender of sovereignty, and that sovereignty is ours. We are going to have to economically prosper in a shrinking industry with one partner by going to other markets. Getting that capped was quite a surrender.
Money is leaving the country because of the business environment here. We know that in 2018 alone, Canadian foreign direct investment in the U.S. increased 13% and the U.S.'s investment in Canada increased 5%. That is a drastic difference and is a reflection of our regulatory environment and the way people do business in Canada.
The Trans Mountain pipeline is now a Crown corporation because U.S. and foreign companies cannot see their way through getting a project built in our country. I raise this now because it matters in the way we deal with different entities across borders and how people prosper in Canada and bring new investment and new prosperity to it. Teck Frontier is a similar project.
The government needs to show the world that Canada does do business when people properly go through the motions and ensure they address indigenous and regulatory concerns, and bring back that foreign investment that is part of every free trade agreement.
Premiers want this agreement signed. The Business Council wants this agreement signed. However, they want it signed because they are tired of the uncertainty created around this. That uncertainty has to stop right away. Goldy Hyder, president of the Business Council of Canada, said that it was good enough and asked that we please get it done.
The necessity of having this free trade agreement is important for the Canadian economy. We are going to move this forward. The issue is to please get serious with this finally and stop surrendering going forward.
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