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View Chrystia Freeland Profile
Lib. (ON)
Thank you very much, Mark. Thank you, everyone. It has been a busy year for all of us, and I would like to join Mark in thanking the people who work so hard to make the work of this committee possible.
I am joined here by two people well known to the committee and to Canadians: Tim Sargent, Deputy Minister for International Trade, and Steve Verheul, who, as I think people know, is our chief NAFTA negotiator.
I'll make some opening remarks and then I'll be happy to answer questions.
I'd like to begin by acknowledging that we're gathered on the traditional territory of the Algonquins.
I'm here today to speak about anything people ask me about, but chiefly about the Canada-U.S. trade relationship. It is that part of my set of responsibilities that is of specific interest, I think, to this committee.
I want to start by taking this opportunity to thank Canadians and leaders from across the country for our unified Team Canada approach to this specific issue. I am very humbled and very appreciative of this effort, and I want to specifically recognize Canada's premiers, labour leaders, business leaders, and members of the NAFTA Council for their tremendous work to date. I do want to acknowledge the work of members of Parliament from all parties, very much including the members of this committee, mayors, civil society, and frankly, many Canadians who have been personally involved and engaged in this effort.
I think there is a broad national recognition that this is a consequential issue for our country. I certainly feel that when I talk to my constituents—or really, I should say, when my constituents talk to me—and I imagine that all of you have had the same experience.
The Canada-U.S. economic relationship is an essential one. One of the things that has been so valuable to Canada is the fact that we are playing as a united team. That is essential. It sends a powerful message to all Canadians and a very powerful message to the United States.
Mr. Chair, dear colleagues, thank you for giving me this opportunity to address the committee today.
I will do my best to explain point of view of the government on the tariffs imposed by the United States on Canadian steel and aluminum, and more generally on the status of NAFTA negotiations.
Allow me to begin with tariffs.
Canada is a friend and ally of the United States, and its closest neighbour. We share the longest non-militarized border in the world. Our soldiers fought together and died side by side during the First World War, the Second World War, the Korean War, and in Afghanistan and Iraq. As I have said on several occasions, the idea that we might constitute a threat to American national security—the pretext invoked by our neighbours to impose these tariffs on Canadian steel and aluminum exports—is not only absurd, it is hurtful.
These section 232 tariffs, Mr. Chair, are illegal under WTO and NAFTA rules. In fact, we have initiated a case at the WTO and have raised a case under chapter 20 of NAFTA.
As a supporter of the rules-based international order, very much including in trade, it was important for Canada to take this legal action, and I'd like to take this opportunity also to thank the very hard-working, committed, and creative Government of Canada trade lawyers who've been working very hard on this file.
Now Canada has no choice but to retaliate with a measured, perfectly reciprocal, dollar-for-dollar response, and we will do so. On May 31, the Prime Minister and I announced that Canada intends to impose tariffs on imports of steel and aluminum and other products from the United States, representing the total value of 2017 Canadian exports affected by the U.S. measures. That is $16.6 billion, Mr. Chair, Canada's strongest trade action since the Second World War.
Since we made that announcement, we have published two lists, one list that will be subject to a 25% tariff and a second list that will be subject to a 10% tariff. These countermeasures will only apply to goods originating from the United States. They will take effect on July 1 and will remain in place until the United States eliminates its trade-restrictive measures against Canada.
Consultations on these lists concluded on June 15.
I'd like to make a particular point, Mr. Chair, that in putting together these lists, the government and our fine officials have worked really hard to find lists that have the minimal impact on Canadians. Where possible we have sought to avoid intermediate goods and to put products on the list that can be easily sourced from either Canadian or other non-U.S. suppliers.
I'd like to take this opportunity to thank all the Canadians who have been very actively engaged in the consultations on these lists, including through their members of Parliament. I've heard directly from many MPs, including members of this committee, about feedback you've had from your constituents and your stakeholders about what should be on the lists. That has been very useful.
Although the formal consultation period is finished, we are still interested in feedback from Canadians. They should be in touch with the government, with Steve and his team, with the Department of Finance, and of course people can always be directly in touch with me. As we take these steps in response to the section 232 tariffs, we act in close collaboration with our like-minded partners in the European Union and Mexico. It's important to point out that these countries, also subject to the section 232 tariffs from June 1, are also allies of the United States.
Mr. Chair and colleagues, we know that no one will benefit from this beggar-thy-neighbour approach to trade. The price will be paid in part by American consumers and by American businesses. I think we all agree that it is important for Canada to stand in defence of the international rules-based order, and we will do so. Canada's policy will be that we will not escalate and we will not back down. Judging by the feedback I have received in the past few weeks, countless Canadians of all political points of view agree. Very many have come out in support of our decision to defend Canadian workers, and I would like to thank all members of the House of Commons, particularly Tracey Ramsey, for the unanimous consent motion that we all passed supporting this action. I think that was a very strong measure; I have shared it with our counterparts in the United States. I'm glad we were able to do it. It's a testament to Canadian unity on this issue, and I'd like to thank provincial and territorial leaders, including Premier-designate Ford, Premier Moe, and Premier Horgan, as well as the CLC and so many others for their support.
One thing I do want to point out, Mr. Chair, is that this unjustified section 232 action by the United States is quite separate from the ongoing negotiations between Canada, the United States, and Mexico to modernize NAFTA. As far as Canada is concerned, these are entirely separate issues, and I'd like to point out this is also the case under U.S. law, given that section 232 is a national security provision.
We know that NAFTA is very much to the advantage of all three NAFTA countries. When it comes to trade between Canada and the United States, our relationship is balanced and mutually beneficial. In fact, in goods and services overall, the U.S. has a slight trade surplus with Canada. The U.S. also has a surplus in trade in manufactured goods, in agricultural goods, and perhaps particularly relevant today, in trade in steel. As I know all of us are very well aware, Canada is the largest market for the United States—larger than China, Japan, and the U.K. combined.
A modernized win-win-win deal that benefits all three NAFTA partners is possible, Mr. Chair, and we continue to work hard and patiently to achieve this outcome. That was the point I made last Thursday when I met with Ambassador Lighthizer in Washington and again when I spoke to him over the telephone yesterday.
I also had a constructive conversation with U.S. Secretary of State Mike Pompeo on Saturday, which included a discussion of NAFTA and the section 232 tariffs. I remain convinced that there is goodwill and a desire to move forward on the NAFTA negotiations, and we have heard that publicly from Secretary Pompeo as recently as yesterday.
Our government feels that now we can continue working on the NAFTA negotiations. We will be working hard over the summer.
Thank you very much.
I'm happy to answer people's questions now.
View Chrystia Freeland Profile
Lib. (ON)
Thank you very much for the question.
Thank you, Dean, if I may. Can we be on a first-name basis? I'm happy for people to call me by my first name. Thank you for your hard work on this issue and for working so closely with stakeholders.
As I said, the formal consultation period closed on June 15. We are now taking in all of the very detailed, extensive feedback we've had from stakeholders. We will be using that feedback to modify the list. That is why the consultation period is so essential. It is a period that we use to hear directly from affected stakeholders and to get the best possible list for Canadians.
Like you, I have heard from people in the boating sector, and that is feedback that we are taking very seriously.
I know it's clear to you, but I do want to reiterate so that it's clear to Canadians. What we published on May 31 was a preliminary set of lists. The consultation period is real and meaningful. It has been important for us to hear from Canadians about what they want to see on the lists and what they don't want to see on the lists. Steve and the team and I and our colleagues in the Department of Finance are now working very hard to integrate that feedback from stakeholders and to modify the lists accordingly.
View Chrystia Freeland Profile
Lib. (ON)
Canada began our conversation with the United States about section 232 on steel and aluminum as soon as this issue was raised in the United States. It was an issue that was raised by Secretary Ross. It was a Department of Commerce investigation. I had many conversations with him, beginning as soon as this investigation was launched last spring.
The Prime Minister discussed this directly—
View Chrystia Freeland Profile
Lib. (ON)
No, I haven't finished my answer.
View Chrystia Freeland Profile
Lib. (ON)
I haven't finished my answer, though, if I may.
The Prime Minister discussed this directly with the President of the United States. I was present at that discussion at the G7 summit in Taormina, Italy. That was in June 2017.
I want to be very clear. There were many subsequent conversations.
View Chrystia Freeland Profile
Lib. (ON)
I want to be clear with Canadians that this issue has been raised by our government at the highest levels. It was also an issue that I raised with Secretary Tillerson and with Ambassador Lighthizer, and it was raised by many other ministers and MPs—
View Chrystia Freeland Profile
Lib. (ON)
I can't talk about safeguards?
View Chrystia Freeland Profile
Lib. (ON)
Okay. I'll do that with somebody else.
View Chrystia Freeland Profile
Lib. (ON)
Ms. Lapointe, thank you for your question, and for your hard work.
As I said in my comments, we work closely with all of the provinces, including Quebec of course. Mr. Verheul and his team speak directly with Quebec government officials. For my part, I had many discussions with ministers St-Pierre and Anglade, and even spoke directly with Premier Couillard.
The Province of Quebec has very effective representation in the United States. It is a pleasure to work with that province, and it's very important to do so. We also worked with Quebec unions and businesses such as forestry companies, and enterprises in the aerospace and aluminum sectors.
As you know very well, there are very strong economic ties between Quebec and the United States. It was very helpful for the federal government to work with all of the provinces, including Quebec.
View Chrystia Freeland Profile
Lib. (ON)
That is a very good question. I see that Mr. Verheul is very happy that you asked it.
The team of negotiators and I consider that these chapters are about modernization. As you said quite rightly, these chapters are not as interesting as others to journalists, but they are very important to Canadians who do business with the United States. Before the negotiations began, we consulted enterprises and workers. To them, the most important issues are trade-related. We have made progress on these issues. That is one of the reasons why I am finally optimistic with regard to the NAFTA negotiations.
It is worth pointing out that NAFTA is a good agreement, but it has been in effect for close to 25 years. We are taking advantage of this precious opportunity to modernize it and adapt it to the 21st century. There is good co-operation among the three countries' negotiators on the modernization chapters.
View Chrystia Freeland Profile
Lib. (ON)
Fine.
To date, negotiators have concluded discussions on nine chapters: technical and commercial barriers; North American competitiveness; good regulatory practices; sanitary and phytosanitary measures; publications and administration; small and medium businesses; the fight against corruption; telecommunications; and competition policies.
View Chrystia Freeland Profile
Lib. (ON)
Again let me thank you for the work we did together on the unanimous consent motion. Thank you for taking such a leading role there.
I agree with you that it is very important for our steel and aluminum workers to know that they have the full support not only of parliamentarians, which I know they have, but also of the Government of Canada.
I, in consultation with my colleagues Navdeep Bains and Bill Morneau, am currently working on ways to support those workers and those industries. I would like to say to this committee and to all Canadians that we absolutely believe those workers, those industries, need our support. I want to point out that the imposition of the retaliatory tariffs is one part of that support. When Canadian workers and Canadian companies now face tariffs selling their steel and aluminum to the United States, it is not fair that their U.S. competitors would not face parallel tariffs selling it to Canada. They will.
The actions that we're taking at the WTO and NAFTA are an important part of the defence. I agree that we need to work on ways to directly support workers and industry, and that work is under way. I would be very interested in ideas you have on the best way to do that.
View Chrystia Freeland Profile
Lib. (ON)
Okay. It's another really good question.
Just at the end, you said you hoped that anything that we're doing on the steel and aluminium industry includes talking to workers, talking to unions. I agree that this is absolutely necessary. That is something we are doing, and I'm committed to continuing to do it.
When it comes to the car sector and the investigation that the U.S. Commerce Department has begun on section 232 tariffs on autos, this is frankly even more absurd than the notion that Canadian steel and aluminum would pose a national security threat. I have raised the issue with Secretaries Ross and Pompeo, and also with Ambassador Lighthizer. We have made clear the Canadian view, and the Prime Minister has raised the issue directly with the President.
We believe, as has been our motto since the beginning of the NAFTA negotiations, that we need to hope for the best and work for the best possible outcome, but always be prepared for every eventuality. As you heard in the House of Commons yesterday from my colleague Navdeep Bains, that very much includes a comprehensive strategy of working with and supporting our automotive sector. I would also point out that just as we have worked closely with our allies in a response to section 232 tariffs on steel and aluminum, this is an issue that we are also discussing with our allies, including the European Union, Japan, and Mexico.
In terms of support for industries under the impact of tariffs, it is worth thinking for a moment about our forestry sector, another sector that has been affected by U.S. tariffs. The Government of Canada, I think with support of all parliamentarians, has stepped up to support those industries.
I'd like to point out, as I have—
View Chrystia Freeland Profile
Lib. (ON)
—in the United States, that the price of the tariffs have been passed on to U.S. consumers. That's an important point to make.
View Chrystia Freeland Profile
Lib. (ON)
Thank you very much for the question, Sukh, and thank you for your hard work on trade in general and also on this issue, which I know is extremely relevant for your own constituents and for your own riding. I think it is really important for Canadian steel and aluminium workers to see their MPs stepping up and playing such a strong role.
When it comes to the lists and the consultation, the first point that bears emphasis is that work on these lists was going on very intensively far ahead of May 31, and I would like again to thank Steve Verheul and his team and the Department of Finance. The fact that we were able to come out immediately on May 31 is due to preparation done by very many people. I think it was a strong action on the part of Canada, and I'm glad we were in a position to do it.
The consultation period has also been very valuable and important, and I'd like to thank all Canadians who've provided feedback. It is led by the Department of Finance, which is directly responsible for this particular area. We've received a total of 1,108 submissions. We've received them from industry associations, from large corporations, from small and medium-sized enterprises, from provinces, from private citizens, and from workers.
We are currently hard at work looking at the lists, talking to people who made submissions, and working on refining the final lists. I think it is really important for us to get those lists right, and that is what we are committed to doing. I've heard from members of this committee directly, but I welcome continuing feedback from members of the committee, from all MPs, and from all Canadian stakeholders. The formal consultation period came to an end on June 15, but we are ready to continue hearing from people. It is really important for us to get this right, and that's what we're committed to doing.
View Chrystia Freeland Profile
Lib. (ON)
Canada is a trading nation. We believe in trade, and we know that trade is a win-win relationship and that both partners benefit when trade happens. When we talk about the section 232 tariffs on steel and aluminum, we make the point about the national security justification being both illegal and absurd, because those are the grounds on which these tariffs are being levied, and it's really important to remind people that facts matter. The law matters. That is why that is where we start.
View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
Lib. (ON)
Again, I think it's important for us to be clear that when it comes to the section 232 investigation of cars, these are early days. We are at the beginning of the process. While we need to be prepared for every eventuality, it's important for us also to realize that we are in a process.
That said, the investigation as currently framed is on light vehicles, so that's cars and trucks, and it does concern all parts that are in a vehicle.
View Chrystia Freeland Profile
Lib. (ON)
Thank you for that question.
Since you mention your own history with NAFTA, Tracey knows what I'm about to say, which is that my own personal history with NAFTA began when my mother unsuccessfully ran as the NDP candidate in Edmonton Strathcona. I'm afraid that the NDP back in the day was very anti-NAFTA, so I did knock on doors in Edmonton Strathcona in talking about that issue.
Some hon. members: Oh, oh!
View Chrystia Freeland Profile
Lib. (ON)
She lost, though.
I think it is worth it for us as Canadians to reflect on that history. In the nearly 25 subsequent years, I think our country has really moved from quite a polarized view around trade, including trade with the United States, to a really unified Team Canada approach.
One of the things that is striking for me is the extent to which Canadians broadly understand the value of trade in general for our country. It doesn't mean we don't have disagreements about specific trade agreements or differing views about what should or should not be in trade agreements, but I think we have a broad appreciation that Canada is a trading nation and that trade is absolutely essential for the prosperity of middle-class Canadians and of everyone who is working hard to join the middle class. I think that is a very good thing. It's a strength for our country.
In these specific negotiations, I think there has been an appreciation from the very outset that on this issue, Canadians were all on the same side, Canada's side. I think we all appreciated that the best outcome for our country would come from all working together. I'm pleased to say that we have been successfully doing this.
We've been doing that partly through the role that members of Parliament have been playing, including this committee. If you don't mind my mentioning another committee, I think the foreign affairs committee has been playing a really strong role as well, as has the Canada-United States Inter-Parliamentary Group. The fact that we have had bipartisan groups of MPs going and talking to their U.S. partners has been extremely helpful.
I think something that has also been very valuable is that all of us—all legislators, the government, certainly our public servants—have been spending a lot of time talking to Canadians about their concerns on these issues. This broad consultative approach, I think, has helped to strongly inform our negotiating positions. We come to the table knowing what Canadians directly affected by a particular issue really need. It has also helped to build a really strong, unified national approach.
Steve and I have been in many conversations where this has been the case. Consulting with Canadians helps us to understand our counterparts in the U.S. and Mexico better. When we talk to the Canadians who are part of a trading relationship with the United States, they have clients and customers on the other side of the border—
View Chrystia Freeland Profile
Lib. (ON)
Thank you for your hard work on behalf of your constituents.
The auto sector is absolutely essential to our country and to this government. It has been an absolute focus of our discussions with the U.S. about the Canada-U.S. economic relationship.
As I think this committee is well aware, the rules of origin in the automotive sector have been at the heart of our NAFTA negotiations. We have spent a great deal of time at the table with our American and Mexican counterparts and we have also consulted very closely with the car parts companies, the car companies, and the unions. We absolutely understand the centrality of the automotive sector to our economy, to our relationship with the U.S., and to NAFTA. We have been and continue to be extremely focused on it when it comes to the NAFTA negotiations.
On the section 232 investigation, let me be very clear. Canada knows, and our partners around the world in Europe, in Asia, in Mexico know this would be an unprecedented act by the United States, and we have been very clear in explaining that to our American counterparts—
View Chrystia Freeland Profile
Lib. (ON)
It's important for us also to be in very close conversation with Canadian and U.S. business about what the impact of such an action would be—
View Chrystia Freeland Profile
Lib. (ON)
With respect, let me say that the Prime Minister's response and my own on May 31, when the section 232 tariffs by the United States were announced, was firm, clear, and resolute, and it spoke to detailed preparation. Our preparations in support of the auto sector are equally detailed, and our support will be equally firm and clear, and that's a commitment.
View Chrystia Freeland Profile
Lib. (ON)
Speak for yourself, man.
View Chrystia Freeland Profile
Lib. (ON)
Thank you for the question, Peter. I will try. I find that I'm able to get into very boring technical details quite quickly when it comes to NAFTA, but I'll try.
It is absolutely the case that when we look at the U.S. negotiating positions on NAFTA, there is a set of issues that we discussed earlier in response to Linda's question, which we describe as the modernization agenda. On those chapters, we're making good progress. We have closed nine of those chapters, and I think those chapters are areas in which we are really going to be able to bring NAFTA up to date to the 21st century and make a real difference to Canadians who are part of the $2.5 billion of business we do with the United States every day.
There is also a set of U.S. negotiating positions that the officials who write me notes about them describe as the “unconventional” U.S. positions. The U.S. Chamber of Commerce uses slightly stronger language and describes them as some of the “poison pill” proposals.
One of these is the proposal for a sunset clause. The idea would be that every five years, unless each country chose to opt back into NAFTA, the treaty would cease to exist. Canada is strongly opposed to that for a number of reasons.
First and foremost, we see the value in a trading agreement being that it allows businesses and workers to build permanent relationships to plan for the long term. An agreement that expires every five years has much less value.
We also make a practical point, which is, as Canadians know very well, that NAFTA already has a six-month notice clause that permits parties to exit. I will be celebrating my 20th wedding anniversary this summer, so I use marriage analogies: there is already one way for us to get divorced, and we don't think another one is necessary.
Now, I do want to be clear that when it comes to this U.S. insistence upon a sunset clause, that is very much on the table. It has not been withdrawn by the United States and it is a major sticking point for Canada. I know we have the support of Canadians in that position.
View Chrystia Freeland Profile
Lib. (ON)
I think that's a really good question. I do want to just start by addressing your initial comment.
View Chrystia Freeland Profile
Lib. (ON)
I'll be super-quick, Randy. I just want to say I have had the same experience in hearing from our American counterparties.
View Chrystia Freeland Profile
Lib. (ON)
Okay. Look, it is absolutely the case, as I said in response to Tracey and to Colin, that our steel and aluminum workers and industries need our support, and just as we have supported the forestry sector, we are working on a plan to support them. I agree with you also, Randy—
View Chrystia Freeland Profile
Lib. (ON)
I'm not going to reveal the details today, but we are consulting carefully on the list, and what is actually on the list will have an impact. We are consulting on what kind of support the industry and workers will need.
I also want to point out that the overall economic situation is relevant. Just as we saw a price response with softwood lumber tariffs, it's going to be important to look at what the broader economic situation is in response to these U.S. measures and in response to the responsive actions taken by Canada, the EU, and Mexico. I want to be clear that the government is very seized of the issue. We believe our workers and industry need to be supported, and we will support them. That also includes the car sector.
View Chrystia Freeland Profile
Lib. (ON)
Thank you very much, Mark, and I'd really like to thank the whole committee for being here. As Mark said, a Monday in the middle of August is not generally a time when intense committee hearings are held, and the fact that you've brought us together here I take as a sign of your really hard work and the real commitment that every member of this committee has to a great outcome for your constituents and Canadians in these talks. It's a privilege and an honour for me to be here to speak to you, and I want to thank everyone who is here. As Mark has pointed out, it's a pretty full room for a summertime committee meeting, which I also think speaks to how consequential these talks are for Canadians.
I'd like to make some opening remarks, and then I'd be happy to answer your questions.
I'd like to start by acknowledging that we're gathered on the traditional territory of the Algonquin.
Trade is about people. It's about creating the best possible conditions for growth, jobs, and prosperity for individuals and working families. That is why we are modernizing the North American Free Trade Agreement, known as NAFTA. That is why we are seizing this opportunity to make what is already a good agreement, even better. The North American free trade area is now the biggest economic zone in the world. Together, Canada, the United States, and Mexico account for a quarter of the world's GDP, with just 7% of its population.
Since 1994, trade among NAFTA partners has roughly tripled, making this a $19-trillion regional market representing 470 million consumers. Thanks to NAFTA, Canada's economy is 2.5% larger than it would otherwise be. It's as though Canada has been receiving a $20-billion cheque every year since NAFTA was ratified. Thanks to NAFTA, North America's economy is highly integrated, making our companies more competitive in the global marketplace and creating more jobs on our continent.
These historic NAFTA negotiations are to begin in two days. We're keen to get to work, not least because we know that uncertainty is never good for our economy.
At every opportunity we've explained to our southern friends—and many of you have been part of that effort—that Canada is the largest export market for two-thirds of U.S. states, and America's biggest overall customer by far. Indeed, Canada buys more from the U.S. than China, the U.K., and Japan combined. I think quite a few of us have uttered that sentence in recent months.
Our American partners have been listening. Today they understand, as we do, that our relationship, the greatest economic partnership in the world, is balanced and mutually beneficial. To wit, in 2016 Canada and the United States traded $635.1 billion U.S. in goods and services. That exchange was almost perfectly reciprocal. In fact, the United States ran a slight surplus with us of $8.1 billion U.S.—less than 1.5% of our total trade. So it's very, very balanced.
We've also been working energetically with our Mexican friends. I'd like to welcome the Mexican ambassador, my friend Dionisio, whose birthday we celebrated at lunch in Mexico City, together with the foreign minister and Minister of Economy and trade. The relationship has, of course, also included regular conversations between Prime Minister Trudeau and Mexican President Enrique Peña Nieto.
Most importantly, we have been listening to Canadians. As of today, we have sought and received more than 21,000 submissions of Canadians' views and concerns about NAFTA. That includes contributions from 16 academics and think tanks, 158 associations, and 55 businesses and corporations.
The Canadian objectives I will now outline are built on these extensive consultations. This process is just beginning. Our negotiations with our NAFTA partners will be informed by continuous consultations with Canadians.
Here are some of Canada's core objectives.
First, we aim to modernize NAFTA. The agreement is 23 years old. The global, North American, and Canadian economies have been transformed in that time by the technology revolution. NAFTA needs to address this in a way that will ensures that we will continue to have a vibrant and internationally competitive technology sector and that all sectors of our economy can reap the full benefits of the digital revolution.
Second, NAFTA should be made more progressive. We will be informed here by the ideas in CETA, the most progressive trade deal in history, launched by Conservatives and completed, proudly, by our government.
In particular, we can make NAFTA more progressive, first, by bringing strong labour safeguards into the core of the agreement; second, by integrating enhanced environmental provisions to ensure no NAFTA country weakens environmental protection to attract investment, for example, and to fully support efforts to address climate change; third, by adding a new chapter on gender rights, in keeping with our commitment to gender equality; fourth, by adding an indigenous chapter, in line with our commitment to improving our relationship with indigenous peoples; and, finally, by reforming the investor-state dispute settlement process, to ensure that governments have an unassailable right to regulate in the public interest.
One reason that these progressive elements are so important, in particular with respect to the environment and labour, is that they are how we guarantee that the modernized NAFTA will be not only an exemplary free trade deal, but also a fair trade deal. Canadians broadly support free trade. Their enthusiasm wavers, however, when trade agreements put our workers at an unfair disadvantage because of the high standards that we rightly demand. Instead, we must pursue progressive trade agreements that benefit all sides and help workers both at home and abroad enjoy higher wages and better conditions.
Third, this negotiation is a valuable opportunity to make life easier for business people on both sides of the border by cutting red tape and harmonizing regulations. We share the U.S. administration's desire to free our companies from needless bureaucracy, and this negotiation is a welcome chance to act on that goal.
Fourth, Canada will seek a freer market for government procurement, a significant accomplishment in CETA. Local-content provisions for major government contracts are political junk food, superficially appetizing, but unhealthy in the long run. Procurement liberalization can go hand in hand with further regulatory harmonization.
Fifth, we want to make the movement of professionals easier, which is increasingly critical to companies' ability to innovate across blended supply chains. NAFTA's chapter 16, which addresses temporary entry for business people, should be renewed and expanded to reflect the needs of our businesses. Here again, CETA provides a model.
Sixth, Canada will uphold and preserve elements in NAFTA that Canadians deem key to our national interest, including a process to ensure that anti-dumping and countervailing duties are only applied fairly when truly warranted; the exception in the agreement to preserve Canadian culture; and Canada's system of supply management.
In all of these discussions, we will come to the table with goodwill and Canada's characteristic ability and willingness to seek compromise and find win-win solutions. But we are committed to a good deal, not just any deal.
So, I would like to say to Canadians today what I will say to our negotiating partners on Wednesday: Our approach in these talks will be in keeping with our national character, hard-working, fact-based, cordial, and guided by the spirit of goodwill and the pursuit of compromise. We also know that there is no contradiction between being polite and being strong. It is no accident that hockey is our national sport.
These negotiations are a deeply serious and profoundly consequential moment for all of us. Trade deals always matter. Done right, they are a vehicle for helping to create more well-paid jobs for the middle class.
Preparing for these negotiations has already united us as a country. I've been astounded and moved by the extremely high level of support and collaboration I and my team have received from business, from labour, from civil society, from every level of government, and from many of you around this table even though we are not all members of the same political party. Time and again Canadians across the country have told me how proud they are to be Canadian at this moment in time and how committed they are to doing everything they can do to help in these consequential negotiations.
Our bipartisan NAFTA Council is evidence of this, and all Canadians are truly fortunate that in these talks we will be represented by the best trade negotiators in the world. Canada's trade officials are internationally renowned for their prowess, and it is a privilege for me to work with this outstanding team of Canadian public servants. Let me take this moment to acknowledge the great Canadians who are sitting alongside me and with whom the committee will have a chance to speak directly later on: Tim Sargent, our deputy minister for trade; Steve Verheul, our chief negotiator for CETA, who is very familiar to many people in this room; and Martin Moen, who is also working very hard on the softwood file in his spare time.
As I said, these talks are profoundly consequential. There may be some dramatic moments ahead, yet I am deeply optimistic about the final outcome.
That is due to this fundamental reality: the Canada-U.S. economic relationship is the most significant, mutually beneficial, and effective anywhere in the world. We know that, and our American neighbours know it too.
Based on those very strong economic fundamentals, I am essentially optimistic going into these negotiations. Together with this fantastic team of trade negotiators, we're going to work very hard and we're going to get a great deal for Canadians.
Thank you, and I'm happy now to take your questions.
View Chrystia Freeland Profile
Lib. (ON)
Thank you very much, Randy, for that, as usual, highly informed question.
I do want to start by thanking you personally for your work, and also thanking parties on the other side of the House. I really am grateful for the way that, particularly south of the border, we've been working together to advance Canadian national interests. I'm glad that you share with me acknowledging the excellence of our negotiators. It's true also that having Kirsten Hillman in Washington is an advantage. I'm not going to claim any credit for the excellence of our public service, particularly in that space.
I know that Gerry, sitting next to you, interacted a lot with Steve as agriculture minister.
I believe, Gerry, you won't contradict me when I say that we share—well, you might on some things—the highest regard for our trade negotiators. It's really, really important.
I just also want to pause on one thing that you mentioned, Randy, that I agree with very strongly. One of the particular aspects of this negotiation that is different from previous big deals Canada has been involved in is that it is not a greenfield negotiation. In a greenfield trade agreement, of course you want it to work because it has the possibility of bringing great benefit to Canadians. But as I said in my remarks this morning, this is more like renovating a house that you're still living in. That makes it a really delicate operation. A great deal of our economy is based on the existing NAFTA, and that is something that we heard in our consultations leading up to this moment. Canadians are very aware of that, and I want to assure the committee that I and the team are very aware of the delicacy of what we are engaged in.
You asked about the consultations, so let me start by saying that we've been focused on two things. One is working hard with our partners and raising their awareness.
We've been working hard with our Mexican partners, and I thank you, Dionisio, for being here. We've been focused very particularly on outreach to the U.S., which you've been a part of.
I just want to remind people that we've had 185 visits to the U.S. We've reached 300 U.S. decision-makers, 200 members of Congress, 50 governors and lieutenant-governors. On our outreach to Canadians, we've had more than 22,500 submissions from Canadians, as well as contributions from academics, think tanks, 158 associations, and 55 corporations.
As I said in my remarks earlier today, our intention is that the consultation with Canadians will be ongoing throughout the talks. The model here is very much like that for CETA, and that's why I'm turning to Steve. I think the CETA effort has an unprecedented number of stakeholder tables and ongoing consultations, and we're going to continue with that practice. Let me say that in those consultations, labour, environment, indigenous groups, and women will very much be included. I think people are aware of the NAFTA Council that we have set up.
View Chrystia Freeland Profile
Lib. (ON)
Have I run out of time?
View Chrystia Freeland Profile
Lib. (ON)
Thank you very much for the question.
All of us have a stake in trade and a great trading relationship with the United States, but for your New Brunswick constituency, I think the relationship is particularly engaged and important. The relationship between New Brunswick and Maine is absolutely essential. You know that 38,500 Maine jobs depend directly on trade with Canada, and Canada by far is Maine's largest export market.
As we're talking about the New Brunswick-Maine relationship, I do want to offer a particular shout-out to Governor LePage of Maine. I have been in close contact with him. I often speak with him on the phone. He is an influential voice in this administration and understands very, very well the intense and interconnected relationship between Maine and Canada. He understands it in detail. He happens to have a personal background in the forestry sector that really informs his point of view in a very useful way, and I have found him to be a fantastic advocate of the relationship and its importance for Maine. I have also found him, not solely in conversation with him but also in his advocacy in Washington, to be very good at explaining a key element of our economic relationship with the United States, which is that we build things together. That is a key element that can sometimes be missed. People can think of trade as something simply being made in one country and sold to another, but the Canadian and U.S. economies are so closely integrated that we actually make things together. An input is produced in Canada and sold to the United States. More work is done on that input. It goes across the border, and that happens over and over and over again in the course of the creation of so many products. We're familiar with that from the auto industry, from manufacturing, but it's also very true in New Brunswick's trade with the United States.
That is why your question is so important, because something that we have done successfully is to make it possible for us to have that kind of a closely integrated and very effective commercial relationship. A core objective for Canada is not only to maintain that relationship, but as I said in my remarks, to also use this negotiation as a real opportunity to make that kind of work even easier.
One of the things we have heard again and again in our consultations, including when I was in Edmonton on Friday speaking to people from the agricultural sector, is that cutting red tape and making it easier to trade is something that Canadians really really see as a concrete and useful outcome. Indeed, one useful thing that we have heard repeatedly from this U.S. administration, both in direct conversations and publicly, is the real desire to cut red tape to make it easier for businesses to do business.
I think that cutting red tape and making our economic connection even easier is going to be one of our chief goals and is something that Canadians across the country, very much including New Brunswick, are very keen for us to achieve.
View Chrystia Freeland Profile
Lib. (ON)
Thank you for the question.
It is a real service to Canada and to your constituents, Tracey, that you're on this committee, and I know that you know very well and that you represent a constituency that understands and is involved in this trading relationship as much as any part of our country is. I know you speak from a very informed place.
On supply management, as I have said repeatedly and as I said in our remarks today, our government is fully committed to supply management. There is something we have said both in public and in private to our American partners and it bears repeating today as an important point to underscore. That is about the balanced and mutually beneficial nature of Canada's overall trading relationship with the United States. It is truly reciprocal. When it comes to dairy, the United States sells us far more than we sell them. It is—
View Chrystia Freeland Profile
Lib. (ON)
And that is why it's important to point out to them, as we do both in private and in public, that when it comes to dairy, today the balance of trade is 5:1 in the U.S.'s favour. I would call that already a pretty good deal, and both I and my negotiators, who have great experience particularly in the agricultural sector, are very aware of that.
Something else that is very important, and that again we point out in public at the table and in our private conversations, is that when it comes to dairy, Canada has our system of supply management for supporting the interests of our producers. The U.S. clearly does not have supply management, but the U.S. has its own system for supporting dairy producers in the United States.
View Chrystia Freeland Profile
Lib. (ON)
Dairy producers in the U.S. are beneficiaries of an extensive web of government supports. That is the reality as well. We remind our American partners of that fact when we enter into this conversation, but I think it's also worth pointing out to Canadians, because I have noticed that in some of the Canadian discussions—
View Chrystia Freeland Profile
Lib. (ON)
Okay, but let me, Tracey, just finish this.
View Chrystia Freeland Profile
Lib. (ON)
I'm speaking now particularly to our journalist friends. Something that I feel may sometimes be missing from the public discourse in Canada is a full appreciation of the extent to which the U.S. dairy sector also benefits from an extensive network of subsidies. Their way of doing it is different from ours, but there are significant government supports.
View Chrystia Freeland Profile
Lib. (ON)
As I said in my remarks earlier today, Canada takes a strong interest in improving and making more progressive investor-state dispute settlement mechanisms. That is something that we were very proud to push hard on in CETA and is definitely an area that we are interested in pursuing here. In particular, of paramount importance is preserving a sovereign, democratically elected government's right to regulate.
View Chrystia Freeland Profile
Lib. (ON)
I'd like to thank you for your work, Ms. Lapointe, as well as your question, which is a very important one.
Not only are the provinces and territories involved in the NAFTA negotiations, but they are also at the centre of our trade relationship with the United States. As everyone knows, a number of issues and challenges affect the Canada-U.S. relationship. We continue to work closely with our provincial and territorial friends and counterparts.
As you highlighted, Quebec has a special role to play given its extensive relationship with the United States and Quebec's importance to the U.S. On that point, I have told the U.S. administration on numerous occasions that the electricity for Trump Tower is supplied by Quebec. It's key that our American counterparts never forget the importance of those economic ties.
As I mentioned, we consulted Canadians quite widely, including the provinces and territories, and those consultations will continue throughout the negotiation process. The CETA negotiations proved that Canada was stronger when the provinces, territories, municipalities, and federal government all worked together. The strongest team we can have is one that truly represents Canada.
Quebec played a special and very key role during the CETA negotiations, and, once again, I want to thank the province for that. On Thursday, I discussed NAFTA with my provincial and territorial counterparts, highlighting the federal government's approach and our desire for continued co-operation. Many provinces and territories are sending their experts and officials to Washington for the first round of negotiations, and that will be incredibly beneficial.
Mr. Hoback indicated that state governors play a very significant role and have a lot to bring to the table. I feel the same way. Perhaps it has to do with the fact that governors have a solid grasp of the economy because they are closer to the day-to-day reality in the country.
View Chrystia Freeland Profile
Lib. (ON)
The provinces and territories played a key role in the CETA negotiations. Lessons were learned, and they will inform the NAFTA negotiations.
This is important for a number of reasons. For one, because we are in constant consultation with the provinces, we've gained a lot of information that will help us during the negotiations.
Another reason the role of the provinces and territories is so important is that they've developed vital ties with our partners and therefore have the potential to exert influence. What we saw during the CETA negotiations was how Quebec was able to influence the governments of France and Belgium, particularly in the case of the Walloons.
As for ties with the U.S., the provinces and territories have formed their own relationships. Quebec, for instance, has worked a great deal with the State of New York.
Thank you.
View Chrystia Freeland Profile
Lib. (ON)
Thank you very much for the question, Peter, and for your very hard work on this file.
I strongly agree with the direction of your question. I also represent a diverse riding, as, I'm sure, many of us do. My riding in particular has very strong Portuguese and Italian communities, and there's been a lot of enthusiasm around CETA, which is going to enter into force on September 21, and we're so happy about that. It presents real opportunities for those communities in Canada to build even closer relationships with the communities in the countries they have come from, and also to use their cultural ties to build some economic benefit for both the EU and Canada.
I really agree with you that our relationship with the U.S. presents many opportunities of a very similar nature. When I am speaking to Americans, I like to say that we're not just friends and neighbours but that so many of us are relatives. It's hard to find a Canadian—and in some of the border areas of the U.S., it's hard to find an American—who doesn't have a close personal human connection with Canada. I think that's one of the reasons that our trading relationship has over time been so strong and so effective.
The former U.S. ambassador to Canada liked to tell a story about how when he travelled around Canada he would say, “So, do you guys do a lot of foreign trade with companies?”, and they would say, “Oh no, we only trade with the United States.” I think that anecdote tells a lot about how Canadians view trade with our biggest trading partner and neighbour.
When it comes to opportunities, you referred specifically to small and medium-sized enterprises. I think that is an important area to focus on. In the consultations I've personally done—and I know my negotiators have had the same experience—including in Edmonton on Friday, I have heard the same message that for those enterprises the red tape is a particular obstacle. We've even heard from people who have said they don't bother using the NAFTA preferences because it's so much of a hassle to fill out all the forms. One of our core objectives—and I think this has particular relevance for small and medium-sized businesses—will be to use these negotiations to cut red tape, to continue the really good work we've already been doing on harmonizing regulations, and to make this trading relationship even more frictionless.
Again here, I do want to emphasize that we see some real opportunity here in our negotiating approach, because this is really consistent with something we have heard in public and in private from this U.S. administration, which is that it is focused on cutting red tape and on making life easier for businesses, and that this is an opportunity for it to do just that.
When I was with the Prime Minister in Rhode Island at the governors' meeting, there was a lot of emphasis from the governors on exactly that point. They said, “Let's use this as a big opportunity to cut red tape to make things easier for businesses.”
I think Mark wants me to stop talking now.
Some hon. members: Oh, oh!
View Chrystia Freeland Profile
Lib. (ON)
I raised it directly with the foreign minister. He acknowledged that I had raised it, so let's hope that creates some opportunity—
View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
Lib. (ON)
I do want to say this. I know we're here to talk about NAFTA, but that is an important case. We as a government have been very focused on it.
View Chrystia Freeland Profile
Lib. (ON)
I was glad to have an opportunity to raise it. What I did say to the foreign minister was that this was an issue of great concern to Canadians, and concern particularly to Canadian businesses.
View Chrystia Freeland Profile
Lib. (ON)
There are two questions embedded in that, and let me take them in turn.
When it comes to the labour and environmental chapters, I'm glad to hear Conservative support for our government pushing very hard in these areas. I think that holds real opportunity for Canada. I am very pleased with the progress we've made there in CETA, a deal that is actually going to be provisionally applied in a few weeks.
View Chrystia Freeland Profile
Lib. (ON)
Hang on. That gives it particular value. It's particularly useful in trade negotiations to refer to a trade deal that is actually in force, not to something that is simply written on a piece of paper.
I'm aware of those provisions that were negotiated in the TPP, and I think they're very interesting. We will also use some of the ideas from the TPP, very much including some of the labour and environmental ideas, which have particular value because there was some U.S. input on them. However, I would point out that the TPP is a deal that this U.S. administration has rejected. We need to be aware and mindful of that.
Also, when it comes to the TPP, we need to realize that embedded in the body of that agreement—and I know you know this very well—is a provision according to which the agreement cannot enter into force. Even if the TPP 11 parties were all to ratify that agreement, it would not enter into force without U.S. ratification. All of our conversations about the TPP need to be based on that fundamental reality.
I do want to say, though, that I was in Manila last week and had very good conversations with many of our TPP 11 partners, including Australia, New Zealand, Malaysia—
View Chrystia Freeland Profile
Lib. (ON)
—Singapore, and Vietnam. We are very pleased to be part of continued discussions among that group. Canada absolutely sees the opportunities in the Asia-Pacific, and we are pursuing them energetically.
View Chrystia Freeland Profile
Lib. (ON)
I share those concerns. The softwood lumber issue is absolutely a key issue. It's—
View Chrystia Freeland Profile
Lib. (ON)
It's a priority of mine and of our government. In fact, I was speaking about the issue less than 12 hours ago with some key representatives of the B.C. industry, and as I mentioned, Martin Moen is my partner in crime on this particular file.
We are very engaged with the U.S. on softwood lumber. We want a good deal and we think that is achievable, but we don't want just any deal, and the Americans know that. We want a deal that is good for Canadians.
I think at the moment that the softwood lumber negotiations will continue in parallel with the NAFTA negotiations, as has historically been the case. We are open to other modalities, but for now I think they'll continue in parallel.
Thanks.
View Chrystia Freeland Profile
Lib. (ON)
Thank you for the question, Kyle.
You're absolutely right that the auto sector, which is so important for your constituency, is important for all of Canada. The concerns of the auto sector, including those of car parts manufacturers like NAPA, and those of labour, are an absolute priority for us in our NAFTA negotiations.
I want to make one other point, because Gerry asked me about softwood lumber and I didn't have enough time to answer. I'll just say quickly on softwood that I do want to highlight what an engaged partner Wilbur Ross has been in those conversations. He has really gotten immersed in the detail of the file, has really been personally involved, and I really appreciate that.
On autos, we are consulting very actively and energetically, and are going to continue those consultations as the negotiations progress. We are talking to the big auto companies. We're talking to the car parts suppliers at multiple levels. As you know, it's a really complicated industry. I'm very pleased that Linda is serving on our council, and also, a really important piece for us is talking to labour. Labour understands the auto parts sector very well and has an important perspective.
One of the incredibly important things that our auto sector brings to the NAFTA conversation and that will be an issue that Canada will keep bringing up at the negotiating table is the extent to which our trade with the United States is really integrated and sophisticated. Flavio Volpe likes to say that we make things together. Don Walker likes to say that too about Magna, right? And that is really the point, that our relationship, particularly in a complex and highly integrated sector like auto parts, is really all about a highly integrated sector that works. One of the things that we are really going to focus on in the negotiations is being aware of the complexity of that economic relationship and ensuring that is reflected in the negotiations. We're going to work hard to make the trade there even easier.
There's something else for which I do want to really thank all the Canadians who work in the auto sector. Randy spoke right at the beginning about the work we have all been doing in reaching out to our partners and colleagues south of the border. That has also been a sector-to-sector outreach, and I think some of the most effective conversations that have been happening to date have been between Canadians and Americans who build things together. People in the auto sector have been particularly effective in having that dialogue and in ensuring that their American partners are fully aware of how important NAFTA is as a foundation for that very effective, integrated economic relationship.
View Chrystia Freeland Profile
Lib. (ON)
Thank you very much for those questions.
As you raised dairy, I can't resist asking whether Max Bernier is also with the program here.
Sorry, I couldn't resist.
View Chrystia Freeland Profile
Lib. (ON)
I'm sorry, I just couldn't resist.
I was very clear in my speech earlier this morning, in my opening remarks here, and in my answer already that our government supports supply management. I think from the questions here that we are now hearing cross-party consensus on this. What is very important is how we frame this issue, both for our American partners and for Canadians. It's important to remind our American partners that in the dairy trade they already benefit 5:1. It's important to remind them also that while supply management is our system for supporting our dairy producers, they have their own systems for subsidizing and supporting their dairy producers. Again, as I mentioned in response to an earlier question, it's particularly important to underscore that in the Canadian public discourse. Those will be the points that we'll be making, and we're very clear on our position on that.
You asked about container sizes. Again, we're very aware of the value and importance of flexibility there. I would also put that in the category of how important it is for us to cut red tape and make trade easier. Certainly I believe that one of the objectives we share with the U.S. administration is that governments should not be creating unnecessary impediments or frictions that make business more difficult. We really see NAFTA as an opportunity to act and improve on that.
You mentioned the carbon tax. I think this may be one of points on which we have to have a friendly disagreement on both sides of the house.
Have I run out of time?
View Chrystia Freeland Profile
Lib. (ON)
I'm sorry, Tracey, because of the echo in the room I didn't exactly get your last point. Could you repeat the climate change point?
View Chrystia Freeland Profile
Lib. (ON)
I thank you for that question.
Something that our government is very proud to have done is to ratify the outstanding ILO conventions. Labour is very important to us, and those conventions are a very important way for Canada to be part of an international community of commitment to high labour standards. The ratification of those conventions was part of our CETA negotiation process, so the ILO conventions, in our experience already, can be part of a trade discussion.
Certainly, in negotiating with our NAFTA partners, we are going to share with them the value that we believe those conventions have, and the value that they have for all economies.
View Chrystia Freeland Profile
Lib. (ON)
As I said in my remarks, we do really see some opportunity, and it was great to hear that the Conservatives support strong labour protections in trade agreements too—they did; don't laugh, Gerry, it's true—and I see some real opportunity here to raise the bar on labour across North America.
View Chrystia Freeland Profile
Lib. (ON)
Thank you for the question.
First, I'd like to underscore something the chair said. Of course, talks with the Americans are a government responsibility, but that responsibility also falls on Parliament and all of its members. I know that the committee members have already done a lot of work on this issue, and I'd like to thank you for that. I'd also like to point out, however, that that is just the beginning. We still have a tremendous amount of work to do.
As you know, the legislative process in the U.S. is absolutely critical during trade deal negotiations, and you, as members of Parliament, have a unique and important relationship with your American counterparts. I want to thank you for all your efforts so far and urge you to keep them up. This is just the beginning. We have a long road ahead.
You asked about the work that had begun in January. Having already spoken at length about the consultations, I'd like to point something else out: our work did not start in January or February but, rather, last summer, before the U.S. elections.
As Minister of International Trade, I had asked department officials to put together materials on NAFTA. We saw that NAFTA had become an election issue during the campaign in the U.S. I want to make that clear because I think it's important for Canadians to know just how much Canada has been preparing. We've been at it for over a year. For me, negotiations have always been like exams: preparation is the most important thing. I want to thank our officials for the work they started more than a year ago.
I'd also like to make another point about our discussions with the Americans. I think that we, as Canadians, understand how the U.S. system works better than anyone, aside from the Americans themselves.
Okay, that's it, sorry.
I have just one last thing to say.
We realize that it is not just relationships with Washington or the White House, with the president and members of cabinet, that matter. While those relationships are indeed essential, those at other levels are important as well. The entire Canadian team, which includes our companies, has endeavoured to work with their U.S. counterparts at all levels, and that is extremely important.
View Chrystia Freeland Profile
Lib. (ON)
Thank you very much, Chairman.
Thank you very much, members of the committee. I think we've all been busy. I think the trade committee has been one of the busiest, most active, and most energetic committees, and I thank you very much for that work. It's really important.
I want to introduce my officials. You've just been hearing from Marvin, who is working on the trade agreement that I think is close to the hearts of all Canadians. Everyone knows the famous Steve Verheul, of CETA fame. I don't know if people have had the chance to meet the terrific new deputy minister of trade, Tim Sargent. We are very lucky to have him. For people who don't know Tim, he comes to International Trade from the Department of Finance and brings to the trade files a very strong economics and financial background. I think that's extremely valuable to have in our department.
Thank you very much, Tim.
I'm going to make a few opening remarks, and then I look forward taking your questions.
I am very pleased to speak to you today in support of CETA, the Act to implement the Comprehensive Economic and Trade Agreement between Canada and the European Union, and the Act to implement the Free Trade Agreement between Canada and Ukraine. These are two historic trade agreements for everyone, and I know many honourable members have worked hard on both agreements.
Our government believes strongly in an open global economy, and we will continue to champion the open society and open global trade. However, we cannot ignore the reality that, today, we are living in the most protectionist environment I have experienced in my lifetime, probably the most protectionist environment since the Second World War.
The Canada-EU Comprehensive Economic and Trade Agreement, CETA, and the Canada-Ukraine free trade agreement, CUFTA, are historic trade agreements for everyone. I know everyone in this room has worked very hard on both.
Our government, and I personally, believe very strongly in an open global economy, and we will continue to champion the open society and open global trade, but none of us here, and no Canadian, can ignore the fact that today we are living in the most protectionist environment I have experienced in my lifetime, probably the most protectionist environment since the Second World War, if not earlier.
There's a reason for that. A lot of people feel that 21st century global capitalism just isn't working for them. This very big anxiety is manifesting itself, among other things, in a powerful backlash against globalization. For those of us who support the open society, it is incredibly important not to be in denial about the power of these sentiments that are sweeping so much of the Western industrialized world.
Mark opened up our conversation by saying that Canada is a trading nation, and I know we all understand that profoundly. Those of us who really understand that in our core can be tempted to believe that the issue is only one of rhetoric and that if only we were better at talking about how valuable trade is and how costly protectionism is, everything would resolve itself. I think that is not going to be enough. We need to look more deeply than that and understand that this powerful wave of populist anti-globalization sentiment that we're seeing around the world is based in the real, very concrete experience of so many people, particularly in Western industrialized countries, including our own.
When we look at the sources of anxiety that people have, that sense of a hollowed-out middle class, I think we also have to appreciate that the answer has to be about more than trade deals, because the anxiety is about more than trade deals, even if that is where the anger is sometimes directed.
What people are worried about, and I think rightly, is the impact of 21st century global capitalism. The concerns people have, their economic concerns, their concerns for themselves, for their retirement, and for the jobs their children will have or not have are very real, and we need to address them. That is why I feel a central part of our ability to be effective on the trade file, of my ability to be an effective trade minister, comes from other parts of our government's agenda. It is why I am so proud to be part of a government whose first action was to cut taxes for the middle class.
I am proud that we raised taxes on the 1%. That element of fairness is so important to Canadians. We are very proud to have created the Canada child benefit for the families most in need and to have boosted CPP for our seniors.
We are making essential investments every day that strengthen and support our middle class, and it is because of those investments, that broader economic framework, that we can proudly say that in Canada, unlike in very many countries today, we do have broad public support for the open society. We are open to trade and open to immigration.
CETA is one of the most progressive trade agreements ever negotiated. It will help redefine what trade can and should be. It will lead to increased prosperity on both sides of the Atlantic, and create well-paying middle-class jobs, which is our priority objective.
With CETA, Canada is raising the bar and establishing more inclusive trade and higher standards for how global economies must function in the 21st century. This agreement that we are examining today cements the paramount right of democratically elected governments to regulate in the interest of our citizens, to regulate the environment, labour standards, and in defence of the public sector.
When it comes to CETA, this is the most progressive trade agreement that has ever been negotiated. Well done, Steve. CETA will help—is already helping—to redefine what trade agreements can and should be. CETA will lead to increased prosperity on both sides of the Atlantic and create well-paying middle-class jobs.
Canada is raising the bar with CETA. With this agreement we're establishing more inclusive trade and higher standards for how globalization should work in the 21st century. The agreement that we are talking about today crucially cements the paramount right of democratically elected governments to regulate in the interest of our citizens to protect the environment, to protect labour standards, and to defend the public sector. Those are key elements, something I am very proud of. We're proud to have made these changes to CETA since coming into office, and we will continue to champion progressive trade policies.
As our Prime Minister said about CETA:
That leadership that we were able to show between Canada and Europe is not just something that will reassure our own citizens but should be an example to the world of how we can move forward on trade deals that do genuinely benefit everyone.
And the benefits really are clear.
I want to mention a couple of examples of companies that will benefit from CETA, because while it can be fun for us to talk about policy, I think it's really important to bring it back to actual humans we are helping with our work.
Take Vancouver's Corinex, which will now be able to bid and compete for contracts and provide its consulting and communications services to EU clients on a fully competitive basis, or Northland Power from Toronto, the city I represent, with its clean and green power projects that will now be able to expand even further into Europe, where it has a strong footprint, or one of my personal favourites, Manitobah Mukluks, the Métis-founded business based in Winnipeg, whose mukluks are currently subject to a 17% tariff in Europe. That tariff will go down to zero after CETA comes into force. It's clear, Mr. Chair, that CETA will translate into increased profits and market opportunities for Canadian businesses of all sizes, in all sectors, and in every part of the country.
Now let me speak for a few moments about CUFTA, which I know you were speaking about earlier.
This is an agreement that has great personal significance to me as a Ukrainian Canadian. I was thinking about it this week, because Tuesday was the day when we gathered to commemorate the very bitter anniversary of the Holodomor, the artificial famine created by Stalin in Ukraine. That was a moving reminder for me of the very deep connections between Canada and Ukraine. Although I expect to face fierce questioning from you all—not from Gerry, though—it was a reminder for me that in our country we have support across party lines for Ukraine. Linda Duncan was there representing the NDP and Peter Kent was there representing the Conservatives.
It was a great personal honour for me on July 11 this summer to sign the free trade agreement with Ukraine in Kiev. My Ukrainian counterpart Stepan Kubiv signed it on behalf of Ukraine.
Canada and Ukraine understand the importance of trade and of developing our economic relationship for the prosperity of people in both countries, but the agreement is also a further affirmation of the strategic partnership between Canada and Ukraine. It's a very concrete way that we can support a country that is fighting very bravely for its independence and for its democracy and that has deep historic ties with our own country.
I should also say that signing the Canada-Ukraine free trade agreement this year is a nice historical moment, since it's the 125th anniversary of the arrival of the first Ukrainian immigrants in Canada.
Actually, they arrived in my home province, in Alberta, but there are a lot in your province too, Randy.
View Chrystia Freeland Profile
Lib. (ON)
What is even more important, if Canada is to ratify both of these agreements, is that we will also send an essential signal to the international community, that in an era of nativism and protectionism, Canada stands for the open society and for open trade.
Mr. Chair, if Canada is to ratify both of these agreements, we will be sending an essential and very distinctive message to the world this year that in an era of rising nativism, of rising protectionism, Canada is a country that stands for the open society and for open trade, and that we are a trading nation and we understand that good progressive trade agreements build prosperity for our middle class and the people working hard to join it.
I want to thank everyone for listening to me just now, and for working so hard to make sure that we continue to be an open society.
Merci.
View Chrystia Freeland Profile
Lib. (ON)
Absolutely not. Probably the elements of our work on CETA.... I want to back up and say on CETA that one of the things I think is so exemplary about this deal is it shows that Canada can be strongest when we can have a change of party and government but continue to work in the national interest. The Prime Minister and I are very happy to acknowledge in particular the work of the former prime minister, Stephen Harper, in setting CETA in motion. As you know, in opposition, we were very proud to support it.
Having said that, I'm perhaps proudest of all, on a personal note, of the changes we made to make this agreement more progressive. When we formed government, one of the first things we learned was that CETA, this very important agreement we championed in opposition, was actually stalled—
View Chrystia Freeland Profile
Lib. (ON)
No; let me finish, please, and then I'm happy to take more questions.
CETA was concluded at a technical level in September 2014. From that time to November 2015, when we formed government and took office, there was no progress. The finalization of the legal scrub was stalled, and that was because the Europeans had come to the conclusion that the old-school ISDS provisions in the old-school CETA were not something Europe could support. They weren't something European civil society could support, and they weren't something that progressive Europeans could support.
View Chrystia Freeland Profile
Lib. (ON)
We looked at it, and I agreed. I thought they were exactly right. ISDS has been around for a long time. I think that now is the time to build a more progressive system, something in which the right of states to regulate is fully enshrined—
View Chrystia Freeland Profile
Lib. (ON)
Hang on.
In addition to making this a better agreement in substance, the changes that we made to the ISDS provisions were essential to getting CETA done on a practical level. I made those changes because they were the right thing to do, but had we not made them, this agreement would still be in legal purgatory in the offices of the European Commission.
View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
Lib. (ON)
Gerry, that is simply untrue.
It was the European Commission that put forward its investment court proposal. This was something that was a concern of the governments of Germany, France—
View Chrystia Freeland Profile
Lib. (ON)
—the Netherlands, and Italy. This agreement would not have happened had we not made the changes to ISDS.
Let me also say—and I think it's good for the committee to know this—the progressive direction that we have moved in with CETA is something that we are rolling out across all of our trade agreements. It's something we believe in and that we're proud to champion.
View Chrystia Freeland Profile
Lib. (ON)
—she's very close to the Ukrainian market. I think that a desire you and I share, and I hope everyone around this table, is to do as much business with Ukraine as possible.
View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
Lib. (ON)
Thank you very much.
Interestingly, I find a similar question, although perhaps with a different emotional tone, from both sides of this table.
As we've been discussing, what had happened was that CETA was stalled, and it was stalled around European concerns about ISDS. When we looked at the agreement, we found that we shared those concerns, and we were happy to work with the Europeans to develop the most progressive ISDS system that exists in a trade agreement.
We made changes in two particular areas. One was on the substance. We strengthened the right of the state to regulate, particularly in the interests of the environment and when it comes to labour standards. We clarified that it was the job of democratically elected states, and not of a trade agreement, to choose which parts of the economy should be in the private sector and which should be in the public sector, and that this agreement should not restrict, for example, the right of a government to choose to renationalize some area.
That's very important, and I think that speaks to concerns people have. People want to be able to elect a government and through that election to choose what will be public, what will be private, what will be environmental standards, and what will be labour standards. They don't want a trade agreement to decide that, and that is one of the things we were very pleased to change.
The other element we were pleased to change was the process and how the ISDS system worked. We have created a system in which the arbiters, the judges, have a much clearer ethical line. They cannot be lawyers in private practice one day and arbiters the next. That's really important. We've also created a system in which the choice of who sits on the panel is not dictated by the company that is choosing to bring a case, so both the process and the substance have been improved.
Something else that's worth explaining is that when it comes to the dispute settlement system, this is the one element of CETA that the Europeans determined was of national competency. That means that it is the element of the agreement that will not be provisionally applied, if and when the agreement is ratified by the European Parliament and by us.
In the way we structured the work we're doing on improving ISDS, there are some areas that are open to discussion. This is really a very important landmark development in how dispute settlement is done in international trade, and we have embarked on a very important conversation with Europeans on how to create the next-generation, more progressive dispute settlement process. I think it's something Canadians can be very proud of.
View Chrystia Freeland Profile
Lib. (ON)
It was these changes we made to the investment dispute settlement process that unblocked the agreement. As a result of these changes that we made—and I want to thank Steve Verheul, with whom I worked on them very closely—we were able to move the agreement forward, finalize the legal scrub on February 29, and move the agreement through the European system.
Those changes were also absolutely central in securing support of key European countries, particularly France and Germany. France and Germany had been hesitant, even critical, of the agreement prior to those changes. Right after we made those changes, I travelled to Brussels, Berlin, and Paris. There we had public announcements of support for the agreement from Germany and France. That's really what got it going.
View Chrystia Freeland Profile
Lib. (ON)
I'm going to start by addressing your assertion at the beginning.
First of all, thank you for your question and thank you for the hard work you do on the trade file. I know that you're very focused on it and that you care a lot about your constituents.
I do want to challenge one assertion, which is the idea that we are somehow rushing with CETA. This agreement, and I think Steve, of all people, can—
View Chrystia Freeland Profile
Lib. (ON)
Steve can point to the fact that as a country, we have been working on CETA for seven years.
The legal document, which is the one that we are going to be voting on, was finalized on February 29 of this year—
View Chrystia Freeland Profile
Lib. (ON)
We've had a lot of time to look at it and study it and I believe very strongly, as I believe do the majority of Canadians, that it's very important, particularly in this protectionist moment in the world, to get this agreement in place to start creating the jobs and growth that it will create for Canadians. It's also a very important moment to be diversifying Canada's economic relationships.
On the pharma question, I think it's important for us to bear in mind, as I think Steve said in his testimony to the committee, that we are very mindful of this issue. This is something my colleague, the Minister of Health, is working on very attentively.
We do need to bear in mind that we have time. The new elements—
View Chrystia Freeland Profile
Lib. (ON)
The new elements in the pharma space that CETA is going to bring in will not actually have an impact on Canadians for eight years—
View Chrystia Freeland Profile
Lib. (ON)
—so it's important not to have a false sense that when this agreement enters into force, those provisions will immediately enter force.
More broadly, what CETA does highlight is that we need a broader look at Canada's pharma strategy, and that is something that my colleague, the Minister of Health, is doing.
I think it's also worth pointing out and worth Canadians knowing that drug prices in European countries like Germany, France, the U.K., are actually lower than in Canada, so the issue is—
View Chrystia Freeland Profile
Lib. (ON)
As I have said, this is an issue on which we are consulting broadly and that my colleague, the Minister of Health, is working on.
I think it's very important for Canadians to understand that the impact of the new provisions in CETA on drug regulation will not fully take effect for a full eight years from the time that this agreement enters into force. It's important to be truthful with Canadians about that—
View Chrystia Freeland Profile
Lib. (ON)
—and it is very important to appreciate that when it comes to drug prices, our government is very committed to working on that file, and it's important to understand that this is part of a broader drug pricing strategy—
View Chrystia Freeland Profile
Lib. (ON)
It is very important to appreciate—
View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
Lib. (ON)
As I've said, on the impact of CETA on drug pricing, this agreement has been carefully structured so that the full impact is not felt for a full eight years.
As I think we are all aware, this is a very fast-moving space, particularly when it comes to new developments, when it comes to issues of biologics, when it comes to the trade-off between generic and brand name drugs. Our response to CETA very much needs to be, and will be, embedded in broader work that my colleague, the Minister of Health, is doing on—
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