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View Chrystia Freeland Profile
Lib. (ON)
Thank you very much, Madam Chair.
Thank you, members of this committee. I'll make a few introductory remarks and then I will be happy to answer your questions.
I'd like to acknowledge that we're gathered on the traditional territory of the Algonquin.
Let me start with very great pleasure by introducing the outstanding Canadian public servants who are here with me today and without whose hard work, dedication and intelligence this pivotal new agreement would not have been possible. I'm going to introduce the two people sitting next to me. Let me just say that they lead an outstanding team of Canadian professional trade negotiators. At a particularly rough moment during the negotiations, one of our negotiators said, “We think of ourselves as the Navy SEALs of Canada”. I think that is a very appropriate way for all of us to think of our outstanding professional trade negotiators.
With me is Steve Verheul, chief negotiator of NAFTA and assistant deputy minister of trade, and Kirsten Hillman, our acting ambassador to the U.S., as well as a trade negotiator of some renown.
I'm very pleased to speak today in support of Bill C-4, the act to implement the new NAFTA, the Canada-United States-Mexico agreement.
Canada is a trading nation. Indeed, with the world's 10th largest economy, trade is the backbone of our economy. Trade is vital for the continued prosperity of Canadian workers, entrepreneurs, businesses and communities across the country.
Our government champions an open, inclusive society and an open global economy. These fundamental Canadian values transcend party and region. In fact, each of Canada's three major, recently concluded, trading agreements—the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and now the new NAFTA—were the outcome of efforts across party lines.
Canadians support free, fair, and balanced international trade, based on mutually agreed rules. These rules provide predictability and stability in how goods, services and investment are carried out between Canada and our major trading partners. We have seen remarkable success in this area.
In 1994 NAFTA created the largest free trade region in the world. In 2018 trilateral merchandise trade between the U.S., Canada and Mexico reached nearly $1.2 trillion U.S., a fourfold increase since 1993.
Today the NAFTA region comprises almost 490 million consumers and has a combined GDP of more than $23.5 trillion U.S. Our three countries together account for more than one-quarter of the world's GDP, with less than 7% of its population. This record of growth is a tribute to all Canadians, to our entrepreneurs and our workers across this country. Trade between the NAFTA partners has helped us build a continental network of supply chains across a range of industrial and agricultural sectors. It has made Canada more competitive globally. It has created good jobs for Canadians and has fostered job-creating direct investment between Canada and the United States.
The new NAFTA helps ensure we maintain this vital relationship, and that we maintain predictability and stability in our commercial relationship with the United States—our closest, and overwhelmingly our largest, trading partner—and with Mexico.
The negotiations to modernize NAFTA were unprecedented in their intensity, scope and urgency. At the outset we faced a barrage of protectionist trade actions from the United States and the very real threat of a U.S. unilateral withdrawal from NAFTA altogether. Team Canada stood firm and team Canada stood united. Guided by strong support for free trade from Canadians across the country, at all orders of government across the political spectrum, from business to labour leaders to indigenous leaders, we sought advice and consensus and we acted in a united way.
I would today like to particularly thank the NAFTA council for its hard work. Together we worked tirelessly to modernize NAFTA for the 21st century and to extract further benefits for Canadians from a trading partnership that has been a model for the world, and that is exactly what we accomplished.
The new NAFTA preserves Canada's tariff-free access to the United States and Mexico. It restores and strengthens the predictability and stability of Canada's access to our largest market, and crucially, it does so in the face of rising protectionist sentiment south of our border and around the world. The new NAFTA improves on and modernizes the original agreement.
Allow me to highlight some of the key tangible benefits for Canadians.
First, this agreement protects $2 billion U.S. worth of daily cross-border goods and services trade between Canada and the United States. This means that 99.9% of Canadian exports to the United States are eligible for tariff free trade.
The new NAFTA preserves crucial cross-border auto supply chains, and provides an incentive to produce vehicles in Canada.
The agreement also commits all partners to comply with stringent labour standards, and strengthens labour obligations to help level the playing field for Canadian workers. Mexico has also undertaken specific commitments to provide for the protection and effective recognition of the right to collective bargaining.
I would add that our government is working in collaboration with the Mexican government to help Mexico implement its labour reforms.
Throughout the negotiations, Canada was confronted with the American tariffs that were unprecedented, unjust, and arbitrary with respect to Canadian steel and aluminum. We were able to avoid an escalation, however, without backtracking. We stayed focused on defending Canadian workers, their families, and their communities.
We succeeded, and those U.S. tariffs have been lifted.
There was an additional U.S. threat to impose a section 232 tariff on Canadian autos and auto parts. For Canada, that threat was lifted on November 30, 2018, the day we signed the new NAFTA and the day we signed a binding letter on 232 autos and auto parts with the United States. As a result, Canada's auto industry now has the stability to seek investment for further growth and innovation.
The new NAFTA also preserves elements of the original NAFTA that have been essential for Canada and were under threat.
It maintains chapter 29 regarding the dispute settlement mechanism for trade. This is a fair and impartial mechanism, which had been included in the original agreement thanks to the hard work accomplished by Canada. This mechanism has been beneficial for our forest sector workers well over the years, and has protected their jobs from unjust trade measures.
The new agreement preserves NAFTA’s cultural exception, which contributes to protecting more than 666,000 jobs in Canada’s cultural industries and is so pivotal to supporting the artists who tell our stories, in both official languages.
Critically, the new NAFTA maintains tariff-free access to the U.S. market for Canadian ranchers and grain farmers. We should never lose sight of the fact that the starting objective of the United States in the NAFTA negotiations was to abolish Canada's system of supply management.
We did not accept that. Instead, we stood up for Canadian farmers and preserved supply management for this generation and for those to come.
The agreement includes an enforceable environment chapter that requires NAFTA partners to maintain high levels of environmental protection, as well as ensuring sound environmental stewardship. In addition, it recognizes and supports the unique role of indigenous peoples in safeguarding and preserving our environment.
The new NAFTA contains ambitious and enforceable labour obligations to protect workers from discrimination in the workplace, including on the basis of gender.
In conclusion, the new NAFTA is good for continued economic growth and prosperity in Canada. It restores stability and predictability for exporters and for the hundreds of thousands of Canadian workers in our export-oriented industries. It allows us to put the uncertainty of recent years in the past.
Most importantly, the new NAFTA is pivotal in securing the future of good-quality Canadian jobs across our country as market access to the United States and Mexico will be assured—will be guaranteed—by the new NAFTA for years to come.
I want to be clear. We have come a long way. However, until this agreement is ratified by all three countries and enters into force, there continues to be risk and uncertainty, which will inevitably grow with the passage of time. This agreement has already been ratified by the United States and Mexico—our two other NAFTA partners.
Debate in Parliament, including at committees, is very important in our democracy, but the risk to Canada is also real. It is imperative we lock in the gains we have made with this agreement, the security we have achieved and the market access we have fought for by ratifying the new NAFTA without undue delay. That is what Canadians expect all of us to do and it's the right thing to do.
Thank you very much.
I'll be happy to take your questions.
View Chrystia Freeland Profile
Lib. (ON)
First of all, let me thank the member from Prince Albert for his question and for the many conversations that we have had together about the new NAFTA. We go back to the time when I was sitting on the other side of the House, and I had the opportunity to ask the then Conservative government questions about trade. I really respect you, Mr. Hoback, with your long experience of trade issues and trade agreements and the many years now that we have spent talking about them and working on them.
You've raised a number of issues. Let me take them in turn.
View Chrystia Freeland Profile
Lib. (ON)
When it comes to Parliament and the committee having time to discuss this agreement, let me just say that the NAFTA negotiation was a long and very public and very consultative process. Throughout that process I appeared many times. I believe it was a dozen times that I appeared before parliamentary and senate committees to answer questions about the new NAFTA. Officials will correct me if that's wrong, please. Canada's trade officials have been available to all parties to discuss the agreement.
I'm actually very proud of the extent to which the negotiation was a very public, very consultative process including members of Parliament, but more broadly also including members of the NAFTA council, including premiers, mayors, business leaders, labour leaders and indigenous leaders across the country.
View Chrystia Freeland Profile
Lib. (ON)
Mr. Hoback, would you like me to finish answering all of your questions?
We have consulted extensively throughout the process, as is appropriate, and answered questions at committee and in Parliament throughout.
To the question of opposition parties having access to information about the final protocol of amendment, which has concluded the agreement and forms the body of the agreement we are now debating and seeking to ratify, immediately upon our conclusion of that protocol of amendment, we made our officials available to brief all the opposition parties. I know that Steve Verheul briefed all the parties, including the Conservative Party, including Mr. Scheer and his caucus. Information was made available right away.
To the idea that somehow we could have begun an official study of this agreement before the protocol of amendment was signed, let me simply say that it would have defeated the purpose of allowing Parliament and the committee to fully debate the finalized agreement. That finalized agreement was concluded only in December, after an extensive series of discussions between Canada, Mexico and the United States to introduce some further modifications to the agreement, which allowed for ratification in the U.S.
View Chrystia Freeland Profile
Lib. (ON)
When it comes to those modifications, let me say one thing very clearly and with absolute conviction, and that is that the modifications that we agreed to in the protocol of amendment in December are 100% in Canada's national interest. It is very rare to have a negotiation where you can say that, but that set of modifications made a good deal better for Canada.
I see that our chair is asking me to wind up. I would be happy to go into those further, and I'd be happy to say more about aluminum. I suspect Simon-Pierre may have some questions for me about that.
We shall see.
View Chrystia Freeland Profile
Lib. (ON)
Thank you very much, Mr. Arya. That is an excellent question. It points to something about the new NAFTA that is not fully appreciated by Canadians.
Something we have discussed often with the negotiators is that in many ways the negotiation around the new NAFTA was almost a two-level negotiation. There was the very high-profile set of issues, often about Canada's pushing back against unprecedented protectionist demands from the United States. That was what was most visible to Canadians, what Canadians were quite rightly most concerned about. Then there was a negotiation on what we sometimes have referred to as the set of bread and butter trade issues. These are the kinds of issues trade negotiations are more routinely concerned about, and they're where some of the greatest gains of NAFTA were won. Let me talk about a few of them.
One is that this agreement has very successfully removed a lot of the red tape associated with cross-border trade. In the consultations we did before and during the negotiation, one of the things we learned, and that we heard most urgently from Canadian businesses engaged in trade in the NAFTA region, was that their greatest issue was all the red tape involved in trade. We heard from a surprising number of businesses that simply didn't bother to claim their NAFTA preferences because the red tape was so overwhelming. Think about that. The weight of the red tape was greater than the value of the tariff-free access that NAFTA offered.
One of the real pluses of this agreement is that, working together with the United States and Mexico, we have done a very good job of cutting back a lot of the red tape by using some of the technologies that the 21st century allows to make it easier for people to trade. That is one of the things we did with NAFTA. It doesn't make a great headline, but it will make life easier for a lot of Canadian businesses and will make them much more competitive.
In terms of the 21st-century economy more broadly, that was another part of this that was beneath the sea level, if you think of an iceberg. There was the tip of the iceberg, the very visible struggles, and then there was all the rest of the iceberg. That was another part of all the rest of the iceberg of the negotiation: a stated effort where we had real agreement between Canada, the U.S. and Mexico to modernize this agreement, to make it relevant to the shape of the 21st-century economy, relevant for the service sector and for sectors of the economy that are based much more on intellectual property than on physical goods. I think we achieved a great deal there.
I would like to make one final point. When it comes to certainty in the future—and to me, this is a very important element of the new NAFTA, something that I hope we in Canada will be able to replicate—after an arduous process of negotiation, we have achieved an agreement that has strong cross-party support in both the U.S. and Mexico.
Mr. Hoback referred to the fact that the U.S. managed to ratify this agreement in the heat of the impeachment struggle in the U.S. We have, in the new NAFTA, an agreement that both Nancy Pelosi and Donald Trump support. I struggle to think of anything else those two important American leaders both support. It's important for Canada that they both support it, because that gives us a real guarantee for the future.
Madam Chair is asking me to wrap up, but let me just conclude by also referring to our guest from Mexico, Mr. Seade. He represents a government that was not in office when the bulk of this agreement was negotiated. I would like to thank and acknowledge the work of Ambassador Seade, and also of President López Obrador. They did a difficult thing, which was to take an agreement that was negotiated by their predecessors and political opponents, take ownership of it and get it across the finish line. That's a real show of national unity in Mexico.
I think it would be great if we could accomplish the same thing here in Canada.
Thank you.
View Chrystia Freeland Profile
Lib. (ON)
Thank you for the question, Mr. Savard-Tremblay.
I am surprised that your first question is not about aluminum.
View Chrystia Freeland Profile
Lib. (ON)
I see that, but I will be very happy to answer questions about aluminum too.
View Chrystia Freeland Profile
Lib. (ON)
In terms of the agreement overall, I would like to start by saying that I am convinced that it is a good agreement for Canada and for Quebec. I am convinced of that because there were long consultations and discussions with entrepreneurs, workers and leaders in Quebec. As you are well aware, Premier Legault has said openly and clearly on a number of occasions that he and the federal government agree that this agreement is very significant and good for Quebec. I agree with Mr. Legault.
I have also observed, both in the negotiations on NAFTA and in those on CETA, that Quebec is one of the provinces in Canada that understands the importance of international trade very well. Quebec has negotiators with a lot of experience and we worked in close collaboration with them.
As for agricultural and dairy producers, it is important to understand the context. As I said in my remarks, the United States began with a clear demand, to completely dismantle the supply management system. To me, that is an astonishing demand. As you are well aware, that has been what the United States has wanted for a number of years. Once again, they tried to completely dismantle our supply management system.
I believe they thought it would be possible. I am very proud that our government stood firm in its response. We said that it would not be possible and that we were going to keep our supply management system.
You are right when you say that, in the negotiations, we gave the United States a little more access to our market, as the previous government had done in the negotiations on the Trans-Pacific Partnership (the TPP) and CETA. I agree with you and with the dairy producers of Canada that, as a result, it is essential for our government to provide fair and equitable compensation to Canadian dairy producers. I hope that all political parties will support that measure. Throughout the negotiations, I had long discussions with Canada's dairy producers. So the producers are well aware of everything that Canada has done.
I would like to take this opportunity to thank the producers in the dairy sector for their support and collaboration. People in the sector are well aware that Canada lives in a world of international free trade. We need open markets, but we have to preserve a part of our own market by protecting our supply management system.
It is complex, it is difficult, and producers in the sector stood with us throughout the process. After the agreement is ratified—which I hope will be done quite quickly—it will be time to provide those producers with fair and equitable compensation.
View Chrystia Freeland Profile
Lib. (ON)
We will continue later.
View Chrystia Freeland Profile
Lib. (ON)
Thank you very much for those questions, Mr. Blaikie, and also for the very detailed, professional conversations you and I have been having in recent weeks, and that have also involved our excellent trade officials who, I believe, have forgotten more about trade than any of us will ever learn.
I'd like to respond in two parts, first, talking about overall trade and progressive Canadians, and then second, about your specific proposals.
One of my objectives from the outset of this negotiation has been to achieve a truly progressive trade agreement, a trade agreement that Canadians, who perhaps traditionally have had doubts about the virtues of free trade, could support. That is why, among other things, we made a real effort to include union leaders, and I'd like to single out Hassan Yussuff, who I know has been speaking with you a lot as well, for his participation in the NAFTA council and for the advice he has offered throughout the negotiation.
Mr. Blaikie, you've pointed out two issues that progressives in Canada...and actually Mr. Manley has long been concerned about one of the issues you mentioned, ISDS. However, you mentioned concerns that progressives have long had with free trade agreements in general, and the new NAFTA in particular: ISDS and the proportionality clause. Two of the things I am the proudest of with the new NAFTA is that we have gotten rid of ISDS completely—a huge victory, a real benefit to Canada and a powerful precedent—and we have gotten rid of the proportionality clause.
I would also mention, as an element of the progressive trade agenda that we have not only articulated but done in the new NAFTA, the unprecedented protections for labour. Mexico—and again thank you very much, Ambassador Seade—as part of this agreement, has implemented historic labour reforms giving Mexican workers the right to organize. This agreement critically makes that commitment by Mexico enforceable. That is a huge win for workers in Canada, the United States and Mexico. The same is true of labour value content provisions. It is also true with our unprecedented environmental protections and protections for indigenous people and on the basis of gender.
Now I want to get to the second part of your question. I also would like this agreement, the entire negotiation process, ultimately, the ratification, to give us certainty in our trade with the U.S. and Mexico, but also to solidify the national consensus around Canada as a trading nation. I agree with you that transparency is a good thing. In the process of the NAFTA negotiation we have sought to be very transparent and very consultative with Canadians, but I agree with you that it would be a good thing to seek to formalize some of the things we have done. When it comes to the 90-day notification, let me simply say that Canadians had far more time than that to know we would be entering into a NAFTA negotiation, but it's a good thing to let Canadians know when we're contemplating working toward a trade agreement.
On the statement of objectives, we launched the NAFTA negotiation with a pretty long speech that I gave here in Ottawa, stating at some length what Canada's objectives would be. I think that was important for Canadians to hear. Again, I think that we would look very favourably at the notion of finding some way to codify that effort, likewise when it comes to sharing with Canadians our assessment of the economic impact of a particular deal.
View Chrystia Freeland Profile
Lib. (ON)
Do I have to stop? Okay.
Let me simply conclude by saying, I think those are very constructive, productive ideas, and I thank you for putting them forward in such a thoughtful way. I am confident that working together we can find a way to give Canadians even more transparency, and confidence in more transparency, in future trade agreements.
View Chrystia Freeland Profile
Lib. (ON)
Thank you very much, Mr. Carrie. Although we can't and we will never agree on everything, I am pleased to learn that we do agree that the changes that were codified in the protocol of amendment in December with the U.S. and Mexico make what I would characterize as a good deal even better. It's good we can agree on that.
I won't spend too much time comparing the U.S. process with the Canadian process, except to say that, certainly from my perspective, our process is different because we are a parliamentary democracy and I think our Parliament is fantastic. I love the Canadian system of representative democracy, but the reality is that, in the U.S. House, the time of the finalization of the protocol of amendment to the time of the U.S. House actually ratifying this deal was a matter of weeks. It was a very, very—
View Chrystia Freeland Profile
Lib. (ON)
May I please finish? I listened to you without interruption.
View Chrystia Freeland Profile
Lib. (ON)
If you want to use the 40 seconds by talking, I'm happy to listen.
View Chrystia Freeland Profile
Lib. (ON)
I think there are actually a number of questions. When it comes to the economic analysis, if the chair would like me to answer that now I can, or I will just begin my answer to the next question with an answer to that.
View Chrystia Freeland Profile
Lib. (ON)
We have absolutely nothing to hide. We are very confident that this is a good deal for Canada and Canadians, and I would also point out that this is not purely the judgment of our government. It is the judgment of the overwhelming number of Canadian businesses, Bay Street analysts, economists, labour leaders and business leaders across the country.
Thank you.
View Chrystia Freeland Profile
Lib. (ON)
Let me, first of all, thank you, Mr. Dhaliwal, for the hard work that you have done throughout this negotiating process. I know this agreement is important to you personally, and to your constituents. It's been a pleasure to work with you on it.
I'd like to start by being a little more precise on the times when, throughout the agreement, I have appeared before committee. I believe that I have appeared before committee to talk about NAFTA four times already. Those were August 14, 2017; February 8, 2018; June 19, 2018; and May 28, 2019—that's for House committees. We'll give you more information in due course about Senate committees. I did refer to previous committee appearances and I wanted to be precise about that.
When it comes to women and girls, that is actually one of the lesser-known successes of this trade agreement. In this agreement, we were able to achieve new—much greater than we have in the current NAFTA—protections for Canadian women and girls, and protections for Canadians when it comes to labour issues in particular, such as that Canadians and their gender identification should not be a cause for discrimination.
As I mentioned in my opening remarks, we were also able to achieve unprecedented protections for indigenous people, including the special role indigenous people have when it comes to protecting our environment.
These are really some new areas for trade agreements to codify. It's part of what I was speaking about with Mr. Blaikie, of the progressive trade agenda that our government has sought to put forward. We had put together in the trade team an entirely new group of officials who, for the first time, were working together specifically on the indigenous issues. It is really new ground for Canada. There is a lot more to be done, but I am pleased that we were able to move the puck forward when it comes to protections for women, protections for girls, protections for LGBTQ people and protections for indigenous people in this landmark agreement.
When it comes specifically to the protections for indigenous people, I would like to thank, by name, Perry Bellegarde. He was a member of our NAFTA council. He worked very hard with us on all aspects of the new NAFTA but in particular on the indigenous issues, and he worked with indigenous partners across North America. I think this is an area in which, going forward, when it comes to trade agreements, Canada will need to continue to do more work. With the new NAFTA, we have laid what I believe are some really important, really valuable foundations.
The protections for indigenous people, for women and girls, and for LGBTQ Canadians are part of the labour and environmental chapters where, overall, we have made some really great progress, both in the specific content of those chapters and also.... Again, I'm turning to Mr. Blaikie as well, because this has long been a concern—I'll finish, Madam Chair—of progressive people thinking about trade. It has been to do better on labour and the environment, but also to do better when it comes to enforceability. I think one of the very strong features of the new NAFTA is much greater enforceability on the environmental chapter and particularly on the labour chapter.
Thank you.
View Chrystia Freeland Profile
Lib. (ON)
When it comes to the supply management sector, let me start by saying something that it is very important. In this negotiation, Canada faced an unprecedented U.S. demand. It was an explicit and open demand that we dismantle the supply management system entirely. The U.S. starting position was that, for us to do a deal with the United States to preserve our essential market access, the price would be to entirely do away with supply management. It's very important for Canadians to be clear that was the U.S. position.
I really want to thank the members of Canada's supply management sector, Canadian farmers, who have an extremely sophisticated understanding of trade agreements, and with whom we consulted extensively. They were very aware of what the U.S. position was, and they were very aware of the extreme lengths that Canada went to in order to preserve our supply management system.
I am very pleased with the outcome we achieved, which was that, by offering limited access to the Canadian market, we were able to preserve our supply management system.
I would point out as well, and we've been asked this question already and I think it is an important one, that we do recognize that this part of the agreement does mean that our supply management farmers are absolutely entitled to fair and equitable compensation. That is something to which this government is absolutely committed. It's something I'm very happy to reiterate today so that all Canadian supply management farmers to know that, once we get this agreement ratified—and we're in the process of it entering into force—the government is absolutely committed to putting in place fair and equitable compensation for our supply management farmers.
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)
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