Committee
Consult the user guide
For assistance, please contact us
Consult the user guide
For assistance, please contact us
Add search criteria
Results: 1 - 100 of 515
View Mark Eyking Profile
Lib. (NS)
Good morning, everyone. Welcome, you early risers.
Before we get into our pre-study here, I have a bit of a request. Colleagues, as you know, we're pretty close with the British and their trade committee, or their new-found trade committee, with what they're going through with Brexit and what they're trying to develop and what they're getting into with their own committee. They're very close to us and they visit us. They have reached out to me and they want to talk a little more, through a video conference, maybe. It will be very hard for us to do this in the next couple of days, with the time zones, but we can, if you want me to reach out to them.
Anybody from the committee is welcome to be in on that video conference, but maybe it should just be me and the vice-chairs, or whoever wants to be in. I'm going to try to pick a time within the next two days, and if it's good for you we'll do a video conference with them. They know our situation, that Parliament is winding down and they know the time difference. They just want to have a chat with us. I was thinking we could do that for a half hour. I think they want to get a feel on how our committee runs and what we're doing with our trade agreements.
Maybe the clerk could explain it a bit.
Collapse
Brian Kingston
View Brian Kingston Profile
Brian Kingston
2019-06-18 8:35
Expand
Thank you, Mr. Chair and committee members. Thanks for the invitation to be here today to take part in your consultations.
As you know, the Business Council of Canada represents chief executives and entrepreneurs of 150 leading Canadian companies. Our members employ 1.7 million Canadians and are responsible for most of Canada's exports, corporate philanthropy and private sector investments in R and D.
It almost goes without saying that trade with the U.S. is critical to our prosperity. The Canadian economy depends on international trade, and the U.S. is by far our largest trade and investment partner. Trade of goods and services represents 64% of Canada's gross domestic product, with the U.S. being the destination for over 75% of our goods exports alone last year. As a result, the Business Council strongly supports CUSMA, NAFTA 2.0, USMCA—whatever we want to call it—and calls for the swift passage of Bill C-100, for the following four reasons:
First, it protects our market access. When these negotiations were first launched, we really had one overarching recommendation to government and that was “do no harm”. To avoid damaging employment, trade and investment, Canadian, American and Mexican businesses needed to retain their preferential market access and commercial opportunities in each country. By this measure, CUSMA is an overwhelming success. The resulting agreement is based upon reciprocal access and treatment, and no Canadian company will face new tariffs or other market access barriers into the North American market.
The second reason is the ability of this agreement to remove uncertainty from the economy. The ratification of CUSMA will eliminate significant trade uncertainty, which has persisted since these negotiations were launched. According to the Bank of Canada's recent monetary policy report, it is assumed that trade uncertainty will reduce the level of business investment in Canada by around 2.5% by 2021. Given that the U.S. remains a key market for Canadian firms planning to invest abroad, 65% of which were recently surveyed by EDC, we believe that reducing uncertainty in the relationship will be a significant boost for investment and the Canadian economy more broadly.
Third, the agreement modernizes NAFTA. CUSMA will improve the trade relationship by modernizing long-outdated elements of NAFTA. The agreement is based on the text of the TPP, which is our most modern free trade agreement. For example, it contains a chapter on digital trade that prohibits customs duties and other discriminatory measures from being applied to digital products. It also ensures that data can be transferred freely across borders. That's one example of the modern new chapters that were not in the original NAFTA.
Fourth, we believe that the agreement will enhance North American competitiveness. It includes important new provisions that will help Canada, the U.S. and Mexico develop a more productive and mutually beneficial trilateral relationship. As two examples, there are chapters on competitiveness specifically, and a chapter on good regulatory practices that establish committees meant to promote economic growth and strengthen regulatory co-operation. We're calling on the government to develop a robust agenda for these committees and start preparing immediately, so that when this agreement does come into force, we're ready to make progress in those areas.
Before I conclude, I want to comment on timing. Last week, a group of CEOs from the U.S., Canada and Mexico were in Washington to discuss CUSMA/USMCA, to meet with House Democrats, and basically to get a sense of how this is moving through Congress. The message was very clear: The window for ratification is closing extremely quickly. Once we get into the presidential elections of 2020, all bets are off, quite frankly.
Business leaders across North America support the swift ratification of this agreement to keep North America tariff-free, make the economy more vibrant and competitive, drive investment and support the creation of high-value jobs. We're expecting Mexico's Senate to approve the trade agreement this week. We believe that if Canada passes Bill C-100, it will send a strong signal to Congress that this agreement has support and should be ratified.
With that, thank you for the opportunity. I look forward to any questions.
Collapse
Dan Paszkowski
View Dan Paszkowski Profile
Dan Paszkowski
2019-06-18 8:40
Expand
Thank you very much, Mr. Chair, for this opportunity to address the committee on the Canadian wine industry's perspectives on the new NAFTA agreement, also known as CUSMA.
The modernization or renegotiation of NAFTA was an unprecedented trade experience. Not only did Canada face a WTO challenge focused on U.S. wine access to B.C. grocery, but the U.S. wine industry also used this trade process to seek changes to almost every element of the original NAFTA, which could have been disastrous for the future of more than 700 wineries across Canada. As a nation, Canada is not only the world's fifth-largest wine importer by value and eighth by volume; it also ranks among the most attractive wine sales markets in the world.
With a growing wine culture across Canada, and a climate and soil in different parts of the country capable of producing world-class wines, the 2006 excise exemption that was established for 100% Canadian wines stimulated investment for more than 400 new wineries over the past decade. Further, it supported a significant demand for Canadian-grown grapes, which increased premium 100% Canadian wine production by 28 million litres per year. In 2018 this new and growing production contributed an additional $3.1 billion in annual economic impact to the Canadian economy, while supporting 37,000 jobs.
The NAFTA demands put forward by the U.S. wine industry were a David and Goliath scenario. With our future at stake, CVA maintained almost daily contact with the wine negotiating team at Global Affairs, providing every statistical detail and intelligence we could find while attending every round of negotiations to make sure our issues remained a top government priority. It was vital to get the record straight. By any metric, NAFTA has been a windfall for the U.S. wine industry, making it the number one wine importer to Canada, surpassing France and Italy, with import value increasing from $19 million in 1988 to $504 million in 2018.
As many of you will know, the changes implemented in the 1988 Canada-U.S. Free Trade Agreement were so significant that many did not think the Canadian wine industry would survive. To compete, we identified new grape varietals, replanted, invested in new technology and techniques, undertook viticultural research and created the VQA system. Today our premium wines represent a 10% market sales share across Canada, with a growing reputation in key markets around the world.
Given these significant changes that we have endured over the past 30 years, NAFTA has been less advantageous for our sector, with bottled wine export growth to the U.S. increasing by a mere $8.2 million, or 25,000 cases. Nonetheless, the U.S. remains a key export market, and we do see potential for growth. It's important to note that with imports owning 70% of the wine sales market in Canada, we continue to place the majority of our focus on growing wine sales at home. While we supported and welcomed free and fair trade with the U.S. and Mexico in the renegotiation, our key focus was to protect what was in the existing NAFTA while enhancing regulatory streamlining and modernization. This task was accomplished. CUSMA did not remove the benefits that were part of the original agreement dating back to 1988, and added the most comprehensive wine annex of any trade agreement negotiated anywhere in the world. We're happy with the wine-related text in CUSMA, and would support its ratification in lockstep with the United States and Mexico.
Having said this, it's important to remind all members of this committee that with CETA and CPTPP ratified and NAFTA renegotiated, 91% of wine imports into Canada now enter tariff-free. This is a major preoccupation for every wine producer in Canada, given that imports have captured roughly 75% of total wine sales growth in our country over the past decade. To take advantage of CUSMA, CETA, CPTPP and future trade agreements, we must support and protect the growth of Canadian wine sales both at home and abroad. For example, as of January 1, the Canadian Food Inspection Agency requires Canadian wineries to implement a prevention control plan to access a “certificate of free sale” to export our wines, a major and costly undertaking for small and medium-size wineries for a low-risk food product. The proposed amendments to the “Product of Canada” label claim will require 85% Canadian content, yet we accept the 75% threshold for “Product of U.S.A.” For more than a decade, Canada has permitted EU, U.S. and other World Wine Trade Group country wines to enter Canada using additives and processing aids not permitted for use by Canadian wineries. Canada must accept the scientific evidence from these countries to fast-track approval to ensure that Canadian wineries have access to the same wine-making tool kit.
Agri-food marketing program funding in Canada is restricted to export promotion, but cannot be used for domestic promotion, where Canadian wineries face our largest competition. Prohibition-era restrictions remain in seven of 10 provinces, and restrict direct-to-consumer wine delivery across provincial borders.
These issues must be addressed in the short term, to ensure we can take full advantage of CUSMA.
In addition, it's absolutely critical that the government focus immediately on resolving Australia's WTO challenge against Canadian wine measures. With the WTO dispute settlement panel well under way, a negative outcome would risk not only the benefits negotiated under CUSMA, but also place at risk 700 wineries from coast to coast, threatening jobs and investment in the future of Canada's highest value-added agricultural industry.
Numerous times the Australian government has publicly stated that it's open to finding a non-WTO resolution with Canada. The Australian wine industry has informed me that a resolution is possible, if Canada offers to remove the legislated annual inflation indexation of the wine excise duty implemented in budget 2017.
The Australian government has also alluded to its disappointment with legislated indexation in its recent WTO submission. What is clear is that the offer to repeal would likely end the WTO challenge. This would not stop the federal government from making future adjustments to the excise duty. It would simply return any decision on future excise duty increases to a vote in Parliament, as part of the budget implementation act process.
In conclusion, we fully support the passage of Bill C-100 and the ratification of CUSMA. However, if the Government of Canada does not offer to repeal the legislated annual excise duty indexation as part of a non-WTO negotiated settlement, we fear that the Canadian wine industry will lose not only the benefits we earned in CUSMA, but additional federal and provincial measures, which would place thousands of jobs, and hundreds of wineries, in every region of this country, at risk.
Thank you, Mr. Chair.
Collapse
Mathew Wilson
View Mathew Wilson Profile
Mathew Wilson
2019-06-18 8:47
Expand
Good morning, and thank you for inviting me here, on behalf of Canada's 90,000 manufacturers and exporters and our association's 2,500 direct members, to support the ratification of Bill C-100 and the Canada-U.S.-Mexico trade agreement.
I would like to thank the Prime Minister, Minister Freeland, the chief negotiator and all of their staff, for their efforts negotiating CUSMA.
Being part of the process, we understand how difficult these negotiations were, and also how critical the outcomes were for Canadian businesses and all their employees. The negotiations were important because CUSMA is not simply another trade agreement. North American trade is the basis on which Canada's manufacturing sector and its 1.7 million employees operate. It is why the Canadian manufacturing sector is responsible for more than two-thirds of Canada's exports. It is how the sector competes against the rest of the world, at home and in foreign markets. It is critical to our future and current success.
As such, CME fully supports the ratification of this legislation, and urges the government to ratify the deal as soon as practical. The primary reason for immediate ratification is based on the opening statement. It is the foundation for modern manufacturing in Canada. CUSMA preserves the integrated manufacturing operations that allow the relative free flow of goods and services between the three markets, and that collectively build products for sale domestically and internationally. Going into negotiations, our members made it clear that the primary objective must be to do no harm to this integrated manufacturing in our economy—which has happened.
We believe CUSMA preserves many of the key elements to the original NAFTA, which were targets of the U.S. for elimination, not the least of which are the dispute settlement mechanisms and the business traveller visa exemptions.
Aside from preservation, CUSMA updates several key areas of NAFTA to bring it into the 21st century. For example, the new digital trade chapter recognizes that the Internet now exists—something the old agreement obviously didn't—and establishes a framework for e-commerce within North America. The customs administration and trade facilitation chapter will also go a long way to modernizing customs procedures throughout North America, better enabling the free flow of goods.
Last, my colleague touched on chapter 26, the new competitiveness chapter, which has not garnered much media attention, but is, in our estimation, one of the biggest accomplishments of CUSMA. It will set up a framework to allow the three countries to become a coordinated trade bloc. It will do this by promoting better coordination and integration of our manufacturing industries, so that we can tackle global trade challenges together. This is a significant accomplishment.
As CUSMA courses its way through each of the three countries' domestic ratification processes, we believe we should immediately get to work on implementing parts of the agreement that do not require legal changes. We should be looking to make early progress by establishing committees for North American competitiveness, and good regulatory practices outlined in the agreement. This would show Canadian leadership, signal to our other partners that we take CUSMA seriously and enable us to hit the ground running, once all three countries ratify the agreement.
In the final analysis, CUSMA is a good deal for Canada, and, given the very challenging negotiations, an impressive achievement. Now that the unfair and punishing section 232 tariffs on Canadian steel and aluminum have been lifted, we urge the government to move forward with ratification as quickly as practical.
Thank you, and I look forward to the discussion.
Collapse
Roger Pelissero
View Roger Pelissero Profile
Roger Pelissero
2019-06-18 8:50
Expand
It's always good to go back to your roots, Mr. Chairman.
Collapse
Roger Pelissero
View Roger Pelissero Profile
Roger Pelissero
2019-06-18 8:50
Expand
All right. I like that.
Thank you, Mr. Chairman and committee members, for having us here today.
My name is Roger Pelissero. I'm a third-generation egg farmer from St. Anns, Ontario. Joining me today is Judi Bundrock, who is our director of international trade policy.
Egg Farmers of Canada is here to share our perspectives on the possible ratification and implementation of the new North American Free Trade Agreement, NAFTA, known here in Canada as CUSMA. I refuse to refer to it the way the Americans do. It's Canada first, then the U.S. and then Mexico. That's the way the countries line up, so CUSMA it always should be.
Egg Farmers of Canada manages the national egg supply and promotes egg consumption while representing the interests of regulated producers from coast to coast. There are over 1,000 egg farmers in this country, located in every province and in the Northwest Territories, which are dedicated to producing fresh, local eggs. In fact, surveys conducted by Canada's top polling firms confirmed that over 88% of Canadians say it's important that they purchase eggs that come from Canadian farms, and 89% of Canadians say they trust the quality standards of foods from our Canadian farms.
We understand the importance of trade agreements for Canada. Our sector has never opposed Canada entering into such free trade agreements. However, our members are disappointed with the outcome of the recent CUSMA. Canadian egg farmers are particularly discouraged with the access granted to our U.S. counterparts, since no specific request was made by the U.S. egg farmers for additional market access for eggs into Canada. In fact, they sent a letter to the United States Trade Representative indicating they were happy with the status quo and the current NAFTA agreement. While Canada's supply management system remains in place, CUSMA further opens up our domestic market to egg imports. This will have a lasting impact, particularly on our young farmers who are making a start in the industry, and on the vast majority of Canadian consumers who prefer to purchase Canadian eggs.
Our primary concern is the increased market access for eggs. The final CUSMA agreement grants the addition of 11.05 million dozen eggs per year at the end of a 16-year implementation period to the United States. These concessions, which are in addition to the requirements under the World Trade Organization and the recently announced comprehensive and progressive agreement for the trans-Pacific partnership, mean a total of 51.4 million dozen eggs will come into our country from the U.S. and other parts of the world. Let's not kid ourselves. It'll be the U.S., because it's very hard to transport eggs. They're a fragile product.
The combined impact granted in these recent trade deals is equivalent to 7% of our current domestic production. This represents the entire annual production from the Atlantic provinces in Canada. That would be all of New Brunswick, all of Prince Edward Island, all of Nova Scotia, and Newfoundland, each and every year, or the per capita consumption of eggs of 2.5 million Canadians per year, forever. They would not have access to Canadian eggs. This outcome will affect generations of Canadians and will result in billions of eggs that my fellow farmers and our children will never be able to produce. It will also affect the health and continued viability of rural communities across Canada that rely on our farms for much-needed jobs and support other businesses in the communities.
Most recently, we were pleased to see that the federal budget included measures for Canadian poultry, egg and dairy farms. With the announcement, the government has taken significant steps to recognize the challenges our farmers face as a result of trade agreements. These measures also recognize the vital contributions of the supply-managed farming sector to the health and stability of Canada's rural communities.
Over the past few months, I have been engaged in dialogue with the poultry working group along with my poultry colleagues. We are very much looking forward to Minister Bibeau's report outlining the mitigation measures for the CPTPP agreement in the coming weeks. Looking ahead, we are also pleased with the government's commitment to engage in further discussions to address the impact of CUSMA on Canadian farms and our industry.
While the process to finalize the CUSMA legislation continues here in Canada, and the U.S. and Mexico work towards ratification, it is important to note that how trade agreements are implemented domestically is just as important as the agreements themselves. In the case of eggs, the administration of the tariff rate quota, the TRQ, must not disrupt the existing competitive landscape and investments in the Canadian egg industry. We're particularly concerned about the provision specific to eggs which states that 30% of the import licences for shell eggs will be made available to new importers. This provision was not included in the CUSMA for any other supply-managed commodities. In our view, the TRQ should be allocated exclusively to those who are negatively impacted by the opening of the Canadian egg market to foreign producers.
In closing, we would like to point out that we are following the WTO activities as well as the Canada-Mercosur free trade agreement closely. We anticipate that these talks will continue to intensify throughout the year, and it would be our intention to remind our government that Canada's system of supply management and the food security of our communities should not and cannot once again be used as a bargaining chip in the negotiations. This goes beyond supporting supply management.
It's time for our Canadian government to start defending the system that delivers so many benefits to our farmers, communities, rural communities and fellow Canadians, because in the end, it's not just the stability of our farms that's at stake but also the ability of our rural communities to thrive.
I thank you for the opportunity to bring our views here today. I look forward to your questions.
Collapse
View Dean Allison Profile
CPC (ON)
View Dean Allison Profile
2019-06-18 8:56
Expand
Thank you, Mr. Chair.
To our witnesses, as our chair mentioned, thanks for coming on such short notice.
I have three questions. I have a lot more, but maybe I'll get three questions in.
Mr. Wilson and Mr. Kingston, just give me your thoughts. You guys talked about being in the States recently. Where do you guys feel the Democrats are after having those conversations? The sense we get from reading the paper is that they're nowhere close. We appreciate the importance of getting this thing ratified, but the challenge is that it doesn't appear that they're anywhere near.
What arguments can be made to say that the Democrats want to give Trump a victory on this thing? Do you have any thoughts on that based on your conversations with Democrats?
Collapse
Brian Kingston
View Brian Kingston Profile
Brian Kingston
2019-06-18 8:57
Expand
We met with a number of House Democrats, particularly those on the ways and means committee, who are looking at this right now. I was surprised, frankly, with the encouraging messaging. They seem to be genuinely trying to, as Speaker Pelosi has said, get to yes. When we were there, of course, the Speaker announced the four working groups looking at labour, environment, enforcement and IP.
It's strikes me that the measures and the efforts they're putting into this are genuine. They truly do want to approve this deal, but they have to find ways to address some of those outstanding issues. Importantly, labour has not come out and endorsed it, despite the President saying a few times that they have. The AFL-CIO has not endorsed fully.
I think the wheels are in motion to approve it. Where I'm worried is on the amount of technical work that needs to be done between now and July 26, when the August recess starts. There is a lot of work to be done, and I think that even if they really want to get to yes, it's going to be difficult to get it done in that time frame. If they miss that, then the next window is in the fall, and I think there's a real chance....
I'm still very much an optimist. I would not rule out it being done before August, but I think that more realistically it may happen in early fall.
Collapse
View Dean Allison Profile
CPC (ON)
View Dean Allison Profile
2019-06-18 8:58
Expand
I get it. They're saying they'll get there, but they want to make a sea of changes. The challenge with us getting too far ahead of this thing is what changes they want. I could ask more questions on that, but I have to get to the eggs and the wine.
Mr. Pelissero, just to recap, on access you talked about an additional 11 million dozen eggs and 51 million under the WTO. Do we get reciprocal access to the U.S. based on that?
Collapse
Roger Pelissero
View Roger Pelissero Profile
Roger Pelissero
2019-06-18 8:59
Expand
We do ship some egg product to the U.S., but under supply management we basically focus on the domestic market.
When you're competing against the average-sized farm in the U.S., where you have 50 farmers who basically own 330 million birds, you're competing against a farm right now that has maybe 25 million hens. Here in Canada the average-sized egg farm is 25,000 birds. It's a vast difference in scale. However, we will look at some of those things because of the trade agreements that aren't in the tariff lines, and we look forward to possibly shipping some product to the United States.
Collapse
View Dean Allison Profile
CPC (ON)
View Dean Allison Profile
2019-06-18 8:59
Expand
Okay, good.
I only have two minutes left. The time goes by too quickly.
Mr. Paszkowski, I understand that you guys are saying you support CUSMA, in terms of how it is. The challenge you have is around the WTO challenge right now with Australia. As you said, we've seen over 400 wineries grow in the last decade or so, since we had a chance to look at VQA being excise-free.
Talk to us about the concern. This is a legitimate concern about what may happen under WTO in terms of our wine market. Explain that one more time.
Collapse
Dan Paszkowski
View Dan Paszkowski Profile
Dan Paszkowski
2019-06-18 9:00
Expand
The concern we have with the WTO challenge is that they have come after us on a number of different measures, both federal and provincial, but they've clearly stated to us that there are three measures that are of significance to them. Number one is getting access to grocery in British Columbia. British Columbia has now offered them a letter that will take place and that follows suit with the side letter that is in CUSMA. The second piece would be access to grocery in Ontario. As all of you know, the Ontario government is amending its liquor system and will provide access for wine and beer sales in grocery and convenience stores, so we're currently waiting for the Ontario government to provide a side letter to Australia. We anticipate that will be coming soon. The third part of the equation, which the Australian industry has told us, is that if the federal government repeals simply its legislative portion of the excise exemption, they would drop the WTO challenge in its entirety.
It's critical to us to have that dropped because there's a lot of risk going through a panel process, which could devastate the industry. As I said, all of the things that we have protected in CUSMA would be lost if we were to lose a WTO panel, so it's a significant risk for us. We're hopeful that the federal government will take our advice and offer that to Prime Minister Morrison when Prime Minister Trudeau meets with him at the G20 meeting at the end of this month. That would bring this panel to an end.
Collapse
View Karen Ludwig Profile
Lib. (NB)
Thank you, Mr. Chair.
Thank you to all the witnesses who are here today.
Mr. Wilson, as you well know, my riding is New Brunswick Southwest, which borders the state of Maine. I'm wondering if you could speak directly to the impact, opportunities and maybe challenges that the ratification of CPTPP, CETA and soon to be CUSMA have and will have for Atlantic Canada.
Thank you.
Collapse
Mathew Wilson
View Mathew Wilson Profile
Mathew Wilson
2019-06-18 9:02
Expand
I think that, in your riding, companies like Irving, for example, are pretty significant employers. Obviously, they don't operate just in New Brunswick. They have massive operations across New England and in the border states. They move products back and forth constantly, whether it's timber coming into processing plants in New Brunswick to make paper towels or timber going back into the United States to make other products, plus a wide range of different consumer products that they're making. Anything that can modernize and streamline those operations to reduce by even a fraction of a percentage the movement of each one of those goods across the border.... You're talking about thousands of trucks a month that are crossing the border just for one company alone. If you can remove even a fraction of those costs for them, it's a significant cost savings that gets passed on to the consumer and allows the companies to invest more in their operations in Canada and the United States. That will be hugely important.
A lot of people think that we have to go to Europe and to Asia, and trade diversification certainly is really important, but for most Canadian companies—look right across the country and at a lot of small companies—very few of them even export. Only about 5% to 10% of Canadian companies export. While it's great to look at markets like China and Europe and the CPTPP, those are great markets but the U.S. is the best market to go to. It's the wealthiest market in the world. It's right next to us. In your riding, it's within a couple of footsteps across a bridge that I've crossed several times. We can't forget about the importance of that market.
As part of this agreement and what we're trying to do, and similar to what some of the other witnesses here said, this isn't just about building on, allowing the Irvings and companies like that to do more business. It should be about how we help more SMEs get into the U.S. market. That's why things like the SME business chapter and growth chapter—they're in the new CUSMA—can help those companies, whether they're Irvings or small chocolate factories that are right on the border with Maine.
Collapse
View Karen Ludwig Profile
Lib. (NB)
I'll just add to that, Mr. Wilson.
This committee has studied the small to medium-sized enterprises, how to make trade real for them and also how they could take advantage of that.
When we were in Washington on the steel and aluminum tariffs, one of the messages that definitely resonated with me was when one of the members of Congress said that with regard to President Trump, his sensitivity is, similar to our egg farmers, leaving people behind. So, anytime we can pull people forward, I think that's an important element.
You mentioned the business traveller visa. If any one of you would like to speak to that as well.... What are the benefits of the reduction in red tape for the business traveller, considering how integrated our market is in North America?
Collapse
Mathew Wilson
View Mathew Wilson Profile
Mathew Wilson
2019-06-18 9:05
Expand
I'm happy to talk about it since I was the one who raised it.
Here's an example that I've heard from companies in the past about their repair person coming across the border. When you buy machinery or equipment, and you buy from an American supplier, for example, there are typically regional specialties and so the repair person will travel back and forth to fix a piece of machinery. Those people get to the border with tools and equipment and often get stopped because they're carrying goods into the country, That occurs coming into Canada or going into the United States. The simpler we can make that and the more clear we make it to border officers that this is supporting integrated trade, it's supporting jobs on both sides of the border, it isn't stealing someone's job, it's actually supporting jobs, the better off we are.
In the current agreement they tried to remove them, I think, early on in the negotiations. If they had removed those, people like us who have had to go down for meetings in Washington.... For meetings that Brian was in last week, he would have had to get a visa to go into the United States, which many other countries have to do. Just think of the millions of people who cross the border almost on a daily basis who do that type of work. The border would have been so congested.
It wouldn't have been just for business travellers like us going down. It would have been the repair people, but it also would have been the goods that would have been stuck behind all those people as well. The cost of eliminating that type of visa would have been massive on our economy and felt right across all sectors.
Collapse
View Karen Ludwig Profile
Lib. (NB)
Great, thank you.
To our egg farmers, you mentioned that 88% of Canadians would like to buy from Canadian farmers. What is the value of actually having a maple leaf on Canadian eggs, so that when I go to the grocery store I know they're from Canada?
Collapse
Dan Paszkowski
View Dan Paszkowski Profile
Dan Paszkowski
2019-06-18 9:07
Expand
Yes, it is quite valuable. On social media, when there are imports coming in.... Consumers are eating more and more eggs all the time. They'll take a picture showing the Canadian flag and then when there are American eggs which say "Product of U.S.A.", it's like.... They really wish they didn't have to buy eggs that are a product of U.S.A., but they still need some eggs to cook and bake with. We can't put a dollar amount on the value, but Canadians really want Canadian eggs. That's the overwhelming....
Collapse
View Tracey Ramsey Profile
NDP (ON)
View Tracey Ramsey Profile
2019-06-18 9:07
Expand
Thank you so much.
Thank you to our witnesses. It's a diverse panel, and it's nice to see different interests being represented, because there are certainly different sides to the CUSMA and the way that Canadians are feeling about it.
I will start with the egg farmers.
If I understand you correctly, you said the amount of market share that's going to be open would represent the entire annual egg production from the Atlantic provinces.
Collapse
View Tracey Ramsey Profile
NDP (ON)
View Tracey Ramsey Profile
2019-06-18 9:08
Expand
People in rural ridings like mine wouldn't have farms to go back to, and those farms that support the local economies would suffer as well in small towns like the ones I represent. Also the vintners, I have vintners in my riding as well.
I want to talk to you a little bit about the TRQ. This provision that has now been included in the agreement for eggs says that 30% of the import licences for shell egg imports will be made available to new importers. I know this was a big issue previously, under the cheese quota in the CETA. I wonder if you can speak to the importance of that coming to actual egg farmers and those who are being impacted versus being dispersed across retailers and everyone else in that space.
Collapse
Roger Pelissero
View Roger Pelissero Profile
Roger Pelissero
2019-06-18 9:08
Expand
Mr. Chair, if I may, I'm going to pass that question over to my director of international trade. She is far more versed on it than I am.
Collapse
Judi Bundrock
View Judi Bundrock Profile
Judi Bundrock
2019-06-18 9:09
Expand
As Roger was mentioning earlier, the way in which trade agreements are implemented is almost as important as the wording in the agreements themselves. We were a little bit surprised to see the 30% provision, especially because we were the only commodity that actually had that provision included. When we explored further with the negotiators what was behind that, we saw it really was the U.S. actually indicating that it wanted to have more access to eggs in Canada.
It's interesting, because of course, as Roger also mentioned, we have a very good relationship with the United Egg Producers in the U.S., and they have indicated that they're happy with the status quo and, as Roger mentioned, they did send a letter to the USTR asking for status quo. I think really the concern with regard to the 30% is that the 30% really should go to those who are being impacted by the trade agreement—graders or processors. If it were to go to a retailer, ultimately it would mean more U.S. eggs on Canadian grocery shelves. It would further perpetuate the problem or the issue that Roger was also talking about, and as he said, we know that Canadians want Canadian eggs, and therefore allocating that 30% to a retailer would perpetuate the issue.
It also has an increased cost on Canadian egg farmers. If the eggs go directly onto the shelf, they displace eggs that would go onto the shelf from a Canadian perspective. It's far better to have those eggs directed to processing. Actually, there's wording in the agreement that says the imports should be directed primarily to processing.
Collapse
View Tracey Ramsey Profile
NDP (ON)
View Tracey Ramsey Profile
2019-06-18 9:10
Expand
One of the other things that's concerning around supply management is regulatory oversight that the U.S. is seeking and has achieved in dairy. I'm wondering if the same is true in terms of your egg producers. Really, this is woven throughout this whole chapter 28, when we're talking about regulatory co-operation. The fear is that not just corporations but the U.S. will have a say over any changes that could be made to our supply-managed system.
Have you looked at that in more detail and is that a concern of yours? If Canada tries to change our system or look at our system differently, will the U.S. have the oversight to change that?
Collapse
Judi Bundrock
View Judi Bundrock Profile
Judi Bundrock
2019-06-18 9:11
Expand
At this point in time, there were no attempts made at taking a look at how the egg industry works in Canada from the American point of view.
We understand the concerns from our dairy farmer colleagues, obviously. We're following it very closely for the reasons you pointed out, that it could have some downstream impacts on how the Americans feel looking at either our system of supply management or really any other domestic tool that we use. That really isn't any of their business.
Collapse
View Tracey Ramsey Profile
NDP (ON)
View Tracey Ramsey Profile
2019-06-18 9:12
Expand
Right. This speaks to our sovereignty, which is what we've been hearing from farmers. It's the concern around sovereignty and our ability to manage our supply management system.
My next question is for the vintners.
Dan, you've painted a picture here of a lot of losses that were incurred by vintners in signing the original NAFTA. The amount of imports now that come in, the percentage of those imports.... Could you talk about the importance of dropping this escalator and supporting our vintners?
Collapse
Dan Paszkowski
View Dan Paszkowski Profile
Dan Paszkowski
2019-06-18 9:12
Expand
It's absolutely critical. It's the foundation of the entire Canadian wine industry as it stands today. Australia tells us it will drop the panel process. If we simply drop the legislative portion of increasing excise duties every year, the Canadian wine industry will survive. If we allow the WTO panel process to go through, we have no idea what we'll look like at the end of that process.
We do know that the measures currently protected under CUSMA will be at risk and at the discretion of whatever the panel decides to do. It will rule in a report in February with a final report in March or April. There's a lot of risk and there are many Canadian vintners right now that are not investing in their industry. It's a wait and see approach. We could see hundreds of wineries go out of business.
Collapse
View Peter Fonseca Profile
Lib. (ON)
Thank you, Mr. Chair.
We commenced this meeting by talking about how the U.K. is looking to engage with us and around what it's doing with trade. I believe the reason for the engagement, and U.K. representatives have been here a number of times, is they've seen through the Canadian lens the way we've negotiated these trade agreements.
We have to look back even prior to President Trump becoming president, when he talked about ripping up these trade agreements. One of the first things he did as soon as he came into office was rip up the TPP.
Here in Canada we've taken a team Canada approach. I want to thank all of the stakeholders who are with us today, all of the witnesses, for being part of that team.
I'm going to start with Brian.
The approach we've taken over these number of years to get us to this point, to stop the President from ripping up the NAFTA, could you tell us what you see in the success of that and is that something with which we should continue?
Collapse
Brian Kingston
View Brian Kingston Profile
Brian Kingston
2019-06-18 9:14
Expand
The approach that's been taken by government over the past few years has been very positive. This has been a wild ride, to say the least. Nobody expected that we would have this NAFTA threat. The way it's been dealt with has been fantastic. I must thank Steve Verheul, our chief negotiator, for taking a really inclusive approach and consulting widely with Canadians and keeping people informed in a very transparent process throughout.
On top of that, the diversification efforts that successive governments have been initiating in Canada are absolutely critical. We are arguably the best platform in the world now to export from. We have access into Europe. We have access into Japan plus the NAFTA 2.0. The Canadian trade agenda is truly a success. Now it's up to business, frankly, to take advantage of these deals and make them work.
Collapse
View Peter Fonseca Profile
Lib. (ON)
Looking at the whole political spectrum, I have a quote here from Brian Mulroney who said, “I commend all—from the Prime Minister down—who contributed to writing this vital new chapter in the ongoing drive for greater Canadian strength and prosperity.” I can take that from the Liberal side, labour, etc. They have all spoken favourably about the approach we took, where we've come to and the deal we've been able to reach.
Mr. Kingston, you talked about the uncertainty and that it would be reducing business investment by about 2.5%. Can you dig a little deeper into that number and explain that to us?
Collapse
Brian Kingston
View Brian Kingston Profile
Brian Kingston
2019-06-18 9:16
Expand
Sure. That's a Bank of Canada projection from their macro model, but we have numerous examples from member companies. Throughout this process, we've been thinking of doing things, for example, upgrading a manufacturing line. We decided to hold off until there's more certainty in these negotiations, because 90% of the product that I produce goes to the U.S. If suddenly we were facing tariffs, maybe this is not the place to be exporting from.
There are examples like that across sectors where companies were just holding back on some of their investment plans to see how this all panned out. We're hoping that, with this agreement ratified in all three countries, you'll see this unleashing of investment as companies now have the certainty to go ahead and essentially go back to business as usual.
Collapse
View Peter Fonseca Profile
Lib. (ON)
That highlights how important this is and that we need to really get this done.
The economy here has been doing.... We have the lowest unemployment rate in 40-plus years. Over one million jobs have been created over the last three and a half years.
Mr. Wilson, since you're with the manufacturing sector, maybe you can share with us some of the numbers that you've experienced. Adding on to that is the 2.5% lift you may get from CUSMA. What would that mean?
Collapse
Mathew Wilson
View Mathew Wilson Profile
Mathew Wilson
2019-06-18 9:17
Expand
First off—and we were talking about this before the committee started—last year was a record year for output for manufacturing in the country and for value-added exports, which is great news.
As we discussed, the challenge is that we're still not clicking on all cylinders. We're behind what the U.S. is doing, for example, and a lot of that comes down to investment. We've seen a significant lag in investment in this country over the last number of years. It tends to be that economic growth follows investment, so measures in the fall economic statement were critical. For example, with the ACCA measures, we saw an immediate kick in investment in Canadian manufacturing as soon as they were introduced, which we also saw in previous governments when they were introduced, and those are critical.
I'm optimistic that the elimination of steel and aluminum tariffs will go a long way to settling some of the uncertainty. That's maybe even bigger than ending the ratification of Bill C-100 and CUSMA overall between the three countries. That was a significant drag. That was obviously a critical step to even get us here today. Again, I commend the negotiators and the team inside the government. You got rid of that because that was the critical step that was weighing things down.
From an employment perspective, things are great, but the biggest problem we have is a lack of skilled labour in this country with skills levelling at all levels of the company. If we don't start solving some of the skills gaps that we have, that investment is going to dry up entirely.
Collapse
View Francis Drouin Profile
Lib. (ON)
Thank you very much, Mr. Chair.
I am not a full member of this committee. I am here today for people from sector 10 such as the Souligny family, the Bourdon family and the Laviolette family, who are major egg producers in my riding.
Mr. Pelissero, thank you for standing up for egg farmers in Canada.
Over the past 10 years, it's been a stressful time for farmers in the supply management sector. We would be misleading Canadians if we didn't say this.
The first question I want to ask you is about the market outlook for egg farmers in Canada. Does it look good right now in terms of the growth sector in Canada?
Collapse
Roger Pelissero
View Roger Pelissero Profile
Roger Pelissero
2019-06-18 9:20
Expand
Our market outlook is strong. We've seen phenomenal growth in egg consumption. We have more Canadians eating more eggs than ever before, but that doesn't offset what we've given away in the trade agreement.
Farmers are investing more, which means buying more supplies, buying more items at your local hardware store and employing more people. In fact, there are about 17,600 jobs across Canada that are supported by egg farming in Canada, which contributes $1.3 billion annually to our GDP. Our growth outlook is good, and our average egg farmer is getting much younger, not grey-haired like me, but looking more like you.
Collapse
Roger Pelissero
View Roger Pelissero Profile
Roger Pelissero
2019-06-18 9:21
Expand
The average age is getting below 40, so it's great for the next generations that come back to the farm.
Collapse
View Francis Drouin Profile
Lib. (ON)
In your opening statement, you talked about the importance of managing the TRQs.
Ms. Bundrock, you've also touched on the importance of eggs going to processors versus eggs going to table. I've heard this from one of your former chairman, Mr. Laurent Souligny. He said that whatever comes in, just make sure it goes towards processing, and that will help them tremendously.
Can you explain why that's important?
Collapse
Roger Pelissero
View Roger Pelissero Profile
Roger Pelissero
2019-06-18 9:21
Expand
Well, I think the first reason is that it is a shell egg, and that goes to one of the panel's questions earlier regarding Canadians seeing that “Product of U.S.A.” label on a box of eggs. If it's for processed products, such as in a breakfast sandwich sold by a retailer, that doesn't highlight it as much, whereas if it's directly on the shelf to the consumer, they're seeing it and saying, “Oh my gosh, I really didn't want that American egg, but I still want eggs.”
Maybe, Ms. Bundrock, you could expand a little bit more on the TRQ aspect of that side.
Collapse
Judi Bundrock
View Judi Bundrock Profile
Judi Bundrock
2019-06-18 9:22
Expand
The processing market in Canada has been growing phenomenally, and so there is definitely a need for eggs for processing. It only makes sense that any additional eggs we're required to import would be directed to processing. That was taken into consideration in both the CPTPP and the CUSMA. Both agreements have wording that I would describe as not as strong as what's in the current NAFTA, because there are actual percentages associated with it. Therefore, there are de facto caps. Both the CUSMA and CPTPP have wording that says the eggs should be directed in priority, or similar language, to processing.
Our concern really is that, when the agreements are implemented, that actually be what happens in practice. We don't feel that the interim allocation for CPTPP for eggs is as strong as it could be—even though currently no CPTPP members can export eggs although we expect it will happen—and therefore, we're taking part in the government consultation on all TRQs. What we would like to see is some really strong language so that the spirit of the agreements, which says that the eggs should be directed in priority to processing, is actually what happens when the agreements are implemented.
Collapse
View Francis Drouin Profile
Lib. (ON)
That's great. Thanks.
Other than the TRQ and managing that TRQ properly, what other mitigation strategies are the egg farmers looking at to ensure that you have growth and you mitigate the impact from some of the trade agreements?
Collapse
Roger Pelissero
View Roger Pelissero Profile
Roger Pelissero
2019-06-18 9:24
Expand
We're looking at continually investing in the industry. We've had phenomenal growth, but that won't offset, as I said, what's given away, because we know what's given away under a trade agreement is given away forever. As we continue to move in that manner, we have young farmers who are investing. When we look at trade agreements, there always seems to be something on the horizon, so there is that leeriness with regard to how much we should invest, whether we should invest it now, or when we should invest.
Having the trade agreements ratified and coming into effect kind of puts where we are to rest, and I think having that will give confidence to the next generations of farmers out there to invest. Similar to the situation of my neighbour here with the vintners and the winemakers, agriculture is waiting to see what happens, because a considerable amount of money is being invested by family farms. I think having trade agreements sealed and saying, “Okay we're done” and now we're defending supply management and not just supporting it, we'll have a different answer.
Collapse
View Randy Hoback Profile
CPC (SK)
View Randy Hoback Profile
2019-06-18 9:25
Expand
Thank you, Chair. Thank you, witnesses, for being here this morning.
I'm going to start by saying that the Conservatives are going to support this deal. We've already indicated that. We worked with the Liberals all the way through this and we've had our ups and downs, but we still have lots of concerns. We're still hearing a lot from industries within Canada about concerns that are coming up.
I'll use the example of fabricated steel. They're looking at tariffs coming on August 1, until USTR will decide, and then we'll see what that looks like. We still have no resolution on softwood lumber; that was not addressed in NAFTA. We still have buy American provisions sitting there in the background, which are going to have implications for our industries.
How do you guys square that? I know you want stability and bankability, but in the same breath, are you really getting that in this deal?
I'll start off with you, Brian, and then go to Mathew.
Collapse
Brian Kingston
View Brian Kingston Profile
Brian Kingston
2019-06-18 9:26
Expand
Thank you.
There's no doubt that our overarching recommendation to government was to do no harm, which they were successful in doing, but we also had a long list of offensive priorities that we were hoping to have addressed, including buy American, clearly, and labour mobility, which was mentioned earlier.
While we protected our existing labour mobility provisions in NAFTA, we were kind of hoping to go beyond that, so there are definitely areas that we could have improved upon. The reality is we were dealing with a U.S. partner that wasn't really interested in taking a more ambitious approach to North American trade, and it was all about pulling back preferences, so I have some sympathy with the fact that it wasn't necessarily possible with this administration. There's no doubt there are areas that can be improved, and that's why we hope we can still work away at things like the competitiveness chapter and regulatory co-operation, because they are not going away.
Collapse
Mathew Wilson
View Mathew Wilson Profile
Mathew Wilson
2019-06-18 9:27
Expand
Maybe I'll just mention, on the buy American government procurement, that was, I think, the biggest missed opportunity in this—and not to be critical. Frankly, the offer from the United States was to eliminate all of it and be backwards from even the WTO commitments that are there, so we secured access that was better than the WTO commitments.
It is disappointing that the U.S. wouldn't look to fully modernize in the way I think Canada wanted to. Certainly, that was on.... If you'll remember back two years ago, I think, when the minister laid out Canada's six recommendations, or six priorities or principles for negotiations, procurement was one of the top six, which we were very pleased to see. Given what the U.S. was asking for, keeping it exactly what it was, that was pretty good.
Now what's really important, and certainly we're working with provincial governments in this way, is to look at a state and provincial level. A lot of the really harmful activities that are going on in buy America are being done at local levels now, which this deal wasn't going to deal with anyway, unfortunately. We're working with several provinces now trying to get some of those dealt with at a local level. It's bad. It's bad for business, and bad for taxpayers overall. We want to see the free movement of those goods.
Collapse
View Randy Hoback Profile
CPC (SK)
View Randy Hoback Profile
2019-06-18 9:28
Expand
What concerns me, like fabricated steel, the government's been preaching about how it got rid of the tariffs and everybody thinks they're all gone, but what they've really been telling us is that these guys have been trying to meet with this government to address this. They've been down in the U.S. a substantial number of times, and there's no response. Nobody's mentioning it, and nobody's highlighting it. Everybody's closing their eyes, plugging their ears, saying, “We'll get through this and then we'll deal with that later.”
I also have to deal with the fact of the tweets. I almost think EDC needs to offer insurance for tweets because of the unpredictability and instability those create. How do you take that out of the marketplace? Maybe that's an option they should look at.
Dan, you talked about the vintners and the excise tax. How many more times do you have to say that? This is something we heard right before the budget came into implementation, and we've heard it year after year. It's nice to see B.C. making movement on the grocery stores, because that was a big issue. I think we would have lost at WTO, so it needed to move forward on that.
What else do you think we need to do to get this government to understand? Maybe a new government will actually understand that better. What else can be done there? Is there compensation coming if you should lose that WTO case because it didn't react accordingly?
Collapse
Dan Paszkowski
View Dan Paszkowski Profile
Dan Paszkowski
2019-06-18 9:29
Expand
Yes, it's a major preoccupation for us. As I said, we worked really hard with our government, and with the opposition, and with negotiators to get through CUSMA. We protected a lot of measures in CUSMA, as we did in CETA. Everything is at risk right now. Fortunately, we know exactly what they want. When budget 2017 came out, the Europeans said, “That is a major problem for us.” The Americans said, “It's a major problem for us.”
Collapse
View Randy Hoback Profile
CPC (SK)
View Randy Hoback Profile
2019-06-18 9:30
Expand
I have 20 seconds.
Roger, what did they offer you for compensation, in light of the fact that you are one of the losers in this deal? You are giving up market access that you normally have. What is there for the losers, the people who are not getting or maybe are more a victim of a deal like this?
Collapse
Roger Pelissero
View Roger Pelissero Profile
Roger Pelissero
2019-06-18 9:30
Expand
We're waiting for the announcement from the minister regarding the CPTPP. I guess we'll have working groups as we move forward on that new agreement, CUSMA. We'll just have to—
Collapse
View Randy Hoback Profile
CPC (SK)
View Randy Hoback Profile
2019-06-18 9:30
Expand
There was nothing pre-negotiated, then.
Mr. Roger Pelissero: Not really, no.
Mr. Randy Hoback: It's election year. You should be good.
Collapse
View Terry Sheehan Profile
Lib. (ON)
View Terry Sheehan Profile
2019-06-18 9:30
Expand
Thank you very much to all our witnesses for coming in today.
I'll start with Mathew from the Canadian manufacturers association.
You made a fairly powerful statement. You felt that the removal of the section 232 tariff onto itself was more important—and I'm going to paraphrase—than CUSMA per se, itself, as well as many other things.
You know I'm from Sault Ste. Marie. Algoma Steel and Tenaris are there, as are a whole bunch of other small and medium-sized manufacturers. You really can't find too much in Canada that isn't manufactured without steel or aluminum in some fashion.
Perhaps you could expand on the importance of removing the section 232 tariff, the strategy that was employed, your thoughts about it and how we arrived at that, as well as the fact that President Trump had.... A lot of people think that the section 232 tariff maybe was just on Canada, but it's really a world tariff, if you will.
He had also mentioned about applying the section 232 tariff on auto. If that happened, what would have happened?
Mathew.
Collapse
Mathew Wilson
View Mathew Wilson Profile
Mathew Wilson
2019-06-18 9:32
Expand
Well, I'll maybe start with where you ended. If steel was the appetizer, I think auto would have been the full course. It would have sunk us, frankly, if that had been put in place. That's why those side agreements that were signed back in the fall were so critical: to make sure that we were exempted from it. Now, it's not a full exemption, obviously, and the administrative burden that could come with that could be significant for the companies involved. They're not even sure how they would administer it, because at some point you have to trace what you're sending in order to be able to fall underneath the requirements that were set out in that side agreement.
The other thing I would say on the agreement on section 232, which was made very clear to me by several of our steel members, including Tenaris and Algoma, is that it is important to understand that it is an agreement and not a full written legal text, but even that in and of itself is a significant step forward, because it wasn't just the fabricators themselves that were hit by it. Almost every single manufacturer in the country was being hit by the tariffs on the importation or exportation of those products, depending on what you are actually making.
The costs were escalating pretty substantially. You're talking about 30% to 40% in input cost increases in a very short period of time. Those aren't costs that they can pass along to their customers. They were starting to lose business. They had pretty full order sheets in terms of producing, but once they go into the next cycle for getting the next round of investments in, say, auto parts fabrication, for example, which would be shipped to the United States, they would have to start factoring in those additional costs on all those bids, and the chances of them winning those bids, even with a depressed Canadian dollar, would be pretty slim.
I know that a lot of the focus was put on the big producers of the steel, but the really big impact in many ways was on the user of the steel. It's not that the big producers weren't impacted by that. It clearly was discussed a lot at length in public, but a lot of the users of the steel, both for import and for export, had significant cost increases that were a real problem for production in both the short term and the long term. That's why getting rid of those, even in an “understanding”—quote, unquote—was critically important to move the economy forward.
Collapse
View Terry Sheehan Profile
Lib. (ON)
View Terry Sheehan Profile
2019-06-18 9:34
Expand
Some of the people early on had suggested settling for a quota. As well, the Ford government actually even stated that we should have removed our counter-tariffs as some kind of gesture to the United States that.... I don't know. I can't follow the logic, actually. In going about our counter-tariffs in particular, how successful were they, in your mind, in getting rid of section 232?
Collapse
Mathew Wilson
View Mathew Wilson Profile
Mathew Wilson
2019-06-18 9:34
Expand
Well, I think it brought it to the attention of lawmakers in the United States, particularly those who have influence in different sectors. I think it was good. If you don't retaliate.... Look, we weren't in favour of slapping tariffs on American imports to Canada, but at the same time, we were in favour of retaliation, for the same reason that we're in favour of Canada slapping on restrictions of U.S. exports into government procurement markets: because we can't get into their markets.
We believe in full reciprocal market access. If you sign a free trade agreement, and I don't care what sector it's in, you should have free and unfettered access to those sectors. Government procurement is one. Steel is another. Potentially, auto—let's hope not—is another. While we don't like the idea of tariffs, we like the idea of the reciprocal action that Canada was willing to take. Yes, it causes pain, but at the same time, if you don't do it, you don't get their attention.
Collapse
View Terry Sheehan Profile
Lib. (ON)
View Terry Sheehan Profile
2019-06-18 9:35
Expand
Thank you.
Brian, you as well as Mathew mentioned your support for Minister Morneau's Bill C-101. In particular, we're asking for unanimous consent so that we can get it through expeditiously. Can you explain to this committee the importance of Bill C-101 as it relates to getting back to free trade?
Collapse
Brian Kingston
View Brian Kingston Profile
Brian Kingston
2019-06-18 9:35
Expand
Yes. On safeguards, the number one thing we heard in our various meetings with the U.S. administration and officials was this ongoing concern around Canada's treatment of transshipment. It was never defined but was always raised, so it's very important that we're taking measures to address perceptions of transshipment even if there is no clear evidence that that is happening. I think what the government has done on steel and aluminum is doing that, is sending that signal, and it will help the industry and, hopefully, insulate us from future U.S. actions.
Collapse
View Colin Carrie Profile
CPC (ON)
View Colin Carrie Profile
2019-06-18 9:36
Expand
Thank you very much, Mr. Chair, and I thank the witnesses for being here. I have so many questions that it's hard to know where to start.
Brian and Mathew, I've been doing a lot of round tables with manufacturers. I hear over and over again that some companies are right at the precipice of maybe closing up or moving their business. One guy put it to me this way. He said, “Look, Colin, I can handle good policy and I can handle bad policy, but I can't handle the uncertainty.”
Even though this is not a perfect deal and, as Randy was saying, there are still issues with fabricated steel, buy American provisions and softwood, what do you think the consequences would be if we weren't able to ratify this as far as that uncertainty question goes?
Brian, perhaps you could start.
Collapse
Brian Kingston
View Brian Kingston Profile
Brian Kingston
2019-06-18 9:37
Expand
Our worry is that if this deal doesn't get ratified, and particularly, if the President feels frustrated with Democrats, he may decide to withdraw from NAFTA. I still think there's a very real risk of that happening.
It then becomes an open question of what we return to. There's a legal debate under way about whether we would go back to the Canada-U.S. FTA or go to nothing at all. We know the U.S. business community is prepared to launch legal challenges in that event to try to delay it, but I would not downplay that risk. It's still a huge concern for business. Then we'd revert to WTO tariffs, and that would be disastrous for the Canadian economy, for companies that depend on access into the U.S.
That uncertainty continues to hang. That's why we want to see Canada ratify, Mexico ratify, to get this behind us and get into 2020 with, hopefully, no discussion of North American trade in the presidential elections.
Collapse
Mathew Wilson
View Mathew Wilson Profile
Mathew Wilson
2019-06-18 9:38
Expand
The WTO bound rates for tariffs really aren't that high, so you'll hear about the impact being very minimal. I heard it out of Global Affairs when NAFTA was first being renegotiated, to not worry, that it's a small amount, 1.5% on average or something like that.
That's not the problem. The problem is all the trade rules that come with NAFTA. Take, for example, the business visa that you talked about earlier. If that goes away, we're in very deep trouble.
It's not just the bound rates and the tariffs; it's all the other uncertainty, the rules we trade by. That's what matters.
Collapse
View Colin Carrie Profile
CPC (ON)
View Colin Carrie Profile
2019-06-18 9:38
Expand
That's what I'm hearing over and over again, that we have to get some of that certainty back.
Can you comment on the relationship with the United States? Mathew, you said if we have a free trade agreement, we should have a free trade agreement. But I've heard some complaints that the U.S. is going towards managed trade. We've seen the use of tariffs, quotas and these types of things.
We didn't have that with the original NAFTA. In my community, of course, there's the auto sector, and the quota situation. There are questions about that and what it means.
Are you seeing a move towards this institutionalization of tariffs and quotas with the United States? What does that mean in our trading relationship?
Collapse
Mathew Wilson
View Mathew Wilson Profile
Mathew Wilson
2019-06-18 9:39
Expand
What we hear a lot about is unfair trade with the United States. I think we've done a decent job—and we can always do better—at talking about how Canada is not that. It's very different in Canada—and Mexico, in the same way—from what their trade relationship is with Vietnam, China, Brazil, Russia, eastern Europe or anywhere else. We are a level playing field with them. We build stuff with them to compete against all those countries together.
I think that's what separates us from everyone else. When we hear these conversations about managed trade, controlling trade, we need to get inside that discussion and say, “We have exactly the same problems you have. We are getting stuff dumped into Canada from a lot of those same markets. How do we work together, not to protect our markets, but to be treated fairly by those other countries?”
That's why it's so important to get that competitiveness chapter inside the CUSMA going. It's going to look at those global problems that manufacturers, the integrated economies, have and how we can work better together to compete against the rest of the world.
I don't see it as a problem with Canada, but it could be a significant problem if we don't stay on top of that discussion in terms of the integrated nature of our economies and how important it is that we work together on those problems.
Collapse
View Colin Carrie Profile
CPC (ON)
View Colin Carrie Profile
2019-06-18 9:40
Expand
I agree. You mentioned this coordinated trading bloc. I think for decades we've been moving towards more integration, regulatory co-operation. There was a feeling for a while that Canada was on team North America, and with these section 232s and stuff, the feeling was that we weren't.
Getting on to that question about the section 232s, I believe there was $2 billion collected, tax dollars, with the tariffs, and it hasn't been disseminated. It was supposed to help out the companies that were really affected.
Can you comment on what should be done with that money and who it should be going to?
Collapse
Mathew Wilson
View Mathew Wilson Profile
Mathew Wilson
2019-06-18 9:41
Expand
It should be going back to the people who paid it, for example, the steel producers and the people who are making the steel. That's where it was supposed to go in the first place, to help them invest in technology and production capacity.
Collapse
View Tracey Ramsey Profile
NDP (ON)
View Tracey Ramsey Profile
2019-06-18 9:41
Expand
It's so difficult to do something in three minutes.
This renegotiation is a once-in-a-lifetime opportunity. In my neck of the woods, in southwestern Ontario, we saw over 400,000 manufacturing jobs bleed out of our country over the course of NAFTA. It has had a very real impact on people, on my community, on people who work in the auto sector, as well as in other manufacturing. There's a lot of anxiety right now about what is happening around this deal, and the things that, quite frankly, the Liberal government won't even discuss with people are what's causing a lot of it.
I want to talk a bit about enforceability and the work that's being done in the States around the Democrats. We need effective enforcement tools, not just for labour and the environment, which are certainly incredibly important, but across the entire agreement.
If we don't have enforceability, which we have seen has been very poor in the original NAFTA, has not worked well, has resulted in a lot of both job and economic losses, we really put ourselves at great jeopardy. I applaud the work the Democrats are doing in Congress to address this critical issue for the entire agreement.
My question is whether you think there's value in waiting for the Democrats to achieve improvement in enforceability, and then Canada being a party to that?
Collapse
Brian Kingston
View Brian Kingston Profile
Brian Kingston
2019-06-18 9:43
Expand
You've hit the nail on the head with enforceability. That is the critical issue that the Democrats are worried about. They talk about labour and environment, but it's all about being able to enforce the commitments in the agreement.
I've just learned that Mexico has 700,000 collective bargaining agreements, and while they've made changes, really important changes to enhance labour rights in the country, the Democrats are rightfully worried that once this agreement is signed they will lose any leverage to make sure that those 700,000 collective bargaining agreements are actually updated the way they're supposed to be done.
I don't think we necessarily need to wait, though, for the Democrats' process to play out. We should watch it over the next couple of weeks, but we can still move ahead and ratify, because you can address the enforcement issue through side agreements, side instruments. There are ways to make sure that chapter 31, the state-to-state chapter, is enforced and their panel-blocking can occur. It can be done, and I think—
Collapse
View Tracey Ramsey Profile
NDP (ON)
View Tracey Ramsey Profile
2019-06-18 9:43
Expand
However, I think the issue, which the Democrats have raised as well, and so have New Democrats here in Canada, is the fact that the enforceability of side agreements, the eligibility of those, is quite weak. We saw that in the original NAFTA, that when things are in side agreements, we haven't been able to enforce those provisions. That's the fear, that if we add on, after the fact, in side agreements, we won't be able to actually enforce them at all.
Collapse
Brian Kingston
View Brian Kingston Profile
Brian Kingston
2019-06-18 9:44
Expand
It's a legitimate fear, given the experience of past agreements, but I've seen various proposed texts that would address that and make sure that the agreement itself is enforceable. I think it can be done. There are creative ways to do it and we would support that.
Collapse
View Richard Hébert Profile
Lib. (QC)
View Richard Hébert Profile
2019-06-18 9:44
Expand
Thank you very much, Mr. Chair.
I thank the witnesses for coming and sharing some very interesting perspectives on this issue.
Under our government, over the past three years, one million new jobs have been created and the unemployment rate has fallen to its lowest level in 40 years. When Mr. Trump came to power, he said that NAFTA was bad and that it had to be completely eliminated. He was even talking, with great vigour, about destroying supply management. However, after very intense negotiations, we succeeded in maintaining supply management. We are one of the only countries in the world that still benefits from this protection for our producers. Not everything is perfect, but at least we have been able to keep a good part of this protection.
I would like to ask a question of Mr. Kingston, who, with his colleague Mr. Wilson, gave a very eloquent speech this morning.
This agreement is about to be signed. We all hope it will be. However, if it were not signed, what impact would this have on jobs, the unemployment rate and wealth creation?
Mr. Kingston, you have the floor.
Collapse
Brian Kingston
View Brian Kingston Profile
Brian Kingston
2019-06-18 9:45
Expand
If this agreement is not signed, we definitely expect it will have an impact on investment, first of all, because companies that were planning to invest and use the accelerated measure that was introduced in the fall economic statement won't do so if their number one market is the U.S. and they're suddenly concerned about their ability to access that market.
If you have a pullback in investment, the immediate consequence is drops. It would be negative for the unemployment rate in Canada.
As much as we've had these fantastic efforts to diversify, we will never change the fact that we sit right beside the U.S. and it is our number one market. Anything that impedes that existing relationship will be bad for the Canadian economy. There's just no way around that.
Collapse
View Richard Hébert Profile
Lib. (QC)
View Richard Hébert Profile
2019-06-18 9:46
Expand
Thank you.
My next question is for Mr. Wilson.
In recent years, we have signed 14 agreements with 51 countries. This opens up a market of 1.5 billion new customers. Our trade is doing well: daily trade south of the border is close to $2 billion. As for the impact of other agreements, notably the CETA agreement, ocean freight rates have increased by 9% in Montreal over the past year.
In your opinion, will the other agreements that are in the process of being signed or about to be signed have as favourable an effect as CETA, and the one you want to see signed as soon as possible, as do we?
Mr. Wilson, you have the floor.
Collapse
Mathew Wilson
View Mathew Wilson Profile
Mathew Wilson
2019-06-18 9:47
Expand
Yes, we should sign it as quickly as possible and show a leadership that has been mentioned here before.
In terms of the other trade agreements, they're different. In many cases, we're sending finished goods to those other markets. We're not sending manufactured products.
What I mean by that is we're not sending auto parts to Europe. We're sending investment for companies to make auto parts in Europe, in many cases, or sending the finished vehicles to Europe. Therefore, it is fundamentally different in that trade relationship with any other market around the world than it is with the United States.
That's why the trade agreement with the United States is so big and so important, because it's not just about sending a car; it's about sending all the thousands of bits and pieces that go into that car, starting from the raw materials, through the steel, through electronics and different components. It's a very different trade agreement.
Those other trade agreements are really important, but also it's often a very different type of company that is trading in those agreements. It's the Lululemons and Arc'teryxes of the world and hopefully wine and other producers that are making finished consumer products. However, 85% of what we make in Canada are subcomponents of parts that go into other things, and those other agreements don't really support those as much as NAFTA does.
Collapse
Sujata Dey
View Sujata Dey Profile
Sujata Dey
2019-06-18 10:00
Expand
Good morning.
I am the head of the international trade campaign at the Council of Canadians.
I will make my presentation in English, but it will be my pleasure to answer questions in French.
The Council of Canadians has been keenly interested in issues of free trade since the initial agreement between the U.S. and Canada.
With over 100,000 supporters, we believe strongly that trade agreements cannot be the exclusive domain of industry representatives. Trade agreements impact our regulations, our public programs, our democracies and our ability to protect the environment.
With the rise of global inequality and a looming environmental crisis, our trade agreements unfortunately are often complicit in promoting corporations' rights over our democracies. This is why, during the NAFTA negotiations, over 30,000 of our members wrote MPs to share their concerns about what should be in a NAFTA agreement. Our honorary chairperson, Maude Barlow, wrote 10 guidelines for what should be included in the new NAFTA. Some of our guidelines have been met; others haven't.
First, the good news: In the new NAFTA, the chapter 11 investor-state provisions are no longer in effect between the U.S. and Canada. This provision has cost us $300 million. It has hurt our ability to develop social and environmental policy. Since Canada has been the biggest loser under chapter 11 and the U.S. the largest litigant, this is an important development.
Going forward, this should be the new standard for all our trade agreements. Unfortunately, this is not the case for the recently adopted CPTPP or CETA. As well, the mandatory energy proportionality provisions mandating us to export a quota of energy to the U.S. has been removed from the new NAFTA. That will give us more policy space to meet our G8 and Paris commitments.
However, the fact remains that this agreement gives disproportionate power to corporations. Chapter 11 may be gone, but now a whole host of new rules puts industry voices, or so-called interested persons, at the regulatory table before any of us—the public or politicians—can see the actual regulations. Under so-called regulatory co-operation, regulators have to follow a new series of stringent practices to make rules.
While industry folks may see safety, food, environmental or labelling regulations as red tape, those of us who are concerned about the safety of our products or what we put on our plates or in our bodies may see things differently. Regulators now face industry-positive criteria that hamper their ability to translate our collective will into rules.
Much has been written about the attacks on the family farm and the allocation of an additional 3.59% in Canadian market share for American dairy products. At the Council of Canadians, we are worried about the standard of this new U.S. milk that will be coming over the border. In the 1990s, we successfully campaigned to end the licensing of bovine growth hormone in Canada. This hormone makes cows produce 25% more milk, but at the expense of cows' health. BGH is used in the U.S. and is not labelled.
The new NAFTA also gives protections that can raise the cost of prescription drugs. The deal gives biologics, a new class of drugs made from human or animal tissue, 10 years of data exclusivity. Currently in Canada, we only give eight years of data exclusivity. Biologics are very important. They include drugs like insulin, or drugs that treat cancer, rheumatoid arthritis, Crohn's disease and ulcerative colitis.
The Parliamentary Budget Officer said the cost would be $169 million just in the first year this agreement would be in effect. Just at the time when the Advisory Council on the Implementation of National Pharmacare is recommending a universal single-payer system for drugs, the new NAFTA would raise the cost of such a program. Recently, a number of MPs signed a declaration asking for these provisions to be taken out of the new NAFTA. Luckily, Democrats in the U.S. are trying to get rid of these drug provisions, as well as demanding improved and enforceable environmental and labour provisions, which are currently lacking.
U.S. Democrats have the vote, and as history has shown, the U.S. has reopened the last four enacted trade agreements after they were signed. It is simply premature to ratify the agreement in its current form. Many important changes still need to be made. The idea that this deal is finished is an illusion.
Thank you.
Collapse
David Adams
View David Adams Profile
David Adams
2019-06-18 10:05
Expand
Thank you, Mr. Chair and honourable members.
On behalf of the 15 members of the Global Automakers of Canada, I appreciate the opportunity to testify before you this morning, on the important subject of Bill C-100, an act to implement the agreement between Canada, the United States of America and the United Mexican States.
As you may know, the Global Automakers of Canada is a national trade association that comprises the exclusive Canadian distributors of all vehicle manufacturers, with the exception of the Detroit-based automakers and Tesla.
The members of the GAC have a long-standing history of supporting transparent, open, rules-based trading relationships between Canada and its major trading partners. Traditionally, that has meant the United States and Mexico. While that continues to be the case, we have also strongly supported the Canada-EU CETA and the CPTPP, as well as the Canada-Korea free trade agreement.
With respect to the talk at hand, however, the Canadian automotive industry and Canadian consumers have benefited significantly from special access to the United States market via a system of managed trade agreements and free trade agreements, dating back to the Auto Pact in 1965, which provides jobs, economies of scale and efficiencies for the industry in Canada.
Our members support the ratification and passage of the CUSMA, as it will allow our members which have a footprint in all three countries continued preferential access to the U.S. market. Without putting too fine a point on it, members of the GAC are very concerned that the uncertainty associated with finalizing this outstanding trade negotiation is having a deleterious impact on business, not only the automotive business, but far beyond.
Thus, the sooner the agreement is ratified the better. Ratification will provide certainty in the North American manufacturing region that is currently lacking, and the appropriate context for investment and business planning.
Over the course of the negotiations, the GAC has been part of each round of the discussions. Some have said that any deal is better than no deal. We don't believe this to be the case. It was important for Canada to be able to work constructively and creatively among the shifting sands of the negotiations.
Given where the U.S. started with this negotiating position regarding the automotive industry, we believe the deal that has been signed represents the best outcome that could have been achieved. Is it ideal? Perhaps not, but as noted before, it provides industry with access, certainty and the opportunity for review, which were missing from the NAFTA.
The members of the Global Automakers of Canada encourage the ratification of this agreement.
Thank you for your time. I would be happy to answer questions in due course.
Collapse
Claire Citeau
View Claire Citeau Profile
Claire Citeau
2019-06-18 10:08
Expand
Thank you for inviting the Canadian Agri-Food Trade Alliance to present its views on the new agreement between Canada, the United States and Mexico.
Our members have a very simple message: CAFTA calls for the swift ratification of CUSMA to ensure continued stability in the North American market, and strongly urges parliamentarians in both Houses to pass Bill C-100 quickly.
CAFTA represents the 90% of farmers who depend on trade, and producers, manufacturers and agri-food exporters who want to grow the economy through better access to international markets. This includes beef, pork, meat, grain cereals, pulses, soybeans, canola, as well as the malt sugar and processed food industries. Together our members account for more than 90% of Canada's agri-food exports, which in 2018 reached record levels of $59 billion and which support one million jobs across urban and rural communities in Canada.
A significant portion of these jobs and sales would not exist without competitive access to world markets. Despite the strong performance, opportunities for further growth are being threatened by unprecedented uncertainty and a rising protectionist sentiment in certain corners, as well as the erosion of predictability in both traditional and new markets.
Last week, CAFTA released its 2019 federal election priorities, entitled “Realizing Canada's Export Potential in an Unpredictable and Fiercely Competitive World”. It is a prescription for what is required to allow Canadian agri-food exports to continue setting records as trade is under threat and increasingly linked to geopolitical and global events.
First on the list of recommendations is to preserve and enhance accessing key export markets and with that, the call to ratify and bring CUSMA into force as quickly as possible.
CAFTA attended all negotiating rounds for the new CUSMA and applauded the news last fall that Canada concluded talks. CAFTA also welcomed the recent resolution of the tariff issue between the Government of Canada and the U.S. related to aluminum and steel products. Tariff-free trade has been an incredible success for businesses throughout North America and for agri-food exporters in particular.
Over the last 25 years, Canadian agricultural and food exports to the U.S. and Mexico have nearly quadrupled under NAFTA. Today, the U.S. and Mexico are our first and fourth-largest export markets, making up about 55% of our total exports last year.
CUSMA builds on the success of the NAFTA agreement. It preserves and secures the duty-free access upon which the North American agriculture and food sector has been built over the past quarter century. Our members, the hundreds of thousands of farmers, ranchers, food processors and agri-food exporters, who rely on trade for their livelihood, are pleased that the Canadian government is taking steps to ratify the new agreement and bring it into force.
Our members emphasize the following outcomes as key benefits of the new CUSMA.
The agreement contains no new tariffs or trade-restricting measures. All agricultural products that have zero tariffs under NAFTA will remain at zero tariffs under CUSMA. Maintaining predictable duty-free access to the North American market is a major win for our members. This will help to strengthen the supply chains that have been developed for the past generation in North America.
This new agreement also includes meaningful progress on regulatory alignment and co-operation. In particular, I would note the establishment of a committee on agriculture that will serve as a forum to address trade barriers, a working group for co-operation on agriculture biotechnology, and the creation of a new sanitary and phytosanitary committee that will help ensure regulations are transparent, based on science, and that trade in North America flows freely, fairly and abundantly.
Another key benefit for our members is the preservation of the dispute resolution provisions that are vital to ensuring fair and transparent processes are in place for when disagreements arise. Preserving chapter 19 in its entirety and much of chapter 20 from the previous NAFTA agreement are also major wins.
Market access improvements for Canadian agri-food exporters include increased quota for refined sugar and sugar-containing products as well as gains for some processed oilseeds products like margarine. These are all welcome news for our members.
All these advances will help to consolidate the gains of the original NAFTA and provide certainty in the North American market, which is essential to the success of our Canadian agri-food exporters.
In closing, CUSMA represents a meaningful upgrade to NAFTA for our members, by keeping our trade tariff-free, establishing processes that will help remove remaining technical barriers to trade and maintaining vital provisions to deal with disputes.
We look forward to working with the government to bring CUSMA into force so that our members can realize its benefits as quickly as possible.
Collapse
Flavio Volpe
View Flavio Volpe Profile
Flavio Volpe
2019-06-18 10:13
Expand
Thank you. It's good to be here.
As most of you know, APMA is Canada's national association of original equipment automotive suppliers. I represent about 300 companies that employ about 100,000 people in this country. Notably for the NAFTA negotiations, Canadian supplier firms employ 43,000 people in the U.S. in 120 plants and about 43,500 people in Mexico in 150 plants.
Throughout the NAFTA negotiations, as some of you know, we were present for every round. In addition to meetings with Canadian officials on a very regular basis, we had time at the White House, the USTR, the Palacio Nacional and all spots in between. Our Canadian positions and Canadian interests found voice on the front page of the Wall Street Journal, the New York Times, the Washington Post, the Economist and so on. We were very active and we were very vocal. I think the agreement is a positive reflection of what we were looking for.
This is a negotiation that no one asked for, from a party that cared only about headlines and Twitter. After four rounds, we finally got the American proposal. It was a self-destructive one. In automotive the proposal was that every vehicle manufactured in North America should have 50% U.S. domestic content.
Canada, importantly, with Mexico, stayed at the table, spent time over the next two rounds highlighting self-harm. Industry associations and stakeholders like ours spent time at the USTR and in Mexico talking about the American self-harm. They countered themselves twice, in March 2018 and then again in April 2018. Our strategy for staying at the table produced the fruit we wanted. They backed off their 50% U.S. domestic content. They came up with other tough terms, but they were negotiable terms.
This current government made a conscious effort and a decision on the NAFTA negotiations to consult openly and frequently with industry. We didn't do it altruistically. Industry was quite vocal about the fact that the Mexicans had an advantage because they took their industry with them in a model they call the “room next door”. The first meeting with this new government was actually at the APMA office with a trade minister, a chief negotiator, an ISED minister and his deputy minister. I thought that was a good step. That's how it is supposed to be done. We saw TPP with both the outgoing government and the incoming government done mostly in the dark; for suppliers, at least, I think the results reflect that.
The new CUSMA is the first increase in regional value content ever in a Canadian trade agreement. For automotive rules of origin, that means an increase in supplier volumes for Canadian plants and footprints of about 25% in shipments. That's $6 billion to $8 billion a year in new purchases, incremental purchases, of an industry that ships about $35 billion a year. To put that in context, that's the equivalent of landing two new greenfield investments in Canada. The last greenfield investment in Canada by a major automaker was in 2007. The upside is unprecedented. This deal for automotive suppliers, from our perspective, must be ratified. I spent time all over the continent during and after; I have spent a great deal of time since in Germany and Japan especially, as well as China. Current suppliers will see the most benefit of this new agreement and its terms, but we are of the opinion, shared by our American equivalent, that the current North American supply base does not have the capacity to meet the requirements for automakers to meet the compliance of 75% North American domestic content.
What it means is that we're also looking at an opportunity that we've been selling very plainly to the Japanese and the Germans especially: We're expecting a great deal of new capital investment in this country from new suppliers who will help their current automakers meet that 75% quotient. This deal has a regional value content level that goes to 75% from 62.5%; on parts, that number is 65% to 70% from 60%, and 70% of those core parts, if they are made with steel and aluminum, must be sourced in North America. In NAFTA we had 29 parts categories that were tracked for compliance. Essentially, we've doubled that.
There is an immediate transition to rules of origin post-ratification. We're hoping that ratification happens in all three countries this year, and there's a three-year phase-in for the RVC levels.
Please ratify this deal without delay. That's been our message in Washington. That's our message in Mexico City.
I'm happy to take questions.
Collapse
View Mark Eyking Profile
Lib. (NS)
Thank you, sir.
I have a quick question. You represent parts manufacturers on both sides of the border, right?
Collapse
Flavio Volpe
View Flavio Volpe Profile
Flavio Volpe
2019-06-18 10:18
Expand
I represent the parts suppliers' interests in Canada, but those head office interests, the GNP interests for major companies like Magna, Martinrea and Linamar, they have investments in the U.S. and in Mexico that in some cases are bigger than their Canadian interests.
Collapse
View Mark Eyking Profile
Lib. (NS)
So, you're kind of indirectly representing them all because you're representing them in Canada.
What about Mexico? You just represent Canada, but because they're affiliated, that's how you represent the others.
Collapse
Flavio Volpe
View Flavio Volpe Profile
Flavio Volpe
2019-06-18 10:19
Expand
In Mexico, in meetings with the President of Mexico and with the secretary of the economy and the secretary of foreign affairs, our message there was that we—Canadian companies—own 150 plants that employ 43,500 Mexican workers as well. So if this doesn't work out and we end up on the other side of a big tariff wall here, we're speaking to them as Mexican investors and employers.
Collapse
View Colin Carrie Profile
CPC (ON)
View Colin Carrie Profile
2019-06-18 10:20
Expand
Thank you very much, Mr. Chair.
I want to thank the witnesses for being here. I'm going to start right off with Mr. Adams and Mr. Volpe.
Everybody around the table is aware of the announcement of General Motors in Oshawa. We are going to be able to retain some parts and stamping manufacturing there, but the quote that I've heard more often than not with our manufacturers is that they can handle bad policy and they can handle good policy, but this uncertainty is a real problem. They're competing for international mandates and Mr. Trump wants to bring a lot of that investment to the United States, and if companies locate there, that's where they get the most certainty.
This deal—as Mr. Adams said, it's not a perfect deal—is really important for my community. So, thank you for your input.
Because we have such integrated trade and integrated supply chains and we build cars together in North America—that's the way it has been going—what would it do to our supply chains, our ability to win investment and certainty if this were not ratified, if we dithered in ratifying this agreement?
Maybe we could start with Mr. Adams and then go to Mr. Volpe.
Collapse
David Adams
View David Adams Profile
David Adams
2019-06-18 10:21
Expand
I think, as you say, uncertainty is the real challenge here. I think we've reached a point where this deal has essentially been finalized and we just need to get it over the goal line. That's why we think it's important that this deal get done sooner rather than later, because uncertainty and confusion about where things stand are the worst things for business investment.
Yes, as Mr. Volpe mentioned, nobody wanted this negotiation. The fact of the matter is that the whole negotiation was focused around bringing more investment into the United States, not necessarily Canada or Mexico, but I think the reality is that we are where we are and we just need to move forward now.
Collapse
Flavio Volpe
View Flavio Volpe Profile
Flavio Volpe
2019-06-18 10:22
Expand
Companies take a longer-term approach than a single term. That being said, the power of a tweet from the President has been demonstrated over the last couple of years to cause marked confusion.
I view the Oshawa news the same way that you do. Lots of our member companies built generations of business out there. The Oshawa business, the decision in Oshawa, is unrelated to the NAFTA renegotiation and maybe the uncertainty with Trump, but it wasn't helped. It was a product mix that wasn't working and the volumes weren't there, but certainly if we didn't have this cloud hanging over our heads, you could convince a company to turn around and make a longer-term decision than the one that unfortunately hurt Oshawa but also hurt six other plants, mostly in the U.S.
We've seen a lot of the OEMs push back, maybe not as publicly as some of us would like, at least from a political standpoint, but they've pushed back and they've said these are 20-year investments.
Certainly it has worked in changing some decisions on allocation into Mexico that weren't yet installed, and producing vehicles. The real threat isn't if we don't have this deal. The threat is that we have somebody in the White House who takes a narcissistic approach to these things and has threatened to pull the NAFTA. In a scenario where we don't have the CUSMA and we have a NAFTA withdrawal, we're going to have a real big problem with investor confidence.
Collapse
View Colin Carrie Profile
CPC (ON)
View Colin Carrie Profile
2019-06-18 10:23
Expand
Yes, and I think these once-in-a-generation investments are so important that we're able to compete for that.
My next question, though, is about the complexity of the rules of origin.
I'm getting some feedback and concern because at the end of the day it's about jobs and keeping jobs in Canada, but if it gets so complicated, some auto manufacturers may just skip the whole thing, manufacture all of the product overseas, just ship it in and pay the 2.5%.
I was wondering if you could comment on the complexity for the rules of origin compared to the NAFTA. Is this a real concern that we need to be worried about? At the end of the day, it's about jobs and keeping jobs in Canada. If it gets far too complicated, are we at risk of losing that entire supply chain to countries that are offshore of North America or even towards the United States?
Collapse
Flavio Volpe
View Flavio Volpe Profile
Flavio Volpe
2019-06-18 10:24
Expand
I think it's a valid concern in general and I think the original American proposal was 85% regional value content, 15% U.S. domestic content, tracing parts down to their raw materials.
We said that the most important perspective from a supplier point of view is if our OEM customers were going to pass, then we were going to get hurt there. Our position was to listen to the OEMs. If they say they won't do it, as you said, the MFN tariff is 2.5%.
Over the course of those rounds, we got to a place on the rules where we simplified them more, dropped some of those content levels to a point that still made suppliers happy, but I think, without exceptions, OEMs are saying they can make it.
On silly things like tracing supplies right down to the raw materials, I pointed out that a lot of plastic products come from petroleum, so do we need to know where the dinosaurs died? That little insert of candour, I think, broke up that discussion.
The Chair: Sorry, but we'll have to finish here—
Mr. Flavio Volpe: Sure, let me just finish the one I have here.
Collapse
Flavio Volpe
View Flavio Volpe Profile
Flavio Volpe
2019-06-18 10:26
Expand
Getting this right is important because the MFN tariff is only 2.5%, but the American intention, I think...using the section 232 tariffs and going back to WTO, our expectation in the industry is that this number is going to go way up.
Collapse
View Kyle Peterson Profile
Lib. (ON)
View Kyle Peterson Profile
2019-06-18 10:26
Expand
Not as well as Mr. Volpe, but thank you, Mr. Chair, and thank you, everyone, for being here today.
I am going to pick up on the auto theme based on the number of auto parts jobs that are based in my riding and rely on a strong auto sector, of course.
I want to take a step back. When President Trump threatened to rip up NAFTA, that was an existential threat, I think, to the auto industry. I'm not sure, Mr. Volpe, if you want to elaborate on that. Mr. Adams, you can too, because I think we needed to put the new deal in that context.
Collapse
Flavio Volpe
View Flavio Volpe Profile
Flavio Volpe
2019-06-18 10:27
Expand
On his way into office, he said he was looking for a border tax on all goods coming in. He then turned around and threatened very specific companies like Ford and BMW, putting a tax specifically on.... Whether he could do it or not was not the question. The markets reacted to the fact that the President of the United States was threatening some type of action.
He threatened to pull out of NAFTA. Our industry knows no borders. Frankly, if you have an OEM customer, there are concentric geographic circles of supply and you have to be close to your customer. There are 10 OEM plants in Canada, but they're all selling goods to the U.S., so it's a big threat. This is the way the President likes to play. Frankly, Canada has had some big, crazy threats, which from a legislative point of view I'm not sure he could enact, but that's not the way capital flows and that's not the way customers pick their suppliers. It was a big threat.
Collapse
David Adams
View David Adams Profile
David Adams
2019-06-18 10:28
Expand
Sure. I think you're right. I think it's a characterization of different companies, too, in terms of the President saying that the BMWs of the world.... BMW has their largest plant in Spartanburg and it's also the largest automotive exporter. I'm sure a lot of Flavio's members supply the plant in Spartanburg as well. This was a real concern for the entire automotive industry, especially when you consider that regardless of manufacturer, about 85% of the production coming out of any Canadian plant is going into the U.S. market. It's not going to Europe or elsewhere; it's going to that U.S. market, so it was a very problematic issue, for sure.
Collapse
View Kyle Peterson Profile
Lib. (ON)
View Kyle Peterson Profile
2019-06-18 10:28
Expand
Based on that, how important were the auto side letters to remove that threat from the industry and then when it comes to investment flows?
Collapse
Flavio Volpe
View Flavio Volpe Profile
Flavio Volpe
2019-06-18 10:28
Expand
The auto side letters are a funny instrument. On one hand, from a purely academic point of view, I would not like to see us in those types of discussions, whereby we concede some extra agreement against a threat that I thought was an improper use of legislation. Others have called it illegal.
The fact is that in our business, sometimes leverage is more important than the legislation. The leverage was we set quotas that, if they were to be reached, would mean that we would have to add three new OEM full capacity plants for us to get to those quotas. There is no prospect currently of seeing them in the future in this environment. Maybe one or two.... I offered to pay the tariff on every vehicle after the third one.
Collapse
View Kyle Peterson Profile
Lib. (ON)
View Kyle Peterson Profile
2019-06-18 10:29
Expand
That's perfect.
Mr. Volpe, I think you were on the record as saying this achievement in the automotive sector benefits Canada immediately and directly. It's going to result in more investment, more volume purchases from existing investment, and underpins the kinds of jobs we want in this country. You elaborated on that. Right now you're saying we don't have the capacity to fully leverage this deal. Are you confident the investment will flow to get us to that capacity?
Collapse
Flavio Volpe
View Flavio Volpe Profile
Flavio Volpe
2019-06-18 10:30
Expand
Suppliers don't build plants or lines on spec. Either you have the contract or you don't. Of course all my members are bidding very aggressively on the new volume. The fact is that volume will be a 25% addition writ large. It won't be spread. Everybody is under the 25%. The winners may get 26% or 50% more volume. You have to do it in three years. To do it in three years is a message I took to Japanese suppliers in Yokohama at a supplier show last week. I told them if they were supplying Mazda, Toyota, Honda, Subaru and these specific items on vehicles that are being assembled there, come to Canada because they make those cars in the U.S. and Canada, and we need them.
Collapse
View Tracey Ramsey Profile
NDP (ON)
View Tracey Ramsey Profile
2019-06-18 10:31
Expand
Thank you so much.
Thank you to all of our witnesses here today.
My first question is for Ms. Dey because she's the first person to raise chapter 20, the intellectual property provisions around the cost of pharmaceuticals. New Democrats have been raising this. Quite frankly, this impacts all Canadians.
You raised the types of drugs, biologics, that are being looked at or that the extension is for, such as insulin, things for Crohn's, rheumatoid arthritis. These are extremely expensive drugs for Canadians. Even if they have some sort of pharmaceutical or drug plan from an employer, typically it won't cover the cost of these drugs. They're so incredibly effective. A lot of people say they will be the future of drugs.
I want to ask you about that and the concerns that not just the New Democrats have, but as you said, the PBO has as well. My colleague Don Davies is our health critic. He asked the Parliamentary Budget Officer to study the impact of pharmaceutical costs in the new CUSMA and the PBO came back with the stunning number of $169 million per year.
I wonder if you can speak to that. To me, this is a TPP hangover. The U.S. wanted this in the original TPP. It was removed in the new CPTPP, but here it is back again because—no surprise—big pharma in the U.S. and Canada is pushing hard for this.
Can you comment on the implications of this for Canadians?
Collapse
Sujata Dey
View Sujata Dey Profile
Sujata Dey
2019-06-18 10:33
Expand
It's an irony, because the first thing President Trump did in office was to say that he hated the TPP and he was going to rip it up. However, what has happened is that a lot of the provisions that were originally in the TPP made themselves into the new NAFTA. One of those is the biologics.
Basically, we have patent protection in Canada for 20 years. However, on top of that, we have what's known as market exclusivity for biologics, which right now, in Canada, is eight years. The new NAFTA would raise it to 10 years. What's important for this is that already it's shown that about 70% of all the new costs to the Quebec assurance médicaments program are these costs of biologics. This is the highest rising class of drugs with all public plans put together. This is something where you can spend about $5,000 to $50,000 a year for a patient on this class of drug. These are very important treatments. This is something that will be offloaded either to private citizens who will have to choose whether they can afford these drugs or not, or in the event of a public plan, it will be offloaded to us.
It is a very important provision. It is basically U.S. pharma that benefits from this, because it is U.S. pharmaceutical companies that are the producers of these biologics. There's no interest for Canadians at all, in terms of industry or our public plans, to have this.
Currently in the United States, the Democrats are asking for these provisions to be specifically removed from the new NAFTA. As I've said before and I can go into more detail, they have the votes, and it's important to note that in 2006 when the Democrats gained majority in the House with George Bush as president, they actually opened up three agreements precisely for pharmaceuticals. They opened up the agreements with Colombia, Panama and Peru to specifically go in and change the pharmaceutical language.
I know industry feels that they are reassured by the signing of this new NAFTA, that this is a done deal, that this is going to provide assurance. However, the elephant in the room is that the United States has to ratify this agreement, too, and the votes aren't there unless this agreement is opened up.
What I'm saying is that this illusion of security, especially when we have this President of perpetual negotiation, is just an illusion. Ratifying this agreement in this speedy form is not going to provide insurance, because there's a critical path element here that we don't control, which is the U.S. Congress.
That illusion of security is just that; it's an illusion.
Collapse
View Sukh Dhaliwal Profile
Lib. (BC)
View Sukh Dhaliwal Profile
2019-06-18 10:36
Expand
Thank you, Mr. Chair, and thank you to the presenters.
Before we reached this deal, people in British Columbia were not very optimistic in dealing with President Trump, with all the tariffs we had. Once this agreement was reached, you have expressed your opinion but when I'm out in the community on the doorsteps, whether it's the small and medium-sized manufacturers or the labour groups, the workers, everyone has said to me, “Sukh Dhaliwal, we want you to tell Prime Minister Justin Trudeau and Chrystia Freeland the great work they have done to get this deal done.”
Do you hear the same on the ground, or a different opinion out there?
Collapse
Flavio Volpe
View Flavio Volpe Profile
Flavio Volpe
2019-06-18 10:37
Expand
Our members were frankly surprised that we were able to get an agreement that had higher regional value content. It's a very straight line between the RVC level and business prospects. There was a positive assessment of this deal. The only question is, are we going to ratify it or not?
They are all of one voice. I just finished my annual conference in Windsor this week and everybody is hopefully optimistic that we do get it passed and we get it moving.
We have a lot of other global forces against Canadian competitiveness. Nobody else is standing still. This deal is helpful for auto parts manufacturers and then soft auto parts suppliers in the IT space.
Collapse
View Sukh Dhaliwal Profile
Lib. (BC)
View Sukh Dhaliwal Profile
2019-06-18 10:38
Expand
How about the rules of origin and labour provisions? Would they slow down the movement of jobs to Mexico or the other way around?
Collapse
Flavio Volpe
View Flavio Volpe Profile
Flavio Volpe
2019-06-18 10:38
Expand
Do you know, I think the naked American objective here was to do exactly that, to repatriate jobs from Mexico, not all of it fact-based and frankly, not a lot of it reversible without hurting American interests and objectives. Those are American companies that invested in Mexico. Closure costs put into a unit price hurts everybody.
The fact of the matter is that with this new labour provision, this labour value content, which is the United States domestic content by another name, is going to buy us supplier investment to north of the Mexican border, and then the rest of it is up to us to hustle. Certainly, I see an uptick in supplier activity, as I've been saying, no longer being an issue of whether we're on an equal playing field with the Mexicans.
Collapse
Results: 1 - 100 of 515 | Page: 1 of 6

1
2
3
4
5
6
>
>|
Show both languages
Refine Your Search
Export As: XML CSV RSS

For more data options, please see Open Data