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Results: 1 - 15 of 2634
View Randy Hoback Profile
CPC (SK)
View Randy Hoback Profile
2020-07-09 13:34
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I'm just trying to read through that. So it does carry through into CUSMA. Basically, if you wanted to put a tariff on, say, Kentucky Bourbon, or something like that, it would not be an option in your toolbox at this point in time?
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Steve Verheul
View Steve Verheul Profile
Steve Verheul
2020-07-09 13:34
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Just to be clear, this is not a part of the CUSMA agreement. It's not part of the obligations contained in the formal international treaty that we've agreed to with the U.S. and Mexico. This does mean there is a certain amount of flexibility with respect to the particular statement that was issued back in May of 2019.
From our perspective, I think it really depends on what kind of action the U.S. takes. If the U.S. were to take some kind of action that was viewed as being consistent with that statement, I think we would have to think about what kind of reaction we would have. We would likely want to stay within the context of that understanding, recognizing that “aluminum-containing products”, for example, is a broad category.
If the U.S. acts outside of the constraints of that agreement or statement that was made back in May of 2019, I think we would certainly have more flexibility in how we might want to respond.
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View Colin Carrie Profile
CPC (ON)
View Colin Carrie Profile
2020-07-09 13:56
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It's not a lot of time.
Thank you very much to the witnesses for being here.
It's great to see colleagues.
I wanted to talk a little bit about the economic impact. I know that with the original CUSMA we begged and pleaded to get these economic impact studies. The Prime Minister didn't make them available until after the deal was done. One of the disturbing things I saw in them was on page 61. It basically said that automotive would be taking a $1.5-billion hit compared to the old NAFTA.
Mr. Verheul, you said in your opening statement that it's so important that Canada maintain its ability to be “an attractive investment environment”. Two-thirds of our income comes from trade, and 3.5 million jobs come from trade. I'm really concerned about the uncertainty we have on the implementation of CUSMA and the effects of COVID on the supply chains.
I'm not an MP from Quebec, but I think everybody knows that the federal government sole-sourced and ordered two jets from Bombardier Aerospace recently. Immediately after CUSMA came into effect, Bombardier Recreational Products announced they'll be opening a brand new plant. But, Steve, it's not in Canada; it's in Mexico. They're investing $185 million and creating up to 1,000 jobs, but not in Canada, not in Quebec. It's in Mexico.
I was wondering what the Liberal government has done and what kinds of resources it has given you, as we move through this implementation, to make sure that the message gets out that Canada is an attractive place to do business. What have they done to decrease the uncertainty with these supply chains? With any new investment, manufacturers are going to be looking at how they're going to get these products back and forth across the border. What has the government asked you to do immediately, as CUSMA is coming into effect, to allow that to happen?
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Steve Verheul
View Steve Verheul Profile
Steve Verheul
2020-07-09 13:58
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With respect to implementation, I think we have been doing a lot of work, a lot of consultation, with industry moving forward to ensure that the change from the existing NAFTA to the new NAFTA, or CUSMA, can happen as smoothly as possible. However, I think probably even more importantly, we have been looking at a number of steps to take to ensure that companies in Canada understand how they can take advantage of the changes under the new agreement, and how we can ensure that we can strengthen our position with respect to the economic relationship between Canada and the U.S., and Mexico as well. A lot of our work through the trade commissioner service has been dedicated to trying to help those companies reach those kinds of achievements.
I want to turn briefly to my colleague Eric Walsh, who is responsible for U.S. trade relations; he might want to add a few comments.
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View Colin Carrie Profile
CPC (ON)
View Colin Carrie Profile
2020-07-09 13:59
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Just before that, Mr. Walsh, I know many companies wanted CUSMA to come into force after January 1, 2021, because of COVID and other factors. What does that delay...? How is having CUSMA implemented now affecting the automotive companies? What's it doing to their certainty levels? Again, I don't want to see this bleed continue in the automotive and manufacturing sector where they think it's better to build in the United States or Mexico because they don't have these issues about supply chains, etc.
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Steve Verheul
View Steve Verheul Profile
Steve Verheul
2020-07-09 14:00
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That was clearly a strong concern of ours, when the U.S. was pressing to have the agreement come into effect sooner rather than later. We know that companies across Canada are facing enough challenges dealing with COVID-19. We were, at least initially, reluctant to have them have to adapt to new rules under the new agreement, so we've been working closely with them to try to make sure this process is as smooth as possible.
In particular with respect to the auto sector, there are a number of provisions that allow for gradual implementation, with a number of flexibilities in recognition of the challenges we're facing now. We have various flexibilities that would delay the coming into force of some of these elements.
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View Randeep Sarai Profile
Lib. (BC)
View Randeep Sarai Profile
2020-07-09 14:01
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Thank you, Madam Chair.
Thank you, Mr. Verheul.
As the member of Parliament for Surrey Centre, along with my colleague, the member of Parliament for Surrey-Newton, I know that Surrey is a big trading hub, whether it's ports or borders. Logistics companies have headquarters here and have a huge impact on our local economy.
I first want to thank you for having concluded CUSMA prior to the pandemic and having it ratified. I think it would be a much more difficult task with protectionist views heightened during a pandemic, so we are fortunate to have it in place. However, due to the pandemic, we've still had over one-third drop in trade between the two countries. I think it's roughly 35% respectively either way, along with toughening the borders in terms of crossing times and limited border crossings.
How difficult do you think it will be to restart supply chains and restart that trade generator that we were before? Would CUSMA be beneficial in that, considering the problems the U.S. is having, particularly with some of its Asian partners?
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Steve Verheul
View Steve Verheul Profile
Steve Verheul
2020-07-09 14:02
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I think we are certainly doing a lot of work to determine how quickly we can move back to as close to normal as we can get in terms of the trading relationships. I think the impact that you cited with respect to the trade going back and forth.... Those numbers are higher than the ones I have seen. I think we have been managing to maintain supply chains, by and large, particularly with the U.S. and with Mexico going forward.
I think there will probably be further pressure on us to narrow the supply chains to some degree—in other words, putting more pressure on North America as a supply chain in itself—and the relationship with the rest of the world will depend on us making efforts to maintain those supply chains as well.
I'd like to see if Eric Walsh has something further to add on this supply chain issue. He's been working on these issues more closely than I have.
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Eric Walsh
View Eric Walsh Profile
Eric Walsh
2020-07-09 14:03
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Yes, I'm happy to jump in. Thank you for inviting me here today.
I think we can say that both Canada and the U.S. are very close partners and part of these complex, integrated, reciprocal supply chains that go both ways across the border, and it's in both of our interests to allow these supplies and people to continue crossing the border.
We've seen this with the situation with PPE, personal protective equipment, and all the related COVID materials. We had difficulty accessing inputs and raw materials, and that's really slowed down production. Logistics has been another factor in the supply chain disruptions, so reinforcing our strong relationships with the U.S., as well as Mexico, is really important to Canada's ongoing prosperity. The integration of the North American production platform, especially in the context of the COVID-19 pandemic, is equally important.
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View Sukh Dhaliwal Profile
Lib. (BC)
View Sukh Dhaliwal Profile
2020-07-09 14:10
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Thank you, Madam Chair.
Thank you to all of my friends. Welcome back to Ottawa.
Mr. Verheul, both Randeep and I come from British Columbia, so we are fully aware of the impact of the ongoing softwood lumber dispute with the United States. Right now, Canadian parties still have pending WTO and NAFTA challenges to the Department of Commerce's underlying countervailing and anti-dumping duties. Could you tell us how the ratification of CUSMA will impact these challenges? Overall, can you give us some context with regard to how the new agreement might work to de-escalate the ongoing dispute between the U.S. and Canada?
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Steve Verheul
View Steve Verheul Profile
Steve Verheul
2020-07-09 14:11
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As you well know, we've had a long-standing irritant with the U.S. with respect to softwood lumber. Given the most recent actions they've taken to reimpose tariffs, both anti-dumping and countervailing duty tariffs, against our softwood lumber producers, we have been challenging those measures under NAFTA and at the WTO. We have met with a number of successes in those efforts. We had been hoping that those kinds of successes would bring the U.S. back to the negotiating table so that we could resolve this for the longer term, but we have not seen a willingness on the U.S. side to advance that.
With respect to the new CUSMA, I think it's important to remember that any kind of softwood agreement is outside of that agreement. It was not envisioned by that agreement, nor was it envisioned by NAFTA. When we have the U.S. pursuing anti-dumping and countervailing duty actions against our softwood lumber producers, they have a legitimate right to do that under the trade remedy provisions of both NAFTA and CUSMA. We have the right to challenge those. In most cases, we've successfully challenged those measures, but the decision to try to negotiate something out requires agreement on the side of both parties.
We are ready to go to the negotiating table at any point in time to resolve this issue. We think it causes damages on both sides of the border. It increases costs, particularly in housing in the U.S., and is totally illegitimate in terms of the application. We're ready to go back to the negotiating table at any point in time. However, we have not yet seen any willingness on the U.S. side to do that.
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View Sukh Dhaliwal Profile
Lib. (BC)
View Sukh Dhaliwal Profile
2020-07-09 14:14
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The COVID-19 pandemic has shown us how fragile the global supply chain can be and how that can impact Canada. With regard to manufacturing, can you explain how the new CUSMA might help bring in some of the manufacturing jobs that left Canada over the past few decades?
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Steve Verheul
View Steve Verheul Profile
Steve Verheul
2020-07-09 14:14
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Aside from the kinds of modernization gains we made in the new NAFTA, particularly with respect to goods moving more easily back and forth across the border, the emphasis is on regulatory reform and on making all of these processes more modern and more simplistic.
Going forward, we think there will be a greater emphasis on supply chains operating within North America, and that is the direction we're looking at. When we take a sector like auto, for example, there are stronger rules of origin requirements, so that the parts, the products and the assembly of the automobiles have to be done on the basis of predominantly North American parts and North American inputs.
We have this situation with respect to other products as well, so I think we will see more of an emphasis on production within the North American region than we've seen in the past. We certainly expect that, as a result, more jobs in these areas will come back to North America and back to Canada. That was a major objective in the negotiations.
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Derek Burney
View Derek Burney Profile
Derek Burney
2020-07-09 14:26
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Thank you, Madam Chair and honourable committee members.
Good afternoon and thank you for the invitation. If I may, in my remarks I will go a bit beyond the specific topics and offer a little more of a global perspective.
First of all, I believe that the most serious problem on trade for Canada in the wake of the COVID-19 pandemic is that the world is turning inwards and becoming a hotbed for protectionism. The U.S., unfortunately, is as reluctant to lead globally on trade as it has been on the pandemic. The major powers are competing for power, leaving middle powers like Canada dependent on multilateral institutions like the WTO, which have been weakened by a lack of clear leadership and any real will to work together. By refusing to name panellists to the WTO’s dispute settlement mechanism, the United States has severely restricted the institution’s ability to safeguard the rule of law on trade.
Due to the pandemic, self-reliance and self-interest are in the ascendency. Global trade has already seen employment, production, prices and supply chains sharply disrupted, and there is now a new public health rationale for constraints on trade, under the guise of national security. A “might is right” trend is taking hold as countries are compelled to fend more for themselves.
What should Canada do in this environment? First of all, now that the USMCA is operational, we need to defend vigorously and, where possible, advance access to the U.S., our most vital market, invoking the dispute settlement mechanism retained from NAFTA without hesitation and using selective retaliation when necessary. For Canada, the USMCA is a respectful salvage more than a platform for economic growth, but it should help check lunges into protectionism. Because bilateral trade is roughly in balance, there is no reason for Canada to become a passive punching bag for U.S. protectionists and mercantilists.
Arbitrary tariffs once again on Canadian aluminum exports will hurt American producers and American consumers more than anybody. This is a message that should be delivered fervently to Congress and at various state levels in the United States. We should not hesitate to retaliate.
Similarly, chronic complaints from Senator Schumer, the majority Democrat leader in the Senate, about Canadian dairy policy should be rebuffed. Canada made modest concessions on dairy in the NAFTA renegotiation and should abide by them, but nothing more. Nonetheless, these attacks are a harbinger of what to expect should the administration change in November. We should stand firm. The best antidote to American protectionism, in my view, would be a robust, V-shaped economic recovery—the sooner, the better.
Second, because 75% of our trade is with the United States, diversification has always been desirable. Now it's essential. For it to become real, however, we first need complete free trade within Canada, a quest over many decades that has delivered more solemn communiques than substantive results. Most popular in western Canada, this effort will only succeed with firm leadership from Ottawa and if economic common sense prevails over narrow provincialism, notably in Quebec and Ontario. According to the IMF, liberating Canadian internal markets would yield a 4% increase in GDP. That's much more than is expected from the USMCA.
Third, free trade across Canada would also give us greater leverage and better access from other preferential trade agreements, which are the best immediate prospects for diversification: CETA with the EU, the Canada–Korea Free Trade Agreement, and the mini-TPP, which affords significant new potential in Japan, Malaysia, Indonesia and Vietnam, among others.
Fourth, we should move deliberately to conclude a bilateral trade deal with a post-Brexit Britain, complementing, where possible, the terms negotiated in CETA, but mindful as well of the terms being negotiated by Britain with the United States. Canada enjoys more than a 2:1 trade balance with Britain. I suspect that their negotiators will seek to make up what they may lose from the European Union by gaining enhanced access specifically from the U.S., Canada and Australia. Our negotiators should be determined to get at least as much in terms of increased access as we are prepared to give. That is the goal for any trade negotiation.
Fifth, Canada should actively explore the prospects for broader trade with India, despite the difficulties posed by the high degree of regulations and protectionism in the Indian economy. This initiative can best be conducted on the basis of careful preparation and consultations, not by high-level junkets.
Sixth, even more daunting are the prospects with China, where relations are completely hamstrung today by the deadlock over Madame Meng and the two Michaels. There is much not to like about China's behaviour these days on trade and many other issues. The way supplies needed for the pandemic were hoarded before China released initial data on the virus and were then sold for huge profits should elicit worldwide scorn, if not harsh penalties.
Today, we are unwilling to counter discriminatory trade actions against Canadian agricultural exports, even though China has a 3:1 trade advantage over us, lest it harm those in detention. We should not be reluctant to retaliate. We must also be more deliberate in joining sanctions against China for its repressive moves against Hong Kong. Canada should, like Britain, extend a welcome hand to Hong Kong refugees. We should also nimbly expand relations with Taiwan.
Most importantly, we need to find a way out of the corner we have painted ourselves in, if not by an exchange of detainees, then by other means. We have become a hapless pawn caught in a dispute between two giants. Asserting self-righteous points of principle may make us feel better, but they will not break the current stalemate. We must deal with the world as it is and not as we would naively like it to be.
We cannot isolate or immunize ourselves from what will soon be the world's largest economy. Mutual self-interest obliges us to gauge prudently and cautiously the prospects for pragmatic, albeit limited, relationship, proceeding, as the adage about how porcupines mate stipulates, very carefully.
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Mark Agnew
View Mark Agnew Profile
Mark Agnew
2020-07-09 14:34
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Thank you very much, Madam Chair and members, for the invitation to speak here at committee today.
Although it's quite common for stakeholders to reference the critical or timely nature of a given study, I think this one really is. International trade is critical to Canada, and our relationships with both the U.S. and U.K. are critical as well.
I want to touch on three issues in my opening remarks this afternoon. The first point is that COVID-19’s impact on international trade has been substantial, and it certainly has brought into focus the need to strengthen supply chain resiliency. I think we all know and accept this. I think most commentary has missed the point that supply chain resiliency is not monolithic—each sector of the economy, and maybe each company, has different needs in regard to what that looks like for their supply chain circumstances.
Also quite importantly, we are a market-oriented economy. Governments generally don't own supply chains; instead, they incentivize private sector behaviour and create the conditions within which businesses operate. Our approach to supply chains needs to ensure that we have the interests of consumers and businesses in mind, in terms not only of their being able to supply inputs and products that we need both in the country and into the country, but also supporting exporters. It goes both ways.
It's also much more than just the production of physical goods. Services across different modes of supply play a critical role in supply chains, whether you're talking about the upstream parts, such as research and development, and engineering and design, or about after-sales servicing of equipment, or transportation and logistics.
This week the chamber released our position statement on supply chain resiliency, which I have shared with committee staff. Hopefully, members have had a chance to look at it in advance. In short, we think governments need to take a holistic approach in how domestic and international policy is used to support supply chain resiliency.
The document is quite long, so I'll just draw your attention to a few of the international tools we think need to be a critical part of the effort.
The first we're calling “security of supply agreements”. We've seen that export controls on medical equipment have proven to be a major problem during the early days of the pandemic. We're asking the government to take a positive approach with our most trusted allies and look at a way to circumscribe and tighten up how countries are allowed to use export restrictions.
We're not naive and certainly realize that there would only be a very small subset of countries that we'd be able to do this with. We commend the work that the government has done through the Ottawa Group and think that this might be a way to take that work, talking about transparency and time-limited and being proportionate, and take that to the next level in a tangible way.
Second, there also needs to be a much greater focus on the issue of industrial subsidies. This has been a long-standing problem since before the pandemic, but it's going to get worse as governments around the world throw huge sums of cash at their domestic industries. This is going to tilt the field against Canadian companies even more so than is already the case, and we certainly need to reign in the excesses of other countries by using multilateral or bilateral tools to do that.
The third aspect of supply chain resiliency is digital trade and e-commerce. As more activities head online, we need to make sure that our trade rules are relevant to the economy of 2020, whether that's cross-border data flows or trade facilitation measures that will support e-commerce.
The second point I want to talk about briefly is the United States. We very much welcome the entry into force of CUSMA and thank negotiators like Steve and his team who have done phenomenal work to get that deal over the finish line. However, our main message here is that it's too early to get out the proverbial mission accomplished banner, given that we have a number of other outstanding trade issues with the United States. The spectre of so-called national security tariffs on both metals and electrical coils looms large once again. We are steadfastly opposed to the United States using them and are working closely with our U.S. official counterparts and are calling on the government to be active on that issue. Additionally, we are without a softwood lumber agreement at the moment. We hope that the resolution of CUSMA will create bandwidth to be able to pick up this issue again and bring it to a resolution.
The last piece I want to touch on in my opening remarks is our relationship with the United Kingdom. In the absence of further developments, Canadian companies are generally now operating on the assumption that the U.K. will leave its current transition status with the EU as of the end of 2020, and that it will enact its so-called global tariff regime in January 2021, which was announced earlier this year.
This means fundamentally that the clock is ticking. Given that discussions have been happening for some time between the U.K. and Canada, our view is that we need to conclude the efforts to transpose the CETA into a bilateral agreement at the earliest possible opportunity and begin the necessary implementation processes, especially here in Canada.
Being fully self-aware, I know this view puts the Canadian Chamber of Commerce in a slightly different spot from some others, but our position is informed by several factors.
One, companies have already faced more than enough supply chain disruptions in the last number of months. Let's give companies the certainty they need and ensure that they won't face tariffs on their exports to the U.K., potentially as of January next year.
The second piece is that, based on the media reporting we're seeing on what the European Commission has said about the status of the U.K.-EU discussions, they might not be finalized until October. That certainly cuts very close to the end of the year, and given our own parliamentary timings, if we decide to wait until we have complete certainty about the outcome of the U.K.-EU discussions, that doesn't leave much time for businesses to plan, especially in the COVID-19 context.
The third factor is that landing a bilateral agreement with the U.K. based on the CETA positions us quite well to take the trade relationship to the next level. Out of the 28 countries in the EU, the U.K. is the one where we can probably have the most advanced trade relationship possible. This includes, for example, deepening services, regulatory work and digital trade rules. It also sends an important signal for Canada to maintain that we are the only G7 country to have comprehensive FTAs with all other G7 countries.
The Canadian Chamber of Commerce represents Canada at a number of global business forums, and that's a point we're always very proud to make when we are speaking to our global counterparts when representing Canada abroad.
I'll stop there, but I'm certainly happy to take any questions from committee members in the Q and A rounds.
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