International Trade Committee on Jan. 30th, 2014

[Cristina Falcone]

No.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

That's what you're asking for.

[Cristina Falcone]

That's what we're asking for.

Tariff reduction is great. It gives new access.

I think this was mentioned in Mark's testimony as well. If you've got these non-tariff barriers that are causing things to be held on a dock, then it doesn't matter how low the tariffs are, it's going to impact the competitiveness and time to market. Single window.... It's very technical, but if we can submit everything electronically and have all the government agencies review versus having to file with multiple agencies—

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I just want to get to Mark quickly.

The alarming statistic that you gave us is that for every one car that's exported 10 are imported. I don't see how we're going to do any better in the vehicle exporting business versus the importing business.

Can you respond to that?

[Mark Nantais]

That's certainly the ratio that would exist now, even with the Canadian tariff in place. The key here for us is from Canada, from our Canadian plants, as global automakers.... People refer to Chrysler, Ford, and General Motors, as the D3 with a certain connotation that we're very myopic in our export aspirations and so forth. In fact, these are companies that actually do business in 30 countries around the world producing and selling vehicles so they are indeed global companies.

The idea here per the “Call to Action” report of the Canadian Automotive Partnership Council is how we get our plants—and it's already happening—to evolve so that we have global platforms so that we can export products from Canada to these countries with which we have a trade agreement.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

What's the answer?

[Mark Nantais]

The answer to that is it's evolving. This is why I mentioned the fact that appropriate tariff reduction schedules are needed so that we can take time to evolve. Clearly, we have been structured to service the North American market primarily. We're highly integrated. That will evolve, and as it evolves we're hoping that through these agreements we can open up new opportunities. For the short term I think you can say that the upside is going to be mostly on the Europeans.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Because some of the—

[The Chair, Conservative, Rob Merrifield]

Your time is all gone, but very quickly, please.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

That's fine.

Thank you.

[The Chair, Conservative, Rob Merrifield]

Mr. Holder, the floor is yours.

[Ed Holder, Conservative, London West, ON]

Mr. Chair, I'd like to thank our guests for being here today. I really appreciate the commentary that you've given us.

Mr. Nantais, thank you for your formal presentation and your responses. As I was listening to your opening remarks, acknowledging it's really the Detroit Three that you represent in terms of Chrysler.... We call them the Detroit Three affectionately.

[Mark Nantais]

I'm glad it's affectionately.

[Ed Holder, Conservative, London West, ON]

With Chrysler, Ford, and General Motors, I was actually surprised I didn't hear an acknowledgement of the strong support the federal government provided. Certainly, it's a great part of the organizations that you represent. I'm sure you'd want to comment and set the record correctly that that mattered, unless it didn't matter. I'm not sure. You might have a thought on that.

[Mark Nantais]

I'd certainly love to comment on that.

Quite frankly, if that decision hadn't been made, and had the hard political decision not been made to provide support to General Motors and Chrysler, not just those two companies wouldn't be here today or in Canada, but we probably wouldn't have an industry here that hadn't gone through extreme upheaval and hardship with many more jobs lost. To set the record straight, if the Government of Canada, in conjunction with the Government of Ontario, and in conjunction with the U.S. government, had not intervened the way they did, we probably would be in dire straits relative to our auto industry today. We are greatly appreciative of that in terms of—

[Ed Holder, Conservative, London West, ON]

It's very kind of you to volunteer that information.

The question I have is about some of the comments you made in response to one of my colleagues. I'm trying to understand. It seems to me that in the auto industry—you talked about the integration, and the highly integrated market that we have between Canada and the United States—we've moved from an emissions and safety standard, we've got a North American model. It's a very high standard. Would you imagine, as we develop CETA—and, of course, Canada is not done with its trade agreements—that your industry would maintain a high-level standard on that global platform that you've talked about? What's the objective? Would you go to a lowest common denominator or would you be the ones who set the bar? I'm just trying to get a feel for that from you, please.

[Mark Nantais]

I don't think any company or country would want to go the lowest common denominator. I don't think that's on the table. There is, you know, opportunity for discussion around standards, homogeny, as I talked about. If we had global standards, that is the optimum. Where all vehicles can be one standard, could enter any market around the globe, is the penultimate goal here.

I could quite conceivably see ongoing discussions with Europe and the U.S., presumably Europe and Canada, but also all three working towards standards that might reflect, you know, the basis of setting standards which are sort of equivalent, functionally equivalent if you will.

[Ed Holder, Conservative, London West, ON]

Not to get off topic, but would you imagine that's happening in Mexico?

[Mark Nantais]

Mexico is part of NAFTA.

[Ed Holder, Conservative, London West, ON]

I know.

[Mark Nantais]

Mexico hasn't come as far as we have to date, relative to both the extent of the standards that we have and the enforcement of the standards that we have, but they are coming along. Certainly in discussions I've had with my Mexican counterpart, they are moving forward in that same direction. It'll take them time, though.

[Ed Holder, Conservative, London West, ON]

Just one final question for you, please. Where I get a little confused about this is we've got strong manufacturing facilities in the United States and in Canada, and we know the integration there. We know that the three major companies you represent have facilities in Europe, but I'm trying to get a feel. What's the passionate interest that you have for CETA? How does that help Canada when you already have manufacturing facilities in Europe?

[Mark Nantais]

Where it helps Canada is, again, we're looking at global platforms here. If you want to be competitive, you want to maximize your production and capacity utilization. It hasn't been a well-known fact, or people haven't recognized that. But when we went through 2008 and 2009, through the deep recession—and I've been around for 30 years in the auto industry, I've never seen a trough as deep as that, with the extent of the damage it had on the economy and in the auto industry—we took out capacity so that we could maximize capacity utilization. Other countries around the world haven't necessarily done that, but probably should have done that. Because they haven't done that, now they're trying to protect that capacity by exporting to our market here.

That's one of the things I talk about. When it comes to our negotiating teams, that's one of the challenges here. You've got a very successful integrated industry here. You've got perhaps other countries around the world seeking to come to Canada because it's in their interest with their domestic industry. From our standpoint, and because we're global manufacturers, because of global competitiveness generally speaking, the only way that we're going to keep capacity here is to find ways to create a business case for new investment, and in the course of that new investment increase the technology in our plants, increase the product, the benefit that we have, and sell it abroad. That's the ultimate goal here. We'd like to see it from our Canadian plants, pure and simple.

[Ed Holder, Conservative, London West, ON]

Thank you.

Ms. Falcone, when you mentioned that you did the polling, I was quite surprised that only 47% of Canadians knew that we had signed an FTA. There might have been some other things going on in the House of Commons that might have distracted from that announcement, but my question of you is: did you actually survey businesses or was this just a broad Canadian...?

[Cristina Falcone]

This was a broad Canadian survey.