Bill C-4 (Historical)

Canada–United States–Mexico Agreement Implementation Act

An Act to implement the Agreement between Canada, the United States of America and the United Mexican States

This enactment implements the Agreement between Canada, the United States of America and the United Mexican States, done at Buenos Aires on November 30, 2018, as amended by the Protocol of Amendment to that Agreement, done at Mexico City on December 10, 2019.
The general provisions of the enactment set out rules of interpretation and specify that no recourse is to be taken on the basis of sections 9 to 20 or any order made under those sections, or on the basis of the provisions of the Agreement, without the consent of the Attorney General of Canada.
Part 1 approves the Agreement, provides for the payment by Canada of its share of the expenditures associated with the operation of the institutional and administrative aspects of the Agreement and gives the Governor in Council the power to make orders in accordance with the Agreement.
Part 2 amends certain Acts to bring them into conformity with Canada’s obligations under the Agreement.
Part 3 contains the coming into force provisions.

Speaker's Ruling

[Judy Sgro, Liberal, Humber River—Black Creek, ON]

Mr. Speaker, I am very pleased to join my colleagues today as we deal with Bill C-4, which is extremely important for us. We call it the CUSMA, or the Canada-United States-Mexico agreement.

I am pleased with the work we did at committee on this particular issue. My committee colleagues from all parties showed their dedication to their constituents and their country while we did this study. Every member made it clear to me that it was their sincerest intent to collaborate, co-operate and come together as a committee to make sure that we did the job we were elected to do and worked in a non-partisan way on something that is critically important to Canada.

With our intensified schedule, our committee analyzed this bill for a total of 38.5 hours. The hard work that took place at committee ensured that Bill C-4 was returned in a timely fashion. Over 117 witnesses were invited, and we heard from a large range of individuals, organizations and businesses.

I would be remiss if I did not acknowledge the hard work of the staff of the House of Commons who were present during these extended meetings. None of this could have been possible without the work of our committee clerks, analysts, translators and the House of Commons staff, who carried out their duties with utmost professionalism. A huge thanks goes out to everyone involved.

This new agreement will help reinforce strong economic ties between Canada, the United States and Mexico. It will improve North America's ability to compete on the global stage. This agreement will also bring back predictability and stability to the economic relationship between Canada, the U.S. and Mexico, which we heard a lot about from various businesses and presenters.

We have seen several actions from the U.S. on trade that had contributed to economic instability for Canadian businesses and their workers, and they were clearly concerned. Canada was confronted with the option of either renegotiating NAFTA or facing the possibility of the United States withdrawing from the agreement. I am pleased that we now have a modern trilateral agreement that turns the page and focuses on the three pillars that make our economic relationship so successful: stability, economic integration and clear, transparent and enforceable rules.

From the start of the negotiations, Canada set out to achieve key priority outcomes: preserve important NAFTA provisions and market access into the U.S. and Mexico, modernize and improve the agreement, and reinforce the security and stability of market access into the U.S. and Mexico for Canadian businesses. We are proud of the fact that we have achieved all three of those objectives.

It is particularly important to note that the preferential tariff treatment under NAFTA is preserved in this new agreement. Canada's preferential access to the U.S. and Mexican markets is vital to the continuing prosperity of Canadian workers whose livelihoods rely on this trade. During consultations with stakeholders, we heard repeatedly about the importance of preserving the benefits of NAFTA and the integrity of North American supply chains. We understand how vital they are to Canadian companies and exporters.

As an annual average from 2016 to 2018, Canada exported 412.2 billion dollars' worth of goods to the United States, Canada's top export market. Over the same period, Canada exported an annual average of 9.2 billion dollars' worth of goods to Mexico, Canada's fifth-largest trading partner. These are very significant numbers, and the new NAFTA ensures continued preferential access to these key export destinations.

The new agreement preserves the market access outcomes that were achieved in the original NAFTA. This means that NAFTA's duty-free access for all non-agricultural goods will be maintained. For agricultural goods, Canadian exports will also continue to benefit from duty-free access for nearly 89% of U.S. agricultural tariff lines and 91% of Mexican tariff lines. The new NAFTA will help farmers to be more competitive and will make it easier for them to export their products and continue to feed North America and the rest of the world.

Maintaining these tariff outcomes provides Canadians with an advantage over those in countries without a preferential trade agreement with the United States and Mexico. It also ensures predictability and continued secure market access for Canadian exporters to our largest trading partners. The preserved tariff-free environment also safeguards the integrity of the integrated North American supply chains. Other key elements of the original NAFTA have also been preserved, including the chapter 19 binational panel dispute settlement, a state-to-state dispute settlement, the cultural exception and temporary entry for business persons.

The new NAFTA also helps open new market access opportunities in the U.S. for Canadian companies and improves existing market access. The new modernized agreement includes new customs and trade facilitation measures that will make it easier for companies to move goods across the border, including by eliminating paper processes and providing a single portal for traders to submit import documentation electronically. In particular, the new agreement moves away from the traditional certificate of origin to a new certificate of origin that allows companies to use existing documents in their business process to certify origin.

The new NAFTA includes a new stand-alone chapter on rules of origin and origin procedures for textiles and apparel goods that will support Canada's textile and apparel sector. The agreement preserves the existing market access that Canada has under NAFTA to the U.S. and Mexican markets in these sectors and ensures that the benefits of the agreement go primarily to producers located in North America. The new agreement provides greater flexibility for producers to use small amounts of materials from outside the region without losing their preference.

Furthermore, the agreement expands a provision from NAFTA to set out a special procedure to more easily establish the origin of the indigenous textiles and apparel. Under this provision, a textile or apparel item that the parties agree is an indigenous handcrafted good will be eligible for duty-free treatment, even if the good does not satisfy the applicable product-specific rule of origin.

Given the importance of predictability and transparency in international trade, the new NAFTA includes provisions that will provide added assurance for exporters that their goods will not be delayed by unjustified or unclear measures at the borders. Companies will have enough time to adjust to new regulations and other requirements. The agreement also ensures Canada's agricultural and processed food exports can rely on sanitary and phytosanitary measures that are risk-based and that increase predictability of market access so that products make it to market in a reasonable amount of time.

The section 232 side letter on autos and auto parts achieved as part of the overall outcome provides added security and stability for Canadian automotive and parts companies that export to the U.S. market. It will reaffirm Canada's attractiveness as an investment destination for this sector.

On trade and indigenous people, for the first time in a Canadian free trade agreement, the new NAFTA incorporates a general exception that clearly confirms that the government can adopt or maintain measures it deems necessary to fulfill its legal obligations to indigenous peoples. An indigenous working group was established to further the dialogue between the government and indigenous peoples, share ideas and work collaboratively on solutions.

We are pleased to have concluded an agreement that incorporates new and modernized provisions that seek to address 21st-century trade issues and support opportunities for Canadian businesses and workers. This includes bringing obligations on labour and environment into the agreement and subjecting them to dispute settlement. It also includes important outcomes toward inclusive trade, including with respect to gender and the interests of indigenous peoples.

In particular, the new labour chapter includes commitments to protect and promote internationally recognized labour rights and principles in North America. It also includes unprecedented protections against violence and against gender-based discrimination with regard to sexual orientation, sexual harassment, gender identity, caregiving responsibilities and wage discrimination.

[Colin Carrie, Conservative, Oshawa, ON]

Mr. Speaker, my colleague chairs the Standing Committee on International Trade and we were able to work together quite well on this agreement. The question I have for her is about something we found out that was quite disturbing, which was the transparency of the government on the economic impact implications of this trade agreement.

Before the election, the Prime Minister and the Deputy Prime Minister were very clear that this was going to be a win-win-win for Canadians. We found out late in the game the government's own numbers. For example, for people in my community in the auto sector there was going to be a hit of $1.5 billion to the auto industry and a decrease of 1.7% in production.

My colleague did not know and we did not know. I believe the Prime Minister and the Deputy Prime Minister were aware of it because they were working on it since 2017.

In order for this not to happen again, what does she think has to be implemented for future trade agreements? This was extremely misleading and it may have caused people to vote differently in the election.

[Judy Sgro, Liberal, Humber River—Black Creek, ON]

Mr. Speaker, I thank my colleague for the great work he did on the committee. He was a great member to work with, as were all the members on the committee.

Not everything goes the way we all want it to go. At the committee level, in reference to the economic report we were waiting for, we did receive it quite late in the process. All of this has been very difficult to ensure that this NAFTA and Bill C-4 get through the committee and that we recognize all of the pluses, such as the thousands of jobs we are protecting in Canada as well as the opportunities for growth that need to happen.

We always learn in everything we do as parliamentarians, and I hope we will learn from this experience as well to move forward.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Mr. Speaker, I listened to the member's remarks with interest. At the end of her remarks, she touched on provisions dealing with gender and equality for women. One of the problems with the way we have negotiated trade agreements has been the secrecy around those negotiations, and I certainly salute the Deputy Prime Minister and the member for Elmwood—Transcona for trying to fix that in the future.

My understanding is that many sources reported that the deal originally had much more extensive provisions dealing with gender equity, workplace harassment and other things that are very important to the equality of women in the workplace and that those disappeared from the final agreement, replaced by just some very general statements.

Can the member tell us if she has any information about what happened to those more extensive gender equity provisions and why they disappeared?

[Judy Sgro, Liberal, Humber River—Black Creek, ON]

Mr. Speaker, the fact that we have issues such as sexual identity, sexual harassment, the protection of the indigenous community and a variety of other things in a trade agreement is terrific.

Would I like to see more? Yes, I would. I would also like to see these kinds of human rights issues embedded into trade agreements. I think there should be more opportunities to see that happen in the future, and I certainly would like to see more of it, not less of it.

[Steven MacKinnon, Liberal, Parliamentary Secretary to the Minister of Public Services and Procurement]

Mr. Speaker, I want to add my voice to those of all members of the House who praised my hon. colleague, the member for Humber River—Black Creek, for her profound commitment and diligence when serving as chair of the Standing Committee on International Trade.

In her view, how does the North American trade agreement contribute to Canada's stability, especially in these uncertain economic times? How does the signing of this agreement contribute to Canada's economic stability?

[Judy Sgro, Liberal, Humber River—Black Creek, ON]

Mr. Speaker, I appreciate the member's acknowledgement very much.

This NAFTA is clearly going to give what we heard is needed. Out of the 117 witnesses, I think at least 100 of them talked about the need for security and stability. They were very uneasy knowing these discussions had been going on for several years. They were very fearful of losing NAFTA completely and wanted to see us do the best we could to get this through. In their minds, and we talked to representatives from the Business Council of Canada and numerous others, this was going to bring stability to Canadian businesses.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, I will be sharing my time with the member for Carlton Trail—Eagle Creek.

As the member of Parliament for Renfrew—Nipissing—Pembroke, I welcome the opportunity to participate in this debate regarding the Canada-U.S.-Mexico agreement, or CUSMA, which will replace the North American Free Trade Agreement that was negotiated by a previous Conservative government.

To paraphrase comments previously made by my Conservative colleagues, the good news is that, after rigorous debate in Parliament and at committee, Canada will continue to have a trade agreement with our largest trading partner. The bad news is that it was negotiated by the Liberal government, which made concession after concession to the United States and Mexico.

The United States is our greatest ally and our largest trading partner. The NAFTA deal that was negotiated by the Conservatives was good for Canada, with $2 billion a day in trade crossing our border, which represents 75% of Canadian exports. The U.S. direct investment in Canada was over $400 billion, which is huge.

Since NAFTA was first implemented, over five million jobs have been created, and total trilateral trade has quadrupled to $1.2 trillion. Conservative trade deals have done a good job creating jobs for Canadians.

The Conservative Party of Canada is the party of free trade. An election was fought over free trade. Luckily for Canadians, the Conservatives won that election. It was under former prime minister Brian Mulroney that the first Canada-U.S. free trade agreement was signed. Then it was under former Conservative prime minister Stephen Harper that Canada signed a record number of trade agreements, providing Canadian businesses with unprecedented access to markets around the world.

The Conservative Party is the party of free trade. We have long supported free trade and will continue to support a free trade agreement with the United States, our largest trading partner, and Mexico.

On February 25, I had the honour of presenting a private member's bill, Bill C-222, an act to amend the Expropriation Act with respect to protection of private property. There has been a disturbing trend in Canada toward what is referred to as regulatory, de facto or constructive taking of private property. This happens when government uses its statutory powers to regulate or restrict the property rights of an owner without acquiring title to the land being adversely affected. The landowner feels the impact of the regulation as if the land has been expropriated.

In the United States, the fifth amendment of the American constitution protects private property rights. In Canada, government acquisition of land without the owner's consent is not subject to the Canadian Charter of Rights and Freedoms. Private property rights were excluded from the Canadian Constitution when it was repatriated in 1982.

In Canada, landowners' rights are found in the expropriation legislation. The government must follow the law as to what land may be expropriated and must observe procedures set out in the legislation. In Canada the government can strictly regulate land, limiting its value and what a landowner can and cannot do with it without triggering the procedures in the legislation.

A de facto regulatory taking means a property owner is not entitled to compensation unless the restrictions of the owner's rights are such that they should be properly regarded within the meaning of the Expropriation Act.

I introduced Bill C-222 to provide some protections from the government taking people's property without compensation. It would appear that CUSMA addresses the issue raised by my private member's bill, Bill C-222. Canadian common law on de facto expropriation suffers from what some jurists refer to as external incoherence.

The present context of CUSMA decries the possibility that the rights of foreign investors in Canadian property are afforded more protection than the rights of Canadian property owners of Canadian property. The source of this incoherence is article 1110 of the North American Free Trade Agreement, or NAFTA, which has been carried over into CUSMA under article 14.8 on expropriation and compensation.

Article 14.8 in the new agreement provides:

1. No Party shall expropriate or nationalize a covered investment either directly or indirectly through measures equivalent to expropriation or nationalization (expropriation), except:

(a) for a public purpose;

(b) in a non-discriminatory manner;

(c) on payment of prompt, adequate, and effective compensation in accordance with paragraphs 2, 3, and 4; and

(d) in accordance with due process of law.

2. Compensation shall:

(a) be paid without delay;

(b) be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place (the date of expropriation);

(c) not reflect any change in value occurring because the intended expropriation had become known earlier; and

(d) be fully realizable and freely transferable.

3. If the fair market value is denominated in a freely usable currency, the compensation paid shall be no less than the fair market value on the date of expropriation, plus interest at a commercially reasonable rate for that currency, accrued from the date of expropriation until the date of payment.

4. If the fair market value is denominated in a currency that is not freely usable, the compensation paid—converted into the currency of payment at the market rate of exchange prevailing on the date of payment—shall be no less than:

(a) the fair market value on the date of expropriation, converted into a freely usable currency at the market rate of exchange prevailing on that date; plus

(b) interest, at a commercially reasonable rate for that freely usable currency, accrued from the date of expropriation until the date of payment.

5. For greater certainty, whether an action or series of actions by a Party constitutes an expropriation shall be determined in accordance with paragraph 1 of this Article and Annex 14-B (Expropriation).

The language used here was rolled over from the 1992 NAFTA and it refers to the indirect nationalizing or expropriating of a measure as being tantamount to nationalization or expropriation. The language clearly exists to ensure that compensation will be owed for both de jure and de facto expropriation by the expropriating country.

The scope of article 14.8 is indeed wide. “Measure” includes any law, regulation, procedure, requirement or practice, and the definition of “investment” is so expansive that it cannot be included here. Moreover, there is no allowance, as there is in Canadian common law, for express statutory language to extinguish the right of compensation.

How the previous NAFTA article 1110 has been treated in arbitration among the parties of NAFTA, Canada, the United States and Mexico, has, or at least should have, bearing on expropriation law in Canada generally. This is particularly so given NAFTA's, now CUSMA's, constitution-like status as a document that cannot be amended without the consent of all signatories.

The NAFTA expropriation case that has received the most attention from Canadian legal scholars is probably The United Mexican States v. Metalclad Corporation. In that case, Metalclad had received approval from the federal government of Mexico to operate a landfill in the municipality of Guadalcazar and began to construct the landfill on that basis. Mid-construction, Guadalcazar informed Metalclad that it would require a municipal permit and must cease construction pending its issuance. More than a year later, Guadalcazar finally made its decision: permit denied.

The governor of San Luis Potosi, the state in which Guadalcazar is situated, further declared Metalclad's land to be a natural area for the protection of rare cacti. The federal government took no saving action. In its decision, the tribunal stated, “these measures, together with the representations of the Mexican federal authorities”, on which Metalclad relied, “and the absence of a timely, orderly or substantive basis for the denial of the construction permit, amounted to an indirect” or de facto “expropriation.”

The tribunal's belief in the far-ranging scope of article 1110 is evident. As outlined in its decision, expropriation in NAFTA, and now CUSMA, includes not only “the open, deliberate and acknowledged takings of property” but also the “covert or incidental interference with the use of property which has the effect of depriving the owner, in whole or in significant part, of the use or reasonably-to-be-expected economic benefit of property.”

Where the ratification of CUSMA will leave expropriation law and Canadian property rights in the future is uncertain. Time will tell whether or not the law will continue to afford foreign investors more protection than Canadians. This is one example of why a detailed analysis of CUSMA is so important for Canadians to understand what is being signed.

[Steven MacKinnon, Liberal, Parliamentary Secretary to the Minister of Public Services and Procurement]

Mr. Speaker, very simply, obviously we on this side of the House believe strongly in the agreement that has been forged with our partners and allies.

I note the concerns raised by my hon. colleague and I will simply ask her a question. If she is that concerned about it, why is voting for the agreement?

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, CUSMA validates my private member's bill, Bill C-222. It naturally follows that Bill C-4 also supports the same principles found in Bill C-222. That is why I am supporting this CUSMA agreement.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Mr. Speaker, I always enjoy working with the member for Renfrew—Nipissing—Pembroke, even though we rarely agree on anything.

My question involves the fact that she is now supporting a trade agreement that will take out the investor-state dispute resolution. That is something that she supported when the former Conservative government in a previous Parliament put investment protection into the Canada-China agreement.

Does the member still support the idea that a corporation like Huawei should be able to sue the Canadian government for losses, and to do so in a secret process, if they are denied the ability to participate in the 5G network? That is something the previous Conservative government put in place in 2014.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, the issue of Huawei involves matters of national security, and I believe in ranking the security of Canada and the defence of Canada as paramount.

I look forward to broad support for Bill C-222 from my colleagues and government members on the basis of consistency between article 14 of CUSMA and the articulation of private property rights in private member's Bill C-222. This is in addition to other sound legislative reasons for supporting Bill C-222.

[Cathay Wagantall, Conservative, Yorkton—Melville, SK]

Mr. Speaker, the vice-president of the Canadian Federation of Agriculture made this quote:

Canada agreed to place a world-wide cap on exports of certain dairy products in the CUSMA, which is unprecedented in regional trade agreements. As the nation’s prosperity depends on reliable access to global markets, Canada must not agree to this kind of provision in any future trade agreement.

What does the member see as the dangers in making this concession in regard to limiting our own trade in other countries on the basis of this agreement?

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, my colleague makes a very good point. Dairy producers tell me that at the very least there has to be some form of compensation for what they specifically have given up.

After negotiating CETA successfully, we had in place a compensation program that was ready to go. Then the election occurred in 2015. The Liberals took over, and they denied compensation to dairy farmers. Furthermore, we have to get permission from the United States before we sign any further trade agreements.

[Larry Bagnell, Liberal, Parliamentary Secretary to the Minister of Economic Development and Official Languages (Canadian Northern Economic Development Agency)]

Mr. Speaker, on the last point, I emphasize that there was not a loss in the trade of those projects. There is a level at which an additional fee is added, but Canada is nowhere near that level yet, so there is not a loss there.

I thank the member for her speech. It was great. On a slightly different topic, however, I wonder if she supports the increased benefits in CUSMA for labour, the environment and women's rights.