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.

[Drew Dilkens, Mayor, City of Windsor, and Member, Big City Mayors' Caucus, Federation of Canadian Municipalities]

Thank you very much.

Good afternoon, Madam Chair, Parliamentary Secretary Bendayan and members of the Standing Committee on International Trade. As I sit in my office right now at Windsor City Hall, what you can't quite see—you'll have to trust me, and you can pull up your Google Maps—is that about one and a half kilometres out the window behind me is the city of Detroit and the United States.

I want to thank you, because I think it's appropriate to have this opportunity to provide some comments on Bill C-4, the Canada, U.S., Mexico agreement implementation act.

Now I don't need to tell anyone in the room that Canada is a trading nation, that our prosperity, growth and success are largely reliant on our ability to trade with other countries. I'm the mayor of the City of Windsor and also a member of the FCM Big City Mayors' Caucus. My community is home to 240,000 people, and we are set in a region of nearly 400,000 people. Our city is the largest border city in Canada. The local economy is intricately tied to that of Detroit, Michigan, and the United States.

We are home to the busiest commercial border crossing between the United States and Canada. In fact, the Windsor-Detroit border crossings handle more than one-third of all Canada-U.S. land trade over four points of entry: the Ambassador Bridge, the Detroit-Windsor Tunnel, the CP Rail tunnel and the Windsor-Detroit Truck Ferry.

The importance of trade with the United States to this area is further punctuated by the fact that one of our nation's largest infrastructure projects is under way, that being the construction of the Gordie Howe bridge linking Windsor and Detroit, Canada and the United States. This project has survived the test of time through four Canadian prime ministers and four U.S. presidents, representing Democratic, Republican, Liberal and Conservative parties. It has made it this far because smart people on both sides of the border understand the value of smooth and efficient border crossings and the value of trade for our economies and what it means for jobs. Nowhere is the value of secure, efficient and safe movement of goods and people so important than to the Windsor-Essex area, likely more so than anywhere else in Canada.

Windsor is proud to be the automotive capital of Canada and home to the largest cluster of tool, die and mould-makers in North America. Our two largest private employers are the Fiat Chrysler assembly plant, home to the Dodge Grand Caravan and Chrysler Pacifica, and the Ford Motor Company, which operates two engine plants locally.

Windsor-Essex is also home to the largest auto cluster in North America, with more than 300 local companies engaging in engineering, designing and manufacturing of cutting-edge industrial systems and products for clients across the globe. This is an industry that supports thousands of well-paying, highly skilled jobs, and one that comprises 30% of our regional GDP.

The auto sector is vital to the economy of Windsor-Essex, but it's also vital to the overall economy of Canada as well as various regional economies throughout the United States. Our local supply chains are still tightly integrated. Based on geography, businesses are able to take advantage of the best elements that all three countries have to offer. There is no better example that I can think of than this: Parts put into a car produced in Canada cross the border an average of seven times before that car rolls off the end of the production line. That, I think, is a great example of how tightly integrated our economies are.

The amendments to the new Canada-United States-Mexico agreement will help strengthen and protect well-paying jobs and will help our companies stay highly competitive in a global economy. That's truly how our employers compete, on a global basis. The agreement's updated rules of origin, increasing the regional value content threshold for cars up to 75% from 62.5% ensures that a higher majority of car parts, such as engines and transmissions, for example, originate in North America, in cities like mine.

The new agreement also introduces new requirements to help ensure that at least 70% of a producer's steel and aluminum products originate in North America. This agreement has the potential to generate increased automotive production in North America, of course, including cities and areas like Windsor-Essex, as well as additional sourcing opportunities for Canadian parts producers, many of which have local footprints in Canada.

I'm not going to sit here and tell you that this new agreement is perfect. It's not. Future revisions to trilateral trade agreements with Mexico and the United States should strongly consider better labour mobility for highly skilled workers, so that positions like robotic technicians, machine learning specialists and other new economy workers can seamlessly travel within the trade zone to meet the changing demands of employers as they and our economies evolve. The 8,000 people from my city who cross the border every day into the United States to work understand how important mobility is for their livelihoods and for that of their employers.

There's an old axiom taught in many law schools that says the best agreement is usually the one that leaves each party thinking they could have done a little bit better. There's no doubt that is the case in this negotiation and revision to our trade agreement. However, the incremental improvements achieved through the process far outweigh any negative aspects.

Political and economic environments juxtaposed with the benefits of this bill lead me to offer my full support to the federal government. On behalf of the people in Windsor—Essex, I encourage Parliament to move quickly to ratify this deal. I personally thank Minister Freeland for her efforts on behalf of all Canadians.

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

We are resuming debate and discussion. We are following up, pursuant to the order of reference of Thursday, February 6, on Bill C-4, an act to implement the agreement between Canada, the United States of America and the United Mexican States.

With us in this segment, on our panel, as individuals, we have Leo Blydorp and Lawrence Herman. From the Assembly of First Nations, we have Judy Whiteduck, director, economic sector, and Risa Schwartz, legal counsel. From the Canadian Manufacturers & Exporters, we have Matthew Poirier, director of policy, and Alan Arcand, chief economist, and from the Federation of Canadian Municipalities, we have the mayor of Windsor, Drew Dilkens.

We will open up our panel for discussion beginning with the Federation of Canadian Municipalities.

Mr. Dilkens, you may go first.

[The Chair, Liberal, Sherry Romanado]

Thank you, Mr. Masse.

He's referring to the motion that was brought forth to this committee at the first meeting on February 18. I'm not sure whether you all have it in front of you. I can read it out:

That the House of Commons Standing Committee on Industry, Science and Technology, hold immediate hearings with the Canadian Radio-television and Telecommunications Commission (CRTC), Royal Canadian Mounted Police (RCMP), Canada's telecommunications companies and other telecom experts and advocacy groups, to better understand (a) the influx of fraud calls to Canadians' home phones and cellular devices including robocalls, ghost calls, and spam calls, (b) to give an update on the successes and failures of the National Do-Not-Call List, and (c) to outline the September 2020 STIR/SHAKEN measures and how this will benefit Canadian consumers.

That is the motion before us, with the addition of a suggested timeline of when it could be done: March 10 and 12.

We sit next week. Obviously, next Tuesday's meeting will be allocated to Bill C-4 to wrap up anything remaining. Next Thursday's meeting will be to discuss what we will be doing. Then we have a riding week. It is the following week, when we're back on the Hill, from March 9 to 13. So this would be on March 10 and 12, if the committee is in agreement.

First we will agree on the actual motion. Then, do we agree on the timing? That being before the committee, I leave the floor open for comments.

Mr. Erskine-Smith.

[The Chair, Liberal, Sherry Romanado]

I just want to make sure in terms of clarity that the proposal we agreed on in terms of the motion is that this committee, from my understanding from the analysts, will receive a briefing note from the clerk of the trade committee with respect to Bill C-4, the new NAFTA, the CUSMA. It will be circulated for everyone to give us a chance to read it. We will see if we can get a witness list from the clerk. As soon as we can get it, we will definitely share that with you.

If it's possible for all parties to provide witness lists to the clerk of this committee by 9 a.m. tomorrow, again, that can be adjusted if we only receive the list of witnesses from the trade committee tomorrow morning. I want to be flexible, understanding that if you haven't received the information, I don't want to penalize you for not having that information in front of you.

If we do receive it today, can we say that by 9 o'clock tomorrow morning you would provide your witness lists? That way, it gives the clerk time to actually invite folks for Monday morning and make sure they are prepared and able to come on Monday.

I just want to double-check with respect to the timing for availability. We will try to have a meeting of this committee from.... I'm looking at a four-hour window. Just to make sure, are you suggesting an 8 a.m. to 12 p.m. meeting of this committee on Monday morning?

[The Chair, Liberal, Sherry Romanado]

In addition to the motion that is before us, we have some other business in front of us. We have various notices of motion. Additionally, the committee has received the notice of tabling of the supplementary estimates (B) for us to discuss. Because we are in committee business, I would like to ask the committee how they would like to proceed.

Do we want to proceed with immediately discussing Bill C-4, given the very short timeline that we have to discuss this with respect to potential witnesses, or would we like to maybe give a deadline of when we could submit our witness lists to the clerk? I am throwing this out there. I am looking at the clerk, who is probably hoping to get that list sooner rather than later.

Ms. Rempel Garner.

[The Chair, Liberal, Sherry Romanado]

If you will give us a moment, the clerk will double-check the letter from the chair of the trade committee and the exact articles of Bill C-4 that were mandated. We will be back to you in a moment.

Mr. Erskine-Smith.

[The Chair, Liberal, Sherry Romanado]

Good morning, everyone. We are starting the second meeting of the Standing Committee on Industry, Science and Technology.

As you know, on Tuesday we passed some routine motions, one of which was to instruct the clerk on ordering food, because this committee sits over the course of the lunch hour. I wanted to let members know, if you have any dietary restrictions, allergies, anything like that, to please let the clerk know so that we won't a member falling ill. We wouldn't want that. If you could let the clerk know, that would be great. You don't have to do it now, but I don't want anyone falling ill.

With that, as you know, we have quite a lot of business in front of us, including various notices of motions that have been put forth to the committee. Further to the last meeting, we have also received notice with respect to Bill C-4. I believe we need to have a motion to proceed with that. I see that Ms. Rempel Garner is ready to go forward.

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I'm calling the meeting to order, pursuant to the order of reference of Thursday, February 6, 2020, Bill C-4, an act to implement the agreement between Canada, the United States of America and the United Mexican States.

Welcome to everybody. Welcome to our witnesses. Good morning to our committee members and a few friends we have visiting today.

I'll introduce the witnesses. From the Canadian Global Affairs Institute, we have Colin Robertson. From MLTC Resource Development, we have Al Balisky, and from NorSask Forest Products, Tracey Gorski. From the Réseau québécois sur l'intégration continentale, we have Claude Vaillancourt and Normand Pépin, and from Vitalus Nutrition, we have Philip Vanderpol, president and chief executive officer.

Mr. Vanderpol, would you like to lead off, please?

[Phil Benson, Lobbyist, Teamsters Canada]

Good evening. Thanks for having us here.

My name is Phil Benson. I'm a lobbyist with Teamsters Canada. With me is Christopher Monette, director of public affairs.

Teamsters Canada is Canada's supply chain union, representing more than 125,000 workers in all sectors of the transportation industry, and in all sectors of the economy, from film and food and beverage to dairy. The International Brotherhood of Teamsters represents 1.4 million workers.

Teamsters Canada supports CUSMA and Bill C-4's timely passage. lt is not the best deal, but it is a deal, an achievement, given America's approach of bargaining in the best interests of its businesses, predicated on national security interests. Gains were made. However, not understanding that the fundamental nature and substance of negotiating trade agreements have changed left opportunity off the table.

Trade is important for many teamsters' jobs. lt is a reason why Teamsters Canada participated in every bargaining round during CUSMA's negotiation. The Liberal government made the right decision to include labour unions, NGOs and civil society in the process. The practice of negotiating trade deals in secret is a factor in the growing disaffection of workers. Opening the door let in new perspectives, leading to a better outcome. Unfortunately, some departments did not get the memo. We were not a “client” in their mind, and they often treated us as an afterthought. We anticipate that this will change and will not happen again.

The minister clearly appreciated and encouraged our activities in building support and consensus in Washington and Mexico City. Working with our colleagues and allies was helpful in achieving gains. It helped build support for a deal. Our International Brotherhood of Teamsters colleagues in Washington led the fight to make the improvements that led to a successful conclusion of the process in the United States. Those changes and the elimination of ISDS provisions are a win.

During the Mexican round, we joined a civil society conference at the Mexican Senate and met with independent trade unions. Workers in the auto supply chain, in a closed-door session, told of unhygienic, inexcusable working conditions and gave testimony of violence and sexual assaults. I am proud of how teamsters and labour are fighting for workers rights everywhere and of a government that got it. Trade agreements must include protection of workers, women, the environment and indigenous peoples, and Bill C-4 is a start in the right direction.

The negotiators' liberalization trade-bargaining blinders in seeking “ambition” lost the opportunity to protect Canadian jobs—for example, some jobs in rail and road transportation. It's a loss. Buy American and the imposition at whim of tariffs left unchecked is a push bet. The six-year review and sunset clause is counter to why trade deals are entered, a confirmation that negotiating trade is no longer all about “ambition” and does offer potential future risk and opportunity.

The provisions of NAFTA are not used by many sectors. The rules of origin are more expensive to comply with than paying the cost of low or zero-based tariffs. We do not believe that will change. As such, the NAFTA negotiations were driven by the goal of the United States to protect American-based auto manufacturing and to dismantle Canada's supply-side management system.

[Meagan Hatch]

Good afternoon.

AHAM represents manufacturers of major, portable and floor-care appliances in Canada and the United States. Our membership includes over 150 companies. The industry supports 40,000 jobs in Canada, including manufacturing, sales, distribution and retail. In Canada the economic impact of the appliance industry is close to $6 billion annually.

AHAM supports the rapid adoption of Bill C-4 and CUSMA.

Canada is a net importer of home appliances, with the U.S. and Mexico being the predominant trading partners. Manufacturers design appliances for a single North American market. This larger market increases consumer choice, drives down costs and maximizes economies of scale.

We support chapter 11 and chapter 28 of the agreement, which aim to reduce technical barriers to trade and increase regulatory alignment. We also support annex 12-D, which is specific to our industry and calls for energy performance standards and test procedures to be harmonized. It also encourages the use of voluntary programs such as Energy Star, noting that they contribute to improving energy efficiency for a range of products.

This is why we'd like to raise an issue that is of great concern to our members both in Canada and the United States. The Liberal Party has put forward a commitment to make Energy Star certification mandatory for all home appliances by 2022.

If all home appliances are required to be Energy Star, almost half of what's available in the market today will vanish, and in the future that could rise to 75%. Although implementation has not started, this has created great uncertainty in the market for both manufacturers and retailers. If the government moves forward with making Energy Star mandatory, Canada will be going against the intent of CUSMA, but more importantly, Canadians will experience a significant reduction in products available on the market. In fact, a staggering 41% of what is currently sold in Canada today will no longer meet these requirements. Because of the sharply limited model selection, it is likely that low-income Canadians will end up paying more for entry-level models. A price rise could be made worse by the greater cost of manufacturing such products, since more efficient components may be costlier, and in some cases, more fundamental construction changes will be needed. Unfortunately, in certain cases minor energy savings would be achieved.

This is because overall, today's home appliances are very energy efficient, and the cost to further improve efficiency could be significant, depending on maturity of the existing technology.

Both NRCan and the U.S. Department of Energy set mandatory minimum energy efficiency standards that all appliances must meet, and these have become more strict over time. Home appliances have undergone several standards changes. Some products are nearing maximum efficiency under available technology, and in some cases, the basic laws of thermodynamics.

Energy Star is a voluntary program. The purpose is to make it easy for consumers to identify higher energy efficiency products. It is intended to highlight the top 25% to 30%, or best in class, of energy efficiency. This competition motivates manufacturers to find new innovation. Manufacturers, in turn, make significant investments to qualify for the program.

If the Canadian market is limited to Energy Star products, this competition ends and the mark loses meaning. If the government mandates that everything be Energy Star, then it renders the brand meaningless. Article 12.D.5 of CUSMA clearly states its support for voluntary programs such as Energy Star to promote energy efficiency. This is in direct contrast to the government's proposal to make the Energy Star program mandatory.

Another rather significant issue with the Liberal commitment is that the Energy Star brand is not owned by the Canadian government. The brand is owned and trademarked by the U.S. Environmental Protection Agency. The U.S. government administers the program and sets the levels that manufacturers must meet in order to qualify for the designation. The Energy Star brand is highly praised by both NRCan and industry alike. The brand is recognized by 85% of the public, and the logo is used around the world. We want it to continue.

The Energy Star commitment is also inconsistent with the Liberal approach to energy efficiency over the last four years. In Canada the federal, provincial and territorial governments all have important roles to play in setting energy efficiency standards. In 2016 the FPT governments developed a framework encouraging market transformation through collaboration on energy efficiency standards. The framework states that when federal, provincial and territorial governments are not coordinated, manufacturers may have to test an identical product more than once to sell it across Canada. This can lead to unnecessary costs, reduce the product choices available in the market and create barriers to internal trade between provinces.

Making Energy Star levels mandatory is also in stark contrast to the government's approach to energy efficiency harmonization with the United States through the work of the regulatory co-operation council.

In 2018, Canada and the United States signed a memorandum of understanding to formalize the RCC and reaffirm the importance of regulatory co-operation. At the time, the president of the Treasury Board noted that aligning energy efficiency standards through the work of the RCC was the best way forward because it would save Canadians about $1.8 billion in energy costs by 2030. This is exactly why CUSMA commits to regulatory harmonization and supports voluntary programs like Energy Star.

Canada has historically been slow to adopt the stricter energy efficiency standards introduced in the United States. Since 2016, under this government, the two countries have made significant strides towards harmonization and alignment through the work of the regulatory co-operation council. Canada is now finally aligned with the United States. This process took over 10 years. It would be a shame to throw it all away.

Regulatory alignment is critical to avoid unnecessary double testings and barriers to trade, and it maximizes consumer product choice. Instead of making Energy Star mandatory, the government should continue to adopt the regulatory framework that can more quickly update its standards. Bill C-4 and CUSMA create a structure for this harmonization to thrive.

AHAM has been a strong advocate for advancements in energy efficiency standards, but making Energy Star mandatory will have negative consequences for middle-class Canadians.

Thank you.

[The Chair, Liberal, Judy Sgro]

I'm calling the meeting back to order.

Pursuant to the order of reference of Thursday, February 6, 2020, we are studying Bill C-4, an act to implement the agreement between Canada, the United States of America and the United Mexican States.

With us on this panel for the next two hours are the Automotive Parts Manufacturers' Association, Flavio Volpe, president; the Association of Home Appliance Manufacturers Canada, Meagan Hatch, director, government relations, and Kevin Girdharry, manager, policy and data analysis; HTC CO2 Systems, Stephen Beasley, vice-president; IPEX Group of Companies, Veso Sobot; and Teamsters Canada, Phil Benson, and Christopher Monette, director, public affairs.

Thank you all very much for making the time to be here today.

Mr. Volpe, we'll start with your comments, please.

[Angelo DiCaro]

I'd say that the fact that this deal is going to get done is probably as much certainty as people have had in the last three years of this roller coaster. In a way, then, it becomes a good thing. Many big investment decisions have been on pause, with people waiting to find out what these final rules are going to look like. I think, then, that having this tumultuous period come to a close is a good thing.

I'm not going to speak for Jerry, but I think that some of the outcomes of the last number of months.... The eventual elimination of the steel and aluminum tariffs has been a big weight lifted off that industry. It's not entirely connected to the deal that's in front of us in Bill C-4, but it's a big thing for our members in those metal sectors. That was very helpful.

As for the auto industry, I've heard many commentators talk about the U.S. FTA with Canada, originally in 1988 and then spilling into NAFTA, as being largely about autos. I think it may be a little myopic for us to think that way, but it's a big component. What we've seen come out of the auto chapter has been a real change in what we've seen with respect to the auto industry in previous trade agreements.

As Dr. Geist was saying, it's always complicated when you're trading things off that you don't fully understand. I'll tell you that from the position of auto workers—and folks in those communities will know—it feels as though they have been the sacrificial lambs put out there for gains in other sectors. This is the first time, it seems, that the intent was to try to create greater certainty for them. For that reason, I think we've done pretty well.

There are still aspects of it that I think could be tightened up, but at this point, just having this thing in place and hoping that investments will now start to smooth out and trickle in is a good thing.

[The Chair, Liberal, James Maloney]

Does everybody understand what we're now about to vote on? There are no more comments? Okay. All in favour of Ms. McLeod's motion as amended?

(Motion as amended agreed to [See Minutes of Proceedings])

See? Remember what I said about the spirit of co-operation at the beginning? Thank you.

On the next piece of business, I assume that everybody has seen the letter we received from the chair of the Standing Committee on International Trade. Is that a yes? Okay.

They have requested that we review certain provisions of Bill C-4. The gist of the request and of the motion that was passed at their committee is that we have the option to agree to do it, in which case we would have to provide a response to that committee no later than 5 p.m. next Tuesday.

That would require us to deal with this sometime between now and next Monday, presumably have some witnesses come and speak to us and then turn to our analysts, who have just explained to us what they do and ask them to become superheroes right out of the gate and turn something around in less than 24 hours. Then we would have to review it ourselves.

Option number two is that we decline to accept this invitation, in which case we can notify the trade committee by Friday.

I'll throw it out there for discussion.

Mr. Lefebvre.

[Angelo DiCaro, Director of Research, Unifor]

Please, I'll explain. When we were first invited, we also asked if Hector could join us and split our time. That's what we've decided to do. We'll do five minutes and five minutes, and that will make up Unifor's time. I only learned about the extra 10 minutes today, so it was too late to fill in the blanks on the comments. I'll go first, if you'll indulge me; then we'll go to Hector.

Good afternoon, Madam Chair and members of the committee. As was said, my name is Angelo DiCaro. I am the national director of research for Unifor.

Unifor is Canada's largest union in the private sector, representing more than 315,000 workers in nearly every industry, from coast to coast to coast.

I want to thank the committee for the invitation to speak today on Bill C-4 and the implementation of CUSMA, and I bring greetings from our national president Jerry Dias and national secretary-treasurer Lana Payne.

I also want to thank the committee for allowing me to share my time with Hector de la Cueva, a friend and an ally of our union, who is with us on video conference from Mexico City. Hector is the general coordinator of Mexico's Labor Research and Trade Union Advisory Center, and he has been a key point of contact for us throughout these NAFTA negotiations.

I want to open my remarks by stating what's probably the obvious. NAFTA has been a very challenging deal for working people, with many negative effects over time.

lt was an agreement built to limit democratic controls over trade and investment and tie the hands of government policy-makers. lt was one of the first agreements to establish private tribunals that investors could use to challenge Canadian regulations and potentially sue governments for unlimited sums of money. lt conceded sovereignty of Canada's energy production to the United States. And despite the obvious competitive pressures that “free trade” would put on workers in all three countries, NAFTA and its negotiators simply paid no mind.

A generation later, we have seen the outcome: a manufacturing trade deficit with Mexico that has ballooned from $3.5 billion at its onset to more than $27 billion today—half of that in the auto sector alone, including parts.

We've seen a workforce pressured by wage cuts and threats of job loss to low-wage right-to-work states or Mexican export processing zones. If you want examples, you don't have to look too far, considering the recent struggles we faced at Nemak, in Essex, and of course our fight with General Motors assembly operations in Oshawa.

These job dislocations happen largely because of NAFTA. They happen because businesses have unconditional access to markets. lt's why companies can sell here but have no obligation to build here.

In light of that, it's almost impossible for our union to be fully satisfied with the outcomes of CUSMA. Unifor members in Kitimat and in Saguenay, for instance, are rightly upset about the unequal treatment the aluminum sector received regarding aluminum content rules for automobiles. It's a problem that needs addressing.

Our members in the softwood lumber industry are still disadvantaged by unfair duties on exports, deepening our already challenged forest industry.

But while we are paying close attention to these concerns, there are, without a doubt, important advances in this deal, led by Minister Freeland and her team, that deserve support.

ln CUSMA, for the first time, tariff-free auto trade is now conditional on high-wage production. It's not a silver bullet, but it is a new tool to help stop the bleeding of investment to low-wage factories and an attempt to incentivize an upward pressure on low-wage production.

ln CUSMA, for the first time, Canada has scrapped its investor-state dispute settlement system, or ISDS. This is very good. Frankly, we would encourage the federal government to go one step further in its implementation efforts and direct the removal of ISDS from all other trade agreements that Canada currently has.

CUSMA also reclaims our energy sovereignty. lt maintains our cultural carve-out and reverses course on certain bad cultural policies enacted under the Harper government.

Most importantly, it establishes important fixes to pre-existing language and groundbreaking new provisions that address workers' rights—provisions that have been made even stronger, thanks to recent changes outlined in the protocol of amendment.

CUSMA's labour provisions not only exceed the terms of the original NAFTA, but they exceed provisions in any trade agreement negotiated ever since—provisions that I, personally, would have thought impossible to achieve even three years ago.

Now, we are not so naive as to think that CUSMA, by itself, fixes the deeply entrenched anti-worker practices in Mexico. If anyone thinks that, then they don't have a clear read of the problem in Mexico.

The implementation of this agreement must come with clear commitments that Canadian officials will work with their Mexican counterparts to finance rights-based community support projects and fully resource a proactive investigative approach to the rapid response mechanism.

All of this must be done in consultation with trade unions and worker advocacy groups in Mexico, like Hector's.

With that, I will pass the rest of my time over to Hector for his comments.

[Dr. Michael Geist, Canada Research Chair in Internet and E-Commerce Law, Faculty of Law, University of Ottawa, As an Individual]

Thank you, Madam Chair, and good afternoon.

As you heard, my name is Michael Geist. I'm a law professor at the University of Ottawa, where I hold the Canada research chair in Internet and e-commerce law. I'm also a member of the Centre for Law, Technology and Society. My areas of specialty include digital policy, intellectual property, privacy and the Internet. I appear today in a personal capacity, representing only my own views.

As you know, the typical approach before committee on a bill study is to examine the bill and identify provisions to support and areas for amendment. In this case, however, what really matters is not what is in the bill, but what is not. Indeed, the most notable issues from a digital policy perspective won't be found in Bill C-4. Rather, they are found in the new NAFTA itself, and they typically limit Canada's policy options for future reforms rather than require immediate legislative action. I think this raises a significant challenge, since the flawed aspects of the deal cannot, to my knowledge, be fixed in Bill C-4. Rather, they require change in a trade agreement that has been largely presented as a take-it-or-leave-it deal.

I'd like to briefly discuss four issues along these lines: copyright term extension, the cultural exemption, privacy and data protection, and Internet platform liability.

First is copyright term extension. The intellectual property provisions in the agreement raise some significant concerns, but none more so than the requirement to extend the term of copyright from the international standard of the life of the author plus 50 years to life plus 70. The additional 20 years is a reform that Canada rightly resisted for decades. By caving on the issue, the agreement represents a major windfall that could run into the hundreds of millions of dollars for rights holders and creates the need to recalibrate Canadian copyright law to restore the balance.

The independent data on copyright term extension is unequivocal: It results in less access to works, higher costs for consumers and no incentive for new creativity. In the words of Paul Heald, one of the leading researchers on the effects of term extension, it effectively represents a tax on consumers to the benefit of publishers with no obligation to benefit the public.

The copyright review that was conducted by the industry committee in the last Parliament included an extensive review into the issue and concluded that extension should only occur as part of a trade agreement ratification. In such a circumstance, it recommended establishing a registration requirement to obtain the additional 20 years of protection to mitigate against the disadvantages of term extension and increase the overall transparency of the copyright system.

Copyright term extension does not appear in Bill C-4 because the government, I think, smartly negotiated a 30-month transition period to address the issue. The government has not rushed into term extension, and it should take full advantage of the transition period to follow the copyright review recommendation by establishing the registration requirement for the additional 20 years. That would allow rights holders who want the additional protection to get it, while also ensuring that many other works enter into the public domain after their term has expired, after life plus 50.

Second is the cultural exemption. Now, much like the copyright term extension, there is no reference to the cultural exemption in Bill C-4, and that's because the cultural exemption doesn't require legislative reform. However, I'd argue that the exemption is one of the most poorly understood aspects of the agreement. Consistent with the government claims, the cultural exemption covers a broad range of sectors, with a near complete exemption for Canada.

However, while the government has emphasized its broad scope, it rarely speaks of subarticle 32.6(4), which comes immediately afterward. That provision was the price of the exemption, and it permits the U.S. to levy retaliatory measures of “equivalent commercial effect” where Canada relies upon the exemption. The retaliatory measures provision means that the U.S. is entitled to levy tariffs or other measures that have an equivalent commercial effect in response to Canadian policies that would otherwise violate the new NAFTA if not for the exemption.

Since the provision does not limit the response to the cultural sector, the U.S. can be expected to target sensitive areas in the Canadian economy, such as dairy or steel, in order to discourage the use of the exemption. That was the U.S. strategy when it recently responded to a French plan to levy a new digital tax: The U.S. planned to levy $2.4 billion in tariffs against French goods such as wine, cheese and handbags.

How could that play out in a Canadian policy context? The recent report of the broadcasting and telecommunications legislative review panel, the so-called Yale report, contains what I view as many ill-advised recommendations on regulating the Internet and online news services, such as news aggregators.

Should the government adopt the broadcast panel recommendations on content, the U.S. would have a strong case for permitting retaliation with measures of equivalent commercial effect. Panel proposals that may violate the new trade agreement include requirements to pay levies to fund Canadian content without full access to the same funding mechanisms enjoyed by Canadians, licensing requirements for Internet services that may violate NAFTA standards, and discoverability requirements that limit the manner in which information is conveyed on websites and services.

I'll emphasize that I think this is bad policy that should be rejected. However, for the purposes of this review of the new NAFTA, note that the policy flexibility to enact reforms in this area is severely limited by the agreement, which establishes the possibility of retaliatory tariffs for cultural policy.

Third is privacy. The limitations of new Canadian policy also arise in the context of privacy and data protection. Unlike the cultural exemption, which permits violations of the treaty subject to potential retaliatory tariffs, on the issue of privacy Canada would run the risk of being offside of its commitment under the new NAFTA.

Note, again, that there is no provision on point in Bill C-4. There is no need for one, since the new NAFTA prohibits certain privacy-related provisions, rather than requiring them.

For example, the new NAFTA includes a provision that prohibits data localization, which refers to measures requiring the data to be stored in Canada. The new NAFTA actually features a more restrictive provision than the one found in the CPTPP. There are some general exceptions that build in GATS-related rules, but the Canadian government will clearly be restricted in its ability to establish localization requirements under the agreement.

The implications of this limitation are far-reaching. With respect to data right now, consider the wide range of policy issues we're grappling with, whether that's Canada's digital charter and the proposals for privacy and data reforms, concerns around data sovereignty, AI-related issues, or fears about the competitiveness of Canadian businesses in relation to Canadian data.

It's notable that the Canadian government itself has established localization requirements as part of its cloud computing policy. Indeed, there is a recognition that data localization may be needed in some circumstances. Yet under this agreement, Canada is severely limited in terms of its ability to implement such requirements.

The same is true on the issue of data transfers, as the new NAFTA limits our ability to restrict them as well. As we enter into discussions with the European Union about the adequacy of Canadian privacy laws, there are concerns that the data transfer provision could put Canada between a proverbial privacy rock and a hard place, with the EU demanding certain restrictions on data transfers and the new NAFTA prohibiting them.

Finally, there is Internet platform liability. A similar dynamic arises in the context of Internet platform liability, which raises the question of what responsibility lies with Internet companies for third party content hosted on their sites. This issue captures large players, such as Google and Facebook, alongside anyone who offers user comments or content. Once again, there is no provision on this issue in Bill C-4. The reason it isn't there is that the new NAFTA restricts policy in the area rather than requiring a new provision.

The new NAFTA includes a legal safe harbour for Internet intermediaries and platforms for content posted by their users. The rule is designed to provide the platforms with immunity from liability both for the removal of content and for the failure to remove content. Contrary to some claims, the rule doesn't mean that “everything goes”. Sites and services are still subject to court orders and the enforcement of criminal law. Intellectual property rights enforcement is also exempted.

However, there are some who argue that the responsibility of Internet platforms should go further, with potential liability for failure to act even in cases of harmful, albeit legal, content. That position raises important freedom of expression concerns and questions about how to balance free speech safeguards with protection from harm.

The issue for a review in Bill C-4 is not to debate where Canada should land on the issue. For example, the broadcast panel recommended liability for online harms, even if the content is legal. Others, including myself, would argue that liability should rest with illegal content, but to create liability for legal content is to render Internet companies judge and jury over what remains online, thereby further empowering those large Internet companies, as well as limiting competition and freedom of speech.

The key point here is that there is a policy debate to be had. Under the new NAFTA, Canada has effectively already committed to a position, one that restricts our ability to establish liability for third party content.

I look forward to your questions.