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.

[Nathalie Caron]

Good afternoon. My name is Nathalie Caron, and I am the senior legislative counsel at the Office of the Law Clerk and Parliamentary Counsel of the House of Commons. I was tasked with drafting the amendments for Bill C-4.

I'd like to start by saying that the work we do for you, always on an individual basis, is confidential and non-partisan. The discussions we have with you about amendments are not shared with anyone without your consent. By the way, when you have amendments, we encourage you to contact us as soon as possible so that we can begin work on the amendments immediately. You don't need to wait until you are fully prepared or you have all your instructions ready. As soon as you're ready to give us instructions for one or two amendments, you can contact us so we can get to work right away.

It can be a lengthy process, depending on how complex the request is—hence the importance of the instructions you give us. It helps us if you can explain the purpose of the measure and your objectives, as well as provide some context. Having that information is very helpful as we draft the amendments. Our role is really to turn your instructions into legislation that does what you want it to. Your explanations and objectives are essential to the analysis we carry out. We perform a legal analysis of your instructions, and if we identify any issues, we let you know. That way, we can try to find you other options. Then, we start drafting.

We produce a draft, which is reviewed and then sent to you for approval. Once approved, it is translated and revised. The process has a number of steps, which is why it's so important that you contact us as quickly as possible.

What I'd like to convey to you today is this: don't hesitate to contact us, even if you're not ready to provide instructions for your amendments. That way, we can at least start the discussion and explore solutions.

[The Clerk]

I'll start by introducing myself.

My name is Philippe Méla, as Ms. Sgro mentioned. I'm the legislative clerk for Bill C-4.

You adopted a motion yesterday determining the dates for the deadline for amendments and the clause-by-clause consideration of the bill. I'm going to be here to help you analyze the receivability of amendments, if you have any, and the amendments will be drafted by my colleague, Nathalie Caron.

Since you already know me, being here quite often, I'm going to let my colleague speak.

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

I would like to call to order the sixth meeting of the Standing Committee on International Trade.

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.

Before we start with our witnesses, Mr. Savard-Tremblay.

[Robert Kucheran]

Thank you very much.

My name is Robert Kucheran. I'm the chairman of the executive board of Canada's Building Trades Unions. We're the voice of over 500,000 skilled Canadian construction workers, members of 15 international unions who work in more than 60 different trades and occupations. Construction is one of the largest sectors in the Canadian economy, representing about 14% of Canada's GDP.

Although the Canada-United States-Mexico agreement, CUSMA, does not have a direct impact on the CBTU or the construction we represent, its efforts to improve labour standards among the three countries have a direct, positive impact on our sector. Therefore, the impending ratification of the updated CUSMA offers us an important opportunity to voice support for this vital trade deal.

As mentioned, CUSMA includes a comprehensive labour chapter fully subject to the dispute settlement provisions of the agreement, which aims to raise and improve labour standards and working conditions in all three countries by building on international labour principles and rights. Labour standards and working conditions have always been a priority of the CBTU as well as our affiliates. We realize that these improvements are targeted to our trading partners, but that's a testament to the level of labour standards and working conditions we have in Canada and continue to advocate for and strengthen in this country. Specifically, the chapter on labour includes an annex on worker representation in collective bargaining in Mexico under which Mexico commits to specific legislative actions that would provide for the effective recognition of the right to collective bargaining. We applaud and support the Government of Canada in its goal of levelling the playing field on labour standards and working conditions to ensure that parties do not lower their levels of protection to attract trade or investment, but rather raise them to the higher standard.

Canada's Building Trades Unions are pleased about the added provisions that provide commitments to ensure greater protection for fundamental principles and rights at work, including prohibition of the importation of goods produced through forced labour; enforcement of obligations related to discrimination, such as discrimination based on sex, sexual orientation and gender identity; addressing violence against workers for exercising their labour rights, such as single instances of violence or threats thereof; and ensuring that migrant workers are protected under these labour laws.

Canada's Building Trades Unions supports these commitments, believing that stronger labour rights will lead to stronger health and safety laws not only for construction workers, but also for all workers. Along with stronger labour provisions, we believe that increased trade leads to stronger economies. This new agreement will reinforce the strong economic ties between the three countries and support the well-paying middle-class jobs that will strengthen the economies of all three countries.

We also support the significant gains that have been achieved for Canadian workers in general, as described earlier in the day by the Canadian Labour Congress in their submission.

Some of the highlights are the elimination of chapter 12, the investor-state dispute settlement provisions under the old NAFTA, which prioritized the rights of foreign investors and corporations over the rights of sovereign governments; the increased North American content requirement for vehicles from 62.5% to 75%; and the new labour value content requirement that stipulates that 40% of material and manufacturing costs in automobiles and 45% in trucks will have to originate in facilities where direct production workers have an average hourly wage of at least $16 U.S.; elimination of NAFTA's energy chapter, including the proportionality clause that required Canada to export a fixed share of energy production to the U.S., even in times of energy shortages; the strengthening of NAFTA's cultural exception, which is expanded to include digital industries; and a clear general exception for indigenous rights, which implies that nothing in this agreement prevents North American governments from fulfilling their legal, social, economic, cultural and moral obligations to first nations.

Canada's Building Trades Unions, along with our affiliation with North America's Building Trades Unions, welcomes the vital improvements to CUSMA that were negotiated early in 2019 between the House Democrats and the U.S. trade representative, and recently passed in the U.S. Senate. Some of these include the removal of language that allowed a responding party to block the formation of a dispute settlement panel; a reversal of the burden of proof on labour and environmental violations; the removal of language in article 23.6 that rendered unenforceable the prohibition of goods produced in whole or in part through forced and compulsory labour; the removal of language in article 23.7 that stipulated that parties only have to address cases of violence against workers that are occurring “through a sustained or recurring course of action or inaction”; the introduction of a bilateral rapid trade labour mechanism that allows for an independent investigation of potential violations of freedom of association and collective bargaining at specific facilities and, where violations are found to be occurring, the imposition of penalties on goods that are not produced in compliance with these obligations; and the removal of provisions requiring 10 years of market protection for biologics.

There's an area that still needs some attention. Canada’s Building Trades Unions would like to have seen greater access for qualified construction workers between Canada, the United States and Mexico. With similarities in training and accreditation for these skilled trades in both Canada and the U.S. specifically, we believe labour shortages in our countries can have a North American solution. We understand that Canada's negotiators attempted to include this in the negotiations, but ultimately it didn't get to the final text.

We thank our negotiators for listening to the CBTU and our affiliates who strongly advocated for this. We stand ready to consult with the Government of Canada to offer our expertise in areas of mutual benefit. Canada’s Building Trades Unions supports Bill C-4, an act to implement the agreement between Canada, the United States of America and the United Mexican States. We urge all parties to pass Bill C-4. We believe that the provisions and commitments included in CUSMA will continue reinforcing the strong economic ties between the three countries and well supporting middle-class jobs into the future.

I want to thank the committee for allowing us the opportunity to present.

Thank you.

[The Chair, Liberal, Judy Sgro]

I call the meeting back to order. Pursuant to our order of reference, we're studying Bill C-4.

Welcome to our witnesses. We appreciate your coming during this late part of the afternoon. Excuse us for trying to.... For members, this is their lunch, dinner and the rest of it. We've been working very hastily, trying to deal with all the issues of NAFTA.

Appearing as individuals, we have Michael Bose and D'Arcy Hilgartner. From Canada's Buildings Trades Unions, we have Robert Kucheran, chairman of the executive board. From the Canadian Trucking Alliance, we have Lak Shoan, director, policy and industry awareness. From the Dairy Farmers of Canada, we have Christopher Cochlin, and from Vermeer's Dairy Limited, Jake Vermeer.

Welcome to all of you. As I said, thank you for making the time.

We'll start with you, Mr. Bose.

[Catherine Cobden, President, Canadian Steel Producers Association]

Thank you, Madam Chair and members of the committee.

Thank you very much for the opportunity to be here today. My name is Catherine Cobden. I'm the president of the Canadian Steel Producers Association and it's my honour to share the perspectives of our members on Bill C-4, an act to implement the agreement between Canada, the United States and Mexico.

I'm here today representing member companies, which produce approximately 15 million tonnes of steel pipe and tubular products annually and support 123,000 direct and indirect jobs in five provinces, from Saskatchewan through to Quebec.

Canada's steel sector plays a strategically important role in the North American economy. We are advanced manufacturers of 100% recyclable and enduring product. We are a critical supplier to other key Canadian and North American sectors, including the automotive, energy and construction sectors and many other general manufacturing applications. We're also a sector that knows first-hand how critical it is for our business success to have strong and productive relationships between Canada and the United States and Mexico.

We operate in a highly integrated marketplace with steel moving back and forth across the Canada, U.S. and Mexico borders as it is transformed into additional products. In this capacity, we thank you all for this agreement and we welcome it wholly. We urge all members of the House of Commons and the Senate to support this bill and ratify it without delay. We see immediate advantages of the new agreement that strengthen NAFTA in several important ways both for our country and certainly for our steel sector. The agreement also creates more certainty in our markets, a much needed and necessary condition for driving increased investment.

Now let me step you through some of the key advantages for steel that we see in this new agreement.

First, the automotive rules of origin incentivize the use of Canadian and North American steel. This means that more North American steel will be used over foreign, non-North American steel. It sounds obvious but it deserves to be said. The new requirement for a 70% North American steel content is a significant gain for the North American steel sector. NAFTA did not have any such provision, so that's a significant development.

Today the North American automotive sector is a valued customer for our technically advanced and high-quality steel, with approximately 25% to 30% of all Canadian steel supplying this sector. That equates to about three million to four million tonnes annually. This is an extremely important development for us and for our steel industry colleagues in the U.S. and Mexico. Indeed, we were quite engaged working together on this and other aspects of this agreement.

Furthermore, the increased North American value content requirements for vehicles and vehicle parts are also important and improve the original NAFTA agreement significantly. As Jean has already mentioned, in some cases it has moved the content requirement from 62% to roughly 75%, which is a tremendous increase.

In the case of steel, we also welcome additional definitions coming into effect in seven years' time that strengthen the rules of origin by ensuring North American sourcing. This is important for our sector. We face severe global overcapacity. It's severe. The OECD estimates that approximately 440 million tonnes of excess capacity exists globally. This excess capacity equates to about 30 times the entire Canadian production. That's steel out there that's looking for a home, that's trying to cross both the Canadian and the North American borders.

Beyond the rules of origin, I want to point out that the new agreement also improves market access for Canadian steel and allows the use of effective trade remedies against unfairly traded imports. That overcapacity, which I mentioned, often results in unfair and injurious trade practices.

The new agreement contains important provisions that will promote increased co-operation and information sharing between North American governments to address circumvention and the evasion of trade remedy orders. This is critical for us. This increased co-operation is essential for the North American steel marketplace because we face a relentless flow of unfairly traded goods due to the global overcapacity I mentioned.

I remind the committee that last May we celebrated the establishment of the Canada-U.S. understanding on trade that resulted in the lifting of the very damaging tariffs on Canadian steel. This did not come easily to our nation, but it came as we worked as one against the difficult tariff situation. For us, CUSMA takes us further along the path of working with our North American trading partners on what we refer to as the principle of a North American perimeter to trade that strengthens the competitiveness of the North American region, that addresses global steel overcapacity and that aims to deal more readily with unfairly traded steel imports.

Madam Chair, please let me end with a call to all, once again, to come together as team Canada, as you have deftly done in the past, and get this deal done as quickly as possible, with my thanks.

I'm happy to take questions.

[Jackie King, Chief Operating Officer, Canadian Chamber of Commerce]

Madam Chair, thank you for the invitation to appear before the committee today regarding the CUSMA implementing legislation. Given the critical importance of this agreement for Canadian businesses, I'm really delighted to be here. I'm joined by my colleague Mark Agnew, who leads our international trade work.

The members of the committee will certainly be familiar with local chambers of commerce in their communities. At the national level, the Canadian Chamber of Commerce represents over 200,000 businesses in all sectors and all regions of the country. Our membership encompasses not only chambers of commerce but also sectoral associations and companies, including everything from small to large multinational organizations.

The Canadian Chamber of Commerce was actively engaged throughout the CUSMA negotiations. We attended the negotiating rounds and mobilized our network of chambers, associations and companies through our “keep trade free” coalition. We also work closely with our counterpart business associations in the United States and Mexico.

With respect to the legislation currently before the committee, this trade agreement and its associated implementing legislation are critical for the Canadian economy. North America is, and will remain, our most important trade and investment partner. Businesses across the country have suffered from significant disruptive uncertainty since President Trump came to office. Although the CUSMA is not a panacea for the erratic trade policies emanating from the White House, it is crucial that we turn the page and lock in the new arrangement to provide certainty for our Canadian companies.

It's in that spirit that we urge the expeditious passage of Bill C-4. Every trade agreement involves trade-offs, and no agreement is perfect. However, our trade negotiators did an extremely commendable job with their efforts, during a very difficult set of circumstances, to deliver the agreement that is now before Parliament for consideration.

Now I'll highlight some of the particular benefits of CUSMA, from our perspective.

Foremost is maintaining the original NAFTA's benefits with respect to tariff-free market access for goods, given the volume of cross-border trade. The importance of the certainty this provides has been underscored by media reports earlier this month, stating that the U.S. is considering raising its WTO bound tariff rates.

CUSMA's goods market access has been complemented by customs and trade facilitation provisions to help ensure that products can move more easily across borders.

Shifting to the services sector, the retention of the labour mobility provisions from the original NAFTA will help to ensure that companies are able to attract the best talent. While we certainly had hoped to expand the list of covered sectors, enhanced labour mobility under the U.S. administration was realistically a bridge too far.

We also welcome the inclusion of digital trade provisions, which will help play a key role in setting global standards on issues such as cross-border data flows. More specifically, these types of provisions are helping to shape the ongoing WTO e-commerce negotiations.

Crucially, CUSMA preserves the NAFTA's dispute settlement provisions for anti-dumping and countervailing duty cases, and strengthens the panel process for state-to-state disputes.

Last, the side letters on section 232 measures provide a degree of protection for Canadian exporters. However, we cannot afford to be complacent under either this or a future U.S. administration.

As I noted a moment ago, the chamber gives its full endorsement to the passage of Bill C-4, and Canada completing its CUSMA ratification process in a timely manner. However, the clear message is that we do not want to see this process as the end of the road when it comes to ensuring Canadian businesses remain competitive while attempting to access opportunities in the North American market.

A perennial concern for us is buy America provisions at the federal and state levels, which attaches conditions to require the use of American-manufactured products. This considerably limits the ability of Canadian firms to participate in many U.S. infrastructure projects, and more specifically, the ability of Canadian companies to use their Canadian-based operations to participate in those contracts. The prevalence of buy America provisions risks creating incentives for companies to move manufacturing jobs to the United States. Unlike NAFTA, CUSMA does not cover U.S.-Canada procurement, and there is a risk—we understand from the media reporting—that the Trump administration may withdraw the United States from the WTO GPA.

Another concern is softwood lumber. Canada's softwood lumber industry remains in a challenging period due to a range of factors including market access and issues with the U.S. The government should continue its efforts to reach a resolution in the softwood lumber dispute in collaboration with our exporting companies.

Finally, regulatory barriers and border frictions continue to create problems for Canadian companies seeking access to the U.S. With the CUSMA negotiations now concluded it is important for the government to ensure the regulatory co-operation council works in partnership with industry-led initiatives such as the Beyond Preclearance Coalition. These types of initiatives may not provide a photo opportunity but they are absolutely critical for companies that move goods across the border.

While these three issues are not ones that we expect to be resolved in CUSMA negotiations, they are crucial to our members and should be priorities for the government now that the CUSMA negotiations are concluded. However, as I mentioned at the outset, we urge the committee to move ahead with its study as expeditiously as possible so that we can complete our domestic ratification procedures and refocus our energy on these outstanding issues.

Thank you, once again, for the opportunity to appear before this committee.

I look forward to your questions.

[The Chair, Liberal, Judy Sgro]

I'm calling the meeting back to order as we continue to do a study of Bill C-4, an act to implement the agreement between Canada, the United States of America and the United Mexican States. Will our witnesses please join us at the table?

With us, from the Aluminium Association of Canada, we have Jean Simard, president and chief executive officer. From the Canadian Automobile Dealers Association, we have Huw Williams, director, public affairs, and Oumar Dicko, chief economist. From the Canadian Chamber of Commerce, we have Jackie King, chief operating officer, and Mark Agnew, director, international policy. Finally, from the Canadian Steel Producers Association, we have Catherine Cobden, president.

Mr. Simard, I will start with you.

[Hassan Yussuff, President, Canadian Labour Congress]

Good afternoon, Madam Chair and members of the committee. My name is Hassan Yussuff. I'm the President of the Canadian Labour Congress. My colleague Chris Roberts is the director of our social policy department.

The CLC speaks on behalf of three million unionized workers, men and women across the country. It's a pleasure to join you here this afternoon.

Canada has always been a trading country. Exports are vital to the Canadian economy, our communities and thousands of jobs. Our steel and auto manufacturing, forestry, agriculture and resource industries depend on trade, and Canadians of course support a fair trade agreement that preserves good jobs, protects labour rights and preserves the ability of the government to regulate in the public interest.

I participated on the government advisory council, providing input during the renegotiations of NAFTA. Canada's unions welcome the important gains for workers continuing in the updated Canadian-U.S.-Mexico agreement. These gains include the elimination of chapter 11, the investor-state dispute settlement, the IDS provision in NAFTA; the enforceable labour rights provisions that are incorporated in the CUSMA as a standalone chapter; the inclusion of a provision restricting the import of goods produced by forced labour; increased North American content requirements for vehicles and a new labour value content requirement in auto manufacturing; the elimination of the NAFTA energy chapter, including the proportionality clause; the strengthening of NAFTA's general cultural exemption in its expansion to include digital industries; and a clear and general exception for indigenous rights. This exception means that nothing in the agreement prevents a North American government from fulfilling its legal, social, economic, cultural and moral obligations to indigenous people.

We're also pleased to see that section 232 tariffs on steel and aluminum imports have been removed. These unfair tariffs caused significant hardship for Canadian workers.

The elimination of chapter 11 is an important step in protecting our environment. Too often, the NAFTA investor-state dispute settlement process allowed investors to sue Canadians and Canada over legitimate measures taken to prevent and limit damage to the environment. The environment chapter in CUSMA includes new commitments to address environmental challenges. These address air quality, endangered species, ocean-depleting substances, conservation for biological diversity, marine pollution, illegal wildlife trade, illegal fishing and the depletion of fishing stocks.

We regret the fact the U.S. negotiators blocked any mention of climate change in the agreement. As a result, CUSMA contains no reference to the Paris Agreement, despite the addition of a number of multilateral environmental agreements in the updated text.

The CLC welcomes the important improvements in CUSMA negotiated last year by the House Democrats and the U.S. Trade Representative. These improvements include restrictions on the ability of the responding party to block the formation of a dispute settlement mechanism panel; changes to strengthen the prohibition of goods produced by forced labour; changes to strengthen the protection of workers from violence and physical intimidation; the introduction of a bilateral rapid-response labour mechanism to respond to the violations of freedom of association and collective bargaining rights; the removal of a provision requiring a 10-year market protection for biologics; and the reversal of the burden of proof on labour and environmental violations—this language now presumes that labour and environmental violations affect trade or investment between the parties unless the responding party can demonstrate otherwise.

Some areas of CUSMA continue to provide cause for concern among Canadian workers. CUSMA makes concessions in Canada's supply management of agriculture by opening markets to more U.S. dairy, ag and poultry products. These concessions will add to the pressure on Canadian producers resulting from market access granted under CETA and the CPTPP. Budget 2019 committed to providing up to $3.9 billion in support for supply–managed producers. However, workers in these supply-managed industries are not offered any protection in support if they lose their income or work due to the ratification of the CUSMA, CETA or CPTPP. We recommend that the government take steps to ensure that these workers are not disadvantaged by the implementation of CUSMA.

The CUSMA facility-specific rapid-response labour mechanism represents an important step forward in labour rights. However, there are few stipulations that unnecessarily limit the responsiveness and scope of a modern mechanism. These include a provision requiring the complainant to first ask the respondent to conduct its own investigation of a potential labour rights violation at a facility covered by the mechanism. Only once there is a disagreement over the findings can verification by a panel of labour experts be invoked. These facilities covered by the mechanism are limited to priority sectors that include manufacturing, service and mining, but exclude agriculture, forestry and the fishing industry, etc.

To summarize, the gains achieved in CUSMA are notably significant. In our view, ratification of the agreement is critical to Canadian interests and the well-being of workers in Canada. Parliament's scrutiny of Bill C-4 is an important and necessary part of the legislative process. However, we urge the parties to pass Bill C-4 without undue delay.

With that, I welcome any questions the committee might have. Thank you very much for allowing us to present here today.

[Claire Citeau, Executive Director, Canadian Agri-Food Trade Alliance]

Thank you for inviting us to speak on behalf of the Canadian Agri-Food Trade Alliance, or CAFTA, the voice of Canadian agri-food exporters, regarding the Canada–United States–Mexico Agreement, or CUSMA.

Our members have a very simple message: CAFTA calls for the swift ratification of CUSMA to ensure continued stability in the North American market and strongly urges parliamentarians in both houses to pass Bill C-4 quickly.

CAFTA represents the 90% of farmers who depend on trade, and producers, manufacturers, and agri-food exporters who want to grow the economy through better and competitive access to international markets. This includes the beef, pork, meat, grain, cereal, pulse, soybean, canola, as well as the malt, sugar and processed food industries. Together, CAFTA members account for more than 90% of Canada's agri-food exports, which, in 2019, reached over $60 billion, and support about a million jobs in urban and rural communities across Canada. A significant portion of these jobs and sales would not exist without competitive access to world markets.

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

I call the meeting of the Standing Committee on International Trade to order.

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

For witnesses in this segment we have, from the Canadian Agri-Food Trade Alliance, Brian Innes, vice-president, and Claire Citeau, the executive director; from the Canadian Cattlemen's Association, Bob Lowe, vice-president, and Fawn Jackson, manager, environment and sustainability; from the Canadian Labour Congress, Hassan Yussuff, president, and Chris Roberts, national director; and from the United Steelworkers, Ken Neumann, national director, and Mark Rowlinson, executive assistant to the national director.

Welcome to all of you. Thank you for taking the time to appear before the committee today.

We will start with Ms. Citeau.

[Colin Carrie, Conservative, Oshawa, ON]

Madam Chair, I would like to speak to my motion.

When I brought this forward, it was in good faith, because in the past we've taken this process forward for bills of extreme importance. We had no idea at that time how many witnesses we were going to have. In order to give the witnesses who were concerned about this bill an ability to tell parliamentarians how it's going to affect them, I did make these recommendations.

I was extremely upset this morning when I read an article from CBC in regard to my motion. It was a matter of poor faith. I'm going to quote it because the Prime Minister quoted my motion. The reporter wrote, “A contentious motion Justin Trudeau characterized as a 'near miss' will come to a vote”. Trudeau said, “There are certain messages that could be passed to some parties that might be playing some challenging games around delaying NAFTA”.

First, I want to tell my Liberal colleagues how upsetting that is to read, when I was not even given the courtesy of being in the story. Second, the Liberals brought forward a very similar motion today. I want to read this into the record because it says how the Liberals were surprised. This comes from the House on February 6, when John Nater, one of our MPs, asked:

Mr. Speaker, when Bill C-4, an act to implement the agreement between Canada, the United States of America and the United Mexican States, is referred to committee, could the government commit to supporting a proposal at committee to have other committees, in addition to the trade committee, study the provisions of Bill C-4 and the impacts within their respective mandates in the same manner that budget bills have been considered at committee in recent years?

Now this is what the Liberal House leader said in the House, on record. Pablo Rodriguez said:

Mr. Speaker, the government is supportive of adopting the process that has been used in the past for budget implementation legislation. Under this process, the chair of the Standing Committee on International Trade would write to the other committees and invite them to do a subject matter review of the relevant provisions of the legislation, as long as the motion contains a fixed date and time for the start and end of clause-by-clause consideration of the bill.

That's basically what I was trying to achieve. The Prime Minister was aware of what the House leader said. I'm just curious, and maybe the parliamentary secretary can comment on this. Was the House leader trying to play politics here, or was the Prime Minister trying to play politics with this, because that certainly wasn't the intention from this side of the House?

[Brian Kingston, Vice-President, Policy, International and Fiscal, Business Council of Canada]

Madame Chair, committee members, thank you for the invitation to take part here today in your consultations on Bill C-4.

The Business Council of Canada represents the chief executives and entrepreneurs of 150 leading Canadian companies in all sectors and regions of our economy. Our member companies employ 1.7 million Canadians, account for more than half the value of the Toronto Stock Exchange, contribute the largest share of federal corporate taxes and are responsible for most of Canada's exports, corporate philanthropy and private sector investment in research and development.

It almost goes without saying, and I've said this many times before in front of this committee, that trade with the United States is absolutely critical to our prosperity. The Canadian economy depends on international trade, clearly, and the U.S. is by far our largest trade and investment partner. Trade of goods and services represents around 64% of Canada's gross domestic product, with the U.S. the destination for 75% of our goods exports last year.

The Business Council strongly supports CUSMA/USMCA and calls for the swift passage of Bill C-4, for four critical reasons.

The first is that the agreement protects market access. When negotiations were first launched, we had one overarching recommendation for government and for our negotiation team, and that was to do no harm. To avoid damaging employment, trade and investment, Canadian, American and Mexican businesses need to retain their preferential access to markets and commercial opportunities in each respective country. By this measure, CUSMA is an overwhelming success. The resulting agreement is based upon reciprocal access and treatment, and no Canadian company will face new tariffs or other market access barriers in North America as a result of this deal.

Given recent reports that the White House is considering raising its WTO bound tariff rates, the importance of quickly ratifying this agreement is even greater. I just might add that, at the beginning of these negotiations, the overarching U.S. objective was to “[i]mprove the U.S. trade balance and reduce the trade deficit with the NAFTA countries.” In other words, the U.S. wanted to restrict imports, not liberalize trade, as is usually the objective in a trade agreement. Given that this is where we started, the final deal achieved the number one objective for the Canadian business community by protecting our market access and doing no harm.

The second reason that we strongly support this agreement is that it removes uncertainty from the Canadian economy. The ratification of CUSMA eliminates significant trade uncertainty. According to the Bank of Canada, protectionist trade measures around the world right now are estimated to reduce global gross domestic product by about 1.3% by 2021. Given that the U.S. remains the key market for Canadian firms that are planning to grow and invest abroad, reducing uncertainty in this critically important relationship will be a boost for the Canadian economy at this time.

The third reason is that the agreement modernizes NAFTA, and this tends to get overlooked at times. CUSMA will improve the trade relationship by modernizing long-outdated elements of NAFTA. The agreement is largely based on the text of the trans-Pacific partnership, which is our most modern trade agreement. For example, there are chapters on digital trade that prohibit customs duties and other discriminatory measures from being applied to digital products, while ensuring that data can be transferred across borders. This is a significant improvement on NAFTA and something to be applauded.

The fourth reason is that it enhances North American competitiveness. CUSMA includes new chapters and provisions that will help us develop a more productive and mutually beneficial relationship, including a chapter specifically on competitiveness and one on good regulatory practices. We call on government to take advantage of these new mechanisms by developing a robust committee work plan.

Before I conclude, I'll just say a word on timing. The U.S. and Mexico have moved to ratify this agreement in their respective legislatures. While we have every right to review and assess the deal, I caution against unnecessary delays. Given all the challenges facing the Canadian economy right now, including rail blockades, coronavirus and our deteriorating relationship with China, the last thing we need to add into that very concerning mix is a delay on this deal with our most important trade partner.

I'll conclude with that, and I look forward to your questions.

[Rachel Bendayan, Liberal, Outremont, QC]

Madam Chair, I would like to move a motion regarding the study schedule for Bill C-4. The motion pertains to the study that we're currently undertaking, and it's based on the motion that was introduced by our colleague Mr. Carrie at the last meeting.

I'm introducing a fresh motion. For procedural ease, I have copies, which I will give to the clerk.

[Chrystia Freeland, Liberal, Deputy Prime Minister and Minister of Intergovernmental Affairs]

Thank you very much, Madam Chair.

Thank you, members of this committee. I'll make a few introductory remarks and then I will be happy to answer your questions.

I'd like to acknowledge that we're gathered on the traditional territory of the Algonquin.

Let me start with very great pleasure by introducing the outstanding Canadian public servants who are here with me today and without whose hard work, dedication and intelligence this pivotal new agreement would not have been possible. I'm going to introduce the two people sitting next to me. Let me just say that they lead an outstanding team of Canadian professional trade negotiators. At a particularly rough moment during the negotiations, one of our negotiators said, “We think of ourselves as the Navy SEALs of Canada”. I think that is a very appropriate way for all of us to think of our outstanding professional trade negotiators.

With me is Steve Verheul, chief negotiator of NAFTA and assistant deputy minister of trade, and Kirsten Hillman, our acting ambassador to the U.S., as well as a trade negotiator of some renown.

I'm very pleased to speak today in support of Bill C-4, the act to implement the new NAFTA, the Canada-United States-Mexico agreement.

Canada is a trading nation. Indeed, with the world's 10th largest economy, trade is the backbone of our economy. Trade is vital for the continued prosperity of Canadian workers, entrepreneurs, businesses and communities across the country.

Our government champions an open, inclusive society and an open global economy. These fundamental Canadian values transcend party and region. In fact, each of Canada's three major, recently concluded, trading agreements—the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and now the new NAFTA—were the outcome of efforts across party lines.

Canadians support free, fair, and balanced international trade, based on mutually agreed rules. These rules provide predictability and stability in how goods, services and investment are carried out between Canada and our major trading partners. We have seen remarkable success in this area.

In 1994 NAFTA created the largest free trade region in the world. In 2018 trilateral merchandise trade between the U.S., Canada and Mexico reached nearly $1.2 trillion U.S., a fourfold increase since 1993.

Today the NAFTA region comprises almost 490 million consumers and has a combined GDP of more than $23.5 trillion U.S. Our three countries together account for more than one-quarter of the world's GDP, with less than 7% of its population. This record of growth is a tribute to all Canadians, to our entrepreneurs and our workers across this country. Trade between the NAFTA partners has helped us build a continental network of supply chains across a range of industrial and agricultural sectors. It has made Canada more competitive globally. It has created good jobs for Canadians and has fostered job-creating direct investment between Canada and the United States.

The new NAFTA helps ensure we maintain this vital relationship, and that we maintain predictability and stability in our commercial relationship with the United States—our closest, and overwhelmingly our largest, trading partner—and with Mexico.

The negotiations to modernize NAFTA were unprecedented in their intensity, scope and urgency. At the outset we faced a barrage of protectionist trade actions from the United States and the very real threat of a U.S. unilateral withdrawal from NAFTA altogether. Team Canada stood firm and team Canada stood united. Guided by strong support for free trade from Canadians across the country, at all orders of government across the political spectrum, from business to labour leaders to indigenous leaders, we sought advice and consensus and we acted in a united way.

I would today like to particularly thank the NAFTA council for its hard work. Together we worked tirelessly to modernize NAFTA for the 21st century and to extract further benefits for Canadians from a trading partnership that has been a model for the world, and that is exactly what we accomplished.

The new NAFTA preserves Canada's tariff-free access to the United States and Mexico. It restores and strengthens the predictability and stability of Canada's access to our largest market, and crucially, it does so in the face of rising protectionist sentiment south of our border and around the world. The new NAFTA improves on and modernizes the original agreement.

Allow me to highlight some of the key tangible benefits for Canadians.

First, this agreement protects $2 billion U.S. worth of daily cross-border goods and services trade between Canada and the United States. This means that 99.9% of Canadian exports to the United States are eligible for tariff free trade.

The new NAFTA preserves crucial cross-border auto supply chains, and provides an incentive to produce vehicles in Canada.

The agreement also commits all partners to comply with stringent labour standards, and strengthens labour obligations to help level the playing field for Canadian workers. Mexico has also undertaken specific commitments to provide for the protection and effective recognition of the right to collective bargaining.

I would add that our government is working in collaboration with the Mexican government to help Mexico implement its labour reforms.

Throughout the negotiations, Canada was confronted with the American tariffs that were unprecedented, unjust, and arbitrary with respect to Canadian steel and aluminum. We were able to avoid an escalation, however, without backtracking. We stayed focused on defending Canadian workers, their families, and their communities.

We succeeded, and those U.S. tariffs have been lifted.

There was an additional U.S. threat to impose a section 232 tariff on Canadian autos and auto parts. For Canada, that threat was lifted on November 30, 2018, the day we signed the new NAFTA and the day we signed a binding letter on 232 autos and auto parts with the United States. As a result, Canada's auto industry now has the stability to seek investment for further growth and innovation.

The new NAFTA also preserves elements of the original NAFTA that have been essential for Canada and were under threat.

It maintains chapter 29 regarding the dispute settlement mechanism for trade. This is a fair and impartial mechanism, which had been included in the original agreement thanks to the hard work accomplished by Canada. This mechanism has been beneficial for our forest sector workers well over the years, and has protected their jobs from unjust trade measures.

The new agreement preserves NAFTA’s cultural exception, which contributes to protecting more than 666,000 jobs in Canada’s cultural industries and is so pivotal to supporting the artists who tell our stories, in both official languages.

Critically, the new NAFTA maintains tariff-free access to the U.S. market for Canadian ranchers and grain farmers. We should never lose sight of the fact that the starting objective of the United States in the NAFTA negotiations was to abolish Canada's system of supply management.

We did not accept that. Instead, we stood up for Canadian farmers and preserved supply management for this generation and for those to come.

The agreement includes an enforceable environment chapter that requires NAFTA partners to maintain high levels of environmental protection, as well as ensuring sound environmental stewardship. In addition, it recognizes and supports the unique role of indigenous peoples in safeguarding and preserving our environment.

The new NAFTA contains ambitious and enforceable labour obligations to protect workers from discrimination in the workplace, including on the basis of gender.

In conclusion, the new NAFTA is good for continued economic growth and prosperity in Canada. It restores stability and predictability for exporters and for the hundreds of thousands of Canadian workers in our export-oriented industries. It allows us to put the uncertainty of recent years in the past.

Most importantly, the new NAFTA is pivotal in securing the future of good-quality Canadian jobs across our country as market access to the United States and Mexico will be assured—will be guaranteed—by the new NAFTA for years to come.

I want to be clear. We have come a long way. However, until this agreement is ratified by all three countries and enters into force, there continues to be risk and uncertainty, which will inevitably grow with the passage of time. This agreement has already been ratified by the United States and Mexico—our two other NAFTA partners.

Debate in Parliament, including at committees, is very important in our democracy, but the risk to Canada is also real. It is imperative we lock in the gains we have made with this agreement, the security we have achieved and the market access we have fought for by ratifying the new NAFTA without undue delay. That is what Canadians expect all of us to do and it's the right thing to do.

Thank you very much.

I'll be happy to take your questions.