Foreign Affairs Committee on May 26th, 2015

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Just for information, we are bringing in Mexico as part of.... They're not a member of the PJBD but we're reaching out to Mexico. They're involved in a lot of trilaterals between defence ministers and so on. We can do things with the Mexicans that the Americans can't, because of 1850 and the Mexican-American war that people haven't gotten over yet. We are trying to bring in Mexico, which might be helpful in other areas.

[Colin Robertson]

Things have to change structurally in Mexico as well, but I think that in the long term we should be looking in terms of the North American perimeter at the integration in the longer term of Mexico into NORAD, for example, because NORAD now extends on water as well. That would be a real step forward, but that's going to take some time.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

There's a big study called “NORAD Next”—what does NORAD evolve to and how do we integrate Mexico, and so on? That is happening.

[Colin Robertson]

Yes.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

On energy issues, Mr. Dade, how do we get a North American energy policy or cooperation going forward? Do we have to wait for a new administration to do that?

[Carlo Dade]

There are things we can do now. The announcement—I think yesterday—of the energy ministers and the secretary agreeing is part of the idea of incrementalism. The incremental approach is key. We have to keep this under the radar screen for those people who talk in terms like TAFTA.

The small approach of looking at issues as they arise, as we did, is the way to go in the shorter term. In 2017, though, we need to be prepared, if there is an opening, to have a new conversation, but that work has to begin now. We can't wait until December 2016 or January 2017 to start this.

If I could really quickly add to this, on regulatory cooperation we have had some success in Canada with the New West Partnership. Being from the Canada West Foundation, I have to mention that as an example of places where we have had success. Also, the provincial differences are highly problematic with the Americans, things like truck tires, double-wides, our different regulations. The Americans are threatening to just abrogate some of the agreements and impose their own rules or to stop truck traffic going across, because they're tired of dealing with the different provinces. Sometimes the provincial works and sometimes it causes us problems.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We'll finish off the first round with Mr. Garneau for seven minutes, please.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you very much to both of you for your testimony. I'll apologize right up front if I put you on the spot with some of my questions. I'll direct my questions as well.

Mr. Robertson, you talked about your 10th recommendation, which had to do with peer-to-peer relationships, and I agree. I think the most important relationship, of course, is the one between the two heads of state of the two countries.

To be very honest with you, I think the relationship between our current Prime Minister and the President of the United States is a very frosty one. I don't think it's much better with Mexico, to be honest with you. Mr. Dade mentioned that it was in part because the current administration in the United States did not really put much importance on Canada, but it takes two to tango. I found it completely regrettable that the summit of the three amigos that was meant to occur in February was cancelled, and it was Canada that decided to do that with our most important trading partner and neighbour, and with a very important emerging partner, Mexico.

What is your feeling about the importance of the relationship between heads of state, specifically between Canada and the United States? There have been good examples of strong relationships between Mulroney and Reagan, and Clinton and Chrétien. How important is that, in your opinion, in terms of helping with issues such as trade and other things?

[Colin Robertson]

Sir, I think it is absolutely vital. Really, the tone at the top sets the stage for so much that follows.

I think former Prime Minister Brian Mulroney said it best when he said that of the relationships that matter for every prime minister, the one that is the most important, the one that prime ministers need to spend the most time at and that prime ministers have to take the initiative with, is that with the presidents of the United States.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you.

Mr. Dade, on the relationship with Mexico, I lived in Houston for nine years, and there you were constantly bathed in the United States-Mexico relationship. It was very much part of your daily life and understandably is why the United States accords a great deal of importance to Mexico and its relationship with them. On the other hand, I have the feeling that it is almost totally absent here between Canada and Mexico. One very rarely hears about it, except for such things as irritants.

You've both mentioned the question of visas. What is it about Canada's position with respect to visas that they are not acting more rapidly to get rid of this significant irritant?

[Carlo Dade]

I can't speak for the government, or the ministry responsible, or the CBSA.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Okay. In that case—and I don't want to put you on the spot—is it having consequences?

[Carlo Dade]

Okay. That we can answer.

Yes, it is. The issue with the visas and Mexico has less to do now with the visas themselves and more with the perception in Mexico of the treatment by the Canadian government of the issue. There is a feeling in Mexico.... I am reporting this. I am not the source of this. I am just passing along what I am told and what I sense in meetings. There is a feeling in Mexico of frustration at the lack of movement, the lack of feeling that this is being taken seriously by the government. Had we just told the Mexicans that the visas are going to be here, we're not going to move them, and we're sorry, I think there would have been repercussions but that would have been one set of issues.

But on top of the visas themselves, we have the second issue of the perception—and let me stress “perception”—in Mexico of the handling of the visa situation, such as conversations with ministers where there is no follow-up or where the conversation is forgotten during the next meeting; the fact that the Mexicans perceive that they were not going to be originally included in the ETA, and the lack of comprehension as to why such an important relationship wouldn't be included; and the lack of comprehensibility as to the hit that Canada has taken in terms of tourism; the fall in terms of the perception of Canada and Mexico; and the opportunities for the Petroleum Services Association and other groups to go to Mexico to freely engage in opportunities arising from energy reform.

It's not just the visas themselves. It's the perception of the handling. I think that can be changed by concrete steps by the government. It's also.... The security issues vis-à-vis Mexico and travel with Mexico are—I can't think of a polite way to characterize those concerns—ridiculous. It's perhaps one issue.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you.

I have one last quick question.

I was interested in your comment that it's not a well-kept secret that the United States may want to ultimately replace or get rid of NAFTA, if TPP comes online. From this side of the border, two of the issues I hear about that are major irritants are, obviously, supply management and intellectual property, which is perhaps the bigger one.

I'd like to hear from both of you, starting with Mr. Robertson, on whether you see other major obstacles standing in the way, apart from these two big ones.

[Colin Robertson]

Sir, do you mean from the American perspective?

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Yes.

[Colin Robertson]

You've identified the two issues that Ambassador Heyman and his predecessor, Ambassador Jacobson, feel that we've gone some distance on but not far enough, namely, supply management and intellectual property, particularly as it relates to patent protection. They feel we're out of kilter with where they are and the Europeans are, for example.

But I would say, on supply management, the Americans have some distance to go as well. My own view on supply management is that we should look at this as an opportunity. I think we're looking at it through the wrong end of the telescope.

I was a member of the team that negotiated the Canada-U.S. Free Trade Agreement. We heard many of the same arguments at that time that we would not be able to compete, from our wine industry and, as I remember it, one particular manufacturer, Lee Valley Tools. Today Lee Valley Tools sells 80% of what they produce in the United States, and our wine industry is doing extremely well. I'm convinced that our artisanal cheeses, in particular the 300 varieties produced in Quebec, can be world beaters. But we need to look at it from the right end of the telescope.

[The Chair, Conservative, Dean Allison]

We'll have to get that in the second round.

We're going to suspend for a second, just to bring on our guest from Toronto, and then we'll come right back. After his presentation we'll continue with the rounds.

[The Chair, Conservative, Dean Allison]

Mr. Wilson, I'm glad to have you join us via video conference from Toronto. We've just spent the first hour talking about some of the competitive issues in North America. We've had some opening statements and one round of questions.

We're going to turn it over to you, sir, for your opening comments, and then we'll continue with our rounds of questions over the next hour.

Mr. Wilson, the floor is yours.

[Michael Wilson, Chairman, Barclays Capital Canada Inc., As an Individual]

Thank you very much, Mr. Chairman. It's nice to be back. I'm sorry I'm not there with you in person. I will withhold judgment on whether it is really nice to be back until after you finish with me, but I'm sure that we'll have a good session.

The key message that I want to leave with you today is to stress the importance of the NAFTA relationship and the broader economic region that we live and work in, to encourage a more proactive set of efforts from the three governments to identify obstacles to growth and opportunities to develop, and to raise awareness of the importance of collaborating among the three governments to strengthen the region.

I'm sure you've heard from the previous witnesses on the importance of trade, energy, transportation, and national security. I'm not going to elaborate on that. The only thing I would say in addition to what has probably already been said is that you might also want to refer to the Zoellick-Petraeus report that was done under the auspices of the Council on Foreign Relations.

I think the broad conclusion is that we have a very strong integrated relationship. It's peaceful. There's a growing convergence and economic performance among the three countries. There are minor political tensions that have been discussed by earlier witnesses, but it's probably the best three-way relationship in the world, and certainly one of the strongest economically.

There's been good progress over the past 20 years. I think NAFTA itself has been a great success with a major increase in trade, investment, and economic integration. That is best seen in the NAFTA supply chain, which has allowed a number of our small and medium-sized companies to get much more engaged in the North American economy. Between the U.S. and Canada, with border management, the Beyond the Border agreement, the regulatory work under the regulatory cooperation council, national security cooperation, and the recent agreement for pre-clearances, another good example, I think it's a good relationship. Mexico is certainly of growing importance in trade and investment, banking, and manufacturing. A number of our companies are operating in Mexico.

But we have to step back and look at where we fit in the world. We live in a very competitive world today. The EU is quite coordinated both economically and politically. Asia, less so, but it is certainly a strong competitor, as are the non-aligned countries, particularly the BRIC countries of China, Russia, Brazil, and India. But as we've heard from others, there are headwinds in each of our countries. We have to try to deal with that as effectively as we can, with the potential competition growing as the years progress.

Let me just comment on a couple of areas of concern and then come to my basic conclusion. I think you've had some discussion this morning on the TPP and the conclusion of the EU agreement. On energy, we have the issues with the Keystone pipeline, but also with the shifting market fundamentals with the shale revolution and the potential of greater production from Mexico. How are we going to manage all of this in the most effective way? Just as I was tuning in on your meeting, there was some discussion on the tone from the top. I'm not going to point fingers here but I think each of our countries has contributed to a weakening in the commitment from the top.

I think the overriding consideration here is that we live in a fast changing world and much more has to be done in collaboration, I believe, to take advantage of this.

My basic point here is that we enjoy a strong position. We have many advantages now. The obstacles we're currently facing are certainly ones that can be overcome. The private sector is doing a very good job, but to maintain and to build on this, I believe we should have a proactive effort of dialogue and collaboration among our three governments, not just with the three leaders but with the key ministerial-level actors in the key areas, the important areas. This should also entail in-depth consultations with our private sectors.

What I would envisage here is a well-planned and comprehensive meeting of the three leaders on an annual basis, with a reporting of the activities in the key areas and agreement on a set of objectives looking forward. I would see this to be complemented effectively by our embassies and the six ambassadors we have within our three countries who can do very effective work on the ground.

But I think the important thing here is that we must develop a greater sense of where we stand as three countries working together to strengthen the North American region. We have the trade relationship to build on, but there's much more to be done to expand on the cooperation to strengthen our position in the world.

Now, I'm not recommending a common market or any limits on our national sovereignty here, but I do envisage a higher degree of cooperative activity in the key areas. We do have irritants among the three countries. There are the visa requirements—that was commented on just now—and KXL, obviously, and immigration issues. They're I think the three most high-profile ones. I don't deny that these exist, but I feel that if we broaden the dialogue, if we raise our sights as to what is important and what can be achieved among our three countries and do so in a very visible way, we can elevate the importance of this strong position that we hold collectively and hopefully pave the way for agreements whose positive results can raise our game and overcome these difficulties.

Let me close with some comments on this as it relates to the role of members of Parliament here.

I would encourage all of you individually to build relationships with your counterparts in the other two countries. Take advantage of the Canada-United States Inter-Parliamentary Group. I was involved in it when I was a member of Parliament, and I found it to be particularly useful both in the discussions we had at the IPG meetings and in my time as a minister, when I carried through with some of the relationships that I had there.

I'll mention just one. Bill Frenzel, a very prominent trade expert, was very helpful during the course of the free trade agreements between the U.S. and Canada and helped me in dealings with others such as Sam Gibbons, who was the chair of the subcommittee on trade.

These relationships I think can be very positive for you. I would encourage you to consider expanding the U.S.-Canada IPG to include Mexico, and if that's not possible, to develop an IPG as it relates to Mexico and Canada working together.

With that, Mr. Chairman, thank you very much for the opportunity. I look forward to any questions you have.

[The Chair, Conservative, Dean Allison]

Thank you very much, Mr. Wilson. It's good to have you here today.

We're going to start our second round of questions.

We'll turn it over to you, Mr. Trottier, for five minutes, please.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Thank you, Mr. Chair.

Thank you to our guests for being here today and for providing testimony. I think this is valuable input for the upcoming North American leaders' summit.

Your points are well taken, that we often take our relationships with the United States and Mexico for granted just because they're so present and so near and maybe less exotic than some of our other relationships. I'd describe our relationships with both countries as strong and very mature. I know we often focus on the irritants, but we do need to recognize that we have some tremendous strengths in terms of our relationships with these countries.

I'd like to comment on the Canada-Mexico relationship, for one. I happen to be chair of our Canada-Mexico Parliamentary Friendship Group. I've had recommendations similar to Mr. Wilson's, that a North American parliamentary group might be useful. Mexico is our third-largest trading partner—I think a lot of Canadians are unaware of that—and it doesn't happen by accident. It's because of that maturity, that relationship, things that Mexicans buy from us, things that we buy from Mexicans, and strong person-to-person ties between the two countries.

On the visas in particular, though, I've had frequent discussions with the Mexicans about that. In 2009 there were 10,000 refugee claims in Canada, which resulted in a tremendous cost to Canada. Some estimates put each claim at about $50,000 in terms of social services, health care, consular services, and ultimately some deportation costs. It ended up costing Canada about half a billion dollars in one year alone. In terms of the offset for tourism, it's hard to see where there would be much of an offset. We just need to understand the Canadian point of view. I know a lot of the Canadian media took the Mexican side in those discussions, and I think the Canadian side needs to be understood.

I do appreciate the recommendations about moving forward, accelerating the progress on the electronic travel authorization and the trilateral trusted traveller program, because that's really critical. Right now our embassies in Mexico can process a visa in less than a week, and it's $100. People, especially higher-end tourists who really want to come to Canada to ski at Whistler, let's say, will pay the $100 and continue to come. Ultimately, I think our goal is for the visa relationship to be similar to that of Chile, where we've removed the visa, but it's based on some very fundamental changes in Mexico around crime rates and socio-economic factors. That doesn't happen overnight.

I do have a question. I think NAFTA is stronger because it's a three-way relationship as opposed to two-way. I think a good example of that is country-of-origin labelling. I think Canada and Mexico had a very common cause, and we made our case very forcefully at the World Trade Organization. Even though that wasn't a NAFTA tribunal—it was the World Trade Organization—I think with our common cause we were able to have a certain influence over U.S. policy-making.

To all of our panellists, is NAFTA stronger because it's a three-way relationship rather than a two-way relationship? In other words, is it less asymmetrical? Can we get more things done in a three-way relationship than we could in the previous two-way relationship we had with the United States?

Perhaps I would start with you, Mr. Wilson. I know you were very involved in Canada-U.S. free trade. Can you talk about how things are perhaps stronger now that it's a three-way relationship?

[Michael Wilson]

I think there's no question that they're stronger as part of a three-way relationship. First of all, with NAFTA, Mexico becoming involved in the agreement that we'd previously had with the U.S. certainly was very important to the development of the Mexican economy. The Mexican economy has grown. Of the three counterparts, the U.S. is clearly number one; there's no doubt about that. But I had frequent opportunities for discussions with my counterpart, the Mexican ambassador to the United States, while I was in Washington. I think we were able to discuss common problems to the benefit of all three countries, no question.

Let me make a brief comment on the visa question you raised in your earlier comments. I think it's important to remember why this came in, and you put your finger on that. It happened when I was in Washington. We didn't do that in a way to disadvantage Mexico or anything like that. It was to address the problem that you've just described. Unfortunately, it's harder to change things once they're established rather than in the earlier decision to bring it in.

I guess the only point I'd make is that at that time, there was significant net immigration into the United States and Canada. Now that this has settled down—in fact, probably net immigration is at zero—people are moving back, from the United States in particular, to Mexico. In fact, I read somewhere that it's causing problems with some of the cities in Mexico on the northern border.

I think now is an opportunity to remove something without having a significant reaction comparable to what we had when we brought it in in the first place.

[The Chair, Conservative, Dean Allison]

Mr. Dade, did you want a quick comment on that?

[Carlo Dade]

Just very quickly on the visas, you'll have the Mexican ambassador here, I think, and that's the type of conversation that really needs to occur with the government and the population in Mexico.

I would note that the issues are larger than just Mexico. Canada is the last APEC economy to adopt the APEC business travel card. We have issues that go beyond Mexico in terms of moving people. Whatever the reason, it will impact our competitiveness. These are things that we have to address too.

With regard to a three-way North America, it depends on the issue. You know that I'm a huge advocate for the relationship with Mexico, but I'll be the first to admit there are some issues where it would be easier just to work with the United States. Take security cooperation; eventually we'll get to the point where we can incorporate Mexico more, but I would have serious issues and give strong counsel about moving too quickly, moving with the Mexican army—the navy, yes, but with the army I would have some issues.

More broadly, we benefit from opportunities in Mexico, just as Europe benefits from the range of countries in Europe. Economically, if you talk to companies like Bombardier, Palliser Furniture.... Heck, if you're in the pipeline business, you thank God that we have the relationship with Mexico, because the Mexicans are building pipelines and we're not.

I think on the whole we do better, but you can always find a specific issue where you can make the case that we're better off bilaterally.