Foreign Affairs Committee on May 26th, 2015

[Paul Dewar, NDP, Ottawa Centre, ON]

Thank you, Mr. Chair.

Again, thank you to our witnesses and our most recent witness, Mr. Wilson.

I want to pick up on the conversation around the TPP and hear from Mr. Wilson and then maybe from Mr. Dade and Mr. Robertson after that.

It seems to me what you're saying here—and I think it's complemented by Mr. Dade—is that when three countries are looking at how to cooperate with regard to markets and standards, that's doable, and it's been done, and improvements are needed. But as we've talked about recently, when you have a table that's much bigger, then it's a bigger challenge. I guess what I'm hearing from both of our witnesses on this is that we need to consolidate a North American agenda for TPP. If that's the case, when would that be done? I assume that would have to have been started yesterday. Also, what are some of the areas in which you can see us working towards a similar approach? Finally, is it possible? This sounds good, but we are also competing with each other as much as we want to cooperate.

I guess my question to our witnesses is whether they see it as being possible and in what areas they would see having a collective North American agenda going into the TPP or as part of the TPP. I'm asking Mr. Wilson, certainly as a former finance minister and a diplomat, and then Mr. Dade and Mr. Robertson.

[Michael Wilson]

Let me just change the focus of the question for a brief comment.

What if it were the European community dealing with TPP? It wouldn't just be the interests of Germany or the interests of Germany and France; it would take into account the broader interests of the community.

All I'm saying is that in recognizing that it is more complicated than just having a U.S.-Japan negotiation, this trade relationship among our three countries is far broader than Japan and the U.S. We have to be able to make that point. If the United States is going to shift the focus of the negotiation today from a U.S.-Japan to a broader one, a Japan-NAFTA, they have to get that direction from the leaders, particularly from the president.

We have to make this point. It's easier for a trade negotiator to have one person, just his or her country, on the other side of the table. We have to make sure they understand and are taking into account the depth and breadth and remarkable impact that NAFTA has on all three of our economies.

I think that can only come out of a North American leaders' meeting with that broader agenda. That's the basic point I'm making.

[Carlo Dade]

Ambassador Wilson and I are in sync on this.

Your question, Mr. Dewar, is a very good one. It's helping to refine the thinking about this issue in response to the TPP.

Here's the issue. A broader agenda for North America can be put together by things we want to talk about, things we need, and things we think we can get away with with the Americans—things to which they'll agree.

But an issue that will bring this all together is how to respond to the TPP. The focus isn't the TPP itself; it's all of the issues that are occasioned by us entering into a broad Pacific agreement that instead of just two other partners has, again for all intents and purposes—including Korea—12 other partners. It's going to have profound changes on 20 years of how we've structured businesses.

We've built businesses and integrated supply chains with the idea of North America, with the idea of having not just access to the United States and Mexico but privileged and somewhat unique access to the United States and Mexico. What happens for Mexican businesses, Bimbo, and others, which have built a model on taking advantage of this privileged access? What happens to Canadian companies that have built models taking advantage of this privileged access? What about automobiles? We don't build automobiles in Canada; we build them in North America. What about beef? Our beef industry is largely North American.

If you start to actually think about responding to the TPP and which industries are going to be impacted, which working groups, and which initiatives are going to need to be changed, you have an agenda that's broad and that speaks to the immediate challenge. Some would say it's a threat, and some would say it's a huge opportunity coming up in the next couple of years that we're going to miss.

If you start to do the work of talking about the TPP, to think about it, to work through all of the impacts, then you see the agenda before the impacts appear after the TPP shows up and we're scrambling to try to figure out what hit us.

[The Chair, Conservative, Dean Allison]

Mr. Robertson.

[Colin Robertson]

Sir, I'll give you a good example.

In terms of autos, the Americans and the Japanese are negotiating auto standards. As Michael Wilson has stated, and as Carlo Dade states, autos are a North American product. There's no such thing as a U.S.-made car or a Canada-made car or a Mexican car, because the parts that go into cars made in North America come from all three parts and can be assembled in all three nations. It doesn't make much sense for us to be negotiating separately, as is the U.S. and Japan to the exclusion of Canada and Mexico. This is where we should be working together. This is where these leaders' meetings can set the agenda and have their officials working together.

When Michael Wilson was the international trade minister, I worked in a group that was negotiating the North American Free Trade Agreement. We had something called international trade advisory committees and sectoral advisory groups that fed in. There's no reason why we can't do that on a North American model, and then take that not just to the Trans-Pacific Partnership but to help us, all three of us, as we are going to be basically negotiating with the Europeans.

The Mexicans already have a free trade agreement. We're on the cusp, I hope, of getting a free trade agreement, and the United States is negotiating as well. We should be looking at North America in the way that the business community looks at it, in a sense of a single entity where frontiers are a hindrance to our competitiveness. That is really what this committee is all about today.

[The Chair, Conservative, Dean Allison]

We're going to finish with Mr. Goldring.

[Peter Goldring, Conservative, Edmonton East, AB]

Thank you, Mr. Chairman.

I was hoping to have a few questions on standards with Ms. Greenwood before she left. After 32 years of my being involved in manufacturing, 25 in my own company manufacturing electrical systems, dealing with safety equipment, and even the myriad of standards that you have to apply there—even UL is different than ULC. There are factory mutuals, CSA, and any number of other ones too. It's very limiting. Sometimes I had the feeling that these standards were really protectionist, protecting some industries over others because it meant that, for example, I could not bring UL into Canada and sell it as ULC. That was illegal.

I'll switch here and go to some of the security aspects.

Mr. Dade, welcome. It's good to see you again.

As far as crime goes, of the 13 to 15 visits that I've had to Mexico, I've never had a problem. But during two visits to Detroit, I was robbed once, so there you go. But my question is on NAFTA and its success. In your group, have you done any studies on it to indicate how we have been making out? My brother who worked at the truck plant at General Motors in Oshawa bought a truck, and it was from Mexico. He was a little disappointed. How has Canada been making out on balance over the last 10 years on the progress of the auto pact? How are they doing beneficially or has there been any degrading?

[Carlo Dade]

I can't comment on all of them. In western Canada we buy cars. We don't do much in the production of trucks but the vehicle business in terms of selling trucks and transportation equipment to Mexico has been good for us, as it has been for other countries with whom we signed free trade agreements. Where we have done well is as Mexico has become middle class. Remember, per capita GDP in Mexico is higher than it is in China now, and it will be out to 2050. As the size of that group, the middle class in Mexico, grows, we see great opportunities for western Canada.

I mentioned wheat, pulses, canola. Mexico is a major producer of packaged food goods. The canola business to Mexico gets lost in shipment to the U.S. but we see this growth of the middle class for commodity producers and for the services we have in western Canada as a huge opportunity.

The energy reform, the guys in the oil patch, not the Suncors but the service companies, the guys who do mats and then fracking fluids are looking on this as a great opportunity. We've done well in western Canada. There are opportunities and we've been able to take advantage of them.

[Peter Goldring, Conservative, Edmonton East, AB]

What about the border areas in the eastern part? Restrictions at some of the border crossings here in the west are holding things up. Are there similar types of restrictions at the borders and has there been more movement to shipping through our ports like Vancouver to reach into Mexico rather than shipping directly by land straight through the border areas? Is there any benefit there?

[Carlo Dade]

CentrePort's doing quite well. They're looking at investments from Mexico in CentrePort and businesses into CentrePort. The Mexicans are looking to open a consulate in Winnipeg, which would give them the same coverage in Canada as in the United States. They would be the only country to have that significant coverage in Canada, and it's because business is booming. It's not to keep track of temporary foreign workers or seasonal agricultural workers. It's for business and investments. That corridor is hugely powerful.

Where we have the problem is Port Metro Vancouver. Because the port's financed its own rehabilitation and upgrading, ships can come into the port more cheaply than they can come into Seattle, so people landing ships in Vancouver go across the border. The Americans attempted to slap a surcharge on trucks from Canada to finance rehabilitation of the port of Seattle, which they refused to pay for by raising taxes or fees at the port. These are the sorts of issues that we.... God love the Americans.

We've managed to survive these sorts of issues with them. Luckily they backed down on that fee, but the North American Development Bank would help with these sorts of issues. It would give us a third ally beyond just Mexico to talk about trade infrastructure in a rational and comprehensive way. It would be a third voice at the table like the role the Inter-American Development Bank, the African Development Bank, the World Bank, play for the trade blocs.

[The Chair, Conservative, Dean Allison]

Do the witnesses have any final comments for us before we wrap up today? Are there any final thoughts?

Mr. Wilson.

[Michael Wilson]

I just had one thought. The relationship between Canada and the other two countries in the whole field of technology is extraordinarily important. I think we should be using these broader medians that I talked about as ways to draw out how we can collaborate among the three countries. Clearly the United States is the leader among the three of us in the world, probably, in the whole field of technology, but the more we can be engaged in that, integrate with the work going on in that country, and be a part of that, the better off we're going to be as we look into the future when we're going to be relying proportionately less and less on the natural resource benefits or advantages that we have.

[The Chair, Conservative, Dean Allison]

Thank you.

Mr. Robertson.

[Colin Robertson]

I'm just going to underline something that Mike Wilson underlined, which I also mentioned in my remarks, and that is the importance of contact, peer-to-peer relations between members of Parliament, members of Congress, and members of the Mexican Congress, the work that you can do individually, and the relationships you can build by going down to Washington and to Mexico City and by participating in the Canada-U.S. Inter-Parliamentary Group.

I praise Mr. Trottier for his work with the Canada-Mexico group. That is really important. These relationships, such as the one Michael Wilson described, from when he was trade minister, with Bill Frenzel, are absolutely vital. That's what prevents so much of the distrust and builds the trust that we have to have to make the thing work. That's how we'll compete better.

[Carlo Dade]

I would underline the importance of contacts that would go beyond Parliament, but they absolutely have to start with Parliament. You have to have more contacts throughout Canada, so this has to be a whole-of-Canada exercise.

Leadership can come from the government, but both the private sector in Canada and the provinces really have to step up to the table. We have visits from only Quebec and Ontario, so I would call on the premiers out west and the New West Partnership to start going down to Mexico.

With regard to the TPP, I think it sets the agenda for how we think about the future of North America. The fact that I don't have an answer about what we should do and about what's most important actually really troubles me. I don't think anyone does. The fact that we're so close and no one has an answer and no one has done the thinking on this worries me.

[The Chair, Conservative, Dean Allison]

Thank you.

Gentlemen, thank you all very much. We appreciate your taking the time.

The meeting is adjourned.