Good morning, Mr. Chair.
Mr. Chair, I would like to thank the committee for inviting me to appear again.
I have no idea how much time I have, but I am sure it will be enough.
So yes, from western Canada you will get an introduction and a welcome in French.
It is indeed a pleasure to be back here. There's a lot of ground to cover. There was a series of questions, so I'll once again endeavour—and fail—to keep my remarks brief. There's a lot out of Washington today. I don't know if you've heard, but the USTR is going to deliver the letter on NAFTA negotiations to the relevant committees: ways and means and Senate finance. I'll talk a little about that and the TPA process at the end.
Rather than address the nine points today, I thought I'd look at some of the previous testimony you've had on the subject, respond to some of the information you've had, try to fill in some of the gaps, and look to build upon what some of my colleagues in the think tank industry and some of the other analysts have done.
I note that I am once again in front of committee solo. I thank you for that. It's either a sign of great interest or a sign that my colleagues in the think tank community don't want to be sitting up here next to me when I testify. It could also just be dumb luck.
To start, I want to talk about three reasons for optimism, and the opportunities associated with that optimism, in our relationship with the Americans, particularly with the upcoming NAFTA negotiations.
First, I'm actually here as director of the centre for trade and investment policy at the Canada West Foundation. I'm sure that most of you are familiar with Canada West, so I won't go through the history. The foundation is 40 years old. We work for all four western provinces. Our creed is that a strong west makes for a strong Canada. The west is Canada's export engine. We have about 30% of the country's population but over 40% of the country's exports. The success of the export economy of western Canada is crucial for the entire country.
I also bring greetings from my new boss and your former colleague, Martha Hall Findlay. I'm sure some of you shared her as a boss in the past and many of you shared her as a colleague. I think that's really a symbol of how much the west is changing and how much Canada West is changing too.
I have three points for optimism and opportunity and what we can do about them with our relationship with the Americans. The first point for optimism is that when we talk about NAFTA, indeed, in the public discourse, in the media, even in the testimony you've had here at the committee, there's a conflation between North America and NAFTA. I think we need to be clear that North American integration and the larger North American projects or economies are not summed up by NAFTA. NAFTA is one component of North American integration. It's an important one, yes, but it is not the sole component.
This is important especially for us as we look to engage with this new administration. As your previous witnesses in particular Scotty Greenwood mentioned, some of the most important elements, the progress and the achievements that we've had, have not been part of the agreement. She spoke extensively about the Regulatory Cooperation Council. This is probably one of the most important assets we have for improving our ability not just to trade with the Americans but to make products with them and with Mexico, which we export in competition with other trade blocs, such as the EU, the Pacific alliance, and the factories of Asia—Vietnam, China linked to Korea, Japan linked to Vietnam, Thailand, etc. That is not part of NAFTA.
You can also look at our ability to move business people back and forth across the border through the NEXUS program. That was a huge advantage that we enjoyed uniquely for a while with the Americans before they expanded the GOES program. Again, it exists; it's not part of NAFTA.
What's interesting about these initiatives is that they are not subjects of discussion. They are flying under the radar. Not only are they flying under the radar, they're also increasing and strengthening. We're talking about tearing up NAFTA at the same time we're not just talking about but actually moving concretely to link the RCC with the U.S.-Mexico equivalent, to have one regulatory co-operation environment for Mexico. It's a huge competitive advantage for us, and this is proceeding despite the rhetoric coming out of Washington.
The administration down south is talking about building walls on the southern border, but at the same time we're talking about linking SENTRI, the U.S.-Mexico trusted traveller program, with NEXUS. We will have one trusted traveller program in North America heightening the movement of people at the same time we're talking about building walls. This is an opportunity for us if we can lift our eyes up from the text of NAFTA and look more broadly and think more creatively about how to advance our relationships.
At the Democratic National Convention last year in Philadelphia, there was a sea of anti-NAFTA signs—NAFTA in a circle with an arrow through it—and a sea of anti-TPP signs—TPP in a circle with an arrow through it—but I have yet to see there or at any NAFTA protest a sign held up with the words RCC in a circle with a line through it. I've never seen anyone holding up a sign saying down with the RCC.
These are opportunities for us to engage the Americans. In this vein, we've been working with the Bush Center in Dallas on a proposal to create a North American infrastructure bank. The idea is the same: to address a specific problem we have with the Americans to which there are practical solutions, and for which there's a real need, and there's a need on the American side as well as the ability to get them to the table.
I actually did a presentation for the Canada-U.S. Inter-Parliamentary Group. I can talk about this more at length. This is a subject that merits some consideration. When Washington begins to look at its infrastructure problem and at solving it and at how broke the U.S. highway trust fund is, as well as at the inability of northern states to fund basic infrastructure, let alone infrastructure along the border, Canada showing up with solutions and Canada showing up with money may be the entree to solving some of our problems.
That's one point for opportunity and optimism: the quiet, behind-the-scenes initiatives that have sprung up to deal with real problems. Our one potential solution is an infrastructure bank. This is completely different from the Canadian infrastructure bank. There's actually a case to be made for this bank as opposed to, I think, the Canadian bank. There's opportunity and optimism.
The second point is that with all these anti-NAFTA signs, I've never seen at a protest someone carrying a sign saying “down with the Manitoba-Montana treaty on invasive species”, or “let's end the Alberta-Idaho agreement on co-operation on regulation for...” whatever.
The subnational level is hugely important for us. It's rich. It's deep. This is where we really have impact with the Americans. The ability to deal with state-level officials as colleagues, as friends, as co-workers, as equals is hugely important to us. It impacts our ability to influence Washington. As politicians, you know that if you get a phone call from a foreign ambassador or from someone in your riding who can deliver votes or sway an election, which phone call do you take? You take the call, if you're in Congress, from the speaker of the state house, from the governor, from the mayor, from the head of a local chamber of commerce. We have unique access to these people to be able to influence the agenda in Washington.
The U.S. Council of State Governments: Canadian provinces are members. The Pacific NorthWest Economic Region: Canadian provinces are members. We host meetings. We host U.S. state legislators in Canada. The U.S. Council of State Governments passed a resolution opposing country of origin labelling. That was the work of Canadian participation in that group.
I was with Cal Dallas recently. He's a former trade minister for Alberta. Cal was telling me stories about his ability to go to states in the U.S. and talk to his counterparts to actually arrive at solutions to problems before they reached the press. You don't hear about this for obvious reasons. It's a great story in the Edmonton Journal if Cal's able to convince California to do something, but it's an even “better story in the Sacramento Bee”. Let the Hansard show that I am using air quotes to indicate that “better story in the Sacramento Bee” is sarcastic.
This is an ability we've really underutilized in the U.S. The problem is that our current relations with the United States demand that it's an “all hands on deck” response.
It's an open secret that the Clerk of the Privy Council has gone to the premiers and asked them—pleaded with them—to do more in the U.S. to increase their contacts, to increase their outreach. However, we're asking the provinces to do this at a time when provincial budgets are strained—Saskatchewan, Manitoba, even Alberta. The feds have money and the provinces don't, yet we're asking the provinces to do more.
We have a couple of things on this. We have a proposal out to Western Economic Diversification to set up a fund to co-finance activities and U.S. engagement with the provinces, to augment and increase what they're doing, but to also serve as a point for coordination and information sharing, so we stop tripping over ourselves when we go down to the States. Manitoba bumps into Alberta coming out of a meeting in a governor's office, and the consul general and foreign affairs are scheduled five minutes later. Coordination and financing will enable us to use this vital tool.
Finally, the reason for optimism—I could spend some more time talking about it, given the news from today—is that we are exiting the period in the U.S. of trade policy by tweet, by idiosyncratic whim, by capriciousness on the part of the administration, by responding to every tweet at two o'clock in the morning, by every offhand comment that Secretary Ross makes on CNN or on Bloomberg. The administration is now running into the TPA. There is a set of rules and requirements for the administration to follow Congress's lead on trade. Article I, section 8, clause 3 of the U.S. Constitution, the commerce clause, states that Congress has the responsibility to regulate trade between the United States, between the Indian nations, and with foreign governments. This is clear congressional authority. They've laid out rules for how the administration has to negotiate and what has to be included in negotiations. They've stepped up the requirements not just for consultation, but for the administration to follow Congress's lead.
If you look at what happened back on March 21, Secretary Ross and acting USTR Stephen Vaughn went to the Senate finance committee to talk about renegotiating NAFTA. During the hearings, they suggested that this will count as notification to the Senate to fulfill the requirements in the TPA. The response was a combination of being scolded and being laughed out of the room. Ron Wyden, the ranking Democrat, told them bluntly to go back, read the TPA requirements, and come back when they had prepared a written submission explaining their goals and how they address the priorities the committee laid out.
The next move by the administration was to suggest that acting USTR Vaughn could do this. Again, they were sent back, were laughed out of the room, were told that there was a process. That's why it's taken until today for the administration to actually be able to begin the 90-day period for negotiations with NAFTA.
I stress this because we're seeing Congress increasingly take control. You've had other witnesses who have looked 20 years back to judge how Congress will do and what power Congress has. I'm looking back a month and a half, and what I'm seeing then, what I'm seeing even today, is Congress really stepping up. It's not just that Congress has an advisory role. If you read the TPA, it says the administration has to respond to and make adjustments to trade negotiating policy based on congressional input. There are checks. They can look at the negotiating text anytime. They can look at what we submit anytime. You're going to see a heightened role for Congress and, I think, a rein on what the administration can do.
There are a couple of things on this, things that shouldn't surprise us. We know that tariff quotas were a big issue in the TPA legislation, and yet we were surprised when the Americans brought up supply management in dairy. Martha Hall Findlay has a new paper coming out on supply management. If you are not already familiar with her work, you will become so, increasingly—a great piece of work. We shouldn't have been surprised when dairy was brought up.
Another issue is localization of data. I would flag this for you. The position of the TPA is that trade negotiations have to fight against keeping data in the jurisdiction. The Americans should be able to have data. The data should be based anywhere. I think that's going to be a major issue if they really push it. Again, the point is that we know what's in the TPA. At the end of today, we'll know what's on the Americans' negotiating agenda, and we can stop jumping at every tweet, at every bit of noise that comes out of the White House.
Yes, there will still be surprises. Yes, the administration will still pull changes at the end. What I'm talking about is balance. We've had idiosyncratic tweets and responding to rumour as the only input. We are now getting something on the other side to balance that out. We are getting clarity and some degree of certainty.
Finally, I have one editorial note. We talk a lot in Canada about our most important relationship being in North America. The U.S. is our most important trading partner and political partner. North America is our most important trade bloc. There is a lot of talk about the importance of North America, yet you would be hard pressed—actually it would be impossible—to tell that by looking at our capacity and our ability to do policy research on North America in this country. Independent groups that can do research on North America and have deep, long-standing connections with counterparts throughout North America are the third track of diplomacy.
I can point to half a dozen centres in the U.S. and two or three in Mexico. I can't point to one in Canada. We closed the Alberta Institute for American Studies a few years ago, and with it, our last independent voice on working on North America. Our capacity on North America, strangely enough, exists in Washington, D.C. The Woodrow Wilson institute and Laura Dawson are probably our best asset in terms of work on North America. It's in Washington, D.C. It's not in Canada.
I think that an issue for the future is capacity: repairing the damage done by cutting the enhanced representation initiative and building up our capacity with consulates and consuls general in the U.S. Also, Canadian studies in the U.S. are a huge asset. We have consuls general who are trying to cover four or five states. Our consul general in Seattle has to go all the way to Idaho. Our poor consul general in Dallas—she's doing a fantastic job down there—has to cover Oklahoma, Louisiana, Arkansas, and New Mexico. If you're in the oil business, you're looking at this saying, “Wait a minute. Louisiana, Oklahoma, Houston, and Dallas, with one person? This is insane.”
It's also on the policy capacity side. We don't have one centre on North America here in Canada. How the hell does that signal this is our most important relationship, when the Americans have half a dozen and even Mexico has two or three?
I am happy to talk about softwood lumber, supply management, and the news we're getting out of Washington this morning.