Industry Committee on Feb. 24th, 2020

[Steve Verheul]

I think you have to step back a bit, because you have to look at the existing NAFTA, in which there is absolutely no protection on aluminum, no kind of provision on aluminum, that requires a certain amount of aluminum to be used in the production of cars. Under the new rules, manufacturers will have to have at least 70% of their purchases of aluminum come from North American sources, which means largely Canada, and more specifically largely Quebec. That's a significant improvement.

There is a difference between the steel and aluminum approaches, given that in this most recent amendment to the protocol that we negotiated and agreed to on December 10 there will be a requirement for steel to be melted and poured in order to qualify as originating in those purchases by manufacturers. However, we also have already established a process whereby we're monitoring imports of aluminum into the North American market. If we start to see a significant proportion of aluminum coming in from other countries, we will address that issue by raising it with the U.S. and Mexico and making the argument that aluminum, for that reason, should be treated the same way as steel with respect to that provision.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Indeed, that is quite favourable. It appears to be something new that came out of the negotiations—a mechanism that would give us the ability to make an adjustment well before the eight or 10 years in question. That's a positive avenue.

Are there any other mechanisms that could be used to protect aluminum, in particular?

[Steve Verheul]

Yes. I think there are two issues we're dealing with on steel and aluminum. We have the provisions in the actual agreement and we also have the national security 232 actions that the U.S. took against steel and aluminum. We also successfully removed those, as you know, but now we do have a process of ongoing consultation with the U.S. about imports of steel and aluminum into North America, and we're trying to determine that there's no transshipment or no back door for other countries to have steel and aluminum come into North America. We want to protect our manufacturing sector, in both steel and aluminum, and those provisions will also help us to do that.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

I should've said this when I asked the last question: there is still a difference between aluminum parts for vehicles and aluminum, itself.

I'm going to switch topics. Concessions were also made with respect to the caps on agricultural exports, especially concentrated milk proteins, skim milk, powdered milk and so forth.

Do you think the protein measure is an attempt by the United States to get around supply management and, if not eliminate it, exert a negative and significant influence on the system?

[Steve Verheul]

I have somebody from Agriculture and Agri-Food Canada, the chief negotiator for agriculture. I think he might be better suited to answer that question.

[The Chair, Liberal, Sherry Romanado]

Could you kindly introduce yourself?

Thank you.

[Aaron Fowler, Chief Agriculture Negotiator and Director General, Trade Agreements and Negotiations, Department of Agriculture and Agri-Food]

Thank you.

My name is Aaron Fowler. I'm Canada's chief agriculture negotiator from AFC.

The export monitoring provisions and export thresholds that are established for skim milk powder under this agreement are unusual. They're not akin to similar provisions in our other FTAs. They were included here because of specific concerns of the United States with respect to aspects of the Canadian supply management system for dairy, and in particular, aspects of the national dairy ingredients strategy that was introduced in 2017. It was a new pricing approach for certain dairy products that was intended to encourage investment and innovation in this sector.

The effect of those pricing changes on the United States resulted in two main areas of concern to them. One was they lost access to the Canadian dairy market for certain products where they had previously been quite competitive, and they saw themselves competing increasingly with Canadian exporters in certain specific types of dairy products where Canadian exports had not traditionally been so high.

As an alternative to addressing their concerns, which they wanted to address by dismantling the supply management system for dairy, we looked for ways to respond to those concerns that would be acceptable to both parties. We explored many ways of doing that with respect to Canada's dairy exports to third countries and ultimately settled on this as the least objectionable way forward.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

My last question is a short one.

Do people think the free trade agreement provides solutions to the softwood lumber crisis that has been going on for at least two decades?

[Steve Verheul]

Softwood lumber is obviously a part of the agreement. The U.S. has the right to initiate investigations and impose duties on what they consider to be anti-dumping and countervailing duties, and we have the right under the protection of the trade dispute settlement process for anti-dumping and countervailing duties. That's how that works. Any agreement on softwood lumber would be outside of the NAFTA agreement and provisions.

[The Chair, Liberal, Sherry Romanado]

Our next speaker is Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

Thank you to you and your team for your hard work.

I'm part of an interparliamentary association of Canada and the U.S. that involves Parliament and also the Senate. We go down to Washington twice a year and across the U.S. and have co-meetings with Senate and Congress and so forth. We know that both capitals can be logic-free zones at times.

We saw some of the things that emerged over the years. I want to go to the point of the environment and labour. In our meetings with Congress and Senate over the years, and those included Republicans and Democrats, I don't think I can remember—and this is a bipartisan group; we go as team Canada—when labour and the environment weren't raised by members of Congress and the Senate, even in particular with regard to Mexico, as factors against workers being competitive here in our country. Why wasn't that part of the original deal? That really led to the exceptionally longer period of time because it had to go back to Congress.

Can I have your comments about why we weren't pushing that from the beginning?

[Steve Verheul]

I think there was an effort to try to improve the obligations on labour. The labour chapter itself is, for the first time under the new agreement, a part of the agreement and subject to dispute settlement. It does include quite a significant number of improvements over the existing side agreement on labour. These include protections for violence against workers and enhanced disciplines and obligations with respect to labour.

[Brian Masse, NDP, Windsor West, ON]

Right, but why wasn't that part of the original attempt? I mean, we left it to Congress and the Democrats to fix that component of it, and it sat there in limbo for nearly a year because we didn't do that from the beginning.

[Steve Verheul]

I think the whole notion of a facility-specific rapid-response mechanism simply hadn't been developed in that kind of detail at that point. To have disciplines targeting specific facilities in another country has never been done before. It did require a much longer negotiation with Mexico in particular, because they are the clear target of this. Working out all of those details was contentious and took a long time. It simply wasn't addressed in the first instance.

[Brian Masse, NDP, Windsor West, ON]

One of the things that's been left off, and maybe you can provide some guidance on where we go from here, is the TN visa. We still have those who go back and forth across the border in occupations that didn't even exist in the 25-year-old original deal. What do we do about that? In the area I represent, and in many border communities and regionally as well, it seems to be very discretionary when those with certain occupations and jobs are allowed to go back and forth. What do we do about that not making it to these negotiations?

[Steve Verheul]

When it comes to those types of issues, when we started, the U.S. position was to get rid of that whole chapter on temporary entry of business people. Our position was to try to enhance and expand it, so we came from completely different places.

We managed to preserve the chapter as it is with the professions that are contained within it. I think we do have opportunities as we move forward to try to further elaborate some of that and provide further specification, but I think the main challenge we had was to simply have a chapter addressing those issues at all, because the U.S. was adamantly against it.

[Brian Masse, NDP, Windsor West, ON]

With regards to data and privacy, what assurances do Canadians have with regard to.... We have a Privacy Commissioner, for example, and they do not have one.

Are there any vulnerabilities in this deal with regards to the independence of our Privacy Commissioner in crafting Canadian laws in light of changing technologies that will allow that independence to be maintained, but also, I would hope, to be enhanced in the future?

[Steve Verheul]

We do have the specific provision related to protecting privacy, but perhaps I could ask Nolan to add a bit to that.

[Nolan Wiebe]

Sure.

I'm Nolan Wiebe with Global Affairs Canada. I'm a senior trade policy officer there.

As Steve mentioned, there are commitments in the context of the digital trade chapter as well as in the exceptions chapter of chapter 32 that relate to the protection of personal information. In the digital trade chapter, the context is specifically with online consumers. There's a broader context under chapter 32, Exceptions and General Provisions, where it applies to all aspects of the agreement.

That measure is intended to ensure that countries do have measures in place to protect personal information of businesses and consumers who engage in online trade.

[Brian Masse, NDP, Windsor West, ON]

That will have no consequences for our Privacy Commissioner, though?

[Nolan Wiebe]

That provision will not have any implications for our Privacy Commissioner, nor would any other provisions in the context of this agreement affect the commissioner's their ability to enforce Canada's measures to protect Canadian personal information.

[Brian Masse, NDP, Windsor West, ON]

Okay.

Lastly, buy America is still a problem. What's your recommendation? There's also buy American, which also gets lost in that.

[A voice]

It does.

[The Chair, Liberal, Sherry Romanado]

Unfortunately, Mr. Masse, that is your time.

The next round of questions will be for five minutes each, and we begin with Ms. Rempel Garner.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Thank you, Madam Chair.

I'll pick up where I left off. Mr. Verheul, your last comment before I got cut off was that we would have to offer provisions in chapter 19 to other trading partners. Is that being discussed with the European Union?