International Trade Committee on June 19th, 2018

[Gordie Hogg, Liberal, South Surrey—White Rock, BC]

Thank you very much.

Thank you, Minister.

I'm so old that when NAFTA was originally negotiated, I was the mayor of a border community, and I remember some of the angst and animosity that grew out of that. Subsequently I was a member of the legislative assembly and a cabinet minister, and I represented the Province of British Columbia on the Pacific NorthWest Economic Region. Having a fair amount of experience with a number of these things and trying to juxtapose what happened 25 years ago with what's happened today, I've been quite encouraged by the way that Canadians with the different political parties have come together and have addressed this situation.

I'm wondering if you can you talk a bit about what Sukh was asking about in terms of the engagement processes that have taken place. I think that the way we do what we do is often as important as what we do, and in some cases more important. Could you describe for me the processes that were engaged in, in terms of addressing it in a sensitive way that captured the values of Canadians in a meaningful way?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you for that question.

Since you mention your own history with NAFTA, Tracey knows what I'm about to say, which is that my own personal history with NAFTA began when my mother unsuccessfully ran as the NDP candidate in Edmonton Strathcona. I'm afraid that the NDP back in the day was very anti-NAFTA, so I did knock on doors in Edmonton Strathcona in talking about that issue.

[Some hon. members]

Oh, oh!

[Chrystia Freeland, Liberal, University—Rosedale, ON]

She lost, though.

I think it is worth it for us as Canadians to reflect on that history. In the nearly 25 subsequent years, I think our country has really moved from quite a polarized view around trade, including trade with the United States, to a really unified Team Canada approach.

One of the things that is striking for me is the extent to which Canadians broadly understand the value of trade in general for our country. It doesn't mean we don't have disagreements about specific trade agreements or differing views about what should or should not be in trade agreements, but I think we have a broad appreciation that Canada is a trading nation and that trade is absolutely essential for the prosperity of middle-class Canadians and of everyone who is working hard to join the middle class. I think that is a very good thing. It's a strength for our country.

In these specific negotiations, I think there has been an appreciation from the very outset that on this issue, Canadians were all on the same side, Canada's side. I think we all appreciated that the best outcome for our country would come from all working together. I'm pleased to say that we have been successfully doing this.

We've been doing that partly through the role that members of Parliament have been playing, including this committee. If you don't mind my mentioning another committee, I think the foreign affairs committee has been playing a really strong role as well, as has the Canada-United States Inter-Parliamentary Group. The fact that we have had bipartisan groups of MPs going and talking to their U.S. partners has been extremely helpful.

I think something that has also been very valuable is that all of us—all legislators, the government, certainly our public servants—have been spending a lot of time talking to Canadians about their concerns on these issues. This broad consultative approach, I think, has helped to strongly inform our negotiating positions. We come to the table knowing what Canadians directly affected by a particular issue really need. It has also helped to build a really strong, unified national approach.

Steve and I have been in many conversations where this has been the case. Consulting with Canadians helps us to understand our counterparts in the U.S. and Mexico better. When we talk to the Canadians who are part of a trading relationship with the United States, they have clients and customers on the other side of the border—

[The Chair, Liberal, Mark Eyking]

Thank you, Minister. That was good.

We're going to move over to Mr. Carrie. You have the floor.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

Thank you, Minister. I think it's pretty obvious that we're all on Canada's side, but I have to tell you as the member of Parliament for Oshawa that we build cars, and I'm extremely concerned. Our factories are going to be significantly affected by the tariffs on steel and aluminum. We always get complaints that Canada is the highest-cost jurisdiction in which to build cars, and it's really affecting our competitiveness.

I know that when the Americans first announced these tariffs, the Prime Minister was quick to go on a victory tour in Quebec, telling workers, “We got your back.” Unfortunately, we didn't get a great result there. We're being hit with these tariffs, so we know that's not the case.

When Mr. Trump says something, he means it, and he's going to follow through. Now we're threatened with these auto tariffs, and as my colleague said, the TD Bank calculates that 160,000 jobs could be affected. That's huge. It makes me extremely nervous.

I'm worried about the plan, frankly. You mentioned that auto is a priority, but Minister, in your speech last year you didn't really mention automotive as a priority. There's nothing in the budget about these tariffs in response. The government is running huge deficits. There's not a lot of fiscal room here.

You say that we have to be prepared, but what is the status of the plan? What can you do to assure auto workers that they're not going to lose their jobs? How far along are you with a plan to adapt to the eventuality of these auto tariffs?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you for your hard work on behalf of your constituents.

The auto sector is absolutely essential to our country and to this government. It has been an absolute focus of our discussions with the U.S. about the Canada-U.S. economic relationship.

As I think this committee is well aware, the rules of origin in the automotive sector have been at the heart of our NAFTA negotiations. We have spent a great deal of time at the table with our American and Mexican counterparts and we have also consulted very closely with the car parts companies, the car companies, and the unions. We absolutely understand the centrality of the automotive sector to our economy, to our relationship with the U.S., and to NAFTA. We have been and continue to be extremely focused on it when it comes to the NAFTA negotiations.

On the section 232 investigation, let me be very clear. Canada knows, and our partners around the world in Europe, in Asia, in Mexico know this would be an unprecedented act by the United States, and we have been very clear in explaining that to our American counterparts—

[Colin Carrie, Conservative, Oshawa, ON]

We do know that, Minister.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

It is important for us to be clear about that as a government and as a country—

[Colin Carrie, Conservative, Oshawa, ON]

We know that.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

It's important for us also to be in very close conversation with Canadian and U.S. business about what the impact of such an action would be—

[Colin Carrie, Conservative, Oshawa, ON]

Minister, I have a very short period of time.

On the weekend I was talking to my neighbours. We're extremely worried about that. We know all that, and respectfully, I thank you for your work on that, but we don't know the plan. Today we even asked for an emergency debate.

I know the Speaker made his decision, but I'm disappointed because for me, a potential 160,000 jobs lost is an emergency. For my community, that's an emergency. For Ontario, that's an emergency. For our economy, that's an emergency.

What I'm asking you today is not things we know. What I'm asking you is, how far along is the plan?

With these other tariffs, the Prime Minister went out early and said not to worry, be happy, or that type of thing. Well, I'm worried. I don't know what the plan is and I don't know if you advised the Prime Minister to do that tour, but I would like to know the plan.

[The Chair, Liberal, Mark Eyking]

Mr. Carrie, you only have 20 seconds, so let the minister answer your question.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

With respect, let me say that the Prime Minister's response and my own on May 31, when the section 232 tariffs by the United States were announced, was firm, clear, and resolute, and it spoke to detailed preparation. Our preparations in support of the auto sector are equally detailed, and our support will be equally firm and clear, and that's a commitment.

[The Chair, Liberal, Mark Eyking]

Thank you, Minister.

We all want to be in QP at two o'clock, so we have roughly 10 minutes to go.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Speak for yourself, man.

[The Chair, Liberal, Mark Eyking]

I'm going to shave a minute off each party. We're going to go four, four, and two.

We have Mr. Fonseca for four minutes.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Thank you Mr. Chair.

Thank you, Minister.

I know you have a robust plan. I thank your team for its leadership and your leadership. In the approach you've taken, you've always kept the door open. You've looked to find that common ground to continue to talk.

On this NAFTA journey, I've heard from so many companies in my riding of Mississauga East—Cooksville that do a great deal of trade with the United States. Since the beginning they've always said they've been fully engaged and they understand all the nuances, but here's what's really telling. One of my neighbours, whom I'll call Fred today—and I won't say his political stripe—has come to me numerous times. He came to me on the weekend and said he liked seeing the minister with Premier-elect Ford talking about NAFTA in that Team Canada approach. However, one of the things Fred said that he would like to know is what's holding this back. What are the barriers?

I know the U.S. administration has talked about this five-year sunset clause, and we've said that's unacceptable, it's a non-starter. Can you explain to Fred, in layman's terms, what that all means to us, and why that would not be acceptable to Canada?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you for the question, Peter. I will try. I find that I'm able to get into very boring technical details quite quickly when it comes to NAFTA, but I'll try.

It is absolutely the case that when we look at the U.S. negotiating positions on NAFTA, there is a set of issues that we discussed earlier in response to Linda's question, which we describe as the modernization agenda. On those chapters, we're making good progress. We have closed nine of those chapters, and I think those chapters are areas in which we are really going to be able to bring NAFTA up to date to the 21st century and make a real difference to Canadians who are part of the $2.5 billion of business we do with the United States every day.

There is also a set of U.S. negotiating positions that the officials who write me notes about them describe as the “unconventional” U.S. positions. The U.S. Chamber of Commerce uses slightly stronger language and describes them as some of the “poison pill” proposals.

One of these is the proposal for a sunset clause. The idea would be that every five years, unless each country chose to opt back into NAFTA, the treaty would cease to exist. Canada is strongly opposed to that for a number of reasons.

First and foremost, we see the value in a trading agreement being that it allows businesses and workers to build permanent relationships to plan for the long term. An agreement that expires every five years has much less value.

We also make a practical point, which is, as Canadians know very well, that NAFTA already has a six-month notice clause that permits parties to exit. I will be celebrating my 20th wedding anniversary this summer, so I use marriage analogies: there is already one way for us to get divorced, and we don't think another one is necessary.

Now, I do want to be clear that when it comes to this U.S. insistence upon a sunset clause, that is very much on the table. It has not been withdrawn by the United States and it is a major sticking point for Canada. I know we have the support of Canadians in that position.

[The Chair, Liberal, Mark Eyking]

Thank you, Minister.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you.

[The Chair, Liberal, Mark Eyking]

We're going to the Conservatives. Mr. Hoback, you have four minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Thank you, Minister. Again, Scrooge is giving me only four minutes. I could use twenty-five minutes.

I'm sorry, Chair. I didn't mean to call you Scrooge, but with the time you tend to be.

Without a doubt, I want to say thanks to the ambassador, his team in Washington, and Steve and Tim for all your hard work on that. Actually, our trade committee went down there two years ago, and when we were down there a month ago, the level of knowledge and the understanding.... I have to say I'm pretty proud that they will repeat back to us the numbers on their state that we gave them a year ago, so they get it. Unfortunately, they have no influence on the President, and that's without a doubt. We know that's still an issue and a problem, and there is stuff the PMO has to do with regard to that.

I guess what I want to get back to is that we need to have a plan moving forward. We can't assume that he's not going to do what he says he's going to do, because he's doing it. He threatened us on aluminum and steel, and he did it. He was threatening us on autos, and he did it.

Now, you know you've put tariffs in place on aluminum and steel and that this tariff is going to have some $16 billion worth of value, so you're going to collect tariffs on that. You're going to collect some 25%, let's say, so we're at roughly $2 billion or $3 billion in tariffs on that. Is that money going to go directly to the companies that are going to be impacted by these tariffs? You have companies that don't use aluminum and steel that are on that tariff list and that will be impacted, so what is your plan to help them? As these tariffs come into place, what is your plan to help them become more competitive so that they can actually be helped to ride through that and keep those jobs? Have we maybe alleviated the tax burden or maybe given them a faster capital gains exemption? Is there anything in the plan that you've put in place to do that? I haven't seen it in the budget. Have you at least looked at that?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

I think that's a really good question. I do want to just start by addressing your initial comment.

[Randy Hoback, Conservative, Prince Albert, SK]

I have only four minutes.