Thank you very much, Mark. Thank you, everyone. It has been a busy year for all of us, and I would like to join Mark in thanking the people who work so hard to make the work of this committee possible.
I am joined here by two people well known to the committee and to Canadians: Tim Sargent, Deputy Minister for International Trade, and Steve Verheul, who, as I think people know, is our chief NAFTA negotiator.
I'll make some opening remarks and then I'll be happy to answer questions.
I'd like to begin by acknowledging that we're gathered on the traditional territory of the Algonquins.
I'm here today to speak about anything people ask me about, but chiefly about the Canada-U.S. trade relationship. It is that part of my set of responsibilities that is of specific interest, I think, to this committee.
I want to start by taking this opportunity to thank Canadians and leaders from across the country for our unified Team Canada approach to this specific issue. I am very humbled and very appreciative of this effort, and I want to specifically recognize Canada's premiers, labour leaders, business leaders, and members of the NAFTA Council for their tremendous work to date. I do want to acknowledge the work of members of Parliament from all parties, very much including the members of this committee, mayors, civil society, and frankly, many Canadians who have been personally involved and engaged in this effort.
I think there is a broad national recognition that this is a consequential issue for our country. I certainly feel that when I talk to my constituents—or really, I should say, when my constituents talk to me—and I imagine that all of you have had the same experience.
The Canada-U.S. economic relationship is an essential one. One of the things that has been so valuable to Canada is the fact that we are playing as a united team. That is essential. It sends a powerful message to all Canadians and a very powerful message to the United States.
Mr. Chair, dear colleagues, thank you for giving me this opportunity to address the committee today.
I will do my best to explain point of view of the government on the tariffs imposed by the United States on Canadian steel and aluminum, and more generally on the status of NAFTA negotiations.
Allow me to begin with tariffs.
Canada is a friend and ally of the United States, and its closest neighbour. We share the longest non-militarized border in the world. Our soldiers fought together and died side by side during the First World War, the Second World War, the Korean War, and in Afghanistan and Iraq. As I have said on several occasions, the idea that we might constitute a threat to American national security—the pretext invoked by our neighbours to impose these tariffs on Canadian steel and aluminum exports—is not only absurd, it is hurtful.
These section 232 tariffs, Mr. Chair, are illegal under WTO and NAFTA rules. In fact, we have initiated a case at the WTO and have raised a case under chapter 20 of NAFTA.
As a supporter of the rules-based international order, very much including in trade, it was important for Canada to take this legal action, and I'd like to take this opportunity also to thank the very hard-working, committed, and creative Government of Canada trade lawyers who've been working very hard on this file.
Now Canada has no choice but to retaliate with a measured, perfectly reciprocal, dollar-for-dollar response, and we will do so. On May 31, the Prime Minister and I announced that Canada intends to impose tariffs on imports of steel and aluminum and other products from the United States, representing the total value of 2017 Canadian exports affected by the U.S. measures. That is $16.6 billion, Mr. Chair, Canada's strongest trade action since the Second World War.
Since we made that announcement, we have published two lists, one list that will be subject to a 25% tariff and a second list that will be subject to a 10% tariff. These countermeasures will only apply to goods originating from the United States. They will take effect on July 1 and will remain in place until the United States eliminates its trade-restrictive measures against Canada.
Consultations on these lists concluded on June 15.
I'd like to make a particular point, Mr. Chair, that in putting together these lists, the government and our fine officials have worked really hard to find lists that have the minimal impact on Canadians. Where possible we have sought to avoid intermediate goods and to put products on the list that can be easily sourced from either Canadian or other non-U.S. suppliers.
I'd like to take this opportunity to thank all the Canadians who have been very actively engaged in the consultations on these lists, including through their members of Parliament. I've heard directly from many MPs, including members of this committee, about feedback you've had from your constituents and your stakeholders about what should be on the lists. That has been very useful.
Although the formal consultation period is finished, we are still interested in feedback from Canadians. They should be in touch with the government, with Steve and his team, with the Department of Finance, and of course people can always be directly in touch with me. As we take these steps in response to the section 232 tariffs, we act in close collaboration with our like-minded partners in the European Union and Mexico. It's important to point out that these countries, also subject to the section 232 tariffs from June 1, are also allies of the United States.
Mr. Chair and colleagues, we know that no one will benefit from this beggar-thy-neighbour approach to trade. The price will be paid in part by American consumers and by American businesses. I think we all agree that it is important for Canada to stand in defence of the international rules-based order, and we will do so. Canada's policy will be that we will not escalate and we will not back down. Judging by the feedback I have received in the past few weeks, countless Canadians of all political points of view agree. Very many have come out in support of our decision to defend Canadian workers, and I would like to thank all members of the House of Commons, particularly Tracey Ramsey, for the unanimous consent motion that we all passed supporting this action. I think that was a very strong measure; I have shared it with our counterparts in the United States. I'm glad we were able to do it. It's a testament to Canadian unity on this issue, and I'd like to thank provincial and territorial leaders, including Premier-designate Ford, Premier Moe, and Premier Horgan, as well as the CLC and so many others for their support.
One thing I do want to point out, Mr. Chair, is that this unjustified section 232 action by the United States is quite separate from the ongoing negotiations between Canada, the United States, and Mexico to modernize NAFTA. As far as Canada is concerned, these are entirely separate issues, and I'd like to point out this is also the case under U.S. law, given that section 232 is a national security provision.
We know that NAFTA is very much to the advantage of all three NAFTA countries. When it comes to trade between Canada and the United States, our relationship is balanced and mutually beneficial. In fact, in goods and services overall, the U.S. has a slight trade surplus with Canada. The U.S. also has a surplus in trade in manufactured goods, in agricultural goods, and perhaps particularly relevant today, in trade in steel. As I know all of us are very well aware, Canada is the largest market for the United States—larger than China, Japan, and the U.K. combined.
A modernized win-win-win deal that benefits all three NAFTA partners is possible, Mr. Chair, and we continue to work hard and patiently to achieve this outcome. That was the point I made last Thursday when I met with Ambassador Lighthizer in Washington and again when I spoke to him over the telephone yesterday.
I also had a constructive conversation with U.S. Secretary of State Mike Pompeo on Saturday, which included a discussion of NAFTA and the section 232 tariffs. I remain convinced that there is goodwill and a desire to move forward on the NAFTA negotiations, and we have heard that publicly from Secretary Pompeo as recently as yesterday.
Our government feels that now we can continue working on the NAFTA negotiations. We will be working hard over the summer.
Thank you very much.
I'm happy to answer people's questions now.