Evidence of meeting #114 for International Trade in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was know.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

1:05 p.m.

Liberal

The Chair Liberal Mark Eyking

I call the meeting to order.

Good afternoon, everyone, and welcome to what is probably the last meeting of the Standing Committee on International Trade before the House rises. Before I go on, I'd like to thank the clerk, our analysts, and all our supporting staff who have helped us get through this very busy year. Our committee has been very busy.

Minister, as you know, we're dealing with the EU, the Pacific Alliance, the ASEAN countries we visited, and Mercosur. Of course, one of the most important studies that we did was on NAFTA, which had us travelling to the United States a few times.

Again, welcome. Thank you for being here despite your busy schedule and thank you for all the hard work you're doing. Congratulations on your very prestigious award.

We are of course going to give you opening comments, and then we'll have interaction with the MPs. We're going to try to get two rounds in today, so we hope everybody stays within their time when we get started with the MPs. I'm going to hit that button when it turns red, when you have 30 seconds. I'm going to be very close on the time because I want to get everybody in.

Without further ado, again, welcome, Minister. You have the floor.

1:05 p.m.

University—Rosedale Ontario

Liberal

Chrystia Freeland LiberalMinister of Foreign Affairs

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.

1:15 p.m.

Liberal

The Chair Liberal Mark Eyking

Thank you, Minister.

We're going to dialogue with the MPs. I'm going to be very strict; as soon as that light is red, it means you have 30 seconds, so if you want to get a short one in, you're going to have to be quick, and maybe the minister can have a quick answer.

Without further ado, we're going to start with the Conservatives' Mr. O'Toole, the member for Durham.

Welcome. You're going to share your time with Mr. Allison for five minutes. Go ahead, sir.

1:15 p.m.

Conservative

Dean Allison Conservative Niagara West, ON

Thank you.

Minister, thank you for all the hard work on this file. Mr. Verheul, to you and your team, I know there have been a lot of hours spent on this, and it's not an easy one.

I may respectfully disagree by saying that section 232 and NAFTA are linked, certainly from the President's point of view. As a matter of fact, 10 minutes before this committee started, Mr. Trump tweeted that Canada is not going to take advantage of the United States anymore.

We've seen these tweets before, and they continue to happen. It seems that everything he tweets ends up actually happening at some point in time.

When we chatted last week about tariffs, I was concerned about schedule I not going into force right away. You said you wanted to consult and try to get the right deal in place. I would say that more than ever, the industry needs certainty.

Today I want to talk about schedule II briefly. I've heard from a lot of companies: KingFisher boats, Whirlpool, JEM Strapping Systems, Okanagan Spring Brewery, Steelway Building Systems, GGS Structures, and the list goes on. They are really concerned about how schedule II will possibly affect them by making it more expensive and less competitive. I think any kind of protracted trade war is not going to go well for Canada, given the size of the United States.

We want a comment on schedule II this time. I asked you about schedule I last week. What are your thoughts around how you got to that list and whether you feel you balanced the businesses versus the trade aspect?

1:15 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

Thank you very much for the question.

Thank you, Dean, if I may. Can we be on a first-name basis? I'm happy for people to call me by my first name. Thank you for your hard work on this issue and for working so closely with stakeholders.

As I said, the formal consultation period closed on June 15. We are now taking in all of the very detailed, extensive feedback we've had from stakeholders. We will be using that feedback to modify the list. That is why the consultation period is so essential. It is a period that we use to hear directly from affected stakeholders and to get the best possible list for Canadians.

Like you, I have heard from people in the boating sector, and that is feedback that we are taking very seriously.

I know it's clear to you, but I do want to reiterate so that it's clear to Canadians. What we published on May 31 was a preliminary set of lists. The consultation period is real and meaningful. It has been important for us to hear from Canadians about what they want to see on the lists and what they don't want to see on the lists. Steve and the team and I and our colleagues in the Department of Finance are now working very hard to integrate that feedback from stakeholders and to modify the lists accordingly.

1:20 p.m.

Conservative

Dean Allison Conservative Niagara West, ON

Thank you.

I'll turn the rest of the time over to Mr. O'Toole.

1:20 p.m.

Liberal

The Chair Liberal Mark Eyking

Mr. O'Toole, you have two minutes.

1:20 p.m.

Conservative

Erin O'Toole Conservative Durham, ON

Thank you, Minister.

Last July, when President Trump alluded to the use of section 232 and specifically tweeting about the dumping of steel and aluminum, it was considered at that time that he was focused on China, but Canada did not change our country of origin marking with respect to these dumping concerns until May 2018, a full year later.

When Mr. Hoback and I went to Washington in February, we were bringing up steel and aluminum tariffs with many officials for the first time. That is what they said. When did Canada start reacting to the threat posed by section 232 tariffs and the administration's concerns about steel from outside North America?

1:20 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

Canada began our conversation with the United States about section 232 on steel and aluminum as soon as this issue was raised in the United States. It was an issue that was raised by Secretary Ross. It was a Department of Commerce investigation. I had many conversations with him, beginning as soon as this investigation was launched last spring.

The Prime Minister discussed this directly—

1:20 p.m.

Conservative

Erin O'Toole Conservative Durham, ON

Could I stop you there, Minister?

1:20 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

No, I haven't finished my answer.

1:20 p.m.

Conservative

Erin O'Toole Conservative Durham, ON

Why no action until May 2018?

1:20 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

I haven't finished my answer, though, if I may.

The Prime Minister discussed this directly with the President of the United States. I was present at that discussion at the G7 summit in Taormina, Italy. That was in June 2017.

I want to be very clear. There were many subsequent conversations.

1:20 p.m.

Conservative

Erin O'Toole Conservative Durham, ON

The country of origin marking—

1:20 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

I want to be clear with Canadians that this issue has been raised by our government at the highest levels. It was also an issue that I raised with Secretary Tillerson and with Ambassador Lighthizer, and it was raised by many other ministers and MPs—

1:20 p.m.

Conservative

Erin O'Toole Conservative Durham, ON

Minister, I have no doubt—

1:20 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

In terms of the global safeguards—

1:20 p.m.

Conservative

Erin O'Toole Conservative Durham, ON

Why so long until the move on the—

1:20 p.m.

Liberal

The Chair Liberal Mark Eyking

Excuse me.

1:20 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

I can't talk about safeguards?

1:20 p.m.

Liberal

The Chair Liberal Mark Eyking

No.

1:20 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

Okay. I'll do that with somebody else.

June 19th, 2018 / 1:20 p.m.

Liberal

The Chair Liberal Mark Eyking

I would remind MPs not to be throwing questions in there in the last 10 seconds.

We're going to move on to the Liberals.

Madam Lapointe, you have the floor.

1:20 p.m.

Liberal

Linda Lapointe Liberal Rivière-des-Mille-Îles, QC

Thank you very much, Mr. Chair.

I want to welcome you and your entire team, Madam Minister.

In your opening statement, you said that the leaders of the business world, unions and the premiers of the various provinces had helped you. I would like you to tell the committee how you worked with the Government of Quebec in particular, but also with Quebec unions and enterprises, to hear their concerns about the NAFTA negotiations.

In what way did the federal government and the Government of Quebec participate in the negotiations?

1:20 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

Ms. Lapointe, thank you for your question, and for your hard work.

As I said in my comments, we work closely with all of the provinces, including Quebec of course. Mr. Verheul and his team speak directly with Quebec government officials. For my part, I had many discussions with ministers St-Pierre and Anglade, and even spoke directly with Premier Couillard.

The Province of Quebec has very effective representation in the United States. It is a pleasure to work with that province, and it's very important to do so. We also worked with Quebec unions and businesses such as forestry companies, and enterprises in the aerospace and aluminum sectors.

As you know very well, there are very strong economic ties between Quebec and the United States. It was very helpful for the federal government to work with all of the provinces, including Quebec.