International Trade Committee on June 18th, 2019

[Bob Lowe, Vice-President, Chair of Foreign Trade Committee, Canadian Cattlemen's Association]

It was a perfect spring for it.

[The Chair, Liberal, Mark Eyking]

Good show.

[Bob Lowe]

Good morning. I would like to thank the committee for allowing us to speak to it.

My name is Bob Lowe. I'm a rancher and feedlot operator in southern Alberta. I'm also the current vice-president of the Canadian Cattlemen's Association, the national voice of Canada's 60,000 beef operations.

The CCA has long been an advocate for free trade, open markets and, of particular relevance today, CUSMA. Under both NAFTA and CUSMA, the beef industries of Canada, the United States and Mexico have and will enjoy reciprocal duty-free trade between our countries. This is how free trade should work. Preservation of this trade access was a high priority for the Canadian beef industry in the NAFTA renegotiation process.

The experience of the North American beef cattle industries under NAFTA is testament to the value of trade agreements. Canada exports approximately half of its beef production, and usually the U.S. is the destination for 70% to 75% of those exports.

Under NAFTA, Canadian beef exports to the U.S. have quadrupled in total value from $500 million in 1995 to $2 billion in 2018, plus another $1.2 billion in live cattle exports.

Beef exports to Mexico have grown nearly 30-fold in value from $3.7 million in 1995 to $110 million in 2018.

On the import side, Canada imported 943 million dollars' worth of U.S. beef and 37 million dollars' worth of Mexican beef in 2018.

The Canada-U.S.-Mexico agreement will allow beef producers across all three of our countries to continue to grow and prosper. In fact, we have jointly submitted a letter of support for swift CUSMA ratification to our three governments.

I would like to give an example of how CAFTA helps me on my own operation. When I sell my cattle, I seek bids from packer buyers in both the U.S. and Canada. Even if I sell at home, I know I have received the best price because the Canadian buyers know I have an option to sell into the U.S. market. If that border weren't open, it's not for me to imagine getting $500 less per animal.

Furthermore, access to markets around the world ensures that the meat packer is able to sell to the customers willing to pay the most for each beef cut, which in turn maximizes the value I get from my cattle. For example, skirt meats might not be a product you know of, but it is one that sells extremely well into the southern U.S. and Mexico. If the packer sells those cuts for more, then they can pay more for my cattle.

Access to global markets, including the North American market, means on average that each carcass is worth $600 more than it would be if we were only able to sell into the Canadian market.

Of course, trade must go two ways, and here in Canada we import products that Canadians like, such as steaks, roasts and ground beef, from the U.S. and Mexico.

The value of NAFTA and the future implementation of CUSMA cannot be overstated in regard to the positive impact on the Canadian economy. Today, the Canadian beef industry, Canada's largest ag sector, contributes $17 billion to the GDP while generating 228,000 jobs, with further growth on the horizon. Every job in the beef sector yields another 3.56 jobs elsewhere in the economy.

I'd like now to ask John to describe some of the more specific aspects of the agreement.

[John Masswohl, Director, Government and International Relations, Canadian Cattlemen's Association]

Thanks, Bob.

Going into this negotiation, as Bob laid out, we kind of liked NAFTA the way it was. It was good for us. We had good, unlimited access to the United States. There were a few little issues here and there, but for the most part, we went into that negotiation with the objective of keeping the tariff-free, quota-free access that we had. We've heard about the U.S. putting tariffs on things, so we were glad to see that was achieved.

We wanted to keep the rules of origin the way they are, that as long as the animals are processed in the NAFTA zone, the beef is able to benefit from the NAFTA provisions. We wanted to resist efforts to bring the mandatory country-of-origin labelling back in the U.S., which cost us billions of dollars between 2008 and 2015. We were glad for that U.S. law to go by the wayside in 2015. There were definitely efforts in the U.S. to seek to bring that requirement back into the NAFTA, so we're glad to see that it was resisted and did not make it as part of the result.

Also, related to the COOL and other issues, we have been a user of the dispute settlement provisions in NAFTA and the WTO. We want to make sure those provisions remain strong. We were glad to see those stay in there.

There were a few things that we wanted to see as regulatory improvements, more related to the efficiency of the border transaction, whether that's for sending live cattle or for beef across the border. Technically, those wouldn't necessarily be things in the agreement but where we ended up with.... There was some discussion about putting in a meat annex that would have some provisions or commitments related to improving those procedures.

In the end, that wasn't in there, but there are commitments and structures in terms of regulatory co-operation that we were glad to see in there. I think overall we're happy with the result, and we would like to see NAFTA 2.0 ratified as quickly as possible.

[The Chair, Liberal, Mark Eyking]

Thank you for coming in front of our committee again.

We have one panellist left. We saved the best for last.

Mr. DiCaro from Unifor, welcome. You have the floor for five minutes.

[Angelo DiCaro, National Representative, Research Department, Unifor]

Good morning, Mr. Chair, honourable members of the committee and staff.

Thanks for the invitation to appear before you today.

My name is Angelo DiCaro, and I work as a national representative and trade policy analyst in the research department at Unifor. I do apologize if folks were expecting our national president, Jerry Dias, to be here. I know he livens things up quite a bit. You have a good second prize from Unifor in this case, so I apologize for that.

For folks who don't know, Unifor is Canada's largest union in the private sector. We represent about 315,000 members who work in nearly every industrial sector, including trade-dependent sectors such as auto, auto parts, various manufacturing, forestry and resources.

As many know, Unifor was a fully engaged stakeholder in the NAFTA renegotiation process. Unifor and its predecessor unions have been staunch critics of the NAFTA and trade agreements like it, agreements that have bestowed extraordinary privileges upon investors, and agreements that have forced competitive imbalance with often unscrupulous trading partners to the detriment of workers and fundamental labour rights.

For our union, the occasion of NAFTA's renegotiation was a once-in-a-generation opportunity to shift our trade priorities, fashion a deal that corrected some of the worst aspects of trade policy and signalled that trade reform is not only desirable but also necessary.

We know Canada's trade performance has weakened, that economic inequality festers and access to good jobs has become more fleeting. Without overstating it, under CUSMA, there is some reason for optimism.

The new deal strikes down controversial investor-state dispute settlement privileges under NAFTA's chapter 11. This is the first time we have done that in any Canadian trade pact. The new deal deal eliminates so-called proportionality rules that sought to limit Canada's management of energy production and exports. It preserves, as was stated, a very necessary cultural policy carve-out, despite sustained and very real pressure by the U.S. media industry to whittle this down. It also corrects a broadcast policy misstep of the previous federal government on the issue of simultaneous substitution that is spelled out in Bill C-100, which is very welcome news.

To some degree, the CUSMA acknowledges the failings of current trade treaties, notably the CPTPP, and their inability to promote fundamental labour rights. The final text on labour standards is far superior to the NAFTA in its current form, although it's still at a distance from the initial and very ambitious text that was sought by Canada's negotiators.

Bill C-100 spells out the conditions in the SIMA, for instance, that make preferential tariffs now impermissible in cases of forced labour. That change is long overdue and must now apply to all of our trading partners.

Important labour law reforms prescribed within a special annex swing a sledgehammer at what is a broken and rotted Mexican industrialization system. Compliance measures introduced by the Mexican Senate are a good first step, but they do need regular, careful and proactive oversight and enforcement to be meaningful.

On auto, as was explained in the previous panel, the CUSMA sets bold new standards for made-in-North America cars and parts as well as a never before seen market access condition premised on high-wage labour. The terms are complex, and they are not without flaws, but are nonetheless a market departure from standard trade rules that have failed to grow and support our auto sector.

All that said, there is no denying there are concerns with this deal. New market access rights to the Canadian dairy market clearly threaten farmers, while extended patent terms for life-saving drugs originally conceded to the U.S. in the first iteration of the trans-Pacific partnership is, in our view, a step backward. Any opportunity to reverse course on these treaty terms and concessions should be carefully considered by the federal government prior to CUSMA coming into effect.

On the handful of key measures that I have noted above, the CUSMA is an encouraging departure from the original NAFTA. The expression of advanced progressive priorities in trade negotiations is an important shift in Canada's policy frame and one we hope will continue.

Does the CUSMA signal a progressive reshaping of trade policy in Canada? No. Was such an objective even feasible under the current U.S. administration? Probably not. What we have, though, is a renewed understanding that alternative approaches to trade policy matter, that the evolution of trade terms is not something that's predetermined or preordained and that good ideas can surface with proper dialogue and a government that's willing to listen.

Thank you for your time, and I look forward to any questions you might have.

[The Chair, Liberal, Mark Eyking]

Thank you, sir. You're right on time. You must have practised this one.

[Angelo DiCaro]

I have my notes down to the second

[The Chair, Liberal, Mark Eyking]

These are good presentations.

We're going to have a dialogue with the MPs now. We're going to use the same system we used for the last round.

We're going to start off with the Conservatives for five minutes.

Mr. Hoback, you have the floor.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair, and thank you, witnesses, for being here today.

Chief Bellegarde, I'm going to start off with you.

You talked about how you'd like to see an amendment put forward as we go through this. Let's flesh that out a little bit as to what you're looking for in that amendment and how it would act. You say you don't want to reopen it, and I think we all agree with that, but how would an amendment actually impact the implications?

[National Chief Perry Bellegarde]

Thank you for the question. Regarding the whole legislative process in getting bills passed, there's always an amendment process to the bill. With Bill C-100, we're specifically looking for a non-derogation clause in there, that nothing in this agreement will negatively impact existing aboriginal treaty rights, recognizing Canada's Constitution, section 35. It's simple.

There are a lot of precedents for that. Even though there's a general exception clause within the agreement, which is good, it's just clearer when it comes to implementation.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay.

Basically what it does is enshrine traditional rights.

[National Chief Perry Bellegarde]

Correct—on the implementation piece. You have the international trade piece, and that's fine, but each nation-state is going to have to look at legislation for implementation. Canada's mechanism for that is Bill C-100. We're saying to put the non-derogation clause within Bill C-100.

[Randy Hoback, Conservative, Prince Albert, SK]

That's something we could do in committee or we could do it in the House itself.

[National Chief Perry Bellegarde]

You could recommend that. Then we'd ask for the appropriate process to be utilized and that it be followed up on.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay. I appreciate that.

You also talked about economic activity. I agree with you. I think we need to look at the trade missions, the whole.... I'll take a step back. We have this issue in Canada where we do an agreement, and then we go with the rest of the people back to Canada and we say, “Okay, the agreement is done”, but nothing happens. Chrétien did the team Canada missions once in a while and I think they worked fairly well. I'm not sure if that's the right approach, but how do we ensure that first nations get a chance to participate in this? What are the things we can do proactively to lay the groundwork to make sure that happens?

[National Chief Perry Bellegarde]

That's a good question. There are a couple of things.

I think the premiers have to be totally involved in this as well. Again, premiers have to have a really respectful relationship, a tight, close, working relationship, with first nations people in their respective provinces and territories.

Again, I'll just use B.C. and the softwood lumber issue as an example. First nations in the northern part of B.C. are involved in forestry as well. They should not be excluded. They should be part of team B.C., if you will, in one case. Right? It's the same thing in Saskatchewan, with potash in the south or uranium in the north: team Saskatchewan. There should be a close relationship there.

Speaking with the provinces...even though we're talking about CUSMA, the Canada-United States-Mexico agreement, there has to be a better agreement to make Canada work more effectively in the economic sense. We also need to look at removing interprovincial trade barriers. That's a whole separate dialogue. I would also seek full indigenous people's participation when those things happen. On the international front, there is no question about working with the premiers and the provinces to be part of any international trade. I think the federal minister in charge should also facilitate that for inclusion, from the federal government side.

[Randy Hoback, Conservative, Prince Albert, SK]

How do we identify the appropriate people in, as you said, softwood lumber in northern B.C.? How does a government find the appropriate people to tap in first nations?

[National Chief Perry Bellegarde]

Even just working with the Assembly of First Nations, through our chiefs committee on economic development, we have reps from every province and territory. We have the appropriate mechanisms to help facilitate that. There are other existing aboriginal institutions, economic development institutions, in Canada as well, but for us, from the first nations side, we have a structure in place. We have a chiefs committee on economic development. I would say that's one avenue to start tapping into.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay. Thank you.

Mr. Masswohl, on the beef side, and Mr. Lowe, I agree with you; it looks like it's good. I just want to flesh out a little bit of the regulatory side, the harmonization side of medications, treatments and stuff like that.

Do you see this actually being improved under this agreement? Did we make some headway to get some harmonization in some of those areas?

[John Masswohl]

There hasn't been so much on the veterinary products that are used, although that's an area that has improved over the last 10 years. We have seen Health Canada and the FDA working more closely to try to have that harmonization. With respect to the agreement itself, per se, I wouldn't say that has changed, but we have seen that happen.

Some of the things that we're looking for are.... We already know that our meat inspection systems in Canada and the U.S. are deemed equivalent. We recognize theirs is equivalent to ours and vice-versa. When we ship a load of beef from, let's say, High River, Alberta, into the United States, it's been inspected under that system. It's deemed equivalent to the U.S., but when it gets to the border, it may or may not have to go to something called an I house, an inspection house, where it gets reinspected. That's an inefficient step. We don't think it's entirely best for food safety to open trucks at the border.

[Randy Hoback, Conservative, Prince Albert, SK]

Is it a random audit?

[John Masswohl]

It can be random. All trucks are subject to that possibility.

[Randy Hoback, Conservative, Prince Albert, SK]

There's one other area I wanted to ask you about, and I asked the auto manufacturers the same thing.

With the trade agreements that we have with TPP and CETA and things like that—well, maybe not so much CETA for the beef sector, but TPP—do you see a historical change in the flow? It used to be that cows were born in Canada, maybe background in Canada, and were finished off in the U.S. Do you see now that we have market access coming out of Canada that might reverse that, and you would see more of the finishing done in Canada, as well as more of the packing and distribution out of Canada?

[John Masswohl]

Yes, I think we are starting to see it this year.

It's early with the TPP, but if I look at some of the numbers, I see that our exports to Japan up to April are up 87% in value. Where are we getting that beef from? Instead of shipping as many live cattle into the U.S., maybe we're keeping more and adding that value here, and if we need to bring some animals in from the U.S. and add that value here, we're all in favour of that.