Thank you, Chair and committee members. Thank you for the invitation to take part in your consultations on bilateral and trilateral trade in North America.
The Business Council of Canada represents chief executives and entrepreneurs in more than 150 leading Canadian companies in all sectors and regions of the country. Our member companies employ 1.7 million citizens, account for more than half the value of the Toronto Stock Exchange, contribute the largest share of federal corporate taxes, and are responsible for most of Canada's exports, corporate philanthropy, and private sector investments in research and development.
The prospect of a new round of NAFTA negotiations presents both a risk and an opportunity for Canada. Our country's economic health depends heavily on the ease with which goods, people, and investment move back and forth across the Canada–U.S. border. In the words of Stephen Schwarzman, chairman of President Donald Trump's strategic and policy forum, “the U.S. and Canada [trade relationship] is really very much in balance and is a model for the way that trade relations should be.”
I'd like to organize my thoughts under three key principles.
Our first principle for the Canada-U.S. relationship, and the NAFTA negotiations in particular, is to do no harm. Canada must protect the framework of rights, benefits, and privileges that our companies and citizens currently enjoy under NAFTA. It's also imperative that any agreement be based upon reciprocal access and treatment.
There's speculation that U.S. negotiators will attempt to rewrite NAFTA's rules of origin for goods. While it's unclear what they want in this regard, the unintended consequences could be quite dire. We support the modernization of outdated NAFTA tracing systems. We support the application of dispute settlement provisions. We do not support country specific rules of origin.
With respect to dispute settlement, the TPP offers a useful model for improving NAFTA in this regard. However, disputes related to NAFTA provisions must not be decided by domestic courts. This was a deal breaker for NAFTA in the original negotiations, and it should remain our position today. While doing no harm is our first principle, achieving only this would be a missed opportunity.
Our second principle is to modernize NAFTA and its predecessor, the Canada-U.S. Free Trade Agreement. They were negotiated in a different era. Opportunities to build upon NAFTA exist in many areas, including intellectual property, e-commerce, state-owned enterprises, competition, sanitary and phytosanitary measures, telecom, customs, labour, environment, procurement, and regulatory co-operation. Again, TPP offers a helpful template in many of these areas.
Labour mobility and customs procedures are two areas, in particular, where NAFTA is clearly outdated. For example, the list of eligible positions that was negotiated under NAFTA almost a quarter of a century ago didn't contemplate today's digital economy. Similarly, in today's world it's incredible that some of our customs procedures are paper based.
Modernizing NAFTA to reflect current business practices and to anticipate future needs would benefit all parties to the treaty.
Together, the Canada-U.S. Free Trade Agreement and NAFTA lay the groundwork for a mutually beneficial energy relationship, and this is an opportune moment to strengthen that.
The Trump administration's approval of the long delayed Keystone XL pipeline is a reminder that our governments have work to do to streamline the permitting process for cross-border energy infrastructure. In renewing NAFTA, we should strive to improve energy security, promote greater co-operation on technology, and expand access to a low-carbon energy solution. Doing so would significantly bolster the competitive opportunities of North America.
Our final principle is that we should go further. Infrastructure and government procurement are important areas in which Canada and the United States should work together. Each country has pressing domestic demands and limited public resources. A U.S.-Canada infrastructure pact could generate a common template for structuring P3 projects, including a recommitment to the principle of non-discrimination against U.S. content in Canada and discrimination against Canadian content in U.S. products. To the extent possible, such a pact could extend to state and provincial governments.
Regulatory co-operation is also an area where progress could mean substantive savings for Canadian and U.S. consumers. We recommend that the two governments establish, as a permanent entity, the existing regulatory co-operation council or a version thereof. This council should work closely with industry to ensure that the council has a mandate of harmonization. The approach should be to harmonize regulations, except in cases where authorities convincingly demonstrate that doing so poses a risk to health and safety. The Business Council of Canada stands ready to work with the government and with committee members to support the coming negotiations.
With that I conclude my remarks. Thank you for the opportunity.