International Trade Committee on May 4th, 2017

[The Chair, Liberal, Mark Eyking]

It's a very exciting committee.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Yes.

Welcome to the panellists.

The question always on my mind is the productivity level in Canada versus the U.S. and the rest of the world, especially Germany and other places. So far so good, but we're trying to establish ground here on where we stand on productivity in order to enhance our position on NAFTA. The NAFTA negotiation is going to be up to who can produce things better and more cheaply. That always dominates trade between two countries.

Can you brief us on our productivity levels in Canada versus the U.S., and how that's going to play out in the future renegotiation of NAFTA?

[Mark Nantais]

If I may start, some of the Canadian plants are the most productive, high-quality plants in the world. That has come about as a result of things like regulatory efficiencies and regulatory harmonization as one of the elements. Regulatory complexity is another. We have a long way to go on this.

When we get into regulatory complexity as it affects manufacturing, that is primarily a provincial jurisdiction. A province adds complexity and costs to your doing business. It has an impact, not just on your ability to bring new investment to Canada, but it could also have an impact on your productivity. That's something that we really have to be mindful of. It's something that you have to think about in conjunction with all of the things we've talked about here.

Federal-provincial co-operation is another key thing. Not only do we need north-south regulatory co-operation; we need east-west co-operation as well. That's also critically important. That even includes going down to the level of weights and dimensions of the transport trucks moving across our provincial borders as well as north-south. It's very complicated, but it's something that is also ripe for assessment and improvement.

Then when it comes to NAFTA, let's face it, we have negotiating partners. We have opponents, if you will, trying to get the best deal for their respective countries. That's something that we have to be mindful of. I think Canada thus far, as its approached NAFTA, has done the right thing. Canadian officials haven't overreacted to some of the hyperbole. They haven't gone out there and lost their cool. They've gone about it an very methodical way. I think that's the right way, and we're fully behind them on that.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

I guess one of the elements of NAFTA or any trade agreement is really to improve efficiency, not so much competition, between two trade partners. I think NAFTA has played quite a role in that regard in making Canada and the U.S., together, competitive on the world stage, because one of the elements a trade deal is also for countries to be selling to new markets.

The one comment I would have on what you just said is that if things continue the way they are, it will really give investors and business and industry cold feet. Are we to see a new industry altogether come into play, in terms of investments, in both markets as a result of the uncertainty that's been created by President Trump's administration and what he's been saying about NAFTA? Don't you see that as being the secret or key point that nobody has been able to explain or discover?

[Mark Nantais]

I think what you're talking about here something that's maybe even separate from NAFTA. Again, what we're talking about here is what will drive investment in Canada. Would a very good and beneficial trade agreement help? Absolutely. But how do we ensure that the cost environment in which we operate here is competitive both federally and provincially. In Ontario, for instance, some great steps have been taken to bring new investment to Canada. But it's not about being equivalent to other jurisdictions; it's about being better than other jurisdictions.

As I said earlier, nothing is static. The moment we move forward and put in place some very good and helpful support systems for new investment, other countries, the United States, Asian countries, or whatever, will also be moving ahead, even doing better or more than what we are doing. That's the world in which we live now, and that's something we have to be very mindful of in the context of a trade agreement and the regulations we put in place that govern industry, both from an investment and manufacturing perspective in this country.

[The Chair, Liberal, Mark Eyking]

Thank you, sir. We're going to move to the NDP now.

Ms. Ramsey, you have three minutes.

[Tracey Ramsey, NDP, Essex, ON]

Thank you.

We talk about this chill, and Canadians are nervous. We can see why. The softwood decision has come out. This is very serious. We have 200,000 forestry jobs in Canada. Businesses are nervous. Communities are nervous based on this. How do you see this inability to come to an agreement on softwood impacting NAFTA negotiations?

[Maryscott Greenwood]

Canadians are nervous, and rightly so. People around the world are nervous. There are a lot of Americans, I might say, who are perplexed, perhaps.

To the particular question of how the softwood lumber dispute impacts NAFTA, it is negative. It has been considered on a completely separate track forever, as has dairy.

Now, we have the U.S. Secretary of Commerce, Wilbur Ross, saying last week that everything impacts everything. What that means is that the U.S. is coming up with its big list of things all at once, its complaints and all of that, as well as the things that it's willing to negotiate on.

Canada, for its part, ought to put together its list of what it wants, what its complaints are, and what it will negotiate. It's going to be “everything in” and let's see how it all comes out. If it could be negotiated separately, that would be terrific.

One thing about the Trump administration is that it is nothing if not unpredictable. He is willing to change his mind, so the facts could really change. However, at the moment, everything is in. Everything is on the table. It's time to get going on it and just negotiate.

[Daniel Ujczo]

I would just add, that is one end of Pennsylvania Avenue. I agree wholeheartedly with what Ms. Greenwood has said. It has taken the varnish that Canada is coming in with clean hands, in particular.

Particularly for members of Congress, things like log export restrictions on private lands are very difficult to defend in a free trade environment to folks who don't understand all the broader issues as well.

Also, when you look at the new decision that came out on preliminary duties, that is a key feature of that. That is something different from what we've seen in the past on this issue. We thought there would be nothing new on softwood. That's one of them, and it's clearly on the administration's radar right now.

[Tracey Ramsey, NDP, Essex, ON]

It's almost like this is a test balloon to see how we will negotiate this together, and what will happen over the softwood prior to it.

I only have a couple of minutes. I do want to ask a question, and it's a whopper to leave you with only a minute for.

Let's talk about the impact of Mexico not being in NAFTA. Clearly, there's a Mexican election coming up. Things are unstable. We don't know what is going to result out of it. They're in their own kind of process right now, and we are talking about our trilateral relationship. What are your thoughts on that?

[Maryscott Greenwood]

In 10 seconds or less, I have a strong preference for keeping Mexico in the negotiation. We're all linked together physically. We're linked together economically and commercially, and we all share the same space on the planet together, so there is a strong preference to keep it together. However, if you can't, I wouldn't sacrifice a good Canada-U.S. deal because the pace at which we both negotiate with Mexico is different. Eventually, we all will work together, but I would love to have Mexico in it.

There may be a TPP without the United States, in which Canada and Mexico could modernize a few things, and the U.S. could perhaps bolt on to that.

[The Chair, Liberal, Mark Eyking]

Thank you. Those are interesting comments.

We're going to move over to the last of our dialogues with an MP.

Madam Ludwig, you have the floor.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Thank you. I have two questions.

New Brunswick sawmills are facing a very difficult situation regarding the softwood lumber case with the United States. The Atlantic region has always received—for the last 35 years—the maritime exclusion. I'm wondering if you could offer any encouraging words to the New Brunswick industry regarding the maritime exclusion.

[Daniel Ujczo]

It was there again in the preliminary duties. The early indications were that we're still moving down that route. We'll have another wave of this in June with the anti-dumping decision, but things look to be continuing on that path. This isn't any insider knowledge, other than just being around this issue for quite some time and reading the decisions, but it looks like it will continue in that vein.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Thank you.

My next question is a little easier. It's about the relationship between Canada and the United States. Where I live in New Brunswick, people often don't even see the border. They cross it so often every day. They walk across. They buy their milk. They buy their gas over there.

Have we become complacent in our two countries regarding the relationship, not seeing the interconnectedness but just seeing ourselves more as allies? How do we get the message out there to Canadians and Americans regarding the importance of our relationships and integration to our continuing quality of life?

[Daniel Ujczo]

I would agree wholeheartedly with your comment. I think we became complacent as opposed to content. We've done that in North America as well. If you talk to any of the original NAFTA negotiators, and people who ran around the Hill, they will all say that they went home after it passed through Congress. They had their toast of champagne and went home and kind of forgot about it. We just thought it was going to go on in perpetuity.

This step is exactly what we were saying earlier, which is that trade statistics are not going to do it. The number of jobs that are created, those are the baselines, but we need the real-world stories about people and processes, the level of integration, and getting that message out. The swamp is important in D.C. as it is here on Parliament Hill, but as I said earlier, all trade is personal. We have to get out in those districts, in key congressional districts, and share these stories of how integrated we are.

There is a favourable audience in the U.S. All polling suggests that the U.S. overwhelmingly supports Canada-U.S. trade. It's just when softwood and dairy and other issues pop up, it's like, “We didn't realize they were doing that”. Then you see this reaction. That's why it's very important in my view—and I'll turn it over to Maryscott—to get the positive message out of what we want to get out of NAFTA on digital technology, the workforce, and shared procurement, etc.

[Maryscott Greenwood]

Thank you.

Very quickly, it is important to show up. So keep going to the United States, but also invite Americans up here. Two underappreciated areas where you can do that are tourism and education.

The Maritimes are beautiful. They're a wonderful vacation spot, and that's important.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

We have Roosevelt's cottage.

[Maryscott Greenwood]

That's right. Absolutely. Campobello

The other one is education. The relative value.... As a parent of a college-aged kid—I'm paying out-of-state tuition; it's outrageous. I would spend a lot of time talking to high school kids and parents of high school kids about coming to school in Canada. There are many wonderful universities. Even for out-of-country tuition, it is much cheaper, and the education is world class. Then you get the alumni network and whatever. It sounds trite, but the minute you come to Canada as an American, you can't help but fall in love. You have to get people to come.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Thank you. That's my time.

[The Chair, Liberal, Mark Eyking]

Do you want to add to that? It's up to you.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

That ended on such a nice note.

My next one was on China.

[The Chair, Liberal, Mark Eyking]

Thank you.

What a great dialogue we had this afternoon. Thank you very much for coming. Just when you think we know it all or have heard it all, you gave us quite a different perspective. Thank you again. We hope that we can count on you another time. When we get this report done, we'll send you copies.

We're going to suspend for two minutes and then get right into future business.

[Proceedings continue in camera]