Thank you very much, Mr. Chairman.
Good afternoon, honourable members. It is indeed a pleasure to be back, and I'm very grateful for the opportunity to appear before you again today.
As you know, I'm here and pleased to represent our member companies, Fiat Chrysler, Ford, and General Motors, who are among the largest multi-national companies in the world. Together they're responsible for approximately 60% of all annual production in Canada and for roughly a century of high-value paying jobs in Canada. The sector accounts for 140,000 direct jobs and about 500,000 direct and indirect jobs right across the country. In 2016, vehicles were in fact the top Canadian export, valued at $64 billion, 95% of which were exported to the United States.
Recently, all three CVMA member companies have collectively announced billions of dollars of new investment in Canada. Additionally, they have made exciting investment announcements in innovative research and engineering related to artificial intelligence and connected and autonomous vehicles, right here in Canada. They're contributing to the future landscape of our industry, if you will. This will harness our highly skilled workforce and capitalize on our world-class research and development capacities.
Let me turn to NAFTA and the reason it has been so important to our industry and the economies of its three participating countries.
Since the Auto Pact of 1965, Canada's auto industry and its supply chains have become deeply integrated with those of the United States and, over time, of Mexico. We build vehicles seamlessly on both sides of the border, and the resulting deep integration has led to a more competitive auto industry and greater consumer choice of vehicles that are more affordable.
The NAFTA, which followed, has been the foundation for a strong, globally competitive trading bloc. The geographic proximity of the three NAFTA partners facilitates the multi-billion dollar parts sector and the just-in-time supply chains critical to our vehicle assembly plants in operation. It also creates inherent transportation and supply chain logistical cost advantages.
Autos account for 20% of total NAFTA trade; that is, about $230 billion. Since Canadian vehicles assembled have slightly higher content, in terms of parts and materials, from U.S. than from Canadian sources, any disruption of the integrated supply chain will impact U.S. auto companies and suppliers' jobs as much as, if not more than, our own.
Much has changed in the global and North American market since NAFTA was first negotiated. The CVMA believes there is an opportunity to modernize NAFTA, which brings into sharp focus the need to ensure that Canada capitalizes on opportunities and also protects what is essential to the long-term health and global competitiveness of the auto industry and the economy overall.
In the auto sector, NAFTA duty-free access and the associated 62.5% minimum content requirement is really the highest of possibly any trade agreement in the world that I know of. It promotes the free trade and flow of vehicles and parts across the borders of the three NAFTA partners. Any changes to the duty-free access and content rules will disrupt the highly integrated supply chains and reduce the massive benefits, undermining the global competitiveness of that integrated automotive industry we talk about.
The CVMA recommends leveraging the existing deep integration of the auto sector to drive additional economic growth for Canada. This may be accomplished by the following means.
Free trade agreement rules of origin must fully consider our strong historical and ongoing reliance on deeply integrated supply chains. This will continue, going forward, as companies rely on existing manufacturing footprints and sources of inputs.
Strong and enforceable currency manipulation disciplines should be added. While the U.S., Canada, and Mexico have not manipulated their currencies, the inclusion of strong and enforcement currency manipulation disciplines in NAFTA would set an important precedent and establish a platform for collaboration, in distinction to other countries that use currency manipulation to benefit their economies and protect their domestic industries.
We've heard several of the panels today talk about regulatory co-operation. This is absolutely critical as we move forward.
Alignment of and recognition of vehicle technical and safety standards ensures that Canadian consumers have access to the safest, cleanest cars in the world at the most competitive prices. Vehicles assembled in one jurisdiction need to be available for export and sale in another without regulatory constraint. Recognition of vehicle safety and technical standards will need to be an accepted component of any trade agreements to support global competitiveness in any trade agreement Canada chooses to pursue moving forward.
Streamlining customs procedures by reducing the unnecessarily burdensome and redundant reporting requirements in Canada that others have spoken about would increase border efficiency, make exports more competitive, enhance border security, and facilitate the legitimate trade that NAFTA seeks to achieve.
Finally, the CVMA recommends that border infrastructure be improved. Improving ports and border crossing facilities will help prevent inefficiencies and bottlenecks, and improve the competitiveness of Canadian exports.
In closing, the CVMA encourages the Canadian government to work with its U.S. counterparts to ensure that any changes with regard to auto trade rules help all partners grow economic activity, create more jobs, and avoid any further regulatory complexity. More regulation will only hurt employment and employment mobility, as well as increase costs for consumers.
Getting a modernized NAFTA right will have implications for future trade agreements, such as the TPP, without the continued participation perhaps of the United States, and a potential trade agreement with China. We want a focus on continued strong integration with our partners in NAFTA to support Canada's competitiveness at the global level.
Mr. Chair, I will conclude on that point, and I would certainly be pleased to answer any questions that members may have. Thank you.