International Trade Committee on May 9th, 2017

[Randy Hoback, Conservative, Prince Albert, SK]

Okay.

[The Chair, Liberal, Mark Eyking]

You have 10 seconds, so I don't want you to throw a question in there and then have to cut off the witness.

[Randy Hoback, Conservative, Prince Albert, SK]

I guess I'm done, then.

[The Chair, Liberal, Mark Eyking]

We're going to move over to the Liberals now. Ms. Ludwig, you have the floor.

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

Thank you, all, for your presentations.

I am going to take a launch off Mr. Hoback's questions.

In terms of not talking about countries in division but countries in partnership, we know that certainly we have similarities, with the United States in particular, but we also have differences, and I think that we need to be cognizant of that as well.

The last day and a half I've been attending the Can/Am Trade Border Alliance conference. It's a great testament to all the work that has been done between Canada and the U.S. on forging greater alliances and deepening the integration chain between our two countries. The Can/Am BTA is 25 years old, just like NAFTA.

My first question is for Mr. Wilson.

With NAFTA being 25 years old, we have a North American integrated supply chain. Where are the opportunities for greater integration, not isolation policies, in terms of the North American supply chain, which we have done so well on for the last number of years?

[Mathew Wilson]

Generally speaking, they are pretty much in every sector. We heard from the auto folks here that there are still growth opportunities there. When we survey our members, generally, about where the growth opportunities are for them, they always look at the U.S. as the primary market.

Most Canadian companies still don't export. In fact, the vast majority, some 90%, don't export out of Canada, so there is still a huge opportunity, especially for small and mid-size companies, to export and grow in those areas.

Among the specific sectors, automotive is the biggest integrated platform. There are always going to be new opportunities, and that will continue as long as it maintains the footprint, especially if we can do the things that David and Caroline were talking about here in terms of growing North America as a global platform. Instead of looking at ourselves as just a regional bloc to trade among ourselves, we can really leverage it for global platforms. There is a huge opportunity for global growth for Canadian companies.

Another sector that I would primarily look at would be agrifood. We export almost no food out of Canada. Whether it's for manufacturing or whether it's finished goods, we still export very little of what's actually produced here. At CME, when we're looking at new market opportunities, we see that agrifood is the one sector that we perform very poorly on internationally, and we see a real opportunity in the U.S. and beyond.

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

Okay, thank you.

My next question is regarding technology. The Canada Border Services Agency and the CBP in the U.S. are certainly working towards greater integration in terms of our customs.

I represent a riding with five border crossings to the United States. One of the things that we have often faced over the years was the bottleneck, the border wait times. I would like to hear from you, as panellists, in terms of the opportunities for eManifest, so that the pre-clearance is actually done on this side; what that might mean to border wait times; the transparency, in terms of the direction of technology; and how we can improve our supply chain.

[Mathew Wilson]

I'm happy to start.

This has been going on for years, decades in fact, and it's long overdue. In fact, Canada's lack of investment in its own technology in the government is part of the reason it has taken so long. Certainly, the industry sector as a whole, the people doing the trading have long supported this. Companies like GM and Ford long ago eliminated their own paper-based processes and are using almost all electronic tracking. They're also on a system called customs self assessment, which eliminates pretty much all border reporting. It is a fantastic program.

The question I have—and certainly Matt would know about this—goes back to the border accords of the 2000s, beyond the border, and things like that. The idea of those was to eliminate border processing, not just to make it electronic.

What's the point in tracking this stuff? We're not shipping stuff to unknown entities. We're shipping stuff between Ford in Ontario and Ford in Michigan, or GM here and GM in Mexico. We know who they're coming from and who they're going to. What's the value of it at all?

We understand security and everything else, and the need to do that stuff, but to me, that is what it always comes back to. If we do a proper job on the perimeter, and we're securing the perimeter the way we're supposed to, then report everything after the fact. The border, frankly, is just a nuisance for most people and companies.

I guess what we're hoping for, through this NAFTA renegotiation, is that we go further than we have in the past and that we get the opportunity to cement some of the things that have occurred. Just saying “Well, let's make it electronic” doesn't eliminate the burden. We need to start eliminating burdens, not just make them electronic.

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

Are there comments from the other panellists as well?

[The Chair, Liberal, Mark Eyking]

It's going to have to be a very short comment.

[Caroline Hughes]

I just want to endorse what Mathew said. The borders are critically important, not just the streamlined procedures, but also the infrastructure. As an example, last Thursday night, May 4, I travelled from Windsor to Sarnia. The quickest way is through the United States, and the Blue Water Bridge was lined up with trucks at midnight, right over the bridge. There was no other traffic on the bridge. You need the resources at the bridge as well.

We need to keep in mind that a vehicle built in North America can cross the border seven times. Every single time it goes through the border, it's hitting those traffic jams and requiring those manifests. It puts us at a competitive disadvantage to vehicles that are built outside of the region and shipped in, which only cross the border once. We're facing seven times that inefficiency.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to move over to an MP who knows all about making vehicles.

From the NDP, Ms. Ramsey, you have the floor.

[Tracey Ramsey, NDP, Essex, ON]

I don't know where to start. As an auto worker, a former Ford employee, someone who lives on a border riding, someone who comes from labour, I could ask you questions all day, so let's get to it.

First, I really want to talk to Mr. Sinclair, because you touched on something that I think is incredibly important. We've heard a lot of “do no harm,” the thought that we don't want to do any harm. We understand the importance of these integrated chains and the reality of how many jobs in North America depend on trade with the U.S.

I think that's well understood, but what's not understood is how having the environmental and labour chapters sitting outside of the agreement has weakened the agreement. You spoke a little bit about that. I believe that we have to leverage our strengths and we have to actually look for better, look for improvements. That's across the board. People want improvements and modernization.

I wonder if you could speak to the ways you think the labour and environmental chapters, or rather the side letters, could be brought into the agreement, and what that strength would achieve.

[Scott Sinclair]

I think, in a 21st-century trade agreement, it's absolutely crucial that those matters be in the main text of the agreement, and that they be fully enforceable. I think it's crucial, as everyone on this panel has said so far, to emphasize the commonalities, the co-operative spirit, the importance of integrated supply chains, and so on and so forth. I also think that parliamentarians have to give at least some thought to what underlies the Trump phenomenon.

[Tracey Ramsey, NDP, Essex, ON]

It's something we heard when we travelled to the States. A lot of working people clearly feel left out of NAFTA. We have lost that GM facility in Windsor, and it's heartbreaking to see that razed. At the same time we see the strength of labour and your companies coming together to bring new work, to bring jobs to Canada.

I think there is an underlying current of people who felt left out because they have lost jobs to Mexico because things have happened. We hear that in the U.S., and we hear that here.

I want to talk about our auto sector. Obviously, auto is incredibly important to Windsor-Essex, and it's important that we protect our domestic manufacturing sectors, including sugar. I'm sorry to leave you out of the conversation, but it is important as well.

I want to talk about the regional value contents and the rules of origin requirements. Can you tell us how this will impact on your operations here in Canada?

[David Paterson]

Currently under NAFTA, the required regional rule of origin is the highest of any agreement that the United States has signed. We would not want to add additional red tape and requirements at a national level or the like. We would like to continue to build on the effectiveness of NAFTA.

To the points you raised about investment, I think it's important we keep in mind that NAFTA's the framework under which we trade. Every day I fight for investment to come here to Canada. We do that together with Unifor together with our municipalities, and we do it with the people around the table.

If I look back over the last 10 years, Canada has done more to help us to build an investment base here by aligning our standards with the United States and by improving our border crossings than I could have imagined 10 years ago.

I look at the last short period of time, and I see some advancement in the auto innovation fund that was long needed and made a huge difference.

These are all things that are really important for us to continue to win investments, but that's what we do every day.

One of the things I mentioned is we purchase more parts from the United States than in Canada. We would prefer to buy our parts in Canada. Why? Because we have to buy American parts with these little Canadian dollars so it's much more expensive. It's a concern to us that we've seen a lot of the parts business moving south.

A flip side in this discussion is it's good to remind our colleagues in the United States that every time we make a purchase of those U.S. parts, a job is involved in that as well, and many American jobs are related to this trade relationship in producing vehicles on both sides of the border.

It's in our mutual interest to build on this. Can we improve upon it? Absolutely. Should we look at labour and environmental agreements within the agreement? Absolutely.

[The Chair, Liberal, Mark Eyking]

Thank you. You're well over time, but those were good questions.

We're going to move to Mr. Fonseca.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

I want to thank the manufacturers and the associations that support the manufacturers for all the jobs you have created, the risks you have taken. I feel it has been a partnership not only in terms of business but also with the government. We were there with the bailout when you needed the investment, and we came out more fruitfully on the other side so that has been very important.

Canadians have seen that and have understood the partnership and the friendship we have in people to people. We have families, tourism, etc. But the public opinion polls have looked at sentiments of how Canadians perceive the United States, and they are at their lowest levels to date, and these have been tracked since 1982.

They were saying it's partly because of all the negativity and everything we're hearing around trade and isolationism, etc., and looking again to open back up.

We've just signed and passed through Parliament what we feel is the most progressive trade agreement in Canada's history, and that is CETA, which we've done with the European Union.

I don't know how immersed you are in that agreement, but as we look to this tweaking or modernization or whatever with NAFTA, have you seen aspects of CETA that you would like to see in any kind of changes to NAFTA? I'll open that up to Mr. Sinclair.

[Scott Sinclair]

I think there are aspects of CETA that will be very difficult to get into NAFTA. I've been at the committee before, talking about CETA's investment court system. It was put on the table in TTIP and was rejected by the United States for a number of different reasons. I think there's an opportunity to take a much more assertive position on the investor-state dispute settlement. There are many, even in the Republican base, who are quite critical of it, the sovereigntist wing. I think there's an opportunity to curtail it substantially, if not to propose removing it.

I also think, for the record, that Canada needs to make some strong asks in this negotiation. It can't all be sitting back and trying to defend the status quo. I think taking a strong position on the investor-state dispute settlement makes sense. We were not meant to be the target of that, but we've turned out to be.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Thank you.

Ms. Hughes.

[Caroline Hughes]

From Ford's perspective, CETA is an incredibly important deal. We have been very supportive of that deal. It helped us make the business case for Oakville, to put the global platform there, knowing we could export up to 40,000 units to the European Union. In 2016, in our first year, we exported just under 20,000 and we're growing that substantially, so CETA is incredibly important.

In contrasting CETA to NAFTA, I want to point out that the rule of origin in NAFTA is higher, at 62.5%. As my colleague Dave pointed out, it's one of the highest in the world. NAFTA has a more robust rule of origin. We also have to be careful because there will probably be some suggestion that we need to look at the rules of origin in NAFTA , or that something more needs to be done. As companies, especially in the auto industry, we've been integrated since 1965, so we've actually had 55 years of integration. We view Canada, the U.S., and more recently, Mexico as one single market. We need the flexibility to source parts and build vehicles where it makes the most sense for us, within a region, and then to take a regional approach as we look outwards. We need to think about the content rules being North American content rules as we turn to other trade agreements. We also have to recognize that 62.5% right now is incredibly robust and one of the highest in the world.

[The Chair, Liberal, Mark Eyking]

That pretty well wraps your time up, Mr. Fonseca.

We're going to move to our second round with the Liberals.

Madam Lapointe, you have the floor.

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

Thank you, Mr. Chair.

I want to thank the witnesses for being here today.

You all understand French, of course.

Mr. Sinclair, you said earlier that if we go to the negotiating table for NAFTA, we should go with many asks and be very vocal. You spoke about the investment chapter.

What else should we renegotiate and take a strong position on?

[Scott Sinclair]

In my opening remarks I tried to highlight some of those. I think that strong enforceable labour standards go somewhat with—

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

—labour mobility. CETA contains many references to labour mobility.

Have you looked at this aspect?