International Trade Committee on May 9th, 2017

[The Chair, Liberal, Mark Eyking]

Good afternoon, everyone. Welcome to cold Ottawa. I welcome the witnesses that we have here today. As you know, our committee is doing a study on the priorities of Canadian stakeholders having an interest in bilateral and trilateral trade within North America. Of course, we're talking about our two present trading partners in NAFTA, the United States and Mexico.

Our committee started this study a couple of months ago. We've already visited the western United States. We were in the states of Washington, California, and Colorado. In a couple of weeks, we're going to be travelling through the Midwest and down, then finishing up in Washington.

As many of you know here, it's a big trading bloc we have with our North American counterparts. We want to see it continue to grow and expand because it's good for jobs, not only in Canada, but in the United States and Mexico.

I think we have five witnesses here on deck. If this is your first time as a witness to a committee, we would like you to do your submissions within five minutes. Keep in mind not to go too quickly because the translators have to translate it. Then we'll open up the dialogue with members of Parliament.

Again, thank you for coming. We'll start off right away. By video conference, we have Sandra Marsden, president of the Canadian Sugar Institute.

Go ahead, Sandra.

[Sandra Marsden, President, Canadian Sugar Institute]

I appreciate the opportunity to appear before the committee today as you consider priorities for the North American trading relationship.

I'd like to speak to the critical importance of NAFTA to maintain and grow export opportunities supporting the growth in Canadian investment and jobs in the sugar and further processing food sectors.

The institute represents Canadian refined sugar producers on nutrition and international trade affairs. We have three cane sugar refineries—in Vancouver, Toronto, and Montreal—and a sugar-beet processing plant in Taber, Alberta. Also, there are two further processing facilities in Ontario that produce products such as iced tea mixes, sweetened cocoa mixes, and so on.

The Canadian sugar industry is an integral part of Canada's food-processing value chain. Our industry depends on food processors for 80% of sugar sales, and food processors in turn depend on Canada's local supply of high-quality, competitively priced refined sugar. Canada's sugar is an input to about 30% of food processing. This includes a wide range of products such as confectionery, mixes and doughs, cereals, baked goods, jams, and so on. In fact, major sugar-using processors account for approximately $18 billion in revenues, $6 billion in exports, and 62,000 Canadian jobs.

The reason that access to Canadian sugar supports food processing in Canada is that the economics of our industry is driven by world market forces. Unlike the United States, Canada's sugar market does not benefit from price supports and high tariffs and quota restrictions. Canada's operations are globally efficient and competitive but are underutilized, given the U.S. and globally restrictive trade policies. Canadian sugar and processed foods depend on export markets. The U.S. is by far the most important market, representing 93% of sugar-containing food product exports. In fact, about 40% of Canada's refined sugar is exported in food products to the United States. Any disruption to this trade and the supply chain makes our industry and our food-processing customers vulnerable. We know this because we've suffered from a long history of U.S. trade actions that have narrowed our trade opportunities. The combined impact of U.S. actions starting in 1994 has resulted in a loss of about 165,000 tonnes of sugar production, representing about 13% of our production.

For the past 20 years, Canada's refined sugar access to the United States has been limited to a small, 10,300-tonne quota for beet sugar, representing less than 0.1% of the U.S. 11-million tonne market. The only opportunity to increase those exports is under emergency shortages.

Sugar-containing products having more than 10% sugar are also restricted by fixed and inflexible quotas. Key restrictions include zero volume or small volume quotas, reclassification of freely traded products into quotas, restrictive rules of origin, as well as end-use restrictions that do not allow any further processing in the United States.

While Canada continues to face these quota restrictions, Mexico's access to the United States was liberalized under NAFTA. As a result, quota limitations are having a more significant negative impact on Canada than in the past, given Mexico's duty-free access for these products to the United States. For example, one impact of this trade imbalance has been the shift of some Canadian confectionery production out of Canada, and the sourcing of intermediate inputs from Mexico. These developments have had a significant negative impact on Canada's overall net trade in processed foods.

Two-way trade in sugar-containing food products with the United States amounted to $10.5 billion in 2016. While Canada maintained a trade surplus of $950 million, this is well below the peak of $1.2 billion over a decade ago. Canada has a trade deficit with Mexico in these products, which worsened to $155 million in 2016. This is extremely important to our industry because this trade loss has resulted in declining capacity utilization, which creates higher input costs for our food-processing customers.

We see the renegotiation or the likely renegotiation of NAFTA as a critical opportunity to modernize trade in sugar and sugar-containing products, to improve capacity utilization and efficiencies in Canada's sugar sector, and as a critical factor supporting the future of food processing in Canada. Canada is the logical supplier of high-quality sugar and sugar-containing products along the Canada-U.S. border, and has an established track record of exporting in a commercially meaningful and responsible, fairly traded manner.

An improved trade balance within NAFTA will help restore value chains where Canadian sugar provides a competitive advantage for the production of intermediate and finished food products. Ultimately, this will help counter the decline in Canada's net trade in processed foods, and enhance investment and jobs in this important manufacturing sector.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to move to the Canadian Centre for Policy Alternatives, with Mr. Sinclair.

Go ahead, sir, you have the floor.

[Scott Sinclair, Senior Research Fellow, Canadian Centre for Policy Alternatives]

Thank you for the opportunity to be part of your study on North American trade relations.

The Canadian Centre for Policy Alternatives is an independent, non-partisan research institute with over three decades of experience analyzing Canadian trade and investment treaties.

The Trump administration is demanding a new framework for North American trade. Despite an imminent NAFTA renegotiation, the specific goals the U.S. will pursue are still unclear. One belief that seems to unite the nationalist and globalist factions in the new administration is that by throwing its weight around, the U.S. can force big concessions from Canada and Mexico. While this is a difficult situation, Canada is not defenceless.

The Canada-U.S. trading relationship is balanced and mutually beneficial, which many Americans recognize. It is helpful to reinforce that message, as our governments have been doing. Yet the anxiety about trade and globalization that Donald Trump exploited to win the White House runs deep and goes beyond his core supporters. Canada's negotiating positions need to reflect that reality. When President Trump talks about favouring trade deals that support American workers, he provides such an opening.

There are many ways to provide a better deal for workers in all three countries. Canada could call President Trump's bluff by championing a fairer distribution of the benefits of trade. An obvious first step is to include strong, fully enforceable labour standards in any deal. Mexican workers, whose real wages have languished under NAFTA and are rarely free to join independent unions, would be the primary beneficiaries, but rising wages and improved working conditions in Mexico and many southern U.S. states would also benefit workers in the rest of North America.

The Trump administration also wants to strengthen NAFTA's rules of origin. Although there is plenty of scope for abuse, higher North American content rules could benefit North American manufacturing workers by discouraging the use of high levels of offshore content.

Canada has had a negative experience under NAFTA's investor-state dispute settlement system and should not hesitate to push to eliminate it. We are the most sued party, and this trend is getting worse. Bad rulings such as in the recent Bilcon case have a chilling effect on legitimate public policy, such as rigorous environmental assessments. Meanwhile, the U.S. has never lost a case.

The Trump administration intends to bolster Buy American purchasing policies that could side-swipe Canadian suppliers. Canada's standard response, to seek an exemption or waiver, has fallen short before and will likely fare worse today. It's time to consider a new approach.

Canada could instead offer reciprocal buy North American policies for new public infrastructure spending. If this is rebuffed, Canada should maximize national economic spinoffs on its own planned public investments through buy Canadian policies.

There are lines that Canada should not cross. With U.S. industries teeing up a long list of trade remedy challenges against Canadian products, Canada can hardly give in to U.S. demands to eliminate or weaken NAFTA's chapter 19 binational review process. If anything, from a Canadian perspective it needs to be strengthened. Nor can Canada afford to give in to President Trump's scapegoating of Canadian dairy farmers. Without supply management, our dairy farmers would be put in the same predicament as their U.S. counterparts, who suffer from the effects of overproduction and farm gate prices that fall below production costs.

Commerce Secretary Wilbur Ross recently said that Canada has adopted an anti-patent position, particularly in pharmaceuticals. This is both false and worrisome. Fully aligning our system of patent protection for medicines with the U.S. model would be very expensive for Canadian consumers and harmful to our health care system.

To close, in general, Canada's immediate priority should be maintaining its tariff-free access to the U.S. market, but it is not too early to be thinking about the end game and potential exit strategies. Reverting to WTO-bound tariff rates would be disruptive, but not catastrophic.

If the Trump administration were to make good on its threat to terminate NAFTA, Canadian exporters could face an additional $3.5 billion to $5 billion U.S. in duties. If an “America first” NAFTA is worse than the multilateral alternative, Canada should naturally choose the latter.

NAFTA renegotiation will be difficult and unpredictable. Canada needs to be prepared to stand up to any bullying, and to consider its options if U.S. negotiating demands become too unreasonable, costly, or harmful to Canadian interests.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Sinclair.

We're going to go to Canadian Manufacturers & Exporters. We have Mr. Wilson.

Go ahead, sir. You have the floor.

[Mathew Wilson, Senior Vice-President, Canadian Manufacturers & Exporters]

Thank you very much, Mr. Chair.

Good afternoon, members of the committee.

Thank you for inviting CME here to speak on behalf of Canada's 90,000 manufacturers and exporters and our association's 2,500 direct members to discuss Canada's trade with our NAFTA partners. NAFTA is the most critical trade relationship that exists for Canadian industry, and we are here today to show our support for the government's efforts to maintain that relationship and to find ways to modernize and strengthen it, where possible.

Canadian Manufacturers & Exporters is Canada's largest industry and trade association, with offices across the country. It is the chair of the Canadian Manufacturing Coalition, which represents 55 sectoral manufacturing associations. More than 85% of our members are small and medium-sized enterprises representing every industrial sector, every export sector, and all regions of the country.

Manufacturing is the single largest business sector in Canada and across the NAFTA region. In Canada, manufacturing sales surpassed $600 billion in 2016 for the third consecutive year, directly accounting for 11% of Canada's total economic output, while employing over 1.7 million Canadians directly in highly productive, value-added, high-paying jobs.

With the base in the NAFTA region, manufacturers are also directly responsible for most of Canada's exports. In 2015 and 2016, manufactured goods exports reached nearly $350 billion each year, an all-time record high, and accounted for almost 70% of total Canadian exports, with nearly 80% of these exports going to our NAFTA partners.

Much of this trade is due to the deep integration of manufacturing operations across the NAFTA region, and in particular between Canada and the U.S. This integration has created a unique relationship for our countries globally. We do not simply trade goods with each other; we build things together, we innovate together, and we compete with the world together.

NAFTA, in most ways, is a model for which all trade agreements should be judged. It has helped increase the standard of living of all participants. It has strengthened industry by combining the talents and expertise of each market, creating bigger markets at home and strengthening our combined competitiveness globally. No other trade agreement that Canada has can compare with the historical, current, or future importance for our economy and our citizens.

At the same time, it does not mean that the agreement should not or could not be improved. Over the nearly 25 years since it was negotiated and came into force, the world around us has changed remarkably. Things that we take for granted today were barely even on our collective radars at the time. The Internet and e-commerce, smart phones, and connected devices are just a few of the technologies that have changed the way we live and work.

The world around us and our global competitors have also changed. China, for example, had a GDP of only about $440 million in 1993. Today it is a $12-trillion economy.

The world of manufacturing has also changed. No longer is it simply about taking raw materials and turning them into a consumer product. Today the lines between manufacturing, technology, and services have blurred, and companies are focused on creating solutions for the lowest cost with the greatest customer value.

CME has worked constructively with the federal government for years on avenues to improve and strengthen the existing NAFTA framework to reflect these changing realities. Efforts such as the border action plans of the 2000s, and the Regulatory Cooperation Council and the beyond the border agreements of the 2010s were aimed directly at improving the NAFTA manufacturing platform without opening up the agreement, because that was seen as politically impossible.

Now, opening the agreement is a political reality, and we should look for ways to cement improvements that support the economic base of NAFTA. To help prioritize, CME is surveying our members to identify priorities for NAFTA modernization and improvement. While our survey is still ongoing, I can give you an overview of the responses as they currently stand.

As a starting point, and most primarily, the overwhelming priority is for Canada to maintain market access across the NAFTA region. While companies want improvement, they are also very concerned about renegotiation that leads to worse economic outcomes through more restrictions, barriers, protectionism on imports and exports of people, goods, or services.

On specific measures for improvement, the priorities mainly stem from the deep level of integration and the volume and value of the trade. Improved customs processes to speed border transactions and eliminating uncertainty through reduced red tape for both people and goods rank as top priorities. Following that, companies are looking to maintain effective dispute settlement processes, improved regulatory co-operation and alignment, and coordinated action on dumping of goods from other markets, and trade policy more generally.

Many of these priorities have already been included in the existing Canada-Europe comprehensive free trade agreement, as well as having been negotiated in the TPP; and we believe they could create a framework for a modernized NAFTA.

At the same time, the relationship between Canada, the U.S., and Mexico is fundamentally different from those represented in those other trade agreements. We believe that if Canada can come to an agreement on these priority areas with other largely new trading partners, we should be looking to go beyond these commitments with our NAFTA partners.

As mentioned earlier, we don't simply trade goods with them, but rather we build goods together by leveraging the 25-year-old NAFTA platform. This negotiation should be the time to create a new phase of NAFTA, and cement in place and go beyond, where possible, the direction started under the recent RCC and beyond the border agreements, where Canada, the U.S., and possibly Mexico, are regulating security on the perimeter together, and restrictions on the internal economy are limited as much as possible.

Thank you again for inviting us to participate in your study. I look forward to questions and discussion.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Wilson.

We're going to go over to the Ford Motor Company of Canada, and we have Ms. Hughes.

Go ahead, you have the floor.

[Caroline Hughes, Vice-President, Government Relations, Ford Motor Company of Canada Limited]

Thank you for the opportunity to provide Ford of Canada's views on the renegotiation of the North American Free Trade Agreement.

The Ford Motor Company is a global automotive and mobility company with about 202,000 employees in 62 plants worldwide. As Canada's longest-established automaker, Ford has employed thousands of Canadians since 1904 in high-quality advanced manufacturing jobs that have helped to build and sustain Canada's middle class. Today in Canada, Ford employs over 8,300 men and women in three vehicle assembly and engine manufacturing plants, three R and D centres, and two parts and distribution centres. Ford's network of 428 dealers supports more than 19,000 employees and communities across Canada. In addition, Ford purchases over $5 billion annually from Canadian parts suppliers to support both our Canadian and global footprint.

Since 2000, Ford has invested over $12 billion in our Canadian operations, including $700 million in Oakville, to produce vehicles in Canada for global markets like China, South America, and now Europe. Last year, in 2016, Ford exported over 18,000 Oakville-built Edges to Europe, including right-hand drive and diesel versions.

Earlier this year, we were proud to announce an additional investment of $1.2 billion to secure a new engine program for our Windsor operations, and to create Ford's first-ever Canadian product development centre, the connectivity and innovation centre, here in Ottawa, in fact, with 300 software and hardware engineers pursuing R and D in connected vehicle technologies.

Needless to say, Canada is a very important market for Ford, and we are proud that Ford has been the number one brand in Canada for eight years.

Trade is fundamental to our business. Each year, on a global basis, Ford exports over 40% of the vehicles that we build worldwide. In Canada, trade policy is even more fundamental to the success of our operations, since 100% of the engines and 90% of the vehicles that Ford builds in Canada are exported.

In the last decade, Ford has increasingly diversified our exports from Canada to countries outside North America. Last year, in fact—

[The Chair, Liberal, Mark Eyking]

Excuse me. I would remind you to just slow down a bit. I don't mind, witnesses, if you go over by half a minute or so. It's better to slow down so we can get the translation.

Go ahead, Ms. Hughes.

[Caroline Hughes]

Thanks.

Last year, 16% of Ford's Canadian vehicle production was exported outside of NAFTA. That said, the U.S. market and NAFTA remain the single biggest and most important market for Canadian-produced vehicles and engines. All of Ford's Canadian engine production and 74% of Ford's Canadian vehicle production is exported to the U.S. and Mexico.

Ford has been and continues to be a very strong supporter of the North American Free Trade Agreement. In fact, it was the auto sector and the 1965 Canada-U.S. Auto Pact that became the basis for the Canada-U.S. Free Trade Agreement and then for the North American Free Trade Agreement.

NAFTA has created one of the most highly integrated and competitive automotive sectors in the world, including one of the most competitive and efficient global supply chains. Canada is a small vehicle market by global standards and Canada's integration into the larger NAFTA region has created economies of scale that have allowed Canada and the NAFTA region to competitively produce vehicles for export to other regions around the world. While Ford continues to support NAFTA, we recognize that as 25-year-old agreement there are opportunities to modernize the agreement.

That is why Ford is working with all three NAFTA governments to ensure the modernization of NAFTA preserves and enhances the globally competitive integration of the North American auto industry while also incorporating important advances to create a modern 21st century agreement that sets the standard that all future trade agreements should be measured by.

Specifically, Ford recommends modernizing NAFTA by adding strong and enforceable currency manipulation disciplines and by achieving acceptance of U.S. automotive safety standards across the region. In addition, Ford also supports modernizing NAFTA by streamlining customs procedures to make business more efficient, and by adopting high standard labour and environmental provisions and improving border infrastructure.

While continuing to support trade within the region, the modernization of NAFTA should also encourage trade diversification outside of the region by ensuring that North American vehicles can compete in global markets around the world. This is why it's critically important to ensure that both currency manipulation and an acceptance of U.S. vehicle standards are included in the modernization. These two issues are the most significant non-tariff barriers that vehicles produced in Canada or in North America face in global markets.

To date, Canada's auto sector and Canadians have benefited from Canada's unfettered access to the U.S. auto market as a result of NAFTA. When Canada concludes CETA, Canada's auto sector will be positioned with duty-free access to North America and to the EU as well, two of the largest and most important vehicle markets in the world.

Looking forward, Ford will continue to support Canada's efforts to establish new free trade agreements with countries like India and Brazil. These markets offer additional opportunities to increase Canadian vehicle exports.

Ford will also continue to speak out against markets that remain closed to Canadian vehicle exports, markets like South Korea and Japan. Closed markets can only be opened by achieving the right terms in trade agreements that eliminate all barriers, including currency manipulation.

Throughout our history, Ford of Canada has played an active and constructive role in articulating the trade policy issues that need to be addressed in trade agreements in order to support Canada's auto sector. We look forward to continuing to play this role as we talk about modernizing NAFTA.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you, Ms. Hughes.

We'll move over to General Motors of Canada and hear from Mr. Paterson.

[David Paterson, Vice-President, Corporate and Environmental Affairs, General Motors of Canada Limited]

Thank you, Mr. Chair, and the members of the committee, for this chance to add a few words to those of my friends, Caroline and Mathew, and my colleagues as well, on behalf of General Motors Canada.

As a quick reminder, GM Canada has world-class assembly plants in St. Catharines, Ingersoll, and Oshawa, Ontario, where we make engines, transmissions, cars, crossovers and, soon, trucks. Our business directly employs about 10,000 people in Canada and we generate many thousands of related jobs in our supply chain, in customer care, and in dealerships coast to coast.

Most recently, we have increased our R and D and our engineering work in Canada for key future automotive technologies to a total of about 1,000 engineering positions who are working in areas like active safety and autonomous vehicle development software, and we're doing that in Oshawa, Markham, Kitchener, Waterloo, Toronto, and Kapuskasing.

NAFTA, of course, is the framework that enables GM and the broader North American automotive industry to be the manufacturing engine of our economy. NAFTA's automotive chapter sets out the trade rules for the deeply integrated and highly efficient auto supply chain between Canada, the United States, and Mexico. That's a unique aspect of our industry that really must be understood and protected in these negotiations.

My advice to the committee, put simply, is that we can and should modernize NAFTA in a way that strengthens our competitiveness as a global trading bloc and at the same time we must take extreme care to “do no harm” to the integrated NAFTA auto supply chain, which is extraordinarily beneficial and important to Canada's economy.

NAFTA enables automotive parts, materials, and finished vehicles to cross our borders duty free and just in time for the benefit of our customers. Famously, auto parts and materials of our tier one and tier two customers may cross borders six or seven times as they are built up into components, ready for final assembly.

At GM Canada we export a little more than 90% of the vehicles that we make, primarily en route to dealers and customers all across the United States, which, of course, is a market 10 times the size of ours. At the same time, we import almost 90% of the vehicles that our dealers sell to Canadians. Our auto trade with the U.S. is balanced, it's duty free, and it's very beneficial to our economy and for consumers.

While our vehicle trade is balanced, Canada imports significantly more auto parts and materials from the United States than we're able to source locally or elsewhere. This trade in auto parts benefits both Canada and the United States. It contributes to Canada's competitiveness, while supporting U.S. manufacturing jobs, especially in the Great Lakes states.

Canada is the number one customer for the U.S. and much of that business is in auto parts, so it's a good thing to remind our U.S. colleagues. Oshawa, for example, receives about 80 trucks a day that go across the border and about 50% or more of our suppliers' individuals parts come from the United States.

In this complex and mutually beneficial trading relationship, there are some things we must take care to maintain and protect and there are some things that we believe can be modernized and improved. Under the category of “do no harm”, we must set out to reduce, not add, red tape. A lot of bureaucracy is still required in tracing auto parts as they move across borders in NAFTA today. We would prefer to see tracing eliminated.

NAFTA's rules of origin for qualified duty-free automotive trade within North America are already the highest of any U.S. agreement. These should not be increased if we are to maintain our global competitive stance. And we cannot just look inward in considering NAFTA. Canada, the U.S., and Mexico together are a competitive bloc in the global auto business. We must enhance, not compromise, that competitiveness.

Under the category of modernization, GM Canada supports the recommendations recently put forward by the American Automotive Policy Council, AAPC, and those include that we should build upon the progress made through the RCC and others to align our vehicle technical standards within NAFTA, while insisting that countries outside NAFTA recognize and accept our technical standards.

North American product is globally competitive, but we must insist that others tear down their non-tariff barriers to our exports. If we want to continue enjoying the economic benefits of our North American auto sector, the global auto trade cannot be a one-way street into our market.

Modernizing also means continuing to improve our border infrastructure as we are doing with the Gordie Howe bridge in Windsor and continuing to streamline our customs procedures for goods and for people.

The AAPC has also called for adding enforceable currency manipulation disciplines that Caroline mentioned, so that countries outside of NAFTA do not take advantage of our market by artificially reducing their currencies.

To sum up, we build things together. In this deeply integrated North American auto sector, GM is at the forefront of Canadian jobs, exports, and innovation. There's a great deal at stake as we open NAFTA negotiations. We should start by ensuring we do no harm to our integrated supply chain, and then we can modernize our auto trade in NAFTA by cutting red tape, aligning on standards, improving the movement of goods and people across borders, and by strengthening our global competitiveness as a global trading bloc.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Paterson. As I alluded to, we are going to go to Detroit, Michigan and Illinois, so we'll be seeing some of your counterparts down there.

[David Paterson]

Good.

[The Chair, Liberal, Mark Eyking]

That will help keep the bond going.

We're going to move over now to the Pacific NorthWest Economic Region. It's great to see you here. We met with your group when we were in Seattle. It was very informative. We had a good reception, and it was an eye-opener for a lot of things that your group put forward to us.

Welcome, and the floor is yours, sir.

[Matt Morrison, Executive Director, Pacific NorthWest Economic Region (PNWER)]

Thank you, Mr. Chairman, and thank you, members of the committee. It was great to see you in Seattle.

PNWER is a unique organization that was formed in statute by Alaska, Washington, Oregon, Idaho, Montana and then B.C., Alberta, Saskatchewan, Northwest Territories, and Yukon. It's 28 years old. We have 22 different working groups in all of the key industry sectors in the region. As I like to say, our economic watersheds flow north and south out there.

We have focused on NAFTA, and looked at the benefits of NAFTA for 20 years. This is a very interesting time. I have to applaud you for a team Canada approach. That's the right approach by working on consistent messaging.

In November we set up a NAFTA modernization task force. We've been working with the international trade offices of all the states and provinces, as well as private sector representatives in looking at what this well-developed region on the northern border in the U.S. could say to both Ottawa and D.C. in terms of NAFTA.

In this process of meeting regularly since January, we've developed a pretty in-depth survey that we've sent out to 10,000 of our members, and are encouraging other organizations to use as well to bring back some data. This is the first time in the U.S.—and I'm an American—we've used the TPA 2015 Act, which really states once this 90-day period begins, Congress, the Speaker, and the President of the Senate will select special congressional advisory committees in the Senate and the House.

We're focusing on who would we want on those congressional advisory committees. They are formed out of the ways and means in the House and the finance committee in the Senate. We're meeting with our congressional champions, and letting them know that we are preparing data and analysis. We really want to have an opportunity to present that to these committees once they're formed.

It's very important for Canada. You've been great at developing data on how foreign direct investment from Canada is impacting specific states, but we need to hone that down to specific congressional districts, because our system is not like yours. We have a fiefdom of 535 kings out there, and it's all about their district.

I'm very encouraged, meeting with John Manley's group, the Business Council of Canada, because they're taking a specific targeted approach to 80 congressional districts, and trying to really look at how many jobs in these districts are related to Canadian investment or partnerships.

We have to get Americans talking to their congressmen; not in Washington, D.C., that never works. You've been to Washington, you get 10 minutes if you're lucky. We need town hall meetings and letters to the editor from simple people saying, “Hey, my job is really on the line here. Don't screw up. The relationship with Canada is really important.”

The congressional research service is very well-respected in Congress. It just came out with its report on NAFTA. I sent it to your committee, but maybe not in time. This went to every congressman, and I was so dismayed. It is six weeks old, but the report says:

The net overall effect of NAFTA on the U.S. economy appears to have been relatively modest, primarily because trade with Canada and Mexico accounts for a small percentage of U.S. GDP

This is what stuff is going out there. We have to overcome that with real people telling real stories about why this is important. Anyway, it's worth reviewing this report because they have a lot of credibility. I mean, it's not the full story.

I think the targeted data is really important. Skirmishes around the edges of NAFTA, the dairy.... that's less than a half of a percent of our trade. I worry that this is a process that could take 24 to 36 months depending on all of this. These are not easy things.

I want to get the big picture out as to why this is important to all three countries and try not to get lost in the peripherals. We'll always have irritants, but we always work through them, and we have mechanisms to do that.

I think we need to work on consistent messaging and really have people work together with strategic partnerships. It's a great opportunity for us to engage our strategic partnerships across North America.

I will say that we need to emphasize our collaborative manufacturing platforms, as has been mentioned by all the folks here at the table. We can and should modernize, but do no harm, and really get the message out from an American perspective. We don't know where the administration is going exactly. Anyway, my organizations are making a lot of inroads into the administration in every way we can think of to be a vehicle to really let them know how important this relationship is and not to screw it up.

[The Chair, Liberal, Mark Eyking]

Thank you very much, Mr. Morrison, and hopefully we can keep drawing from you. You're such an ally, and you're giving us such good information and advice here. It's a big task we're undertaking. Your comments about getting right to the individuals who are being affected on both sides of the border are key for us. I hope we can keep relying on you to give us some advice. We hope there are others in your position across the United States who have the same perspective and represent the same kinds of groups, and that's who we're going to.

As soon as that committee is struck, the committee that you're talking about in the United States, it would be good for us to know who's on there because maybe we can bump into them when we're in Washington and reflect the great trading relationship we have.

Thank you to all the witnesses for your presentations.

We're going to open it up to dialogue with the MPs. First, we have Mr. Hoback.

Go ahead, sir.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

First of all, Chair, I want to highlight that there are a couple of guests in the room here. We have Mike Cuffe. He's a state legislator from Montana who's part of PNWER, and Larry Doke, an MLA from Saskatchewan.

Mike is someone who is stopping the spread of zebra mussels west, working across the border to make sure that we don't see that infestation move into the western U.S. or western Canada, and there's an example of how we work together and how we get good results.

Mike, thank you for your work on that.

I noticed there are surveys in the works. Mathew, you said you have a survey, and Matt, did you say you had a survey? Can we get you to table those surveys when they're completed? I think they would be helpful for this committee to look at. I'm kind of curious about what your members are going to be saying.

[Mathew Wilson]

Yes.

[Randy Hoback, Conservative, Prince Albert, SK]

It's been a crazy while since the inauguration. I think in the last 10 weeks I've been home five days because of this file. I've been out talking to a lot of people across Canada and the U.S., and there's a lot of fear.

Maybe I'll start with you, Mathew. What's happening in the investment side of the business community here in Canada and even with your colleagues in the U.S.? What are they telling you as far as we don't know where things are sitting right now? What's that doing to projects? Are they on hold? Just give us a glimpse of what's happening there.

[Mathew Wilson]

Sure. I think it will be a fairly short answer. David and Caroline from General Motors and Ford just talked a little bit about specifically their companies, and they're making investment decisions. I think in the small and mid-size companies, though, there's just a lot of uncertainty right now. The companies I'm talking to have just huge uncertainty. It has nothing to do with anything this government's doing in Canada; it's just generally there's been economic uncertainty going around the world for quite some time now, and this just adds to it.

If you look at investment decisions that are going on in Canada across all business lines and especially manufacturing, the investment isn't happening to the level we need for economic growth. We're hoping to see that trend reverse. These discussions on NAFTA, especially when so much of our business is reliant on the NAFTA region, don't help that investment, for sure.

[Randy Hoback, Conservative, Prince Albert, SK]

There is NAFTA, and then there is the border adjustment tax. I think both of those come into play in creating that environment.

One of the concerns I have is that we hear this talk about what one country can get from another country. It really concerns me, because this is not the platform that we necessarily want to start an agreement on. It should be one of what we can do as a bloc to move forward, to be as competitive as possible as a bloc in selling our goods outside our bloc.

What advice would you give us to get the conversation changed in that manner?

Mr. Morrison, maybe I'll start with you. What do we need to do? I know we've made lots of visits to Washington D.C, but I think this committee is probably one of the first committees to actually go outside of Washington to talk to other folks. Is that the right angle, or is there any other advice you would give us on helping to change that channel to get it to be a discussion on what we need to do as a bloc?

[Matt Morrison]

That's a great point, Randy.

It's good to remember that the U.S. is not the enemy. We're your market.

Within the U.S., this whole thing is really about China, so we can all get behind blaming China.

Keep in mind that this relationship is on firm footing. We're going to have these skirmishes for the next 18 months, and it's going to be tough, but we should remember that we have a foundation that's long and deep, and the people we are talking to are really our best friends and allies. I think having that as a basis is really important.

[Randy Hoback, Conservative, Prince Albert, SK]

You mentioned the focus on China, and I've heard that as well. We're also talking about looking at the possibility of having some sort of agreement with China.

What would be the implications of trying to do that at the same time as NAFTA? What would be the result of that information? Is it well known down there that we are actually talking to China?

[Matt Morrison]

I'm not sure how to answer that.

It's something that you would have to take into consideration, how that might play out. The uncertainty we're facing is the difficulty. Hopefully we'll get this thing wrapped up as soon as we can.

On the other hand, you have to do what you have to do.