International Trade Committee on Aug. 14th, 2017

[Tracey Ramsey, NDP, Essex, ON]

My question for you is how confident can you be that the Americans will even include the words “climate change”? They've pulled out of what happened in Paris and they have a president who claims that climate change is a Chinese hoax. How can you be confident that we will ensure that in NAFTA where we're going in Canada is protected?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

I thank you for that question.

Something that our government is very proud to have done is to ratify the outstanding ILO conventions. Labour is very important to us, and those conventions are a very important way for Canada to be part of an international community of commitment to high labour standards. The ratification of those conventions was part of our CETA negotiation process, so the ILO conventions, in our experience already, can be part of a trade discussion.

Certainly, in negotiating with our NAFTA partners, we are going to share with them the value that we believe those conventions have, and the value that they have for all economies.

As I said in my remarks, we do really see some opportunity, and it was great to hear that the Conservatives support strong labour protections in trade agreements too—they did; don't laugh, Gerry, it's true—and I see some real opportunity here to raise the bar on labour across North America.

[The Chair, Liberal, Mark Eyking]

Thank you very much, Minister.

We have one more left. Madam Fortier, you have the floor for four minutes. Go ahead.

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

Thank you.

Thank you for being here today.

I know that both you and the Prime Minister have been in regular contact with your U.S. counterparts to help them realize how extensive the economic ties between Canada and the U.S. are.

Could you give us an overview of the steps that have been taken since the new president, Donald Trump, was inaugurated on January 20?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you for the question.

First, I'd like to underscore something the chair said. Of course, talks with the Americans are a government responsibility, but that responsibility also falls on Parliament and all of its members. I know that the committee members have already done a lot of work on this issue, and I'd like to thank you for that. I'd also like to point out, however, that that is just the beginning. We still have a tremendous amount of work to do.

As you know, the legislative process in the U.S. is absolutely critical during trade deal negotiations, and you, as members of Parliament, have a unique and important relationship with your American counterparts. I want to thank you for all your efforts so far and urge you to keep them up. This is just the beginning. We have a long road ahead.

You asked about the work that had begun in January. Having already spoken at length about the consultations, I'd like to point something else out: our work did not start in January or February but, rather, last summer, before the U.S. elections.

As Minister of International Trade, I had asked department officials to put together materials on NAFTA. We saw that NAFTA had become an election issue during the campaign in the U.S. I want to make that clear because I think it's important for Canadians to know just how much Canada has been preparing. We've been at it for over a year. For me, negotiations have always been like exams: preparation is the most important thing. I want to thank our officials for the work they started more than a year ago.

I'd also like to make another point about our discussions with the Americans. I think that we, as Canadians, understand how the U.S. system works better than anyone, aside from the Americans themselves.

Okay, that's it, sorry.

I have just one last thing to say.

We realize that it is not just relationships with Washington or the White House, with the president and members of cabinet, that matter. While those relationships are indeed essential, those at other levels are important as well. The entire Canadian team, which includes our companies, has endeavoured to work with their U.S. counterparts at all levels, and that is extremely important.

[The Chair, Liberal, Mark Eyking]

Thank you, Minister.

That kind of wraps up our questioning for you today. Again, I'd like to thank you and your staff for coming here today, and I wish you and your team good luck. You have your sleeves rolled up and you're heading down south of the border in the next few days, so good luck. If you need us, give us a call.

We're going to suspend for just two minutes, and we'll come right back with the officials.

[The Chair, Liberal, Mark Eyking]

Now we have the officials here for any more detailed questions that anybody has. We're not going to be able to do two full rounds, but will try to do almost one and a half.

Is everybody good to go?

I'll ask everybody to keep their questions to NAFTA and future trade agreements within North America.

We're going to start with the Conservatives right off the bat.

Go ahead, Dave.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

I wasn't expecting that right off the bat, so....

I'm going to tell you what's on my mind.

Thank you all for being here. You know we're big fans of the the great work you've done, and you certainly have proven that we have some great people at the helm.

A reporter was asking me about the last question I asked, about container sizes and the importance of our ministers and government officials understanding that—and she didn't understand the question. The response was that we need to harmonize, but, Steve, you understand those container sizes and why we're kind of lucky that we had put these things into place a long time ago. Doing that saved a lot of jobs as a result. It's kind of like when I drive down the 401. I love to go at a steady speed, and I know everybody does, but when you have somebody about a mile up the road who's gawking, a mile back you're stopped. For negotiators—and I don't want to put you on the spot—it's so fast, and it's something that needs to be seamless, so if you're not getting quick responses and government officials understanding these issues to the degree that they should, that can slow the process down so much.

I'm not trying to ask you to tell tales out of school, but are you finding that your negotiation is moving forward? Are you getting the proper help that you need?

For us Conservatives, I know that's our job as opposition. We always say this government doesn't know what it's doing, and it said the same thing about us, but do you have that confidence level that the people at the helm know what they're talking about and understand the issues that are so important to Canadians like the ones Tracey and I know, in the auto industry and the ag industry and the greenhouse industry? Do you have that confidence level?

[Steve Verheul, Acting Assistant Deputy Minister, Trade Policy and Negotiation, and Chief Negotiator for the North American Free Trade Agreement, Department of Foreign Affairs, Trade and Development]

Thank you, Mr. Chair.

On those kinds of issues and on container sizes, I can tell you that I've been familiar with that issue for, I don't know, 25 years or more maybe. We haven't yet heard from the U.S., and certainly not from Mexico, as to whether it's interested in pursuing that issue that may arise. But for the moment, I think that we're in a position that just as we have some issues like that, there are many issues on the U.S. side that are equally of concern to us. I think we have a good balance such that we will not be pushed too hard on those types of things.

I think certainly we are getting the kinds of resources we need. We have a lot of people involved in these negotiations. We're going to have 28 negotiating tables, and all will be fully staffed by Canadian federal government officials, so we are ready to go and we have what we need.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Thanks.

You just finished an important—I think it might rate as the most important—agreement we've seen in 25 years. It remains to be seen how it will compare to NAFTA. You had good experience. You understood how the Europeans conduct business and the complexities that would result from different member states. There are 53 member states that you have to negotiate through.

With the Americans, we have such a close relationship. Can you talk about some of the differences and some of the challenges and some of the advantages to negotiating with our neighbours to the south versus the negotiations that took place across the water?

[Steve Verheul]

I think in any negotiation you have to take account of what kind of negotiating partner you have. For a country like Canada, where we're often the smaller player in a negotiation—we were the smaller player in negotiations with the EU, and we're a smaller player in the negotiations with the U.S.—we have to accommodate our style and our approach to some extent to the other trading partner. The U.S. style of negotiating is very different from the EU style, and we will make those adjustments. Plus, we have Mexico, so it's a trilateral negotiation in this instance, as compared to that with the EU.

We've been doing a lot of research on what the U.S. will be looking for, looking not just at its stated negotiating objectives but well beyond that. We have a good sense of what it's going to bring to the table and what the value of it is. I think we're certainly well positioned to respond to whatever might come, very well prepared. The U.S. style is something we can deal with. We've dealt with it for many years. We've negotiated with the U.S. in various configurations, not just in NAFTA, but in other negotiations, and we know it well.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to move over to the Liberals now.

Madam Ludwig.

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

Thank you.

Thank you very much for all the work that you've done and that you will be doing going forward.

As I mentioned in my previous question for Minister Freeland, I represent an area that borders on the United States. In fact, we have five international border crossings to the U.S. When we were in Washington at the beginning of June, we heard from the House ways and means committee, and have from others across the U.S., regarding the significance of the change in technology over the last 23 years since the agreement was first signed.

How do you foresee technology coming into play in the renegotiations? Do you see technology being incorporated as an individual chapter? Do you see it being incorporated across all chapters in the new agreement?

The other point I wanted to stress and ask a question about is nimbleness. We heard from the chair of the House ways and means committee in Washington, who talked about the possibility of there being some nimbleness with the agreement moving forward so that we can adapt to some of the changes a bit more expeditiously than by waiting for an agreement to expire.

Thank you.

[Steve Verheul]

It has been 23 years since NAFTA was negotiated. A lot has changed, and I think there will be a number of areas in the agreement that we will want to modernize and bring up to date where things have changed. Specific chapters will address some of those changes, such as those on the digital area and on electronic commerce. Those will be brand new chapters that the original NAFTA did not have. Intellectual property has changed a lot. There's a lot of new technology in that area, so we'll have to be working on those issues.

One of our bigger objectives will be the use technology in moving goods back and forth across the border, with electronic authorization and automatic approvals for whether you're claiming a NAFTA rule of origin or not, so we can bring that up to more modern times. Some of the existing provisions take time and are more expensive, and industry has said that we have to move on that as well. Even in the area of the movement of people back and forth across the border, we have new professions that didn't exist at that point in time and we need to incorporate those into the NAFTA.

So those types of issues are going to appear, some in individual chapters but with many spread across almost the entire agreement.

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

Thank you.

Another area that came up in our discussions in the United States had to do with harmonization. We've heard this before at our trade committee. Regardless of the trade agreement we have studied, harmonization has been a concern amongst a number of business people.

How do you see foresee harmonization, in terms of pre-clearance and harmonization of customs between Canada and the U.S., so there is not so much a lessening or a “thinning” of the border, as some people like to call it, but much more an attempt to get together on a more efficient, smarter border crossing so that the flow of traffic is eased? How do we do that while also maintaining a focus on security?

[Steve Verheul]

Certainly harmonization is a significant issue that we'll spend some time talking about. We don't really see issues like pre-clearance as harmonization. It's more a matter of coming up with common approaches to have a smooth process back and forth across the border.

When it comes to regulatory issues, some stakeholders are calling for harmonization between Canada and the U.S., and Mexico in some cases, but I think that's not necessarily going to be something that we would pursue across the board. Where it makes sense in a specific industry that is very integrated, then we may pursue that. In other areas, it's more about making sure you have some kind of regulatory coherence or co-operation to ensure that although regulations may be different, they don't pose an obstacle, because they're essentially trying to achieve the same objective. Those, I think, we can deal with more easily, and that's probably the more common approach that we'll take.

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

Thank you.

[The Chair, Liberal, Mark Eyking]

It will have to be a very quick question and a quick answer.

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

Sometimes we hear concerns that NAFTA has had negative impacts on the U.S. economy. What examples would you give? How do you measure the impacts of NAFTA across North America when we've had such globalization, with so many injections into our North American economy? Certainly most of us would argue that NAFTA and other agreements have made our North American economies stronger.

[Steve Verheul]

I think in the case of NAFTA, we've heard some discussion, particularly from some commentators in the U.S. We don't think NAFTA has resulted in all of the losses that are sometimes claimed by some people. We think automation, advancements in technology, and globalization more broadly have resulted in a loss of jobs, or the evolution of jobs. Some older jobs are now being performed by machines. They're no longer being performed by people, and that evolution has clearly happened.

With respect to NAFTA, I think it can—

[The Chair, Liberal, Mark Eyking]

I'm sorry, sir, but we're out of time. We're going to have to move over to the—

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Despite what he said?

[The Chair, Liberal, Mark Eyking]

I know, but he can get a shot in a little later on in another question.

We're going to move over to the NDP.

Ms. Ramsey, you have the floor.

[Tracey Ramsey, NDP, Essex, ON]

I just want to quickly comment on that last train of thought and say that we haven't had any greenfield manufacturing sites. That's largely attributed to trade deals, the fact that it is more beneficial for companies to go to other countries than it is to stay in Canada. That contributes to job loss, because there are spin-off jobs and everything that's attached to that. If we can't attract those greenfield sites, as we've been unable to do under some of the trade deals we have, that's a very real issue for us.

I have one quick procedural question. Upon conclusion of the agreement, will you table an explanatory memorandum to inform parliamentarians of what we will see in the actual implementing legislation?

[Steve Verheul]

It is our usual practice, once we finish negotiation, to provide explanatory documents to provide a more easy-to-follow explanation of what has been achieved in the agreement. So, yes.