International Trade Committee on Sept. 25th, 2017

[Tracey Ramsey, NDP, Essex, ON]

That would be great.

[John Murphy]

This is an area that has been pretty much in the news, and I don't want to do it—

[Tracey Ramsey, NDP, Essex, ON]

No, but if they have anything publicly, if they put anything out that you know of in your chamber, we would be happy to receive that here.

Then I'll flip over to another issue that's important to my region that we noted in the 18 pages, which is raising the de minimis to $800. Could you speak to your chamber's position on that? I'm sure you've seen the Canadian chamber's position. I'm curious as to what your position is on the de minimis.

[John Murphy]

We're strong supporters of a commercially meaningful de minimis level. We believe there's evidence through studies conducted in a number of jurisdictions that show that the tariff revenue forgone by having a higher de minimis level is actually more than compensated for with the increase in trade and the economic growth that follows from it. We do regard this as an important issue that we should address here.

In our earlier conversation, we were talking about what things can address.... For example, the Canadian negotiators want to find ways to boost Canadian exports. We believe that this is an area that would in a legitimate way help trade and help consumers on both sides of the border.

[The Chair, Liberal, Mark Eyking]

You have about 40 seconds.

[Tracey Ramsey, NDP, Essex, ON]

I'll just ask you quickly about the timing. There has been a lot of concern here in Canada about how fast this process is, that there's this short window of time of 11 days in between. Could you speak to whether the chamber feels that this is the best representation of this scope of trade talks?

[John Murphy]

We're torn, because we're mindful of, particularly with regard to Mexico, the political calculus there. We've been supportive of the idea of moving relatively quickly, but at the end of the day, we're a business organization that represents our member companies, and consistently our line is always that the substance needs to drive the timing. It's important to get this agreement right.

I'm sorry about the fudge of an answer there.

[The Chair, Liberal, Mark Eyking]

Thank you, and that wraps up the time.

We're going to move to the Conservatives now for five minutes.

Mr. Dreeshen, go ahead. You have the floor, sir.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you, Mr. Murphy, for being here today.

I had the opportunity last week to speak with Karen Harbert, your Global Energy Institute representative, to talk about some of the issues as far as energy is concerned. Coming from Alberta, I know that is extremely critical as we look at some of the issues that have been a challenge for us lately. Seeing the Keystone pipeline finally moving forward is certainly appreciated there.

Of course, the chamber of commerce...certainly a valuable asset. We've had some discussions on small business tax fairness, so we've been relying on our chambers of commerce to get some word out there. It's important in the work that you do, and coming here to talk to us about this is also very important.

You spoke about chapter 19 issues and you said there are some agriculture groups that have an issue with that. Which groups are those?

[John Murphy]

Yes, I'd be happy to find a copy of the letter and share that with you. This was a collection of U.S. agricultural organizations that had expressed concern about the U.S. administration's interest in doing away with chapter 19. In essence, it was a position that was somewhat aligned with that of the Canadian government. It was many of the largest commodity groups and it's interesting to see them focusing on this issue, which as I said, has been one that the U.S. business and agriculture community has not really focused on much in the past.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

The other thing you had mentioned, just listening to what you've spoken to Ms. Ramsey about, was a commercially meaningful de minimis, which some people suggest should be identical. At least it gives people some leeway to discuss what that would mean to each country, as you're looking at the type of industries that are associated with it. I believe that's a positive aspect, as we work from there.

Getting back to the agricultural side of things, you're talking about sanitary and phytosanitary provisions and the significance of making sure that things are done via sound science. I think this is so important, especially as we talk about moving cattle across the border and the different ways in which inspections are done when cattle are coming north into Canada versus Canadian cattle going into the U.S. There are differences, which I know the cattle industry has talked about immensely and about how that should be dealt with. Of course, when we have these.... That is one of the areas where the border is very thick and it causes a lot of issues, so I think that's an important part. Have any of your members talked about how one could look at trying to bring those regulations closer together?

[John Murphy]

I don't have specifics, but generally speaking, the kinds of regulatory co-operation initiatives that we've seen in recent years have a real constituency in our membership. The Regulatory Co-operation Council is a program of which we've been very supportive and we've seen some modest progress in a number of sectors. Certainly in agriculture, that's the case. I got an earful about this when I was drafted by some of our member companies to be the co-chairman of the COOL Reform Coalition. This is the U.S. business and agriculture coalition that lobbied for the U.S. to alter its country-of-origin labelling program to comply with the WTO ruling.

Again, the American public may not be very aware of it, but as in manufacturing where we make things together here in North America, it's also true in agriculture. We need to find ways to make that work better.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

One of the other issues that has come up, since we have companies that are on both sides of the border, is that Canadian companies have been bought up or are trying to be bought up by Chinese companies, and there are concerns about safety. We know that the U.S. government has some concerns about that. Do any of your affiliates concern themselves with these kinds of issues?

[John Murphy]

About Chinese acquisitions of....

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Is there a concern about Chinese acquisitions of Canadian companies that are also then dealing with U.S. companies?

[John Murphy]

It is a matter of considerable interest at the moment in Washington. Senator Cornyn, who's the number two ranking member of the Senate, is at work on a bill to reform our CFIUS process. That's the committee on foreign investment in the United States through which we have a process that looks at acquisitions from abroad to determine if there's a national security concern. It's narrowly focused on national security, so it's not an economic test of any kind. However, there is growing interest in that area and I think it's multi-sectoral, even though a lot of it is in the tech sector.

[The Chair, Liberal, Mark Eyking]

Thank you. That wraps up your time, Mr. Dreeshen.

We're going to move over to the Liberals now. Mr. Dhaliwal, you have the floor.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Mr. Murphy, welcome to you and your team.

You were mentioning that, and even when we were travelling through the U.S., we did not find a single person who is against NAFTA. They're all willing to work together among three nations. You also mentioned that even in one of the states, North Dakota, where they voted for the President in big numbers, they are saying that they are advocates of NAFTA.

The U.S. Chamber of Commerce, local governments, business organizations, private enterprise, all want this to move forward. What is stalling it, from the U.S. perspective?

[John Murphy]

What's driving it, you mean, if in fact the business and agriculture communities are not expressing serious concerns about the NAFTA?

As I've mentioned, there is a case for modernization of the agreement in a number of areas, and that's sincere and substantial. The U.S. Chamber of Commerce shared in the formal process of the Government of Canada soliciting input. We shared a document that outlines a number of points on that, but beyond that, President Trump was successful as a candidate and won the election by speaking to concerns, particularly across the U.S. Midwestern states, that appear to relate to social and economic change in that region.

To some degree, the concern was about immigration, and to some degree it was about manufacturing job losses, and NAFTA was blamed. It's a tale as old as time that the benefits of trade are spread diffusely and the costs are borne narrowly. That has been true with trade, and also true to the degree there has been manufacturing job loss in the United States, but U.S. manufacturing employment peaked in 1979. It has been on a downward trend since then, even though U.S. manufacturing output has doubled and even tripled since 1979. U.S. manufacturers are just more efficient than ever. They make more and more stuff with fewer and fewer workers.

I think we live in a time when candidates can tap into those legitimate concerns. I think what we in the business community need to do is find a way to channel those concerns into ways that will deliver real and practical solutions, such as apprenticeships and helping people get on a highway that's going to take them through the appropriate kind of schooling into real jobs in the private sector.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

On the other hand, I come from British Columbia, and the major issue we face every 10 years is the softwood lumber issue. Do you see any permanent fix apart from signing these agreements every so often?

[John Murphy]

Do I see a permanent solution?

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Yes.

[John Murphy]

Well, it's not the solution that policy-makers can bring up and impose, but I do think that over time there's going to be more integration in this sector, and that will make these kinds of trade disputes less likely.

I do think it's interesting that we're having this conversation now, in the wake of the hurricanes that hit Texas and Florida. There's a huge amount of rebuilding that has to take place, and it's estimated that steep tariffs on softwood lumber would only add pretty substantially to the cost of those new homes that have to be built. That's an interesting point that I'm sure is being delivered home to U.S. policy-makers right now.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you, Mr. Murphy.

[The Chair, Liberal, Mark Eyking]

Mr. Murphy, you talked about trade and its economic benefit and how it sprinkles across, and I think you're speaking to the converted here. We are kind of non-partisan, and when we travel, we all believe that.

I think the other thing we find, especially in going to the United States, is that the bonding we have with individuals is important, that connection when you're trading. You're talking back and forth. I think it also bodes well for how we work together when our countries have conflicts in the world. I think it's so key, that trade.

A few years ago I was in Egypt when they were signing a deal with Jordan and Israel, I think. Way back, they were so-called enemies, and somebody said that they wouldn't be doing a lot of trade but would be talking more. I think it's so important that we recognize not just the economic part of trade, but also the bonding between countries, peoples, and individuals. We even have marriages back and forth, and we trade hockey players. There's so much going on. Sometimes when we have a situation like this, when it's all on the table, I think it shows us more how much we have.

That's more of a statement. You can respond to that if you want.