I would like to specify that I am no longer with the Government of Quebec. I was Minister of Industry and Minister of Finance for Quebec for eight years. I work in the same building as before, but in a legal firm, at Norton Rose Fulbright, where I am a strategic advisor. I am the chief Quebec negotiator for NAFTA. So it is true that in this case, I represent the Government of Quebec.
I believe I have five minutes to speak to you very briefly about five points in NAFTA that are related to Quebec's objectives.
The table is in English and I am the one who prepared it.
It's U.S. numbers using U.S. dollars, and the source is the USTR.
The American administration is obsessed with trade deficits. This table shows that we have exchanges that total $600 billion overall with the United States. The United States has a surplus in services and a deficit where goods are concerned. However, if we remove energy, and the Secretary of Commerce Wilbur Ross says that energy
is a “blameless deficit”,
and so the United States have a surplus. They also have a slight surplus in agriculture, although it could be said that agricultural trade is balanced.
In parallel with the $600 billion in American trade, there are $622 billion in investment stocks, that is to say $353 billion in American investments in Canada and $269 billion of Canadian investments in the United States.
So those are two very integrated economies. Currently, this is under attack. The first objective is, as they say in Washington,
“do no harm”.
Can we continue in this manner? To give you a better perspective, I should mention that Asian competition did not exist in its current form 25 years ago, but today it is very strong. Protectionism is not the way to fight Asian competition; it must be fought through an even greater integration of the Canadian and American economies, and strengthening value chains, because then they will be more productive. If our economies are more productive, they will be more competitive, and that will be a win-win situation for both parties.
As for our main offensive interests—because we must also have offensive interests—first there is access to public procurement, if we want to strengthen our economies. Certain big American public business opportunities are currently closed to Canadian businesses. I am thinking of everything that is included in the Buy American provisions, which are being added to. That should be one of our first important objectives, as Quebeckers and Canadians.
And then, there is the temporary admission of tradesmen and professionals. All of our enterprises—I have done a lot of consultation in Quebec and in Canada, but also in the United States—want to increase the flexibility of this temporary admission. We have to avoid the word “immigration”.
Immigration is a four-letter word.
It is not immigration currently in the United States, but trade. When you sell equipment or computer services worth $100 million, technicians and professionals need to follow, to do the work involved.
Then I would talk about obstacles at the borders. For instance, there is a dual agricultural inspection, and also a dual biotechnology inspection by the FDA for pharmaceutical products. Could we not simplify our lives and have a single inspection, and recognize the inspection carried out by the other government? There is also regulatory co-operation and certification. Why do we need two certifications? Mr. Johnson might speak about what he managed to accomplish with Europe. Human beings are the same in Canada and the United States. We are not talking about dogs, cats or elephants. We are all human beings, and the standards in Canada and the United States are very high. These elements would make our enterprises more effective and productive, and strengthen our economies.
From the defensive point of view—and the watchword is “do no harm”—I would point to four things, but there are others. First, there is the protection of supply management, which is fundamental.
There is chapter 19 of NAFTA, but I will save that for the end.
There is also the cultural exception, that is to say Quebec and Canada's capacity to adopt their cultural policies and to have it declared that this does not violate trade agreements. That is fundamental in today's world.
The de minimis rule is a major one. Perhaps one of your witnesses spoke about that. It is connected to the $20 amount, that is to say the maximum value for which one may import goods electronically without having to pay duty or tax. We also have to make a distinction here between tariffs and sales tax. Europe has established two levels, a very high one for tariffs and a very low one for sales tax. The latter applies at a very low level.
For retail businesses in Canada, it's a matter of having fair rules of the game. In fact, when a client purchases a product from a Canadian electronics retailer, he pays 15% sales tax in Quebec. However, if he ordered merchandise of equal value, let's say $500, from an American electronics business, he would not have to pay that tax.
This makes me think of the former tax on manufactured goods. It was a bit crazy, because we taxed the products of Canadian manufacturers whereas imported products were not taxed. That tax was replaced by the GST.
I will conclude by speaking about chapter 19 of NAFTA, regarding the arbitration mechanism. In my opinion, Quebec's economy is under attack today. We have a vast free trade market. We have a zero tariff with NAFTA, a quota for textiles and a quota for supply management, but the softwood lumber sector has very high countervailing duties, of course. The C Series is the aircraft industry flagship, and represents tens of thousands of jobs. There is also supercalendered paper. There is an investigation about newsprint. There is also an investigation on steel and aluminum. Of course, we naive Canadians believe that the aluminum industry is secure and that we will be exempted. However, there is an inquiry into aluminum, and we don't know the results of that yet. If we add the softwood lumber file, that of the C Series, that of supercalendered paper, newsprint, steel, aluminum and there are more, it is like an open bar. Moreover, the American Commerce Department finds in favour of foreign businesses once every 10 years.
This is a hostile environment right now.
We have to change this because Canadians, Quebeckers and Americans are proponents of free trade.