International Trade Committee on Oct. 2nd, 2017

[Colin Carrie, Conservative, Oshawa, ON]

Maybe I'll ask you a question, too, Mr. Bachand. You brought up the C Series. I can understand the frustration Premier Couillard has regarding the issue, considering Boeing is an incredibly subsidized company as well, but with these types of disagreements there's a concern about the rhetoric in one part of the country versus the other. I know that in Manitoba, for example, Boeing has I think 1,400 jobs, so when we have politicians say that not a bolt from Boeing should enter Canada when we're in the middle of these negotiations, do you think the rhetoric is helpful on this side of the border as well? What is your feeling in that regard?

[Raymond Bachand]

I have two comments. I wouldn't compare the heavily subsidized—by some $20 billion—Boeing and how it built its strength through military contracts and then transfer that to anything else in the world.... I would contest that Bombardier was subsidized. I don't think that an equity investment in the C Series is a subsidy. It's a billion-dollar.... The Government of Quebec specifically, with lawyers, said, “We're not going to subsidize that and that's why we're going to equity.” They were criticized for doing that by people, but it was an investment at risk and with outside analysis of the worth of that.

The drama, if we can call it that, with the commerce department is that it doesn't take into account basically that.... This is not a neutral court. The commerce department is basically the lobbyist for American business. They make decisions which are, from our point of view, sometimes wrong. I was minister during the first softwood lumber trade dispute—we appointed Pierre Marc at that point as our chief negotiator—and we won in chapter 19. For most of the decisions by Commerce, we win at the end of the day.

This one is by Boeing, and we'll see what the courts will say eventually. They have no planes. The client, Delta, says, “Hey, Boeing is complaining about something it didn't make an offer on, because it has no plane to offer.”

I'm proud of our Prime Minister and the way he reacted in saying that enough is enough, and if we're going to be bullied, we're going to stand up, and we're not going to take it. Our kids shouldn't take it in schoolyards, and we shouldn't take it in trade either.

[Colin Carrie, Conservative, Oshawa, ON]

Mr. Johnson, you mentioned the subnational issues. I believe it was the Canadian Federation of Independent Business that said subnational issues have a negative impact on certain small and medium-sized businesses that trade with the United States and Mexico. Do you think the Government of Quebec would support expanding the Canada-United States Regulatory Cooperation Council to include and incorporate subnational governments?

[The Chair, Liberal, Mark Eyking]

Excuse me. I'm sorry, Mr. Johnson.

I have to remind my colleagues here that you cannot ask a question when you're at the end of your five minutes. It doesn't work.

[Voices]

Oh, oh!

[Colin Carrie, Conservative, Oshawa, ON]

He was going to—

[The Chair, Liberal, Mark Eyking]

Maybe there's another chance that Mr. Johnson can get in there, but we have to go to Madam Lapointe.

Madam Lapointe, you have the floor.

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

Thank you, Mr. Chair.

I thank the witnesses for being here today.

It's been a long time since I've asked you any questions, Mr. Bachand. Thank you for being here today.

At the National Assembly, I was my party's spokesperson with regard to Minister Bachand's files.

As the provinces are consulted, I would like to know what Quebec thinks needs to be improved or taken into consideration in NAFTA.

[Raymond Bachand]

Earlier I spoke about our provincial objectives, but since we are not at the negotiating tables, I cannot imagine a more important topic of co-operation than this between the Government of Canada, the provinces, and the experienced negotiators. Mr. Johnson can draw a comparison with what was done in Europe. The strategy is established by the players, together. There are 28 tables and each day five to eight of them sit. Every evening after these rounds of negotiation, each negotiator who sat at the table comes to meet with us to tell us what happened at the table on that day, and convey to us what the Mexicans and Americans said, as well as the texts that were exchanged.

These people exchange information with their provincial colleagues. For my part, this is done with Mr. Verheul. We also have access to Ms. Freeland's cabinet and to that of the Prime Minister. It is rather—

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

It's very constructive?

[Raymond Bachand]

Indeed I would say that that is all the more important in such negotiations. Of course the Americans may be frustrated. In certain cases, they can try to find divisions among the provinces. For the moment, however, nothing is filtering out regarding the positions of the provinces and the Government of Canada.

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

You spoke earlier about the retail trade. E-trade, however, did not exist when the agreement was signed 23 years ago. You mentioned that. Furthermore, 23 years ago the Asian market as a whole was not what it has become today.

In light of the situation, what would you like to see included in the next agreement so that our enterprises, and everything that is connected to them commercially, are really well represented, and benefit from advantages just like the Americans?

[Raymond Bachand]

You are correct to say that electronic trade did not exist 23 years ago. The iPhone was created 10 years ago.

I once was Minister of Finance and I am now president of the Institut du Québec, which has just produced a report on e-trade. I think that for Quebec and all of the country, standardizing the rules of the game is what is important.

Competition is a very good thing, on condition that everyone is on a level playing field. That means that the Department of Finance of Quebec, of Ontario and of Canada are going to have to reverse the burden. Retailers and suppliers are going to have to collect the sales tax when a transaction is done through e-trade. This has to be transparent, and everyone has to be on an equal footing; that is fundamental. It requires reforms, but they are being done in Europe, Australia, Norway and elsewhere. It is doable.

In this way, we can create many more openings for e-trade. In the meantime, I think we have to be somewhat more protectionist, because things are totally unfair for our retailers. We are talking about tens of thousands of jobs that are going to change in any case because of what is happening with e-trade. If e-trade is done within Canada and everyone pays the sales tax, there is no problem. However, if someone from the outside does not pay the sales tax, it becomes a serious problem.

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

Thank you.

Earlier you spoke about the cultural exemption. When we went to Washington last spring, an American government representative told us that he didn't want to hear about this exemption. When I heard that I almost fell off my chair.

How can we ensure that the cultural exemption will be preserved?

[Raymond Bachand]

In my opinion, there are some controversial topics that we have to put in the centre of the table. Chapter 19 of NAFTA is one, and the cultural exception is another.

I was in the company of Mr. Brian Mulroney last week, as our offices are in the same hall in the legal firm I work for. We were able to discuss this. You will remember that at the time, under President Reagan, the cultural exemption issue was settled in the first week, and that of NAFTA's chapter 19 on the last evening. The cultural exemption in fact goes back to that period.

Mr. Lighthizer testified before the American Congress on July 17. He published a report of about 40 pages in which he lists all of the positions 30 days before the beginning of the negotiations. It is in fact interesting to see that the word “culture” is not mentioned anywhere in that report. It is not a priority for the American administration.

That being said, I am certain that at one point or another, the United States is going to ask for the abolition of the cultural exception. If not next week in Washington, it will be in November. Canada has to refuse. That is just as important for English Canada as for French Canada.

Everyone has to be on an equal footing, but we have to allow the government to occasionally subsidize or help cultural productions and our cultural industries. That is something that is now recognized by UNESCO. The cultural exemption issue is fundamental. We simply have to oppose its abolition.

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

Perfect.

I'm done.

Thank you very much.

[The Chair, Liberal, Mark Eyking]

Thank you.

Before I go to the NDP, I have a quick question. Last week, you couldn't get a hotel room in this town because all the negotiations were in Ottawa—

[Raymond Bachand]

The prices were up.

[The Chair, Liberal, Mark Eyking]

I saw that.

We also had as witnesses the U.S. Chamber of Commerce. They had about 50 major corporations here with them. I think you alluded to how involved they are, these corporations. Do we do it differently? When we go to the United States, do a lot of our corporations go with us? Or is there a total difference between the way we do it and the way they do it?

[Raymond Bachand]

That's a good question. No, I think it's going both ways. The Governments of Canada, Quebec, Ontario, Alberta, and Saskatchewan have all been going to the States.

Our corporations also have been doing it. The U.S. Chamber of Commerce is their big ally. At the end of the day, it's Americans who are convincing Americans that this is good for them. For our corporations have this $270-billion investment, the U.S. is a huge supplier. Nine million Americans work today because there's NAFTA and they sell to Canada. There's one problem: they don't know it.

[The Chair, Liberal, Mark Eyking]

That's right.

[Raymond Bachand]

We have to go sur le terrain in the United States. In each little locality where we as Canadians have a business, we have to make sure, maybe through social media, that the workers in that business understand the relationship. The truck that leaves is Federal Express or it's Bachand Delivery. You don't know if it's going to Canada. If you know it's going to Canada, and you know you have 20 jobs or 50 jobs, and you do it locally, in bottom-up politics with the mayor and someone from the governor's office, it's going to trickle up.

[The Chair, Liberal, Mark Eyking]

Mr. Bachand, that's what our committee did last week. We went into the Midwest. We went right in where the conflict is.

We're going to move to the NDP.

Go ahead, Madam Ramsey. You have five minutes.

[Tracey Ramsey, NDP, Essex, ON]

Thank you so much. I also share my colleague's concern about the cultural exemption. I think it's incredibly important for the entire country. I know that she came up out of her chair around that issue. I also know that other members of the committee, when we were in Washington meeting with congressional members, came up a little out of their chairs when we started to talk about supply management.

In Washington, we heard about how Canada has a poor quality of milk and how Canada has unfair trading practices. Collectively, though, we've done a good job of challenging that. I wonder if you could tell us whether you're confident that the negotiating team will be able to protect our supply-managed system.

[Raymond Bachand]

The short answer is yes. I'm out of politics today, but you aren't. I think the lesson from Maxime Bernier is that if you don't support supply management, your seat is at risk, whatever party you're from, and there are provincial elections in Ontario and Quebec this year and in Canada next year.

Over and above that, fundamentally, I don't want the milk supply for my children to be dependent on another country, be it the United States, but certainly not Asia, and then you have a bacteria problem. Second, we have a large country that is territorially very widely dispersed. Farms are the basis of the rural economy, and if we lose these farms, we're going to be in for huge economic and social problems. The BCG has done a very good report on what could happen to the competitiveness of our economy. This is not like giving some cheese to the Europeans.

The U.S. plants are 50 kilometres or 300 kilometres away. One plant for yogourt or something in New Jersey could probably supply the whole of northeastern Canada, and vice versa if you go to the west.