International Trade Committee on Oct. 2nd, 2017

[Tracey Ramsey, NDP, Essex, ON]

They farm quite differently.

[Raymond Bachand]

This is major.

[Tracey Ramsey, NDP, Essex, ON]

I come from a rural riding that has dairy farms. I'm in southwestern Ontario but I'm also on the border, so I understand the health impact and the differences between the milk. Being able to have fresh, quality dairy is really important to us.

I want to ask you about procurement, because of course there are Buy American provisions, and “Hire American” goes along with that. In the context of the changes to NAFTA, I'm wondering what policy areas you're looking at provincially and territorially. What do you expect will be discussed or is being discussed at that subnational level?

[Raymond Bachand]

I won't answer on what's being discussed, but what I expect.... You know, with Europe, the provinces opened up on subnational procurement, including on Hydro-Québec, a sacred cow for Quebec. The quid pro quo, though, was access to a market of 500 million people. That's a market that's as important dollar-wise as the United States. In the TPP we opened up, but we have access to countries to which we never had access, such as Japan and other countries.

NAFTA exists. It's existed for 25 years. Our position at this point in time is, yes, theoretically we could open it up at the table under one condition: la reciprocité. It has to be mutual. If we're going to open up market access for subnational governments, for provincial governments in Canada, are they going to open up Buy American provisions and are they going to open it up for the States for procurement? If the answer is no, we shouldn't open it up. If the answer is yes, we should consider it.

[Tracey Ramsey, NDP, Essex, ON]

I wonder if you can crack open a little further into that provincial and territorial issue outside of the procurement, because there are other subnational issues as well. There are concerns about our health care system and about a lot of the things we deliver publicly. In terms of the Quebec perspective, you're a model to the country, I think, on a lot of publicly delivered services, so I wonder if it's a concern to you that the Americans will be seeking access to those services in being able to deliver them privately.

[Raymond Bachand]

Maybe I'm naive—Pierre Marc has much more experience than I do in trade issues—but I think health and education are not on the table, and they never have been. For Canadians—and in other countries also—these basic services to citizens are important. Maybe they'll ask me, because they're going to ask for things which are going to be very offensive in the next few weeks. They've done so in Ottawa, but the rest will be in Washington, and then let's hope that it's a little friendlier.... On that, though, it is something that is totally unacceptable to Canadians of whatever political party.

[The Chair, Liberal, Mark Eyking]

Thank you, sir. That's good dialogue.

We'll move on to you, Ms. Ludwig. I'm just suggesting that maybe you can give Mr. Johnson some of your time.

Go ahead.

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

I have a question about the integrated supply chain. Both of you have mentioned or discussed that previous witnesses consistently talked about how integrated our supply chain is in North America, but we also hear rhetoric about the disastrous deal that NAFTA has been on job losses. How do we measure the impact of NAFTA on the changes to employment and in manufacturing when there have been so many global changes and other trade agreements signed over the last 23 years? How can we possibly ever pull it out and say that this is a direct result of NAFTA?

[Raymond Bachand]

That's a good question. I don't have the numbers with me today. If you look at the growth of the Canadian-Mexican-American economy and the millions of jobs created over that period of time, and especially in the first years when Asia was not as competitive, there are huge numbers. Yes, manufacturing is suffering. It's suffering worldwide. It's suffering because of the recession. It's suffering because of robotization and mechanization and all that's happening that reduces jobs.

In NAFTA, and also in Mexico.... I remember when I was the CEO of the Solidarity Fund. The Bombardier aerospace plant was creating jobs in Mexico. The union leader said to me, “You know, Mr. Bachand, I'm not happy about it, but it has to happen.” In our value chain, if we don't have our low-cost components, our final product is going to be too expensive and we're not going to sell it. Then we are going to lose more jobs. The rules of origin are a delicate balance. Industry by industry, the answer is different, but I think the integration in Mexico has helped us to be more competitive globally. If we have a stronger labour chapter with them....

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

Thank you.

Mr. Johnson.

[Pierre Marc Johnson]

On the same issue, I agree with what Raymond said. It's common sense. Either you believe in trade or you don't. From some of the rhetoric I've been hearing from Washington in the past few months, it seems people ignore that trade has value.

It's interesting to see that a populist movement, which was what the last election in the U.S. was about, gives us a presidency in the United States where the discourse is pretty similar to what I've heard from the remaining Marxists in Europe: people who don't believe in trade, people who think trade is bad—for different reasons, I guess, but with the same display of not being interested in details or facts.

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

Thank you for that. Certainly, when we listen to witnesses, we hear so much about the injection of technology and how that in effect has had a tremendous impact on manufacturing. Also, there may have been job losses in some areas, but as you've mentioned, Mr. Bachand, so many job gains in other areas.

Mr. Johnson, you've been involved with so many trade negotiations in the past. In past trade agreements, have the provinces been involved to the extent that they are now in the current NAFTA negotiations?

[Pierre Marc Johnson]

They were more involved in CETA than they are in NAFTA, and much more involved in CETA than in the TPP. The degree of involvement in the case of CETA came from the fact that the Europeans wanted the provinces to be there. Why? Because they knew that, constitutionally, the governments of the provinces wouldn't open up on les marchés publics.

[Raymond Bachand]

That's public procurement.

[Pierre Marc Johnson]

On public procurements, I'm sorry. Why? Because the federal government does not have the capacity to impose that on the provinces, which is why the Europeans wanted us at the table. We were there, but also on issues related to education, health, access to the possibility of being present in the services sectors in these areas, where we explained why not.

In the case of NAFTA, my understanding is that the U.S. doesn't want the states in the U.S. to be present, so normally they shouldn't bother us with public procurements of the provinces, unless they give a commitment that the states in the U.S. will act with reciprocity.

In the case of TPP, it's something else. If we're talking about TPP-1, there was the presence of the provinces that were briefed. In the case of TPP-2, for me it's much more unclear as to how much the provinces can be briefed on what's happening in that unusual round, because of the decision of the United States to tear up the TPP.

On the rest, I think the presence of the provinces is a constructive element in any trade negotiation. Why? Because they can furnish both to the Canadian team, and sometimes to the other team, if the federal government judges it's worthwhile having these types of meetings, informally usually.... It's worthwhile so that people understand exactly what we're talking about on both sides and can commit in the same direction. That hasn't happened in TPP-2, but it is happening in a way in NAFTA, inasmuch as the quality of the briefing and the quality of the team at the federal level is absolutely exceptional.

I dare say I never thought I would see that today, but I think the Canadian team is better prepared than the U.S. team, with much less resources. In that sense, it's a good thing the provinces are there at every meeting amongst the Canadian delegation. Why? Because they can have an input on strategy. I saw it in CETA, not only on defending their turf, their constitutional attributions, or their interests in things that are a federal jurisdiction such as agricultural tariffs, but also in terms of strategy around the Canadian table. I think it has been used largely by Steve Verheul.

[Raymond Bachand]

If I may take 10 seconds, in the other offensive chapters on Canadian values—like environment and labour—labour is 90% led by the provinces in Canada. The federal jurisdiction on labour is very small, so you need the provinces to put these Canadian values chapters in.

[The Chair, Liberal, Mark Eyking]

Thank you.

If I may just add to that, with the provinces, another very good thing for us in having them there is they have a very good relationship with the governors. Sometimes they fill that void.

[Raymond Bachand]

Yes.

[The Chair, Liberal, Mark Eyking]

We noticed when we were on the west coast that the states and provinces almost have different north-south blocks happening. They do a good job for us keeping in touch with the governors. It bodes well for us.

That wraps up the panel. We've had great dialogue and we were on time this afternoon.

I thank the witnesses. You always come whenever we're talking about any trade negotiations, and it's good to see you.

I thank the MPs for being on time and having good questions and dialogue.

That ends the session this afternoon. The meeting is adjourned.