International Trade Committee on Dec. 4th, 2017

[Steve Verheul]

Well, we do have the view that the prospects for the auto sector in Canada still remain quite positive. We are exporting a lot more autos to the U.S. than we import from the U.S. Eighty-five per cent of our exports go to the U.S., so it's a major market for us, but we strongly feel there is potential to do much better. If we can address some of the concerns that we've been trying to address with respect to the movement of parts and autos back and forth across the border, we think we can create an environment that will attract even further investment to Canada.

We're also doing that with the negotiation of other agreements, such as the CETA. We have access for further production to go off to the European Union, which could also position us as a hub between the EU and the U.S. in that kind of production.

It's partly in the NAFTA negotiations that we're pursuing these issues, and it's partly bilaterally with the U.S. that we're having these discussions. It partly relates to our other trading initiatives as well.

[Brian Masse, NDP, Windsor West, ON]

How much time do I have?

[The Vice-Chair, Conservative, Dean Allison]

You have 30 seconds.

[Brian Masse, NDP, Windsor West, ON]

In that context, has there been any discussion about the U.S. states using massive subsidization—different from the federal level—to acquire investment? Has that come up?

[Steve Verheul]

We have had that discussion at the table. We've also had discussions about the U.S. right-to-work states, where we feel that there is an unfair advantage being provided and that those tend to be the states that are trying to attract investment by offering lower labour standards.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

[The Vice-Chair, Conservative, Dean Allison]

We're going to move it over to you, Ms. Ludwig. You have five minutes.

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

Thank you very much for your presentation today.

Some of the businesses I speak with talk about uncertainty. For any of us around this room who have been involved directly with domestic or international business, one of the surefire things we need to have to succeed is a level of certainty.

Suppose you were talking to a Canadian business person today. Let's say you were talking to the owner of a company in my riding, and he or she is looking at where to invest. Do they grow their business? Maybe they're looking at succession planning. When they're looking out at the next year ahead and wondering what to do, what advice would you give them?

[Steve Verheul]

Well, I think there's no denying that we are in a period of uncertainty with respect to the U.S. in particular and their approach to the NAFTA negotiations. I'm not sure that there's any escaping some level of uncertainty, both with where the negotiation might be going and with respect to some of its ideas that this administration is putting forward in.

I don't think we're in a position to provide concrete assurances when it comes to NAFTA at this point, unfortunately. We can only assure people that we're negotiating in Canada's interests as strongly as we can and that we're very aware of the impacts of uncertainty.

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

Thank you.

Often we hear about Buy American. Based on your conversations, is there an opportunity for a “Buy North American” brand and to have North American products, as we've talked about around this room? Our supply chain is so integrated that we build things together. We all value national security. We value more efficient, smarter border crossings. What about the opportunities to focus on branding North America?

[Steve Verheul]

That is something we have been pursuing for some time in various fora. Even before this NAFTA renegotiation began, we were trying to advance that proposal in various other discussions that we've had with the U.S. on government procurement initiatives, particularly their Buy American proposals. We have not had much success in convincing the U.S. to move away from “Buy American” to “Buy North American”, although, as you point out, we think it would be a far more efficient and effective approach that would provide greater benefits to both sides.

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

Thank you.

My next question is about analysis. You spoke, Mr. Verheul, about some analysis that may not have been done on the U.S. side. What analysis has the Canadian government done on the potential impact on the stock market if we did have a modernized NAFTA? What's the potential impact on jobs?

We know from the numbers that nine million Americans depend on direct trade with Canada for their jobs, and we're looking at 14 million North American jobs that depend on trade within our region. What are some of the opportunities, or has there been any analysis done to strengthen the job market in terms of numbers and our competitiveness?

[Steve Verheul]

In some ways it's difficult to provide a lot of specifics for that kind of analysis.

Clearly, if the U.S. did withdraw from NAFTA, Canada and the U.S. would probably continue to be each other's largest trading partner, just because of the fundamental economics around that. In all likelihood that trade would become more expensive. If the U.S. did withdraw from NAFTA and started to reimpose some tariffs against imports coming from Canada, then we would anticipate some adjustment in currencies to reflect those additional costs. Certainly we'd be looking at domestic policies to ensure that our industries would remain competitive.

I think assessing an impact in the absence of knowing what measures may be taken or what some of the unpredictable factors might be is very difficult as a definitive prediction.

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

Thank you.

Do I have more time?

[The Vice-Chair, Conservative, Dean Allison]

You have another 30 seconds.

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

Great.

One thing we heard last week from the senators and the members of Congress was that during the presidential campaign, both candidates campaigned anti-NAFTA, so certainly that's work that needs to be done. They had recommended to us to look possibly at an education campaign. Would you suggest that's a good idea, but on our side of the border as well?

[Steve Verheul]

Yes, I would say so, because I think over the last 23 years we've come to accept NAFTA as a given and we haven't really had a lot of common discussion about the impacts or the importance of NAFTA. I think that in many ways it's been taken for granted that we have generally free access to each other's market and a free flow of goods and services moving back and forth, as well as investment.

I think an education campaign needs to happen primarily in the U.S. because I think that's where the greatest misunderstanding of the agreement and its impacts exist. However, without a doubt it needs to take place in Canada as well. I think the most important part is to demonstrate that with a renegotiation of this type, we can take steps to improve it, to make it a more progressive agreement and make it an agreement that will benefit a wider range of citizens and population. That's what we should be focusing on, not proposals that would benefit the U.S. at the expense of the other two partners.

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

Thank you very much.

[The Vice-Chair, Conservative, Dean Allison]

Thank you, Ms. Ludwig.

We're now going to go to Madame Lapointe for five minutes.

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

We talked about technology earlier. Of course, this has changed the world in recent years, and the automotive sector has been affected quite significantly.

My colleague spoke about the chapter and the provisions dealing with e-commerce and the protection of personal information. That did not exist in 1994.

Now that we want to modernize the North American Free Trade Agreement, I would like you to tell us a little more about e-commerce.

What have you heard about it? You say you received 44,000 briefs. Have people expressed their points of view on this?

[Steve Verheul]

Yes. There are various elements we would like to modernize in NAFTA. One of them at the top of the list is certainly electronic commerce, which did not, to all intents and purposes, exist at the time NAFTA was first negotiated. We need to bring those newer issues related to advancements in technology into the discussion to ensure we have clear rules and a clear understanding of the treatment that's going to be provided to that area of business.

That's what we're trying to do with the digital trade chapter. That's what we're trying to do with other chapters, such as telecommunications, which has also shown a lot of advancement over the years. There are a lot of new ideas in other areas as well, even the traditional areas where we can bring newer and much more modern approaches to the table. That's the real benefit we can get out of this negotiation.

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

Thank you.

Earlier, in your presentation, you said that the provinces and territories were consulted. As you know, I'm from Quebec, and Quebec is very active. We welcomed Mr. Bachand, the lead negotiator, to the committee.

How could the provinces help you further in future negotiations? I'm emphasizing that the next negotiations will take place in Montreal.

[Steve Verheul]

Yes. We've been working very closely with the representatives from Quebec, in particular Monsieur Bachand. I meet with him regularly. I meet with the Quebec delegation regularly, along with other provinces and territories as well. That will obviously be a particular priority when we're in Montreal, because the concerns Quebec has brought to the table are a key part of our negotiating objectives overall, and we need to show some clear advancements in those areas.

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

Thank you very much.

That will be all from me.

[The Vice-Chair, Conservative, Dean Allison]

Go ahead, Mr. Carrie.