International Trade Committee on Dec. 4th, 2017

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

As Ms. Ludwig and Mr. Masse mentioned, we were in the States last week. One of the themes we heard over and over again was basically “do no harm”. We heard that over and over again from the auto sector and the agrifood sector, but we also heard it from security.

There's an issue I'm trying to get my head around, and maybe you can help me out with it. When you talk to the Americans about security versus trade, it seems their perspective is they put security first, then trade. There seems to be a perception that Canada puts trade first, and then security.

When you're looking at NAFTA and at North America, with NAFTA we have better cybersecurity, better food security, better energy security, and better defence security for North America. I'm trying to think, what's in North America's...? What's in the best interest of the U.S., Canada, and Mexico?

I had a gentleman who is involved in the security sector. He said that theoretically you could have less trade with the U.S., and then Canada would have to look to other markets. I know the PM is in China now, so taking that example, if you have a weakness of Canadian enterprises, they are more susceptible to a takeover. That may be a cause for concern with state-owned Chinese enterprises. I asked a couple of the congressmen whether it was in their best interest to have state-owned Chinese enterprises on their northern border, as a hypothetical situation, and I don't think they had even thought about security.

My question to you—and again it's an opinion question—is this: is it in the United States' best interest, from a security perspective, to withdraw from NAFTA? Maybe you could thematically talk about cybersecurity, food, energy, and defence. Where's the win?

[Steve Verheul]

We would certainly argue that there is no win if the U.S. were to withdraw from NAFTA in any of those areas.

There was a lot of trade in the agriculture sector in particular. You mentioned food security. We obviously don't produce the full range of food products within Canada. We need countries like the U.S. and Mexico to import some products from. It's not that different for the Mexicans or the U.S. either. Just as Canada and Mexico are the U.S.'s largest export markets for food products, these are our largest markets as well. Certainly the U.S. is. When it comes to food security and cybersecurity, there's a lot of co-operation. There are a lot of mechanisms that have been created to enhance that co-operation and build confidence in it. I think that certainly the U.S. would be in a far weaker position if they were to withdraw from NAFTA.

We haven't really heard much about security at the table, in particular between Canada and the U.S. There is certainly a concern there if the U.S. withdraws from NAFTA. Mexico has said that the relationship with the U.S. is about more than just trade. It's also about security issues. It's also about managing the drug issue. It's about managing immigration. I think it's important that we have co-operation in all of those areas among the three parties, and I think that would leave us all much more secure than we would be otherwise.

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

Thank you.

I just have a couple of points on the sunset clause.

We have spoken already about uncertainty, and the sunset clause is part of that. I know that when we have discussions with different groups, it's always brought up, but I'm not sure that everybody understands the significance of it. I'm wondering if you could give us a quick primer of the effects, the different items, and the different areas where there needs to be concern just on that one file.

[Steve Verheul]

Do you mean on the sunset clause?

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

Yes, the sunset clause.

[Steve Verheul]

We're spending a lot of time trying to negotiate legal language that will be binding and subject to enforceable dispute settlement. That is the primary purpose of developing free trade agreements with other countries: to have a very secure environment for investors to establish the kinds of supply chains that we've seen develop over the years in North America. It's not just supply chains, but also sourcing, product decisions, and investment decisions. All of those are much more effective on the basis of a secure environment.

With the sunset clause, you have very little security at all, because there's a constant threat that the agreement will end. I think few enterprises are going to be looking to make a long-term investment commitment in North America, and in particular in any of the three parties, if they don't have some assurance that the terms of trade are going to be predictable, so that they can know that years down the road, as their investment continues, they will be operating under the same business conditions as they were when they first started that investment. If the prospect is that the agreement will end after one of those five-year periods, all at once their investment is going to be very negatively impacted, because the conditions of trade will change entirely.

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

Is it all chapters, then, that they're speaking of, or have they discussed maybe having certain ones that they think need to be re-addressed?

[Steve Verheul]

The U.S. proposal would address every single chapter, the entire agreement.

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

Okay. That's the part that I wanted to make sure we all understood, because I think some people think this is going well and you probably wouldn't want to mess with that, but other people want to have a chance to renegotiate certain parts of it. I think that was the key part.

Do I have any more time?

[The Vice-Chair, Conservative, Dean Allison]

You're over time, but you're the last speaker, so you can ask one last question. I think the Liberals are all good for questions.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

I have a 10-second question.

[The Vice-Chair, Conservative, Dean Allison]

Okay, that's fine.

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

I just want to come back to the discussion you just mentioned, because I've been on ParlAmericas. We go down to Central and South America. We have discussions.

One of the critical things that people talk about is drug trafficking and the issues associated with it. We have a NAFTA agreement that talks about the movement of drugs and other crime-related issues. All of these things are intertwined with the three countries and with everything in the western hemisphere.

With our experimentation on marijuana legislation and so on, are there discussions there when we start talking about movement across the border?

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Mr. Chair, I think it's out of order to speak about marijuana. This has nothing to do with NAFTA.

[The Vice-Chair, Conservative, Dean Allison]

Mr. Verheul, do you have a comment? If not, we'll move on.

[Steve Verheul]

We haven't had that discussion at the negotiating table.

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

Okay. Thank you.

[The Vice-Chair, Conservative, Dean Allison]

Mr. Peterson, do you have a final wrap-up question?

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair. It's a follow-up question.

Earlier you mentioned that we'd fall back on the bilateral agreement, which is currently under suspension, if NAFTA were to not be successfully renegotiated. That said, clearly the priority or our main objective is to pursue the trilateral agreement. Is that correct?

[Steve Verheul]

Absolutely. I think we would all be far better off if we preserved the trilateral agreement and renegotiated NAFTA to improve it, to make it more effective in a trilateral context, in a North American context. That's our strongest preference by far. That is the best outcome we can achieve.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Okay. Thank you.

[The Vice-Chair, Conservative, Dean Allison]

Thank you very much, everyone, for the rounds of questions today. We got in a few extra rounds today as well, so thank you very much for that.

I'll remind members that tomorrow afternoon you can look for the latest draft report in your mailbox, and we'll be talking about that when we come back on Wednesday.

Once again, thank you very much for your time here today.

With that, the meeting is adjourned.