Evidence of meeting #11 for International Trade in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was agreement.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Steve Verheul  Chief Negotiator and Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development
Marie-France Paquet  Chief Economist, Department of Foreign Affairs, Trade and Development

1:10 p.m.

Chief Negotiator and Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development

Steve Verheul

I have a couple of comments.

The issue of aluminum has attracted a lot of attention. We are certainly concerned about how things might develop as they go on.

1:10 p.m.

Bloc

Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC

Just a moment please, I have no interpretation.

1:10 p.m.

Chief Negotiator and Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development

Steve Verheul

Should I keep talking?

1:10 p.m.

Bloc

Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC

I hear it, but it is almost inaudible.

I hear you much better now. I'm sorry.

1:10 p.m.

Chief Negotiator and Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development

Steve Verheul

Thanks.

We've had a number of discussions on the aluminum issue, and I think you're certainly aware that we do intend to closely monitor the amounts of aluminum coming into North America, in particular to Mexico. If we do see significant quantities coming in, then we are prepared to take action.

I noticed a quote from the chief negotiator for Mexico saying that they thought that, because of the greater tightness of the rules of origin—it's now 75% North American content overall and then the 70% requirement for aluminum—they felt they would have to source from North American sources, which would amount to Quebec.

We're hopeful that Mexico and all the manufacturers in North America will be sourcing aluminum from Canada and from Quebec. If that's not the case, and we find that there is some deviation from that, we are prepared to take that case to our trading partners.

1:10 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much.

We'll go on to Mr. Blaikie.

1:10 p.m.

NDP

Daniel Blaikie NDP Elmwood—Transcona, MB

Thank you.

I think it is important to start with an expression of some serious frustration that we didn't get this document earlier, not just earlier than this meeting to allow us to prepare for this meeting, but earlier in the process generally. That is why the NDP undertook to negotiate with the government to change the policy to ensure that, going forward, economic impact assessments are tabled coincident with ratifying legislation to give parliamentarians time to absorb this information. Then we'd be able to ask better questions and get some clarity on negotiation objectives and whom we're actually negotiating with, because sometimes that hasn't always been clear. I think those changes will serve parliamentarians well, but also members of civil society and Canadians who watch the trade file closely.

That said, I'm perplexed at the amount of time it took to prepare this document. Here I think of the U.S. having produced, not just a much longer document, but also, as we heard today, a document with a level of analysis we weren't able to duplicate here in Canada. I just heard that today. It's disappointing, I would say, because it's not as if the U.S. report was just tabled this afternoon. It goes back to April 2019. We knew what kind of analysis the Americans were undertaking. We had a signed agreement. Now it's changed. Democrats in the United States were able to succeed in making some improvements.

Am I to understand that Global Affairs hadn't begun work on a number of the...? I ask because there's a lot in the agreement that's the same between the two versions, the one that preceded the December agreement of last year and the December agreement itself. If most of the agreement is the same, and it is, then how is it that we could get to December—never mind December but February 2020—and not have most of that economic analysis complete?

1:15 p.m.

Chief Economist, Department of Foreign Affairs, Trade and Development

Marie-France Paquet

Thank you very much.

In terms of the USITC, you're right: they issued their report around Easter weekend in April. On our part, we started the same thing, talking to the relevant government departments. I think the first department we had a lot of discussions with was the industry department to talk about the rules of origin in the automotive sector. That alone took us quite a bit of time, I can tell you. We did not start a month ago, that's for sure. We started a long time ago.

You are right that changes were implemented in December. We had a few discussions after that to ask if it changed anything. There are changes, and then the question is whether we can take them into account. For example, on IT, it's same thing. We're not able to take that into account in the model. You're right. We still had to look at it.

1:15 p.m.

NDP

Daniel Blaikie NDP Elmwood—Transcona, MB

I have a further question, if you don't mind.

As negotiations proceeded, we certainly saw that things were changing after the signing of the first agreement, but even during the negotiation of the original agreement itself, it seems to me, looking at from the outside, that the negotiators aren't asking the economists in government to prepare any economic analysis while the negotiations are happening. So our negotiators don't have economic impact assessment data and analysis at their fingertips when they're deciding what they're going to agree to or not, on behalf of Canadians.

That seems incredible to me.

1:15 p.m.

Chief Economist, Department of Foreign Affairs, Trade and Development

Marie-France Paquet

That's how it looks from the outside. I can appreciate that, but I've got the chief negotiator right here. He can tell you whether or he has found us to have been supportive or not, and I've had direct, let's say, requests from the deputy minister at the time about the rules of origin playing out like this or like that, or different things, and sometimes the emails or questions come in a bit of a cryptic way. Not to reveal too much on the negotiation side, but we've had discussions.

1:15 p.m.

NDP

Daniel Blaikie NDP Elmwood—Transcona, MB

I'm glad to hear that there is some of that back and forth, but I am curious how that doesn't provide a sufficient basis for an economic impact study if that analysis is already being done as we evaluate items at the table and decide whether to agree or not. How is it not possible to collate a lot of that information into a kind of interim economic analysis or some kind of preliminary document that would help people here and across the country start the work of trying to understand what I'm glad to hear negotiators do already understand? You wouldn't know it by the quantity of information coming out of government.

That's where I'm perplexed. It's not just in the case of Canada-U.S. We know that our European trading partners do an economic analysis at the outset before they start negotiation about possible scenarios.

It's concerning to me that Canada doesn't appear to do that work, and if the work is being done, I don't understand why it's not possible to produce at least a version of something that could be released publicly to start providing some of that food for thought and to inform some of the discussions that happen, whether they're on the aluminum sector or on softwood lumber—you name the sector that's going to be affected. If the information is already there—and I hope it is and I'm hearing it is—I don't see why it isn't possible to release more information earlier on.

1:15 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much, Mr. Blaikie. I'm sorry. I have to move on to Mr. Carrie.

1:15 p.m.

Conservative

Colin Carrie Conservative Oshawa, ON

Thank you for being here, Madame Paquet.

I'm upset and frustrated today, but not upset at you, if I come across a little upset.

In response the question by my colleague on what date you started working on this assessment, you implied to Mr. Blaikie that it's been going on for a long time.

1:15 p.m.

Chief Economist, Department of Foreign Affairs, Trade and Development

Marie-France Paquet

Honestly, I don't know the date, but I took office in September 2017, and—

1:15 p.m.

Conservative

Colin Carrie Conservative Oshawa, ON

It was ongoing then?

1:15 p.m.

Chief Economist, Department of Foreign Affairs, Trade and Development

Marie-France Paquet

Yes, we were working on this.

February 26th, 2020 / 1:15 p.m.

Conservative

Colin Carrie Conservative Oshawa, ON

That's all I need. So it was there, and as Mr. Blaikie states, nobody around the table believes that the Prime Minister and the minister would sign on to an agreement without having some facts in front of them. You mentioned that this is a process you go through. Nobody politically says you need to do it; it's just something you do.

I want to look at your record and what you did in the past. The TPP was signed on February 4, 2016. You made the economic impact analysis of that available on March 16, so it was within a month. The CPTPP was signed on March 8, 2018. You had the economic analysis of that released on February 16, 2018, a month beforehand.

We're stumped because my colleague Mr. Hoback was asking the government way back in the spring to do a prestudy on it. By your own historic numbers, even if you take the date that we asked for this in December—but we didn't just ask for the full study, we just wanted advice and documents, perhaps the advice to the minister—we got nothing until literally 20 minutes before you're here.

We were told by the Prime Minister and the minister before the election, which was.... Okay, they knew what was going on here because the agreement for CUSMA was signed on November 30, 2018. So I would have thought with your bureaucratic processes, you would have had a really good idea within a month or two of what this meant for Canadians, and yet it wasn't released by the government. I wonder why this was held from Canadians before the election.

Do you have any idea why?

1:20 p.m.

Chief Negotiator and Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development

Steve Verheul

Let me respond to a bit of this.

I think in every free trade negotiation that we do, we do an economic analysis prior to starting the negotiation. We've done that in this case as well.

1:20 p.m.

Conservative

Colin Carrie Conservative Oshawa, ON

Absolutely. Mr. Verheul, I only have five minutes here. With this timeline I am outraged, okay, because in the past, historically, the Canadian government has done a good job of getting these documents out to Canadians. We had the C.D. Howe report. Again, I disagree with the premise of your analysis here. The C.D. Howe report said this is going to be a $10-billion hit compared with what we had before, which is $14 billion Canadian. It works out to about $1,500 per family.

We know that when this government started, there was an agreement in place. Here, I applaud Mr. Verheul. I think he's a genius as far as negotiations are concerned. The original TPP would have had a positive impact, $4.3 billion. Our Prime Minister decided not to sign it because it wasn't progressive enough. It was 14 months before Mr. Trump was even in office, and now we're being asked to rush this through, which is important. Even C.D. Howe said that if we didn't do this deal, it would be a hit to us even worse than this. I think they said $14 billion U.S., or something along those lines.

My comment is, why didn't we know? If this was signed in November 2018, we could quote the Prime Minister saying it's a win-win-win. It's a victory for Canadians. It's a better deal. They knew.

You didn't just start this analysis in December when we asked for it, so was there any direction to you not to provide documents to this committee?

Madame Paquet.

1:20 p.m.

Chief Economist, Department of Foreign Affairs, Trade and Development

Marie-France Paquet

Thank you very much.

The difficulty in releasing, let's say, a teaser or advance notice on the numbers is that when you change one thing, it changes everything, because it's such a big model. That's why it is so difficult. When I said recently we decided to revisit the policy reduction uncertainty, if we had decided to put it in the final study, it would have changed the numbers completely.

1:20 p.m.

Conservative

Colin Carrie Conservative Oshawa, ON

I have 15 seconds. Like I said, if were able to do that with the TPP, if you were able to make it available a month ahead with the CPTPP—and in this case, CUSMA was signed on November 30, 2018—nobody believes that you could not have given any documentation to this committee. Nobody believes that for one minute. We're wondering why not. Why was this not provided to us before the election?

I'm going to have to leave it at that. That's the best I can do today.

I do appreciate your being here. I want you to know that I'm not upset at you, because I know you do a good job. I'm not upset at Mr. Verheul because he has done an amazing job—

1:20 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much, Mr. Carrie.

Mr. Sheehan.

1:20 p.m.

Liberal

Terry Sheehan Liberal Sault Ste. Marie, ON

Thank you very much.

I want to thank you for your good work and to underline and highlight your impartiality as bureaucrats, as opposed to being in a political arena. We are certainly sitting in a political arena now, I would note for the people who might be watching.

I note that during the negotiations, the C.D. Howe Institute, which has been referenced by my friends across the way, released a report stating that a potential U.S. withdrawal from NAFTA could cause Canadian auto industry exports to decline by $5.2 billion. Your researcher notes that you were not able to fully assess the auto sector, including the potential imposition of the section 232 tariffs. TD Bank notes, though, that up to one in five Ontario manufacturing jobs could have been at risk, plus additional supply chain impacts. You know I'm from the steel industry in the Sault.

Madame Paquet and Monsieur Verheul, how would characterize the potential impact on the auto sector, one, if the U.S. withdrew from the agreement, and, two, if the U.S. imposed tariffs on the auto sector?

1:25 p.m.

Chief Economist, Department of Foreign Affairs, Trade and Development

Marie-France Paquet

Thank you very much.

The impact on the automotive industry would have been really bad. It would have been hit very hard, of course, as you know, without any number.... In terms of the number of jobs—and I stand to be corrected—I think it's about one-third of the 38,000 jobs that would have been...in the industrial sectors. Then from that you have the auto sector. A big chunk of what we've been able to preserve would have been in the automotive sector. From that perspective, of course, it's hugely beneficial.

1:25 p.m.

Liberal

Terry Sheehan Liberal Sault Ste. Marie, ON

In my community of Sault Ste. Marie, the direct impact of the section 232 tariffs on steel was felt extremely hard. The situation faced in the negotiations was dire at times, and we felt the impact right at home. I've referenced that before. Not only was a U.S. withdrawal a real possibility, but the punitive tariffs on key sectors were felt in my backyard.

Are there some regions of the country that would have been the hardest hit by a U.S. withdrawal from the agreement, in your opinion?