Thank you, Madam Chair. I'll start.
First of all, thank you for the opportunity to appear before you again to discuss the economic impact assessment of the Canada-United States-Mexico agreement.
I am joined today by Marie-France Paquet, the chief economist at Global Affairs Canada. Before turning the floor over to her to present her assessment, I would like to provide some short remarks.
With respect to the context of the negotiations, since its implementation in 1994, the NAFTA has had a positive impact on the Canadian economy and has supported a stable, integrated and competitive North American market.
NAFTA has supported the development of an integrated and competitive North American market by providing manufacturers, producers, investors and consumers with a predictable and secure commercial environment. NAFTA has helped to generate economic growth and raise the standard of living for the people of all three member countries.
As this committee is aware, the modernization of the NAFTA took place at a difficult time in Canada's bilateral commercial relationship with the United States. When U.S. President Donald Trump took office in January 2017, he sought to replace NAFTA with a new agreement, under the threat of a U.S. withdrawal from NAFTA.
The U.S. administration then took the unprecedented step of imposing tariffs on imports of Canadian steel and aluminum on the basis of purported threats to national security, but with absolutely no legitimate justification for those measures. The U.S. administration had also launched a national security investigation that could have led to section 232 tariffs on Canadian autos and auto parts exports to the United States, also under the national security provisions and also without any legitimate justification.
Given this overarching context, Canada was presented with two options: first of all, to refuse to negotiate and risk the U.S. withdrawal from NAFTA; or secondly, to enter into negotiations to defend Canadian interests and modernize the agreement.
In this context Canada chose to engage in negotiations with the United States and Mexico towards the modernization of NAFTA.
I would like to underline that it is important to remember that preserving the status quo was not an option for Canada. The negotiating process was unique. Normally free trade agreement partners are looking to liberalize trade. In this process the U.S. goal from the start of the negotiations was to rebalance the agreement in its favour. The President continued to threaten to withdraw from NAFTA if a satisfactory outcome could not be reached.
In the face of this unprecedented situation, Canada undertook broad and extensive engagement with Canadians on objectives for the NAFTA modernization process. Ultimately we were successful in defending Canadian interests against extreme and unconventional U.S. positions.
The final CUSMA outcome preserves NAFTA's virtually tariff-free market access for Canadian exports. It modernizes and updates the agreement to support Canada's access to and integration with the North American economy, and it provides important stability and predictability for Canadian businesses and workers.
Importantly, and as a condition for moving forward towards implementation of the new agreement, on May 17, 2019, Canada secured the removal of the U.S. section 232 tariffs on aluminum and steel, returning these sectors to duty-free trade and removing a significant barrier to Canada's participation in North American supply chains. In addition, Canada secured an exemption from future U.S. section 232 tariffs on automobiles and auto parts.
I would now like to turn to my colleague Marie-France Paquet, chief economist of Global Affairs Canada, who will provide you with more detailed information on her team's economic impact assessment of CUSMA.
Thank you very much.