International Trade Committee on Feb. 26th, 2020

[Marie-France Paquet]

We don't have a regional model. It's not a provincial or regional model; it's Canada as a whole, so I cannot tell you the impact on this province or that province out of the numbers we can provide. For that, you would need to model every province as a country with the internal trade challenges and then sum it up.

We don't do that, of course, but being in Canada, we know that some of the sectors are located in an aggregate way, if you will. It's not perfectly circumscribed, but that's what it is. The best we can do is to extrapolate from the numbers in one sector, and some of the sectors are spread out across the country, whereas others are more concentrated.

In the automotive sector, we say, “That's the hardest hit,” and you know where it hits at home, right?

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Very good, so there are about 123,000 direct and indirect steel jobs. In Ontario, there's Hamilton and Sault Ste.-Marie, but you are right—there are a number of small and medium-sized businesses across the way. Of course, I know that aluminum factors very prominently in Quebec, but we heard testimony from some people in the aluminum business down in Windsor.

I appreciate that effort. On behalf of the steelworkers, thank you to both of you for standing up for Canada.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

It's on to Mr. Lewis.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Madam Chair.

I won't go into my disappointment because my colleagues have done a very good job at that, but you need to know, just like Mr. Carrie said....

I don't know if I'm disappointed or if I'm kind of blown away, because I've been part of a lot of trade deals, a lot of business deals over my time. Never have I ever come out of a business deal and said, “I think this is a great deal, but I don't really know how it's going to hit my pocketbook.” Never. It really makes absolutely no sense to me at all.

I believe you mentioned that you actually did have an impact statement done before this trade deal was done. Did I hear that correctly, Mr. Verheul?

[Steve Verheul]

Yes, we usually do some kind of analysis beforehand to project the potential gains or losses that could occur.

[Chris Lewis, Conservative, Essex, ON]

Thank you, and where is that paperwork?

[Steve Verheul]

In this particular case, given that it wasn't a new free trade agreement, what we did assess was the impact of the potential loss of NAFTA, which is what we were facing at the time. That was announced as it was completed.

[Chris Lewis, Conservative, Essex, ON]

So where is that paperwork?

[Steve Verheul]

We can certainly check on being able to provide that.

[Chris Lewis, Conservative, Essex, ON]

I think this committee deserves that paperwork, at the very least.

Would it be fair to say that the only way that you could make the numbers look good in this economic impact analysis statement would be to compare CUSMA to having no deal at all?

I'm trying to get through my brain what you're comparing this with, but I have to assume it's all about the numbers and making them look good. Is that a fair statement?

[Steve Verheul]

No, it's not, because we were comparing the reality we faced at the time, and that reality was the elimination of NAFTA and the imposition of tariffs on steel and aluminum, which happened. We were under threat that if we did not negotiate, NAFTA would be eliminated; the U.S. would withdraw. That was the reality of that path if we had not negotiated.

Instead, we chose to negotiate, and we ended up with the agreement that we have in front of us. The only relevant comparison, from our perspective, is between those two paths that lay in front of us. If we had not negotiated, that would be the world we'd live in—no NAFTA, tariffs on steel and aluminum, and most likely, tariffs on autos and auto parts.

[Chris Lewis, Conservative, Essex, ON]

Thank you.

For everyone, this is the U.S.-Mexico-Canada trade agreement, and this here is the economic impact assessment text that what we got today. This has been done since April 2019, and this text here is what we got 20 minutes before we arrived. I believe somebody is hiding something. I have to believe that.

The last point I'll make is that though I don't much agree with what the Prime Minister does on a lot of different things, I have to agree that there's enough intelligence there that he did have some kind of a statement in his hands to know if it was a good deal for Canada before November 30, 2018. God help us if he didn't.

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

We go on to Ms. Bendayan, for four minutes, please.

[Rachel Bendayan, Liberal, Outremont, QC]

Mr. Verheul, your position as chief negotiator meant that you were not only on the front lines negotiating with the United States and Mexico, but also on the front lines here in Canada in discussions with industry leaders, businesses, chambers of commerce and numerous stakeholders, some of whom have come before the committee and told us the benefits of CUSMA for their industries and businesses. I wonder if what you heard on the ground here in Canada from industry is consistent with the chief economist's report and the information you see in the report today.

[Steve Verheul]

Obviously, we haven't received specific numbers from industry, but based on what they've been telling us across the various sectors that are most affected by the outcomes, certainly the results are very comparable to what we've encountered here.

I would like to clarify that, as I mentioned, we do an analysis before any negotiation. On the notion of doing macroeconomic quantitative analysis during a negotiation in the expectation that people would have that as input into a negotiation, that doesn't happen. No country in the world does that. No negotiating team in any part of the world does that kind of analysis to inform themselves.

We had a team of over 150 people working on this negotiation. They were largely economists. They know their issues. We spoke intensively with the sectors that were involved. That's where we got our information, along with our own analysis and expertise. But on the notion of constructing and following a quantitative model to guide us in the negotiation, no one does that.

[Rachel Bendayan, Liberal, Outremont, QC]

Given, as we saw in reality, the changes that were put forward by other member countries in December, in your view, would it have been somehow detrimental to our national interests and our negotiating position to start releasing information before the United States and Mexico ratified the agreement?

[Steve Verheul]

That was the position that we took early on. We knew there was discontent within the U.S., particularly in the House where that they did not agree with elements of what the U.S. had negotiated and there were discussions actively taking place.

Mexico ratified it very quickly. The U.S. ratified it fairly quickly as well, but we knew there was still a negotiation going on. We had several issues that were of significant importance to us in that negotiation, particularly the issue of the date of the term for biologic drugs, which would have had a significant impact on us; the issue of getting dispute settlement processes that would actually work as a part of that as well; and provisions on labour and the environment. The negotiation was not done, so we saw little point in conducting a full economic analysis until the negotiations were actually completed.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you.

[The Chair, Liberal, Judy Sgro]

We go on to Mr. Savard-Tremblay for two minutes.

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

Thank you, Madam Chair.

Unfortunately, we were short on time. Mr. Verheul, I propose that you continue where we left off. You were telling me that there would be monitoring and a way to correct things in case of problems. Is that right?

[Steve Verheul]

Yes. Clearly if we do see imports of aluminum coming in in greater quantities than we've seen in the past, then we will be going to our trading partners to look for a resolution of that.

I'd also just mention that the U.S. still has its process under the section 232 actions under both steel and aluminum that if there are surges in either steel or aluminum imports, they do have, in their legislation at least, the right to impose penalties again, or reimpose those tariffs. So they are also monitoring imports of aluminum into Mexico.

We have a number of avenues we can pursue here and we are talking quite closely, in particular, with the U.S. about this issue.

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

Do you see the agreement between the government and the Bloc Québécois as progress?

[Steve Verheul]

I'm sorry, I heard “the gain between the Quebec government and the Canadian government.”

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

I'm talking about the agreement announced this morning between the Bloc Québécois and the Government of Canada to ensure the monitoring and apply the same conditions to the aluminum sector as those applied to the steel sector if there was an issue. Do you consider that to be a step in the right direction and a success?

[Steve Verheul]

Yes, I think that's exactly the right way to go. In our discussions with the U.S. as well.... The U.S. has set aside new funding to monitor aluminum imports into North America internally, so there's the notion of our monitoring what is happening on the aluminum front. If we start to see that aluminum is being brought into North America from China or other countries and undercutting Canadian sources, then we will be making proposals to the U.S. and Mexico to have aluminum treated on the same basis as steel.