Madame Chair, committee members, thank you for the invitation to take part here today in your consultations on Bill C-4.
The Business Council of Canada represents the chief executives and entrepreneurs of 150 leading Canadian companies in all sectors and regions of our economy. Our member companies employ 1.7 million Canadians, account for more than half the value of the Toronto Stock Exchange, contribute the largest share of federal corporate taxes and are responsible for most of Canada's exports, corporate philanthropy and private sector investment in research and development.
It almost goes without saying, and I've said this many times before in front of this committee, that trade with the United States is absolutely critical to our prosperity. The Canadian economy depends on international trade, clearly, and the U.S. is by far our largest trade and investment partner. Trade of goods and services represents around 64% of Canada's gross domestic product, with the U.S. the destination for 75% of our goods exports last year.
The Business Council strongly supports CUSMA/USMCA and calls for the swift passage of Bill C-4, for four critical reasons.
The first is that the agreement protects market access. When negotiations were first launched, we had one overarching recommendation for government and for our negotiation team, and that was to do no harm. To avoid damaging employment, trade and investment, Canadian, American and Mexican businesses need to retain their preferential access to markets and commercial opportunities in each respective country. By this measure, CUSMA is an overwhelming success. The resulting agreement is based upon reciprocal access and treatment, and no Canadian company will face new tariffs or other market access barriers in North America as a result of this deal.
Given recent reports that the White House is considering raising its WTO bound tariff rates, the importance of quickly ratifying this agreement is even greater. I just might add that, at the beginning of these negotiations, the overarching U.S. objective was to “[i]mprove the U.S. trade balance and reduce the trade deficit with the NAFTA countries.” In other words, the U.S. wanted to restrict imports, not liberalize trade, as is usually the objective in a trade agreement. Given that this is where we started, the final deal achieved the number one objective for the Canadian business community by protecting our market access and doing no harm.
The second reason that we strongly support this agreement is that it removes uncertainty from the Canadian economy. The ratification of CUSMA eliminates significant trade uncertainty. According to the Bank of Canada, protectionist trade measures around the world right now are estimated to reduce global gross domestic product by about 1.3% by 2021. Given that the U.S. remains the key market for Canadian firms that are planning to grow and invest abroad, reducing uncertainty in this critically important relationship will be a boost for the Canadian economy at this time.
The third reason is that the agreement modernizes NAFTA, and this tends to get overlooked at times. CUSMA will improve the trade relationship by modernizing long-outdated elements of NAFTA. The agreement is largely based on the text of the trans-Pacific partnership, which is our most modern trade agreement. For example, there are chapters on digital trade that prohibit customs duties and other discriminatory measures from being applied to digital products, while ensuring that data can be transferred across borders. This is a significant improvement on NAFTA and something to be applauded.
The fourth reason is that it enhances North American competitiveness. CUSMA includes new chapters and provisions that will help us develop a more productive and mutually beneficial relationship, including a chapter specifically on competitiveness and one on good regulatory practices. We call on government to take advantage of these new mechanisms by developing a robust committee work plan.
Before I conclude, I'll just say a word on timing. The U.S. and Mexico have moved to ratify this agreement in their respective legislatures. While we have every right to review and assess the deal, I caution against unnecessary delays. Given all the challenges facing the Canadian economy right now, including rail blockades, coronavirus and our deteriorating relationship with China, the last thing we need to add into that very concerning mix is a delay on this deal with our most important trade partner.
I'll conclude with that, and I look forward to your questions.