Good afternoon.
Madam Chair and committee members, before I start, I would like to thank you for inviting me to appear before you in order to present some viewpoints from the west. They are not just about NAFTA, because everyone is well aware of how important it is.
Instead, I'd like to talk about some of the things that need to be considered in our framework for understanding the agreement and in going ahead as the committee debates and, indeed, as the country looks on and debates participation in the new agreement.
The Canada West Foundation, as I'm sure the committee is well aware, was created 50 years ago to lend a voice to the western provinces, to facilitate the participation of the west and to facilitate the contributions of the west to the making of a strong Canada. A strong west is a strong Canada, and today, 50 years later, we realize that some of those debates have never gone away, and the Canada West Foundation remains engaged in them.
We are also one of the organizations most implicated on the trade file, given the importance of trade for the west. You will have seen our work on issues such as Bill C-69. Before it was a national issue, Canada West was there. You will have seen our work in forming the changes to the legislation.
On trade, we modelled the impact of the trans-Pacific partnership trade agreement on the Canadian economy before the federal government did. We continue this advance work. We are modelling the impact of the CPTPP on our trade infrastructure. Even though the government did this for CETA and has chosen not to do it for the CPTPP, the Canada West Foundation has stepped up to do this because of the importance of the agreement for the country, not just for the west.
On NAFTA, I have three points to consider quickly. These lead to my recommendations for action, about which I won't go into detail, because you have them in writing.
First is the rush toward normalcy in thinking about our relations with the Americans simply because we have an agreement. We have seen, time and time again, from the election of Donald Trump through his handling of diplomacy to his conduct of trade, a complete destruction and remaking of how the U.S. does foreign policy, diplomacy and trade policy.
Let me give you one example with this agreement itself. It's usually the process, with a trade agreement, to improve conditions of trade. Parties agree that there are things that can be done to improve conditions of trade, and they agree to meet, either starting from scratch or building on an agreement. We did this in North America. We updated the North American trade agreement to modernize it, to bring it into the 21st century, to take care of labour issues and intellectual property. We had a win-win situation, where all parties made concessions, and all parties were happy with the results. When Donald Trump came in, that was ripped up and we were told that win-win no longer works; what works is “I win, you lose.” Starting from this point is unprecedented in trade negotiations. We had no choice, and the government did the best it could—I think the best that anyone could. Hats off to the government for the job it did under those very difficult circumstances.
That is just one indication of how upended the world in which we are now trying to function is on the trade front. We see the U.S attacking the World Trade Organization. We can't proceed with our old ways of thinking, or our old frameworks, when looking at this agreement. Every witness you have has to tell how the agreement, and their interpretation, fits into this new reality.
Let me give you one example of something we are worried about. Yes, we have an agreement, and Brian is absolutely right: for those areas where the President does not pay attention, or pull the rug out from under us, or change the rules, the agreement will work. It is much better than not having an agreement. The modelling of the trade agreement done by others shows that the agreement is a net economic welfare loss for all three countries. The only thing worse is not having an agreement, which is an even greater economic and GDP welfare loss. I suggest you call in Dan Ciuriak, the modeller here in Ottawa. He does the modelling for Canada West. He used to work for Foreign Affairs. He can fill you in on the details of the modelling. That's a conversation I would strongly urge you to have, to get to the bottom of the modelling numbers and what they show.
Moving on to the statutory authority of the President, we have never seen a president exercise the four or five statutory provisions that the president has to manage trade. These are provisions delegated to the president from Congress.
We saw the steel and aluminum tariffs, Canadian steel and aluminum declared a national security threat. This is not the worst of what the President can do. There is more.
At the end of May, we woke up to see the following from the White House, and this is the White House statement:
As everyone knows, the United States of America has been invaded by hundreds of thousands of people coming through Mexico.... Mexico's passive cooperation...constitutes an emergency and extraordinary threat to the national security and economy of the United States.... To address the emergency...I am invoking the authorities...[in] the International Emergency Economic Powers Act. Accordingly, starting on June 10, 2019 [less than a week after this announcement was made], the United States will impose a 5 percent Tariff on all goods imported from Mexico.... If the crisis persists...the Tariffs will be raised to 10 percent on July 1 [basically three weeks or 21 days later].... Tariffs will be increased to 15 percent on August 1, 2019, to 20 percent on September 1, 2019, and to 25 percent on October 1, 2019.
This is the threat that hangs over us should the President decide to ignore the rules and use the statutory power he has. This is something that really needs to be taken into consideration. We need to realize that the signing of the agreement is not the end of our fight on trade with the Americans and trade in North America. It's not even the end of the first period.
This is going to be a long-term game. We are going to have to step up the extraordinary efforts we made to build alliances in the States to prevent this type of situation. We do not fight this in Ottawa with the ambassador. We fight this in Boise. We fight this in Springfield. We fight this in Sacramento. We fight this at the state level where premiers work with our counterparts as governors, and MLAs work with their counterparts at state legislatures. It's imperative that we not drop the ball and think of this as mission accomplished.
The second point, very quickly, is that there are parts of this agreement that I think we really don't understand. I would highlight article 32.10, the article dealing with negotiating with non-market countries. The provision itself isn't problematic. We announce when we are going to negotiate and we have to share as much text as we think is possible—these are not onerous or unusual provisions.
But what is a non-market country? What did we agree to when we agreed that we would give the Americans these powers with non-market countries? We think it's China, but the Americans have a list of 11 countries—10 plus China. Who else is on that list? Well, Vietnam was on that list, and we dodged a bullet by getting the TPP done with Vietnam before the Americans were able to use this for mischief. Again, I would urge the committee to look at article 32.10. Do we fully understand it? Can the government fully explain it?
Regarding cultural exemptions, we've granted the Americans the right to impose countervailing duties should we invoke our abilities under the cultural exemptions. Michael Geist just had a long piece on this. I would urge you to call Michael, Wesley Wark and others, to really go into that.
As for the points I raise in the recommendations, we have to help the provinces do their job in terms of defending our interests in the States. During the negotiations, the Clerk of the Privy Council and the Prime Minister asked the provinces to do more. They stepped up.
The government gave money to ACOA to help the Atlantic provinces do more vis-à-vis the States. We haven't gotten the same in the west, and the west could really use the support. In a time of financial constraints, in a time of budget cuts, we are being asked to do more, and we don't have the resources, so we really could use the feds to step up.
There are also possibilities to engage the Americans on a bilateral basis for things that we couldn't do with the Mexicans at the table. The greatest failure of this agreement was not to advance provisions for moving business people. We can engage the Americans bilaterally, especially at the state-provincial, the regional level.
In terms of an infrastructure bank, the infrastructure idea is one where the Americans really need help. We can step forward and offer them help, and in so doing create a permanent institution with the Americans to avoid the vicissitudes of political changes and the changing political climate, and have a permanent institution focused on the North American border.
I will leave it there for questions.
Thank you very much.