International Trade Committee on Feb. 19th, 2020

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you.

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

We all have family that we think about every now and then. Arjan is 16, so he might be driving a car right now.

That's a little segue into my first question.

We've been thinking a lot about things. We heard a lot when we were down in Washington. We talked about the 232 steel and aluminum tariffs. I'm co-chair of the all-party steel caucus, and I was there prior to the 232s and after. I remember talking with a Democrat. I won't name him and name names since we're not naming names. That was around 26 years ago. He said, “I voted against the free trade agreement. I voted against it.” I remember it too. I was much younger then. My hair was a little darker. I had noticed there was a lot of trepidation, fear, if you will, about job losses in Canada, including around the auto sector.

That same Democrat said he voted against it then. Now he says, “I'm voting for it this time because I see how important it is and see the integration of the market.” Algoma Steel ships 60% of its steel into the manufacturing sector, into appliances and into auto. They source all the materials from about four or five states, coal and steel.

I'll start with you. What's different today from it was then, in people not having the fear? How does this agreement secure Canadian jobs?

[Flavio Volpe]

I think I know who you're talking about.

The original agreement happened at a time when about 80% of the vehicles made in North America were made in the Great Lakes region. There was the idea that for Great Lakes states, if we opened the door to Mexico or Canada, there was going to be some erosion. That's why he voted against it.

This time, the agreement raises the regional value content but also turns around specifically on vehicle parts, on a section called core parts, and says—and these are the six most added-value parts, the ones you think they are: engines, transmissions, suspensions—if you're going to use steel to make those parts, or you're going to use aluminum to make those parts, 70% of that has to be sourced regionally.

Simply put, if he is representing a district that's in the automotive-manufacturing sector or in steel, this agreement favours those regions. Specifically with the provision for labour value content, if you make a car in a facility that pays less than $16 an hour—that's the wage, not the fully-loaded cost of labour—then 40% of that car has to come from parts facilities that pay $16 an hour. Presumably, if they're making those core parts, they're making them with 70% local steel.

It's a really simple binary decision for anybody who is in a manufacturing district or riding. For automotive steel and aluminum, this agreement guarantees more content than the one it replaces. For any of the three signatory countries, it is the first one in 25 years that raises that number.

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

Thank you.

To the teamsters, I have the same question.

[Phil Benson]

The teamsters have always supported free trade. As a union, we have grown. There's an awful lot of our members who, quite bluntly, live and die by trade—our railroads, etc.

The dairy issue is an exception. It's because, in this case, the only reason they'll potentially be losing work isn't because of regular trade. It's because the government has decided to allow access, such that it's giving $3.9 billion-plus to business, etc.

All we're saying is that if a worker loses a job in that sector, which we're concerned about, that there be some compensation for them. We're not asking for compensation for everybody. Whether it's transportation, many of the other jobs, some jobs will be lost and some jobs will be won. Hopefully, we'll win more than we lose, and we'll continue to grow.

It's a unique situation, a special situation, building a fence around it only for those industries when a government chooses to subsidize because of the trade.... They know it hurts so bad. I can only think of one case where this has happened, and it's this one.

We think it's fair to have something there just in case, as an insurance program or a program for workers, so they have a little bit taken care of. Otherwise, trust me that we'll look after ourselves.

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

No doubt.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

I'm sorry, Mr. Sheehan. Your time is up.

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

Okay.

[The Chair, Liberal, Judy Sgro]

We'll go on to Mr. Lewis, for five minutes.

[Chris Lewis, Conservative, Essex, ON]

Thank you very much, Madam Chair, and to all of our witnesses.

I'm going to address this to Mr. Volpe.

Sir, I listened very keenly to your opening remarks. They were very well done. You had a lot of quotes and a lot of dates.

In my riding down by Essex—of course, I continue to say it—we're so entrenched in the automotive industry. It is very close to our border, the busiest international border in North America. I was listening, again with keen interest.

One quick date that I would bring to your attention, sir, was back in April of 2019. That was a date that the United States lawmakers received an economic impact study to help them make decisions with their new NAFTA trade agreement. That's one study that at least this side of the table has not seen as yet. We're very sure it's coming, but we haven't seen it as yet. I just want to bring that one date to your attention as well as a couple of quick quotes. I got this from the CBSA website.

The CBSA website currently states, “The CBSA, at this time, will not be seeking additional resources to implement and administer the CUSMA.”

It goes on to read as follows:

The CBSA will have to update policy and standard operating procedures, as well as identify new system and operational requirements. Should the implementation of new CUSMA benefits to the trade community add pressure on CBSA operations, resources needs will be reassessed to inform future recommendations to the Minister, as appropriate.

It sounds to me as though it's a little bit after the fact.

I acknowledge your enthusiastic support for the new NAFTA, sir. There certainly does appear to be good news for the auto sector, and that, of course, is good news for workers and businesses in my riding of Essex.

The focus of my questioning has not been on whether to ratify, but rather on implementation, the concern being that there is a very short 90-day window between ratification and implementation, which will be handled by the CBSA. The committee was advised that one of the most complicated elements of this agreement are the rules of origin, particularly in the auto sector. There are much more stringent rules in terms of content, as well as the labour value content threshold, which companies will now have to track throughout their supply chain.

In your opinion, sir, does the CBSA have the tools and the training to make sure they're ready to go on their front, and, further, that our Canadian businesses and manufacturers, the ones who literally feed our families, aren't interrupted along the way? I suppose In your opinion, have those tough questions been asked of our businesses and the government?

[Flavio Volpe]

The short answer is yes, but there is a longer answer.

The timing is dictated by Washington. Washington has been in an absolute hurry, because of course there's an election season and the president would very much like to take credit for gains on the USMCA.

We've asked the same questions to the CBSA. We have a standing committee of members with the CBSA that meets regularly.

It's a two-part question. What's the excess capacity available at the CBSA to process...? They're not operating at 100% here, so there is some excess capacity. The second part is that even though the rules come into play at enforcement, which is the first day of the third month after ratification by this House, there's a three-year ramp-up on content levels. You're going to have to track new product, but the level of that product, the volume of that product, is going to be stepped up over the course of three years. It's a question, a real operating question, that we've engaged in with the CBSA, but the CBSA, fortunately, has engaged industry rather directly on it.

[Chris Lewis, Conservative, Essex, ON]

You spoke about the first day of the third month. Do you have any concerns with the CBSA being ready for the first day of the third month? Have you heard any concerns about whether it is going to be ready to implement, be it for businesses or any other stakeholders?

[Flavio Volpe]

We work in a just-in-time business and on very thin margins, so we're always concerned. That's a matter of concern every day, whether the CBSA from day to day, year to year, is ready. The question will be this: When the uniform regulations get released with the description of parts in those agreements, will they match HS codes that are easily processed? If so, then it will be a swifter process.

In the end, a product has to get into a vehicle, into a truck or a railcar, and it has to go across a border. There is a finite amount of product that can go through, because there's a finite number of hours in a day. The border is manned, so to speak, 24 hours a day.

We don't see that as the primary concern. It's a prudent question, especially given your riding. I spend a lot of time in your riding. I have a lot of members in your riding, and they're all asking similar questions. If we get access to about 25% more volume orders, can we ship them and can we fill them? I think the second question is the most important one, but the first one is prudent to ask.

[The Chair, Liberal, Judy Sgro]

Mr. Dhaliwal.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you, Madam Chair, and thank you, Terry, for bringing up my son's 16th birthday. Even though I miss him, we are doing very important historic work right here in Ottawa, and I feel very proud.

My first question is to my friend, Phil. Over the last many years, we have constructively worked together, and I want to thank the teamster members in my part of the world as they've helped me in the past, and we have always had very important dialogue.

You mentioned that teamsters are big when it comes to the transport industry. Yesterday, we had the president of the Canadian Truckers Alliance here, and he mentioned that this is very positive for the trucking industry. Would you agree, or could you tell me how this will help those teamster members who are in the transport industry?

[Phil Benson]

It's a fairly simple formula. We do trains, railroad, airports, ports and couriers. If you look at the modern world, the more dollar volume there is, the faster it has to move. It means work and it means jobs.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Do you agree that it will create jobs?

[Phil Benson]

Absolutely, in that haul. Somewhere else, we're not sure. That's why I keep saying we're going to be fine, because in the modern world, if a union must be located somewhere, that's excellent. Of course, we do other things. As you know, there is British Columbia film. We're doing very well in film, and free trade helps film. It helps all our members who are in film to go through all the different.... As you know, we do everything from ice wine to breweries, beverages, fruit juice and tomato sauce. All of these things, when they move, they cross borders. People want them. It means work for us. It is the same for trade. The more our pulses sell, the more grain sells, it means work for us because we have to move it.

In all those aspects, it's a very good thing for many teamsters' jobs.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

My next question is to Mr. Beasley. You mentioned that Canada has very smart and intelligent people. Could you tell me how Canada can remain a leader and advocate for the environment while pursuing all these trade deals?

[Todd Beasley]

When we look at the analogy of how we solved the acid rain problem, as a government we created public policy that stated to industry that there were guidelines they must meet. We gave industry the appropriate amount of time to work on the problem to solve it, and we gave them the patience of our understanding that, along that technological development way, failure will happen.

When goals are worthwhile, we use the lessons learned of failure and we continue to go forward and march forward, and eventually those failures will lead to success. This is exactly what happened when we had a very serious existential threat to our well-being within North America, which was acid rain. What we created were tax policies. I believe government has no business making technological decisions. I believe that those with the best bona fide interest are industry and the technical representations of those industries, together with universities and trade associations.

What we would be able to do is.... If we were to create public policy that unlocked that, unleashed that and encouraged industry, I'm comfortable saying that great things would happen. If I use the analogy of the west, some people may have the impression that oilmen don't care very much about the environment, that we care about drilling wells and perhaps producing oil and gas. Nothing could be further from the truth. For the last 30 or 40 years, some of the best oilmen have been working on both sides, improving the ways to improve our energy intensity per barrel produced.

Back to your direct question, the best thing we should do from a public policy perspective is to create the playing field, not make technological decisions. We don't need to make these investments. The investments that industry would make would be investments that would make them money together with solving those problems.

I guess what I would suggest, if you were to ask me specifically, is an expansion of the scientific research and experimental development potential. If we had generous status that industry could count on.... Let them make the decision, but let them be able to monetize their losses on the way to success. Great things would be accomplished in our society. I have no doubt about that.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go to Mr. Savard-Tremblay for two and a half minutes.

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

I'm going to pick up where I left off when I ran out of time earlier.

Mr. Monette, you brought up the matter of compensation not just for dairy farmers, but also for dairy workers. That idea isn't nearly as talked about as compensation for farmers, so it's good that you brought it up because we can discuss it here.

What form would that compensation take?

[Christopher Monette]

I would say it should come in two forms, mainly.

First, before dairy workers lose their jobs, it's important to make money available for training and skills upgrading so they are familiar with the latest technology and able to meet all of the industry's needs.

Take, for example, a warehouse worker who loses their job in a dairy processing plant because their employer needs to find other types of workers elsewhere. Given the current labour shortage, especially in Quebec, finding those workers will be a challenge. If, however, funding were available, the employer could re-train the worker and keep them.

Granted, it probably won't be possible to save every job, so when layoffs have to be made, funding for enhanced employment insurance benefits and severance is a must. Some workers have family members who are diabetic or have other serious illnesses, and it's not as expensive as you might think to extend coverage under the employer's group insurance plan to make sure those families don't fall through the cracks.

Lastly, older workers should be able to buy a few years of pensionable service so they can retire earlier. Buying a year or two of pensionable service isn't as expensive as you might think either. Across the sector, the cost varies between $5,000 and $10,000.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Blaikie.