Evidence of meeting #6 for International Trade in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was workers.
A video is available from Parliament.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
Thanks very much.
Mr. Geist, one philosophical difference, frankly, that the NDP has with free trade agreements is that they don't enshrine a precautionary principle at all. They make it hard to regulate down the road for the things that you couldn't have accounted for when you signed the deal. Some industry experts might have been able to, but the layperson and many people in government, and trade negotiators even, just wouldn't be aware of them.
In the case of something like the auto sector, you can get to a point—and this certainly seems to have happened more than at any other time—where you have companies and a union representing workers, and those are the interests. I mean, there's a consumer interest too.
Who, other than the big data companies, is in the room or could have been in the room to represent the interests of Canadians and their information? That seems, to me, to be one of the deficiencies here. It is very one-sided when you're talking about negotiating these provisions. Facebook and Google are there, but who would be the counterpoint that might have been in the negotiating room?
Canada Research Chair in Internet and E-Commerce Law, Faculty of Law, University of Ottawa, As an Individual
I'm not sure that there was a counterpoint on the digital trade chapter in particular. One gets the sense that these provisions were familiar to negotiators because they are similar to what we agreed to in the TPP. Because there was some familiarity with it, there was a sense that, okay, we've already agreed to these once, so what's the big deal?
I think the reality, though, is that there are some provisions in this agreement that go further than we agreed to even in the TPP. With the extent to which we may have agreed to it a couple of years earlier in a different agreement, some of those issues have become even more salient.
A good example is the Internet platform liability issue. It seems to me that it's there less because some of the large platforms were interested in having Canada create safe harbours for these large companies and more because they were interested in ensuring that these were locked down in the U.S. environment, because the U.S. would be subject to those same provisions.
The problem we face is that while we were negotiating that, that issue really took off as a place where there is much policy debate. Literally, the Justice Department in the United States is holding a hearing today on this same issue. Speaker of the House Pelosi tried to remove this provision at the very last minute, but it was too late.
As I say, I think there are good arguments on both sides about changing some of those rules. I fear that we have now locked ourselves into a provision and given ourselves less flexibility on an issue that just about everybody recognizes is really, really important when we start talking about where responsibility lies in the online environment.
Liberal
The Chair Liberal Judy Sgro
Thank you very much.
Thank you to all of our witnesses for that excellent information.
We will suspend in order to change our panel of witnesses.
Liberal
The Chair Liberal Judy Sgro
I'm calling the meeting back to order.
Pursuant to the order of reference of Thursday, February 6, 2020, we are studying Bill C-4, an act to implement the agreement between Canada, the United States of America and the United Mexican States.
With us on this panel for the next two hours are the Automotive Parts Manufacturers' Association, Flavio Volpe, president; the Association of Home Appliance Manufacturers Canada, Meagan Hatch, director, government relations, and Kevin Girdharry, manager, policy and data analysis; HTC CO2 Systems, Stephen Beasley, vice-president; IPEX Group of Companies, Veso Sobot; and Teamsters Canada, Phil Benson, and Christopher Monette, director, public affairs.
Thank you all very much for making the time to be here today.
Mr. Volpe, we'll start with your comments, please.
Flavio Volpe President, Automotive Parts Manufacturers' Association
I think one of your staff took my speech to make copies for everybody. I'll do it extemporaneously, as I always do here.
Liberal
The Chair Liberal Judy Sgro
We're copying your notes for the translators, so we're going to hold for a few minutes.
We will begin with Ms. Hatch.
Meagan Hatch
Good afternoon.
AHAM represents manufacturers of major, portable and floor-care appliances in Canada and the United States. Our membership includes over 150 companies. The industry supports 40,000 jobs in Canada, including manufacturing, sales, distribution and retail. In Canada the economic impact of the appliance industry is close to $6 billion annually.
AHAM supports the rapid adoption of Bill C-4 and CUSMA.
Canada is a net importer of home appliances, with the U.S. and Mexico being the predominant trading partners. Manufacturers design appliances for a single North American market. This larger market increases consumer choice, drives down costs and maximizes economies of scale.
We support chapter 11 and chapter 28 of the agreement, which aim to reduce technical barriers to trade and increase regulatory alignment. We also support annex 12-D, which is specific to our industry and calls for energy performance standards and test procedures to be harmonized. It also encourages the use of voluntary programs such as Energy Star, noting that they contribute to improving energy efficiency for a range of products.
This is why we'd like to raise an issue that is of great concern to our members both in Canada and the United States. The Liberal Party has put forward a commitment to make Energy Star certification mandatory for all home appliances by 2022.
If all home appliances are required to be Energy Star, almost half of what's available in the market today will vanish, and in the future that could rise to 75%. Although implementation has not started, this has created great uncertainty in the market for both manufacturers and retailers. If the government moves forward with making Energy Star mandatory, Canada will be going against the intent of CUSMA, but more importantly, Canadians will experience a significant reduction in products available on the market. In fact, a staggering 41% of what is currently sold in Canada today will no longer meet these requirements. Because of the sharply limited model selection, it is likely that low-income Canadians will end up paying more for entry-level models. A price rise could be made worse by the greater cost of manufacturing such products, since more efficient components may be costlier, and in some cases, more fundamental construction changes will be needed. Unfortunately, in certain cases minor energy savings would be achieved.
This is because overall, today's home appliances are very energy efficient, and the cost to further improve efficiency could be significant, depending on maturity of the existing technology.
Both NRCan and the U.S. Department of Energy set mandatory minimum energy efficiency standards that all appliances must meet, and these have become more strict over time. Home appliances have undergone several standards changes. Some products are nearing maximum efficiency under available technology, and in some cases, the basic laws of thermodynamics.
Energy Star is a voluntary program. The purpose is to make it easy for consumers to identify higher energy efficiency products. It is intended to highlight the top 25% to 30%, or best in class, of energy efficiency. This competition motivates manufacturers to find new innovation. Manufacturers, in turn, make significant investments to qualify for the program.
If the Canadian market is limited to Energy Star products, this competition ends and the mark loses meaning. If the government mandates that everything be Energy Star, then it renders the brand meaningless. Article 12.D.5 of CUSMA clearly states its support for voluntary programs such as Energy Star to promote energy efficiency. This is in direct contrast to the government's proposal to make the Energy Star program mandatory.
Another rather significant issue with the Liberal commitment is that the Energy Star brand is not owned by the Canadian government. The brand is owned and trademarked by the U.S. Environmental Protection Agency. The U.S. government administers the program and sets the levels that manufacturers must meet in order to qualify for the designation. The Energy Star brand is highly praised by both NRCan and industry alike. The brand is recognized by 85% of the public, and the logo is used around the world. We want it to continue.
The Energy Star commitment is also inconsistent with the Liberal approach to energy efficiency over the last four years. In Canada the federal, provincial and territorial governments all have important roles to play in setting energy efficiency standards. In 2016 the FPT governments developed a framework encouraging market transformation through collaboration on energy efficiency standards. The framework states that when federal, provincial and territorial governments are not coordinated, manufacturers may have to test an identical product more than once to sell it across Canada. This can lead to unnecessary costs, reduce the product choices available in the market and create barriers to internal trade between provinces.
Making Energy Star levels mandatory is also in stark contrast to the government's approach to energy efficiency harmonization with the United States through the work of the regulatory co-operation council.
In 2018, Canada and the United States signed a memorandum of understanding to formalize the RCC and reaffirm the importance of regulatory co-operation. At the time, the president of the Treasury Board noted that aligning energy efficiency standards through the work of the RCC was the best way forward because it would save Canadians about $1.8 billion in energy costs by 2030. This is exactly why CUSMA commits to regulatory harmonization and supports voluntary programs like Energy Star.
Canada has historically been slow to adopt the stricter energy efficiency standards introduced in the United States. Since 2016, under this government, the two countries have made significant strides towards harmonization and alignment through the work of the regulatory co-operation council. Canada is now finally aligned with the United States. This process took over 10 years. It would be a shame to throw it all away.
Regulatory alignment is critical to avoid unnecessary double testings and barriers to trade, and it maximizes consumer product choice. Instead of making Energy Star mandatory, the government should continue to adopt the regulatory framework that can more quickly update its standards. Bill C-4 and CUSMA create a structure for this harmonization to thrive.
AHAM has been a strong advocate for advancements in energy efficiency standards, but making Energy Star mandatory will have negative consequences for middle-class Canadians.
Thank you.
Todd Beasley
Thank you very much.
Good evening, ladies and gentlemen and Madam Chair.
I want to thank you very much for giving me the opportunity to appear and give testimony to this committee on behalf of myself and on behalf of Regina's HTC Extraction Systems. They are a superlative carbon capture company that I'll tell you more about in just a second.
It's been my previous honour to testify to the Standing Committee on the Environment regarding Canada's greenhouse gas strategies, and on behalf of the Government of Canada to the U.S. Department of Energy on developing resource energy conservation technologies. I'm considered an expert in a field of science referred to as gas treating. I'm a proud second-generation oilman. I've dedicated my career to creating superb environmental technologies that have been installed on five of the world's continents.
Ladies and gentlemen, I'm absolutely delighted that our Canadian political leaders have expended significant effort to bring this massive potential of continued free trade between Canada and our friends in the United States and Mexico. With this initiative we're truly blessed, but we can never forget that we live next door to the largest, most competitive economy on the planet. They are 10 times our size and their economy exceeds that by an order of magnitude. When it comes down to it, we also have to be very mindful of our Mexican friends. As we heard in the previous testimony, they have a skilled workforce and are prepared to work for wages that are half of what ours are.
If we, the Canadian people, are to truly gain from this free trade relationship, we must think and act strategically. We must reflect on the consideration of public policy and taxation strategies that perhaps our trading partners have no intention of adopting. We must consider the impact on our ability to compete. Our economy, our municipalities and our businesses must be competitive in order to fully benefit from this free trade relationship. We must create foundations so that we can effectively compete.
Ladies and gentlemen, we need to talk about the elephant in the room, which of course is Canada's global warming concerns and our nation's strategies and their potential impact to this competitiveness. We must find an effective balance; indeed, I know we can. Prime Minister Trudeau and Deputy Prime Minister Chrystia Freeland have recently stated publicly that even if we eliminate all sources of carbon from coast to coast in this country, we will not move the dial internationally. I believe they're both absolutely right. I believe that the best Canada can do is to develop and fully perfect technologies that the rest of the world can confidently adopt.
Canada has provided this leadership before and it was a glorious success in both our environmental and our trade relationship with the Americans. There's some grey hair in this room and there's some not-so-grey hair, but some of us will remember yet another existential threat to our well-being and the environment. It was the threat of acid rain. In the 1970s, this environmental threat was truly horrific and it was immediate. In essence, pollution from industrial factories was causing acidified rain, which was rapidly killing North America's lakes and water bodies. At that time, the Canadian government, together with the United States, created public policy through clean air legislation, which mandated industry to fix this problem. They did fix the problem. They turned this environmental threat into a technical and entrepreneurial success story. Most importantly, this was accomplished rapidly and without punitive harmful policies that harmed society's competitiveness. Our free trade agreement must consider this.
The analogy then is the exact analogy today, in terms of solving these problems. At the end of the day, as a society, I know we can do it.
Bear with me. On February 12, a press release announced that the United States led the world in carbon dioxide reduction while, at the same time, it became the world's leading hydrocarbon-producing nation. They accomplished this environmental miracle without punitive taxation. We must consider similar strategies.
If Canada were to focus its efforts on the creation of public policy that would unlock the technical and entrepreneurial capacity of our nation, there is nothing that we could not accomplish. We could cure cancer. We cured polio. We could cure Alzheimer's and we could most certainly create superlative environmental technologies to solve the environmental challenges without harming our economy. As a result, we could be competitive in this North American free trade agreement that we're considering today.
I also believe that we cannot solve these problems at the household level. In the same manner by which acid rain was solved, we must look at this from an industrial perspective and we must engage our free trade partners in the pursuit. Indeed, we can profit from this under free trade and we can lead the world in environmental technologies.
This is one example of many. On December 2, 2017, the Saskatchewan government signed an accord with the governors of Montana, Wyoming, North Dakota and South Dakota for the further development of its CCS EOR initiative. This initiative has removed three million tonnes of carbon dioxide, which is the equivalent of taking 750,000 automobiles off the road. President Trump referenced this in his 2018 state of the union address.
With respect to free trade and our environmental commitments, it was announced on November 8, 2019, that United States shale oil production has peaked. That production miracle had allowed them to become the world's largest crude oil producer. They are now in decline. What that means is that Canada's oil and gas are about to become strategic to the United States again, and that will happen sooner rather than later.
Our oil and gas resources represent one of the greatest sources of wealth our country has ever been blessed with, and we must embrace this for the benefit of all Canadians. We understand that there are some in society who feel this is directly opposed to our environmental commitments. Ladies and gentlemen, nothing could be further from the truth. We've shown leadership before. We can do it again and we should do it again.
I previously worked with SaskPower on the CCS EOR project, and I'm currently working with Regina's HTC technologies. Our team has some of the most dedicated individuals you'll ever meet. We are creating superlative technologies that capture CO2 at an industrial level. We've been selected by the Alberta government in its quest for the world's best carbon-capture technology, and we're proud to be part of the team that is vying for the environmental XPRIZE.
Free trade between Canada, the United States and Mexico truly represents a glorious opportunity for all regions of Canada, but for it to truly work for all of us, we must think and we must act strategically.
Ladies and gentlemen, I want to thank you very much. I would be remiss if I didn't mention this. We must—while we're looking at North American free trade—have a commitment to fully ratifying section 121 of the Canadian Constitution, which, of course, is dedicated to interprovincial free trade. This is a major strategic problem for Canada that must be fixed. I would say that this should be the first priority, rather than a free trade deal with the United States and Mexico. We have to get our own house in order so we can compete in the world.
Ladies and gentlemen, thank you very much for your time.
Liberal
The Chair Liberal Judy Sgro
Thank you very much, Mr. Beasley.
Now, we will go back over to Mr. Volpe.
President, Automotive Parts Manufacturers' Association
Thank you. It's a pleasure to be back here, Madam Chair and members.
Where are we, and how did we get here?
We're discussing the attributes of the new NAFTA, having negotiated at an unprecedented speed and with a heretofore unseen bellicose and belligerent trading partner. This partner, our celebrated best friend, the United States, was bent on disrupting the global trading order with little regard for precedent or consequence.
It's important to understand context. We're not debating an academic study written in a vacuum to be picked apart by subject matter experts. We're here to discuss what happened in the real world from 2015 to 2019 to get us to where we are today. Members of this committee will be among the only ones tasked with voting to ratify the new agreement, or not. There is no vehicle for renegotiation, adjustment or request for discussions with the two other trading partners. You are faced with an up or down vote through no fault of your own or of the government that negotiated it.
It is what it is, and there are no surprises in it. The text of the agreement signed in October 2018 has been available online since November 2018. The text of the revisions negotiated between parties as a condition of U.S. congressional support was signed in November 2019 and available online since December 2019.
From August 2017 through September 2018, parties met in Washington, Ottawa, Montreal and Mexico City repeatedly, and I was present at every single round, including the December 2017 “this isn't really a round” round. I met with officials before, during and after every single round, and I did more than 600 on-the-record media hits on what we were looking for and what we needed to see. There were no surprises.
For the third time in the lifespan of these negotiations, I'm here again at committee to share candid thoughts and positions that probably every one of you knows I hold.
In June of 2015 at the infamous Trump Tower escalator speech where he announced his candidacy for Republican nominee for President of the United States, Donald Trump said this about the Ford Motor Company investment in Mexico:
...every car and every truck and every part manufactured that comes across the border, we're going to charge you a 35-percent tax...and that tax is going to be paid simultaneously with the transaction, and that's it.
We were in the middle of exhausting TPP negotiations that resulted in a flawed document in October later that year. In a New York Times piece that described the TPP as “subject of future political battles in the United States and elsewhere”, I was quoted as saying, “Anybody who is championing gains or who is forecasting losses is way ahead of themselves.”
In February 2016, Donald Trump declared that, if he won, he would extract the U.S. from it and its status as the defacto NAFTA update was put into question. In July of 2016, when challenged that his tariff plans would not pass WTO muster and his TPP withdrawal threat would be costly, candidate Trump said, “Then we're going to renegotiate or we're going to pull out”. Lumping in NAFTA he said, “These trade deals are a disaster. You know, the World Trade Organization is a disaster.”
We were warned in plain sight what a President Trump would do and mean for our trading relationship. Still, no one thought he would win at that point, thinking he was at best an ill-informed soon to be former candidate.
I took his election threat seriously. In September 2016, I led a delegation of Canadian automotive suppliers to Capitol Hill in Washington to speak to senior senators and staffers about the implications of a Trumpian reset on trade. I met with the USTR on his threat to pull out of TPP, which I had hoped for because it reduced the regional value content on automotive suppliers to as low as 35%, from NAFTA's 60%.
At an event at the prestigious Press Club on September 28, 2016, a month before the election, I delivered an address that said Canada was the smallest of the three NAFTA partners and that it needed to clearly target large, new, advanced manufacturing commitments from foreign automakers to keep pace with Mexican and U.S. growth.
All the tariff threats and angst were clearly on the minds of the industry and were the central focus of our pre-election activity that year.
In September 2016, in an Automotive News piece on the tariff threat, I said that Canada and other countries look to the U.S. to set an example, and that recklessness on the part of the U.S. would encourage other countries to disregard world trade rules.
My quote conceded that there was some merit to the Trumpian complaints, but cautioned that a U.S. overresponse would even be more harmful:
Some of the rest of the world does cheat on these obligations.... But the solution isn't for the global trading leader to drop its standards in response.
It's a tough spot to be in. But you're there for a reason. It's like Superman getting into a bar fight. Why?
Canada, its largest trading partner the United States, and Mexico have agreed to the CUSMA to replace the existing NAFTA. This is the first trade deal between major auto-producing nations since the original NAFTA that sees the regional value content for automotive production go up in the region. A higher RVC in vehicles means that, if an automaker wants to sell to a consumer in the three countries, it needs to source more of its content in those three countries.
Since the original NAFTA moved RVC on vehicles up from the Canada-U.S. Free Trade Agreement from 50% to 62.5%, we've seen a succession of trade deals where Canadian governments have progressively negotiated Canadian automotive suppliers' considerations downwards: Canada-Korea is 55%; CETA RVC is 50%; CPTPP is 45%.
In the CUSMA, the vehicle RVC level rises from 62.5% to 75%, a 20% notional increase. That means more local activity and jobs. To get to the NAFTA RVC, an automaker has to track local content in 29 parts categories. To be eligible, the RVC of those automotive parts must only be 60%. The CUSMA expands the list of categories by almost double and raises the automotive parts RVC as high as 75%, an increase in some cases of 25% notionally through the supply chain.
The North American automotive market is approximately 21 million units annually and is the most sought-after consumer market in the automotive world. Raising the thresholds to access it benefits companies that have invested in plants and in people within the CUSMA.
While the cost of an automobile may increase marginally if the manufacturers are required to source supplies from within the NAFTA region rather than from the cheapest global sources, the benefit will be more investment in Ontario, Quebec, B.C. and in many U.S. and Mexican states, and less in the places that sell to us but do not buy from us, like the members of the CPTPP, CETA and Korea.
In automotive, the CUSMA addresses the protectionist needs of the U.S. administration but wraps in its purview Canada and Mexico as primary partners.
Side agreements for exemptions on tariff threats were a major challenge, but Canada and Mexico achieved an insurance policy on this that's worth noting. As detractors here at home decried the side agreements, I told The Economist magazine that, normally, trade agreements are self-reinforcing but that this one is being held together with threats. This is the context that we are working in, not some respectful bargaining between partners with equal leverage.
All vehicles in the CUSMA will now need to meet a minimum threshold of 40% being made by workers making at least $16 an hour. Canada will benefit; Mexico may suffer.
This provision was created during the final course of the negotiations in bilateral U.S. and Mexican discussions that caused a stir with Canadian commentators who said Canada has no role in those talks. Meeting frequently with U.S. and Mexican negotiators during that period, I didn't share that opinion. I told a Wall Street Journal front page report that the labour value content proposal “disproportionately affects Mexico” and that we were “advising Canada not to comment or take a position until the Mexicans do.” That's what Canada's negotiators did.
The U.S. is committed to raising the cost of importing automotive goods from overseas. In June 2019, I told this committee that the U.S. was using the section 232 steel and aluminum tariff threat to bully its partners and intended to use the WTO process to raise the 2.5% most favoured nation tariff dramatically. On February 12 this year, Bloomberg reported from Washington that the Trump administration is mulling a plan to increase those long-standing tariff rates at WTO. This is a move that is aimed at rewriting its relationships with major trading partners.
Importantly, Canada negotiated section 232 exemptions from the U.S. at production levels that materially outpace export growth models to the U.S. over the next five to 10 years. Specifically, Canada will be permitted to ship 2.6 million vehicles annually and $32 billion in automotive parts to the United States tariff-free, up 40% from today.
Ending the fraught negotiation process with a deal that increases investment and more competitive market access for Canada is extraordinary. Unlike the Houston Astros hitters, nobody hit the garbage bins for us. We had to react to pitches on skill with no warning, and we won.
We enjoyed unprecedented access to the Canadian negotiating team. In addition to this, I sought and received in-person access to the White House, USTR and the Mexican president and his negotiation team.
I will write a book one day chronicling the behind-the-scenes actions. Chapter one may be the USTR reaction to my November 2017 Canadian Press headline lampooning their silly materials-tracing proposals: Do we need to know where the dinosaurs died?
Today I want to give full credit for our success on CUSMA to Chrystia Freeland, Steve Verheul and their team of tireless officials who consulted constantly with the Canadian automotive industry all over the continent. They deserve specific credit: Martin Thornell, Karen LaHay, Andrei Marinescu, Aaron Fowler, all of team Canada and the Government of Canada. It was a non-partisan, public-private effort and it was amazing. I was proud to be a footnote in this history's chapter.
Thank you.
Veso Sobot Director, Corporate Affairs, IPEX Group of Companies
Thank you.
My name is Veso Sobot. I am an engineer with IPEX. We manufacture plastic pipe for construction. If you take a look under your sink when you go home tonight, late at night—my goodness, you guys have stamina—you'll see black pipe under there. It's probably our stuff. We make the grey electrical pipe at the side of your house, the blue water main pipe out in the streets and the green sewer pipe.
We were founded in 1949 in Toronto. Our founders escaped Estonia and got to Toronto. They started making hula hoops at night and selling them during the day. Within three years, they made their first million dollars. Our founder said, look, this hula hoop thing might be a fad, so we'd better diversify. They straightened out the hula hoop, and that's how we got into the pipe business. Today we've made enough pipe to go around the world about 200 times.
Of course, very important to us is the U.S. trade relationship. We have 15 plants in Canada, five in Ontario. We now have 10 plants in the United States. In 2009, when President Obama signed the American Recovery and Reinvestment Act, which called for “buy America”, we were shut out of the U.S. market for probably 12 months. It was devastating to us. We lost long-standing customers. We've never been able to regain them. We also lost some logistical chains that we had access to. It took about 12 months for Canada to negotiate a Canadian exemption to buy America.
Here's my bottom-line recommendation to the group: Please pass USMCA, or CUSMA, as soon as possible. Lock in the gains that we have, but please understand that there are no protections in CUSMA against America doing buy American again. They can cut us off tomorrow and we won't be able to ship into the United States tomorrow. You might say, well, you have 10 plants in the States, so you should be okay, but the truth is that a lot of those plants have specialties. We ship product amongst ourselves. Product that's made in Chicago or in Michigan comes back to Toronto for certain products. Products that are made in North Carolina come back to Toronto and vice versa. Although we have some flexibility, we don't have huge flexibility.
My bottom line there, Madam Chair, is that if your folks could consider some sort of fund just in case America cuts us off again, some sort of fund that would help Canadian manufacturers if they were injured because America decided to implement buy America again, that would be wonderful—sort of like how you did for steel and aluminum, which was very effective and appropriate. It gave a little bit more security to Canadian industry.
I would add one more thing. In the new NAFTA, article 32.11 talks about Mexico's exemption to certain buy America issues. We don't know exactly how this will all play out. It would be wise of us to take a close look at article 32.11 and check to see whether Mexico has a bit of an advantage on us or not. If the article doesn't give them an exemption on buy America, that's great. It will prevent Canadian companies from moving their plants to Mexico and shipping back into the U.S.A.
As our bottom line, please pass USMCA as fast as you can. Let's lock in the gains, but let's also continue to work to see if we can make this better as time moves on.
Liberal
Phil Benson Lobbyist, Teamsters Canada
Good evening. Thanks for having us here.
My name is Phil Benson. I'm a lobbyist with Teamsters Canada. With me is Christopher Monette, director of public affairs.
Teamsters Canada is Canada's supply chain union, representing more than 125,000 workers in all sectors of the transportation industry, and in all sectors of the economy, from film and food and beverage to dairy. The International Brotherhood of Teamsters represents 1.4 million workers.
Teamsters Canada supports CUSMA and Bill C-4's timely passage. lt is not the best deal, but it is a deal, an achievement, given America's approach of bargaining in the best interests of its businesses, predicated on national security interests. Gains were made. However, not understanding that the fundamental nature and substance of negotiating trade agreements have changed left opportunity off the table.
Trade is important for many teamsters' jobs. lt is a reason why Teamsters Canada participated in every bargaining round during CUSMA's negotiation. The Liberal government made the right decision to include labour unions, NGOs and civil society in the process. The practice of negotiating trade deals in secret is a factor in the growing disaffection of workers. Opening the door let in new perspectives, leading to a better outcome. Unfortunately, some departments did not get the memo. We were not a “client” in their mind, and they often treated us as an afterthought. We anticipate that this will change and will not happen again.
The minister clearly appreciated and encouraged our activities in building support and consensus in Washington and Mexico City. Working with our colleagues and allies was helpful in achieving gains. It helped build support for a deal. Our International Brotherhood of Teamsters colleagues in Washington led the fight to make the improvements that led to a successful conclusion of the process in the United States. Those changes and the elimination of ISDS provisions are a win.
During the Mexican round, we joined a civil society conference at the Mexican Senate and met with independent trade unions. Workers in the auto supply chain, in a closed-door session, told of unhygienic, inexcusable working conditions and gave testimony of violence and sexual assaults. I am proud of how teamsters and labour are fighting for workers rights everywhere and of a government that got it. Trade agreements must include protection of workers, women, the environment and indigenous peoples, and Bill C-4 is a start in the right direction.
The negotiators' liberalization trade-bargaining blinders in seeking “ambition” lost the opportunity to protect Canadian jobs—for example, some jobs in rail and road transportation. It's a loss. Buy American and the imposition at whim of tariffs left unchecked is a push bet. The six-year review and sunset clause is counter to why trade deals are entered, a confirmation that negotiating trade is no longer all about “ambition” and does offer potential future risk and opportunity.
The provisions of NAFTA are not used by many sectors. The rules of origin are more expensive to comply with than paying the cost of low or zero-based tariffs. We do not believe that will change. As such, the NAFTA negotiations were driven by the goal of the United States to protect American-based auto manufacturing and to dismantle Canada's supply-side management system.
Christopher Monette Director, Public Affairs, Teamsters Canada
Good afternoon, ladies and gentlemen.
While many may know the Teamsters as Canada's largest transportation union, it is less well known that we are also Canada's largest dairy workers' union.
We represent 5,000 workers in dairies across the country and more than 500 workers involved in bulk milk and dairy transportation from Vancouver Island to Newfoundland and Labrador.
As such, our union supports supply management, and we recognize our government's efforts to protect the supply management system. It is a win to repel the American push to dismantle supply management. It is a loss that greater foreign access to Canada's dairy market was granted.
One cannot examine CUSMA's potential impact on dairy workers in isolation. Canada has repeatedly tossed the dairy sector under the bus in an effort to secure trade agreements. The impact on the sector of CETA, the CPTPP and CUSMA is cumulative and severe. Close to 10% of the Canadian dairy market has been sacrificed on the altar of these free trade agreements—this, at a time when domestic demand for milk has been steadily falling.
As a result the government recognized the need to compensate the dairy industry. Let me be clear: We are in complete solidarity with dairy farmers, and we are not opposed to companies in the dairy processing sector receiving money either. The problem we call to your attention is that actual dairy workers are getting nothing—no money for training or skills upgrading, no enhanced EI or severance for workers who lose their jobs.
They are getting absolutely zero.
This year Saputo announced it will lay off 300 workers, after receiving $7 million from the dairy processing investment fund. These laid-off workers will receive nothing from a government that has seen fit in recent years to give billions to literally every other player in the industry. Worse still, the government's subsidies might not even create or secure other jobs in the sector, as the funds can be used to automate production lines, potentially causing even more job losses.
Trade agreements are viewed as one cause in the rise of the disaffection of workers. What do you think dairy workers and everyday working-class Canadians in general might think when industry is given billions and workers get nothing?
Our thinking at this stage is that a program for the 25,000 workers employed in the dairy processing sector could cost less than 1% of the $3.9 billion earmarked in the spring 2019 federal budget for sectors affected by recent trade agreements. The good news is that Teamsters Canada has held some discussions at the departmental level. They are at an early stage and came only after years of effort.
We ask that the committee support our initiative. As a matter of policy, we should no longer assume money given to an industry will automagically trickle down to workers. It is a sound position that when a government decides it must compensate an industry due to the effects of entering into a trade agreement, compensation must include a package for actual workers.
That said, we'd welcome any questions the committee might have.
Thank you very much.
Conservative
Colin Carrie Conservative Oshawa, ON
Thank you very much, Madam Chair.
Thank you to the witnesses for being here. I really appreciate your being here on short notice. This is such an important agreement.
Mr. Sobot, when you said we should pass this quickly, I think everybody around the table wants to make sure this does pass, but we want to make sure we do our due diligence. With any of these agreements, some families, some businesses and some sectors are negatively affected. You even mentioned the challenges with the buy American situation. Mr. Benson mentioned some lost opportunities. We've heard from other sectors, whether softwood lumber, buy American.... By signing on to this, we are losing some leverage we could have had, and that's a concern.
You mentioned that Mexico may have an exemption to buy American in article 32.11. That concerns me, particularly when it seems that in the past we were able to negotiate an exemption.
I was wondering how that can be. What have you seen or heard from other industry colleagues regarding why we weren't able to get those exemptions? Was it a priority for the negotiators? What exactly happened? Did you hear anything?
Director, Corporate Affairs, IPEX Group of Companies
That's a very good question.
I recall that back in 2009 and 2010 the government was very interested in getting industry's input on buy American. We participated very fully in that initiative, and Canada did get an exemption. I think that was February 2010.
This time out we didn't hear very much. When we went to one of our associations, Canadian Manufacturers & Exporters, they said buy American wasn't on the table essentially, because the Americans had, they'd seen, an outrageous request that they'd only allow Canadian companies to access procurement for the month of January. From February to December we weren't allowed.
Our negotiating team thought they'd better not talk about that and focus on other things. Thankfully, at least that whole notion of only having January as an opportunity went by the wayside. When the papers came back, it was a checklist—you asked for this, we gave you this. They compared the checklist. What essentially happened is that Mexico, I think, was in the driver's seat in negotiations, and we had to agree at the last minute.
Conservative
Colin Carrie Conservative Oshawa, ON
Yes, well, that's a problem. I had the opportunity. I was in Washington and we had five premiers down there. Basically, they were talking about infrastructure and the importance of having access on both sides, because many of these businesses, such as yours, are very integrated. For cost-effectiveness, like you said, some things are made in the American factory and some in the Canadian. I just see this as a lost opportunity, unfortunately. I think the premiers are taking a leadership role, trying to get down there and reduce some of those barriers. When we're looking at our overall competitiveness, we see, I think, that everybody is happy that we have an agreement in place and we have some rules.
I think it was Ms. Hatch who talked about some unique Canadian regulations relative to the United States. I come from Oshawa, and we just lost our plant. Regardless of certainty with this agreement, unfortunately, we weren't able to keep that plant operating as an assembly plant. We may have some parts and things along those lines. You mention this Energy Star rating that is unique to Canada. If the government goes ahead and says all appliances have to have this rating, it's not going to be the same rules as in the United States and Mexico.
I was wondering how that is going to affect manufacturers. I remember, years ago, there was intention for all these unique automotive regulations in Canada, and some manufacturers, basically, said to me, “Look, if we can't sell it in Canada, we're not building it in Canada, so you guys better get it together.”
What's it like with your association? If we get these unique Canadian environmental regulations in that may not even make that much of a difference, what does it do to the jobs and the ability to be competitive in North America?
Meagan Hatch
It will potentially have an impact on affordability and it will significantly reduce the consumer choices here in Canada because around 41% to 75% of the appliances that are on the market right now just won't be available, and that's in less than two years. That's significant.
I just want to go back—
Conservative
Colin Carrie Conservative Oshawa, ON
Do you have numbers, too, on what percentage of appliances are made in Canada that would not be able to fulfill any of these new requirements unique to Canada?
Kevin Girdharry Manager, Policy and Data Analysis, Association of Home Appliance Manufacturers Canada
We don't have the specific numbers of products. Most manufacturing is done either in the U.S. and Mexico and then brought into Canada. Just to what Meagan was speaking about, it's the 41% that won't comply with Energy Star, and those are usually the entry-level products, so it's like your refrigerators with the freezer on the top, your top-load washers where you open the door at the top. Those are usually the entry-level products that everyday middle-class or lower-income Canadians will purchase. Those are not necessarily Energy Star. Those would be non-compliant right away.
Conservative