International Trade Committee on Feb. 24th, 2020

[Michael Kram, Conservative, Regina—Wascana, SK]

I'm sorry, I mean interprovincial trade.

[Michael Powell]

I understand. It really depends on two dance partners.

What you will see moving forward is that in a number of jurisdictions in Canada, you will see more transmissions. Manitoba and Saskatchewan have signed a MOU to look at some of these things going forward. There are conversations going on in Atlantic Canada right now where it seems to be working toward more transmission moving into Atlantic Canada. The opportunities in Ontario and Quebec would be a conversation that would have to happen between those two governments.

It's more complicated than two provinces being next to each other on a map, unfortunately. It comes down to choices about how individual provinces and companies generate, where the best source is and ultimately, how they can provide the best deal to customers.

[Michael Kram, Conservative, Regina—Wascana, SK]

If electricity rates are typically lower in the United States, would we expect to see pressure for the lower cost of electricity to be purchased on this side of the border?

[Michael Powell]

By and large, Canada is an exporter of electricity. There's an app on your phone called Gridwatch that will let you see real time in Ontario the locations of the different interconnections. It's exceptionally nerdy to follow.

You can see even in Ontario we might be exporting near Niagara Falls. We might be importing near Sault Ste. Marie. British Columbia by and large buys the most power into Canada. Again, Canada is still an exporter. It just happens that there is more hydro available at any given time in Washington state, and it flows into Canada. Electrons flow where they need to go.

[Michael Kram, Conservative, Regina—Wascana, SK]

Ms. Pohlmann, you talked a little bit about the small business chapter in CUSMA.

What elements of that chapter would you like to see expanded into future trade agreements with other countries that would be beneficial for small businesses in Canada?

[Corinne Pohlmann]

Including a chapter is a big start, because that never was the case before, and expanding what's already in that chapter. Right now, actually nothing is binding in that particular chapter. Maybe making parts of it more binding as there is an obligation on the countries that are signatories to the agreement to come together and create common websites that provide services or programs, share information that combines everybody's approach to trade, and how they are going to deal with small businesses. That's the piece that would be important.

There's also a commitment to create a committee to look at this. The committee is only focused on government folks who then potentially involve stakeholders once a year. Maybe if that grouping was a bit broader than just government folks, but included actual industry folks, they could provide input into the system directly to each of the governments and demonstrate how they could improve services to small business.

[The Chair, Liberal, Judy Sgro]

Mr. Sarai.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you all for coming. It's been pretty insightful for us to find out how various industries are affected differently, everything from electrons to retail goods going across our border.

My first question is for Ms. Pohlmann.

On the new paperless regime that is to be implemented under the new CUSMA in terms of goods going back and forth, do you think that will help and have some cost savings for our retail sector or our business sector, specifically for smaller and mid-size companies?

[Corinne Pohlmann]

I hope so, I think is the answer.

Certainly going paperless can often be an advantage, but it can also not necessarily change much. If you're just transferring what was on paper onto a screen, and you're still having to pull the data, and you still have to figure out how to get that information, it doesn't necessarily change anything, but if they are making things more efficient, if you can track where your shipments are going, that does make a huge difference.

A lot of small businesses don't mind the rules or the processes. It's understanding how they are supposed to abide by them that's the problem. When they don't get that information, or if they don't have information coming back to them that allows them to track where their shipments are, for example, it becomes very stressful. If that allows that sort of communication to happen more in real time, yes, it would definitely be an improvement.

[Randeep Sarai, Liberal, Surrey Centre, BC]

This is not specific to CUSMA, but it's CUSMA, CETA, CPTPP. How do we get our independent businesses to know more about what the options are? I went through the deck as well, and there still seems to be a gap in awareness, particularly with procurement, where they can export. I know EDC does some sort of a job on that.

How can we do a better job so our small, medium-size and larger corporations get it really quickly? How do they get the resources to know they can export?

[Corinne Pohlmann]

I am asked that question a lot, and there's not an easy answer because they are so disparate across the country. They are all focused on different things. When you're running your business, you're really just focused on running your business.

Similar to what I think my colleague at RCC said, it is working with organizations like ours because they trust us. We do provide that information back to them. We try to encourage them to think about trade, to work with the various organizations out there designed to help them. That's a key piece of this as well.

As I said earlier, it's also about making sure when you do make improvements to the trade system it is well communicated to small businesses so they can see something behind what you're saying. They can feel on the ground that they don't have to fill out that form anymore, or now they can track where their shipment's going.

That will do more than any of us talking to them because then they start talking to each other, and that's where things start to snowball.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Mr. McLinton, you talked a lot about duties and going across the border. I have met with people in the duty-free business. One of the problems they have said, and I want to know if this is true, is that it's the enforcement on our side on things like cigarettes. You're allowed to export a maximum amount, bring into the U.S. and vice versa come in here.

They say our enforcement is weak. We get more imports than are allowable because a CBSA officer won't want to enforce it even though it's declared.

Is that a problem you see that has large-scale ramifications? If so, how do you see it best being improved?

[Jason McLinton]

Yes, we would definitely like to see better enforcement of the rules that exist. That being said, we understand the challenges associated with that. We are a trading nation, and that's a good thing.

To your earlier question about online, anything that facilitates goods going both ways, and in the case of retailers and consumers, anything that facilitates goods coming into this country is a good thing.

We understand the volume of things. We definitely would like to see better enforcement, but ultimately at the end of the day, as I said, I think the Canadian negotiating team did a good job with the limits they established.

I did want to touch on that point about online and facilitating trade. Retailers support that. The single biggest barrier, though, and one of the single biggest challenges to all our retailers, including small and medium-size retailers, is government over-regulation.

What you talked about I think will facilitate things, but what we would like to see is more regulatory co-operation between Canada and the U.S. and even within Canada, because the number of examples we have—children's toys, strollers, child car seats—where there are slightly different requirements in Canada from the United States, where if we could all agree that we would like to afford the same highest level of protection possible to all citizens, that sort of thing would have a significant impact on making sure Canadians are able to have as much choice as possible and keep prices low.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. McLinton.

Next is Mr. Lewis.

[Chris Lewis, Conservative, Essex, ON]

My question is for the CFIB, please. It's not that we're picking on you; we just have lots of questions. Thank you so much for appearing before the committee.

Prior to being elected to Parliament, I, too, like many of us, was a small business owner—multiple businesses—so I understand to a great extent the challenges and opportunities that face us.

I note that you were among the five signatories to the May 29, 2019, letter to Prime Minister Trudeau in which you offer support for the new NAFTA deal. In that letter, you enthused that CUSMA will “generate significant new benefits for the Canadian economy, spurring new investments while encouraging the creation of new high-value jobs”. As well, you refer to opportunities even before ratification “to enhance North American competitiveness and good regulatory practices”. You propose to achieve this by establishing committees in each area to promote economic growth and regulatory co-operation.

Some industry leaders, however, have described CUSMA in less than glowing terms. They basically say that this deal is better than no deal at all. Does that surprise you, or is that the level of enthusiasm for this agreement, which differs from sector to sector?

[Corinne Pohlmann]

I think it's partly from sector to sector. Obviously, as an organization that is multisectoral—we represent businesses of all different types—as I tried to point out, there are elements of CUSMA that also have concerns for us in regard to some of the sectors, and there are others as well. Overall, we believe it's an important move, and we need to move forward.

NAFTA was getting stale. It didn't include things that had changed over the last 25 years, so it was important to move forward. There was a lot of instability in the trade world, and there still is, so certainty was becoming an issue as well. Moving forward with certainty is hugely important for all businesses, not just small businesses. That was a big reason why we were pushing for that particular movement at that particular time.

[Chris Lewis, Conservative, Essex, ON]

Thank you.

Can you describe in more detail what your association sees as significant benefits for the Canadian economy specific to the association?

[Corinne Pohlmann]

Overall, again, it's opportunity. Obviously, as mentioned in the presentation that we made, the United States is the most important country to trade with. When we looked at the feedback from our members as we went through the NAFTA negotiation process in terms of the things that they would like to see, again it came back to that certainty, knowing and understanding what the rules and duties were, not changing things too much but feeling like there was a revived interest in making sure that the trade was going to continue to happen.

I think it's really the overall picture that we're looking at here. Because we're so diverse in terms of our membership, it's hard for me to pinpoint specifics. It's that overall certainty that's important, and the ability to continue to trade freely into the United States.

[Chris Lewis, Conservative, Essex, ON]

Does the short 90-day window from ratification to implementation concern the members at all? Does it concern the association at all, that short period of learning curve?

[Corinne Pohlmann]

No, I don't think so. Again, I think they're vaguely aware that this is coming, and the sooner it happens, the better.

[Chris Lewis, Conservative, Essex, ON]

Madam Chair, may I give my last minute to my colleague, Mr. Carrie?

[The Chair, Liberal, Judy Sgro]

Mr. Carrie.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Lewis.

I have a question for the Chemistry Industy Association.

Out of curiosity, what percentage of your members or your business is petrochemicals?

[Isabelle Des Chênes]

Actually a significant portion is. We have a few in Quebec that do organic chemicals, but certainly about 85% are petrochemical.

[Colin Carrie, Conservative, Oshawa, ON]

It's 85%. We all agree that it's important that we have an agreement because we have rules back and forth. The auto sector was here earlier. They said that the whole idea of these agreements is that we have harmonization of regulations and rules.

The current government is actually putting in a lot of unique Canadian costs such as environmental costs, carbon taxes and high electrical costs in Ontario. We always hear from manufacturers how it's really getting hard, kind of like a death by a thousand cuts type of thing.

If the government puts in policies that make it difficult for the petroleum industry to do business in Canada, what's the incentive for your businesses to stay in Canada if the supply is going to be coming from the United States?