Allow me to introduce myself. My name is Charles Milliard, and I am the president and CEO of the Fédération des chambres de commerce du Québec, or the FCCQ for short. Joining me is Kathy Megyery, vice-president of strategy and economic affairs.
I'd like to thank the committee for having us despite a few technical problems. We had a bit of trouble with the connection for our appearance this morning, so I thank you for your patience.
The Fédération des chambres de commerce du Québec represents 132 chambers of commerce across Quebec and 1,100 member businesses. The federation's members are active in every sector of the economy throughout the entire province. As Quebec's largest network of business people and businesses, the federation also serves as a provincial chamber of commerce, advocating for public policies on behalf of its members.
I want to start by saying that the federation welcomes the signing of the trade agreement between Canada, the U.S. and Mexico, which, as we know, puts an end to more than a year of business uncertainty. The prevailing uncertainty prior to the conclusion of the agreement was quite detrimental to business and investment in Canada. While the federation fully recognizes the importance of the new agreement, it has serious concerns about certain aspects that warrant rigorous federal oversight.
The federation recognizes that the agreement was unfortunately concluded to the detriment of our supply management system and Quebec's dairy farmers, who were to some extent sacrificed. That is true of the negotiations leading to all three of the major trade deals recently signed, the Canada–European Union Comprehensive Economic and Trade Agreement, or CETA, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, and CUSMA.
In addition, despite the very clear calls of Quebec's aluminum sector regarding regional content rules, it will not see its fate improve under the agreement. Conversely, the steel sector, 53% of which is based in Ontario, obtained the protections it had been calling for. Going forward, interprovincial equity should be the guiding principle for any concessions the federal government makes in negotiating international agreements.
What's more, this agreement causes a third breach in supply management, thereby undermining the system's viability and long-term sustainability, especially for the smallest farms. Government announcements regarding compensation for CETA and the CPTPP were long in coming, and the payments have taken even longer, unfortunately. To date, dairy processors and poultry and egg farmers continue to wait for their compensation payments. Nothing has yet been announced in connection with CUSMA.
The FCCQ is calling on the government to swiftly establish the terms of the compensation program for dairy farmers and producers further to CUSMA. The federation also submits that Quebec farmers should receive compensation commensurate to the share of Quebec's agri-food sector in the Canadian economy as a whole.
As for the aluminum sector, the government must remain vigilant. Initially, CUSMA contained a provision requiring that 70% of steel and aluminum originate in North America. Accordingly, Mexico was supposed to purchase 70% of its supply from North America. However, a grey area in the definition would likely have allowed Mexico to continue buying cheap metal from China, as it has been for months now.
The flaw was corrected in the new version of CUSMA, but only for steel, not for aluminum. This new dynamic will impact Quebec's market share. American companies supplied by Quebec have already begun relocating operations to Mexico so they can pay less for metal. Consequently, we will probably lose more and more of the U.S. market as we watch metal processing capacity move to Mexico. The FCCQ is therefore calling on the federal government to ensure the industry maintains its competitiveness in a market that has just undergone a significant change, by engaging the Americans through all diplomatic channels necessary to force Mexico to play by the rules.
Under the provisions of CUSMA, Canada agreed to an increase in the duty collection threshold, the de minimis threshold, which went from $20 to $150 for duties. A longtime demand of online retailers in the U.S., the increase could lead to a spike in cross-border shopping, which would have obvious consequences for Quebec retailers and their employees. The higher threshold could prompt U.S. online retailers to start offering customers free shipping to Canada, something many already offer their customers in the U.S. The FCCQ is therefore calling on the federal government to pay close attention to the retail sector overall to ensure it can remain competitive with foreign companies.
Furthermore, the federation's members, especially small and medium-size businesses, share a common concern, one we want to convey to the government today: information on the benefits of these trade agreements is lacking. They feel the government should be doing a better job when it comes to the trade deals and after-sales service.
Although a number of mechanisms are in place, the information doesn't always seem to flow as effectively as our business network in Quebec would like. The government should be more proactive when it comes to educating companies about the benefits of leveraging trade agreements and conquering foreign markets.
Accordingly, it is necessary, in our view, to provide businesses with support as they enter the export market for the first time. It would also be a good idea to provide smaller businesses with more online support and high-potential companies with tailored support.
The FCCQ has always advocated the importance of diversifying export markets and leverages its network of well-established local chambers of commerce across the province to help Quebec companies discover the benefits of export markets and seize new business opportunities.
Against the current backdrop of American protectionism, it's important for Quebec companies to focus on other high-potential markets and increase their proportion of non-U.S. exports. As you know, 70% of Quebec exports last year were destined for the U.S.
Diversifying our trade partners is even more important considering the uncertainty caused by American surtaxes, which has taken its toll on our economy in recent years.
Finally, I want to highlight the fact that numerous products that are not compliant with current regulations seem to be making their way across the border, because the Canadian Food Inspection Agency is short on resources. With added restrictions, it's essential to increase the level of screening and analysis to make sure imported products adhere to the same requirements our products do.
Clearly, the purpose of Canada's regulatory framework is to foster better consumer health, but to do that, companies subject to the regulations must incur the associated costs. Harmonization is thus vital to the competitiveness of Quebec's agri-food industry. The FCCQ is recommending that the government increase controls and inspections by the agency to ensure imported products meet the same standards and rules as Canadian products.
Thank you. We would be pleased to answer any questions you have.