International Trade Committee on Feb. 25th, 2020

[Charles Milliard]

Good question.

However, we're more concerned about GHG emissions, and this will continue over the next few years. The Quebec market, particularly the aluminum market, is developing technology to make aluminum almost carbon neutral. This could increase—

[Chandra Arya, Liberal, Nepean, ON]

I'm sorry, but my question is not about that.

[The Chair, Liberal, Judy Sgro]

You have 10 seconds left.

[Chandra Arya, Liberal, Nepean, ON]

I will give up my 10 seconds.

[The Chair, Liberal, Judy Sgro]

For our guest, you have a short time. Would you like to try to complete an answer to Mr. Arya's question?

[Charles Milliard]

I was saying that Quebec aluminum will become more and more appealing because it's clean aluminum. Given the climate crisis, I believe it will become more and more appealing to sell on the markets.

[The Chair, Liberal, Judy Sgro]

Mr. Savard-Tremblay, you have two and a half minutes.

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

My question is again for the representatives of the Fédération des chambres de commerce du Québec. If people from Quebec are here, we might as well make the most of it.

I want to acknowledge Mr. Lyonnais, whom I've known for years. I hope that he's doing well.

You said earlier that this agreement wasn't perfect, but that it was the lesser of two evils under the circumstances. This agreement contains many new provisions, including a chapter on the environment. However, this chapter is very weak. We know that the environment is, in many ways, the issue of the day.

Would you be ready to say that this agreement, unfortunately, doesn't meet the standards of an agreement in 2020?

[Kathy Megyery]

Good question. We surveyed our members regarding this agreement. The survey very strongly indicated that industries are afraid of losing their competitiveness because of this agreement. That's the message that we want to get across today.

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

You're basically saying that, with respect to aluminum, there hasn't been any progress in relation to the former NAFTA when there should have been, and that there has been a setback for agriculture. That's your assessment to some extent.

[Kathy Megyery]

We must ensure that compensatory measures are put in place and implemented, because in the case of the other agreements, these measures are slow to take effect.

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

Perfect. Thank you.

Do you have anything to add, Mr. Milliard?

[Charles Milliard]

I was simply saying that, regardless of the growth of the aluminum industry, the bulk of this industry is in Quebec. I think that organizations such as ours must highlight the importance of preserving the strength of this industry in Quebec. The federal government must remain vigilant with regard to both compensatory measures and diplomatic efforts to promote this industry, regardless of its growth.

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

It's very—

[The Chair, Liberal, Judy Sgro]

Thank you. I'm sorry, your time is up.

Mr. Blaikie.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

I'll continue on the same topic.

What should the federal government do to promote the aluminum industry, both in Quebec and in British Columbia?

[Kathy Megyery]

We fear that Mexico is importing aluminum from China and processing this aluminum in a very minor way so that it will be considered aluminum made in the signatory countries. We must keep a very close eye on this situation so that this doesn't happen, because this would really reduce aluminum exports to the United States and Mexico.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Do we have the necessary data to know how much aluminum from China is entering Mexico? Should the federal government put measures in place to ensure that it has the necessary information?

[Charles Milliard]

The information is already available. As I was saying, between May and July 2019, aluminum exports from China to the United States decreased by 60%, whereas exports from China to Mexico increased by 240% and exports from Mexico to the United States increased by 260%, all in just a few months. We wanted this issue addressed in the free trade agreement. The steel matter was addressed. However, unfortunately, because of the unclear definition of aluminum, we're still concerned about this issue.

CUSMA stipulated a minimum of 70% North American content. Given the failure to address the lack of clarity with respect to aluminum, this type of unfortunate consequence could happen again. However, there are still legislative foundations. The government must work with the Americans and Mexicans to ensure that they comply with the minimum content of 70%. That's our option for now. We would have preferred something stronger, such as the protection provided for steel. We don't have this, and we must take steps in that direction. That's what we can do for the time being.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

To all our witnesses, thank you for a very interesting morning, and for taking the time to contribute.

I will suspend until the next panel.

[The Chair, Liberal, Judy Sgro]

I call the meeting back to order.

We are continuing our study of Bill C-4, an act to implement the agreement between Canada, the United States of America and the United Mexican States.

With us for this segment, we have the Canadian Centre for Policy Alternatives, Stuart Trew, researcher and editor; the Chamber of Commerce of Metropolitan Montreal, Michel Leblanc, president and chief executive officer by video conference; and the Dairy Processors Association of Canada, Mathieu Frigon, president and chief executive officer, and Dominique Benoit, treasurer and member of the board of directors.

Welcome to you all. We're going to start with the video conference.

Mr. Leblanc, the floor is yours, sir.

[Michel Leblanc, President and Chief Executive Officer, Chamber of Commerce of Metropolitan Montreal]

Good morning. Thank you for your invitation. If I had received it sooner, I could have joined you.

The Chamber of Commerce of Metropolitan Montreal has been in place for nearly 200 years to represent the business community of Metropolitan Montreal. For 36 years, we've been connecting businesses to export markets. To do so, we're supported by the Government of Canada through Canada Economic Development for Quebec Regions. We raise funds from businesses and the private sector. We're also supported by the Government of Quebec.

This experience in international markets first led us to understand the importance of the American market. For decades, Montreal's business community has been acutely aware of the importance of American markets, both for their growth and supply and, in the case of many businesses, for the efficiency of their production chain. This chain is well integrated and it crosses the border in both directions. As a result, for more than 20 years, the Chamber of Commerce has supported the implementation of free trade agreements in a sustainable, strong and permanent manner. From our point of view, the agreement with the United States is obviously the cornerstone of our economic development.

Seventy percent of Quebec's exports are destined for the United States. We estimate that 20% of Quebec's GDP depends on this fluid trade relationship with the United States. Over the years, the number of jobs here directly related to trade with the United States has grown steadily. In many cases, these positions are very well-paying jobs, either in the Montreal region or throughout Quebec.

The free trade agreement that needed to be renewed and that became CUSMA was crucial. We supported this renewal from the beginning. In addition, nearly two years ago, we invited 24 chamber of commerce leaders from major North American cities—eight leaders from the United States, eight from Canada and eight from Mexico—to Montreal to discuss what we could do to ensure that the agreement was renewed. We were extremely pleased to see the progress made and, ultimately, the renewal of an agreement.

As part of the renewal of this agreement, we've heard that things could have been even better, particularly with regard to aluminum. Similarly, during the negotiation of the agreement with the European Union, issues arose among agricultural producers. We believe that no agreement is perfect and, in this case, we probably have the best agreement that we could have hoped for with the United States. We believe that some areas could have been improved, with regard to aluminum, for example. However, our challenge is to find out how we can help the aluminum sector and not in any way to block, reject or delay the implementation and ratification of the agreement.

Our message to you and to all politicians is that there's no ambiguity from the point of view of the economy of Quebec, the Montreal region and Montreal-based businesses, and that the agreement must be ratified without delay and implemented as quickly as possible.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Leblanc. I appreciate your comments.

We'll go to Mr. Trew from the Canadian Centre for Policy Alternatives.

[Stuart Trew, Researcher and Editor, Canadian Centre for Policy Alternatives]

Thanks very much to the committee on behalf of the CCPA for the opportunity to present here on the CUSMA ratification legislation.

The CCPA is Canada's longest-standing independent research institute. In fact, we're celebrating our 40th anniversary this year. From our earliest days, the CCPA has rooted its policy recommendations in values of social justice and environmental sustainability. That goes for our trade and investment research as well. We've been recently working internationally on the NAFTA negotiations with some friends in the United States and Mexico as well.

I'd like to start by agreeing with something that Michael Geist said to the committee last week, which is that the most important thing here is maybe not the implementing legislation itself, but the impact that the agreement is going to have on Canadians and Canadian public policy in the future. This is something that I think multiple witnesses have brought up as well.

At this point, Parliament obviously has little leverage to alter the CUSMA. Still, there are steps that Canada can take on its own without reopening the deal to enhance the treaty's positive features and to mitigate the harm from its worst. I'm going to briefly list some of those here today.

The first issue is making medicines more affordable. The original intellectual property rights chapter in CUSMA would have required Canada to increase data protection term limits on biologic drugs from eight to 10 years. Biologics are increasingly important for the treatment of Crohn's disease, rheumatoid arthritis and many other illnesses. The Parliamentary Budget Officer predicted that the original CUSMA data exclusivity extension would have increased their costs through public and private drug plans by about $160 million a year.

Thanks to U.S. Democrats, that change was dropped from the agreement. The Democrats also successfully removed provisions in CUSMA that would have facilitated patents for new uses on existing drugs—the evergreening issue—which blocks cheaper generics from hitting the market.

Canada should build on these victories to get serious about the high costs of medicines here in Canada. We can do this by moving forward on the proposals to improve the way that we regulate brand name drug prices. Health Canada estimates, for example, that simply by removing the U.S. and Switzerland from the basket of countries it uses to determine prices in Canada, we could save, on average, about $1.2 billion a year in drug costs.

Second, I think we should swiftly adopt a universal, single-payer pharmacare program, as recommended by the government's expert panel on pharmacare, since this would significantly reduce drug costs by increasing the bargaining power of public buyers. Both of these measures are already in the sights of the USTR, for example, which is looking to pressure Canada not to introduce these things, because their pharma industry will take the hit on them. So I think we need to move fast.

The second issue is on enforcing labour rights in the new CUSMA. As the committee has heard from several witnesses already, CUSMA's labour provisions are a significant improvement on NAFTA. The challenge to all three countries now is enforcement.

Beyond a commitment to receive and consider public complaints of labour violations in Canada, Mexico or the U.S., CUSMA's labour provisions are enforceable only through government-to-government dispute settlements. For a number of reasons, this isn't ideal. Governments can't always be relied on to bring cases forward on behalf of workers.

A way that Canada could address this would be to set up an independent, domestic complaint process that would allow labour unions, citizens and citizen groups to initiate complaints when international labour standards are violated. There should be an impartial body that could hear these complaints in the same way that impartial bodies hear procurement complaints under other parts of trade agreements. If they're credible, the complaints will move forward no matter what.

On environment and the climate emergency, we would say that the new NAFTA is decidedly less satisfactory. This reflects, obviously in part, the fact that we were negotiating with a climate-denying U.S. administration. Still, the CPTPP, the trans-Pacific partnership, and the EU trade deal are not all that much better on the environment, so not all of the blame can go on the obstructionism of the U.S. administration.

CUSMA's environmental chapter is technically enforceable through state-to-state dispute settlement, but again, what's the likelihood? Its obligations are so weak it really hardly matters. Outside of a few hard rules regarding matters like fisheries subsidies and wildlife trafficking, the chapter's commitments are mostly vague and voluntary. It also contains a gigantic loophole in the sense that it only applies to three federations, three federal states. It only applies to the federal level in all three countries.

CUSMA's most significant step forward on the environment was getting rid of ISDS, the investor-state dispute settlement process. Canada has faced dozens of ISDS cases, more than any other country in the NAFTA region, and many of those have challenged legitimate, lawful and non-discriminatory environmental and resource management decisions. The elimination of ISDS in CUSMA is indeed important, as Minister Freeland told committee last week, and it should be precedent setting. The challenge now is how Canada removes ISDS from its many dozens of investment treaties with other countries.

I want to speak a bit about deregulation in CUSMA. CUSMA's chapters and annexes dealing with how governments regulate in general have gotten relatively less attention in all three countries than other parts of the agreement, yet they may prove to be as significant and controversial as ISDS became in NAFTA. Remember, we didn't know much about investor-state dispute settlement when NAFTA was signed or how it would operate. The same logic is at play with the good regulatory practices chapter, which, for the first time in any free trade agreement, locks in a very specific ideology about regulation, which says that commerce should reign supreme and precaution should take a back seat or be thrown to the wind.

Central regulatory agencies, for example Treasury Board here or OIRA in the United States, are required in CUSMA to ensure that federal agencies avoid unnecessary restrictions on competition in the marketplace when they're deciding on appropriate health or environmental protections. There is significant potential for multinational companies to abuse a new notice and review process in CUSMA, which requires regulators to seek and respond to any recommendation to modify or repeal a regulation that is set to create a burden on business.

Global producers of chemicals, pesticides, pharmaceuticals, GMOs, cosmetics, tobacco, food additives, etc., are continually disputing good science on the risks that their products pose to human health and the environment. Now under CUSMA, a government could be taken to dispute settlement, by another country on behalf of one of its industries for example, for sustained or recurring unwillingness to heed corporate complaints about public interest regulations. The so-far voluntary Canada-U.S. regulatory co-operation council, a process that is now enshrined in CUSMA, can lead to delays in removing known toxins, known carcinogens, bioaccumulative compounds and endocrine disruptors from consumer products due to pressures to harmonize across borders for the sake of commerce, again, built up into the good regulatory practices chapter.

As the CCPA's former executive director Bruce Campbell has expertly shown, such pressures led to the downward harmonization of rail safety standards in Canada and aviation safety standards, leading to the tragedies of Lac-Mégantic and the Boeing disasters. In theory, CUSMA's good regulatory practices chapter leaves the door open for government to regulate in a more cautionary, protective way, however the primary objective of the chapter is clearly to reduce the burden on business. In fact, regulatory co-operation is defined in CUSMA as, first and foremost, a means to facilitate and promote economic growth, not as a means to enhance public protections.

It's more important than ever, therefore, that Canada counterbalance the deregulatory pressures in this agreement and other free trade agreements by enshrining the precautionary principle in law. A directive reasserting our regulators' authority to give the benefit of the doubt to protecting public health; removing potentially toxic substances from circulation, plastics for example; protecting animal populations; etc., would fit most Canadians' understanding of what good regulation means.

In conclusion, CUSMA is a mixed bag, at least from a progressive point of view. But is it a model for future Canadian trade deals? We would say no, not at all. Canadians recognize that securing this deal was a defensive measure. Despite the new agreement, just like NAFTA, our access to the U.S. market remains precarious. The U.S. is the most powerful country in the world. It will do what it wants to do. There is no way out of this reality for Canada. Canada's challenge now is to find ways to work around and outside of CUSMA to improve working standards and environmental protections across North America, lower drug costs for Canadians, rapidly decarbonize our economy in line with the Paris Agreement commitments and fully recognize the UN Declaration on the Rights of Indigenous Peoples on a path to real reconciliation.

Thanks very much.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Trew.

We'll move on to the Dairy Processors, Mathieu Frigon and Dominique Benoit.