International Trade Committee on Feb. 25th, 2020

[Kathy Megyery]

You're right to acknowledge all these organizations. These people are doing a very good job.

Furthermore, what our members are telling us concerns the agreement with the European Union. Businesses are finding that France has a much greater presence in Quebec than Quebec businesses have in France. That's one example. This shows once again that, despite everything in place, we must still do more to ensure that Quebec businesses benefit from a very natural relationship with France, for example, and, of course, with the United States, which is the first choice of businesses, especially in northern and northeastern United States. However, SMEs are often unaware of the opportunities. They don't necessarily have the funding needed to proceed with exports. With all the mechanisms in place, we must do more and better.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you, Ms. Megyery.

Ms. Greenwood, my colleague raised some private sector research and I've seen that research, as well as others, as I'm sure you have. Significant private sector research demonstrates the potential impact of U.S. withdrawal from a North American free trade agreement. As you mentioned at the beginning of your testimony, that was a very real possibility at the beginning of these negotiations.

I refer here to Scotiabank, which said that a U.S. withdrawal from NAFTA would have created a situation where “the Canadian economy would stand a strong chance of falling into a recession”. Similarly, the Royal Bank of Canada raised alarm bells.

The research appears clear to me that the preservation of a free trade agreement with our largest trading partner can't be understated. I was wondering if you could comment on that.

[Maryscott Greenwood]

I completely agree with you.

The question is, what are the possible scenarios? You as policy-makers quite rightly look at that. It's not just whether we like the new agreement better or whether we like it less than the current agreement. The question is what happens if you don't go along with this agreement that you've been negotiating for the last year. What does the United States do then? What does Mexico do?

You're right that the current situation is quite volatile. You can't underestimate the current occupant of the Oval Office in retaliation, in self-inflicted wounds in the United States, with the purpose of gaining leverage or punishing our partners and our allies.

It's the largest economic relationship in the world, and it hangs in the balance, quite frankly, with this agreement.

From a United States point of view, what the policy-makers look at is this: If we can't get to an agreement with Canada and Mexico, our neighbours and close allies, how are we going to trade with the rest of the world? As goes the U.S. economy, so goes the economy of our friends and neighbours.

We really are interlinked. There is quite a huge stake in our thriving together with this agreement.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Greenwood.

We will move on to Mr. Kram.

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

Thank you to all the witnesses for joining us here today.

Ms. Greenwood, I would like to address some of the concerns you mentioned in your opening statements. I am completely confident that the House of Commons is going to pass the new NAFTA. You seemed a bit uncertain of that in your opening statement. Certainly the Conservatives, and I'm sure the other parties, will support this agreement.

You also mentioned the importance of certainty in the marketplace so that businesses can function. The new NAFTA has a lifetime of 16 years and then it will be up for renewal.

What can the Government of Canada and politicians do over the lifetime of this 16-year agreement to facilitate a greater degree of certainty in the marketplace so that businesses can do business?

[Maryscott Greenwood]

Institutionalizing our agreements as much as we can is a key to extending the life of the agreement. Going deeper on things such as regulatory mutual recognition, all the details in how we collaborate, how our regulators work together or work at cross purposes, those are the types of things that will help ensure that the agreement lasts well beyond the sunset period.

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

Could you talk a bit about the relationship, the back and forth between the business community and the government? Should we be having more regular meetings? What can we do to facilitate all of that?

[Maryscott Greenwood]

We believe that dialogue with all of your stakeholders and constituents, including the business community, workers and advocates from all walks of life is a good practice in a democracy, and we try to facilitate that, as many of you have experienced.

Having an honest dialogue where you can exchange ideas and concerns and help educate each other is really important. By the way, we believe it's not just the politically elected officials and their staff, but also the civil servants, the back and forth between the civil servants in our three respective countries, to figure out where there are areas in which they can learn from each other and recognize each other's regulations. That's a huge area of co-operation that in some areas goes well and in some areas needs a lot of improvement.

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

You also raised the possibility of Bernie Sanders being the next president after November. What advice could you give to the Government of Canada to facilitate free trade and cross-border trade in the event that we see Bernie Sanders in the White House in November?

[Maryscott Greenwood]

The Government of Canada—and not just the government but all of Canada, Canada as a country—did an extraordinarily good job after the election of President Trump, which is not something that I think anybody, including Donald Trump, predicted.

The whole-of-Canada approach to engagement in the United States to remind all types of people, inside the Beltway and outside the Beltway, of how interconnected we are was a really good effort. It wasn't just one party or another. It wasn't just federal leaders. The premiers and mayors were involved. It was quite a comprehensive effort to remind Americans that we are in this together and that you can't just turn your back on Canada.

That type of intensive effort to help continually remind Americans is something that we do at the Canadian American Business Council, but it's also something that is incredibly important for you, as policy-makers, in your travels and in your interactions with your counterparts.

I would imagine that type of effort would continue regardless of the outcome of this year's presidential election here.

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

Thank you.

Madam Chair, how much time is left?

[The Chair, Liberal, Judy Sgro]

You have 30 seconds.

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

I'll be very brief. I have a question for the representatives from Quebec.

You have raised the issue of the dumping of aluminum from Mexico. Could you briefly give us an idea of some of the tricks they play to get Chinese aluminum into the Canadian and American markets by going through Mexico?

[The Chair, Liberal, Judy Sgro]

Give a very short answer to a difficult question.

[Charles Milliard]

I didn't fully understand your question. However, we discovered that, between May and July 2019, Mexico obtained its aluminum directly from China. Unfortunately, the new agreement hasn't resolved this issue. The steel issue has been resolved, but the Canadian government must verify the situation, because we've seen an increase. Chinese aluminum imports into the United States have decreased by 60%, whereas Chinese aluminum imports into Mexico have increased by 240% in a few months. We can see that Mexico is really exploiting this gap—

[The Chair, Liberal, Judy Sgro]

I'm sorry, sir. I have to interrupt. Thank you very much.

Mr. Arya.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Madam Chair.

My question is for Ms. Greenwood.

Ms. Greenwood, before this new NAFTA, we had the old NAFTA for decades, but the trade between Canada and the U.S. has not gone up much. It has remained fairly stable. To quote some numbers, in 2011 Canadian exports were at $315 billion, and in 2019 they were at around $319 billion, so basically Canadian exports to the U.S. have remained stable. U.S. exports to Canada are also stable, between $281 billion and $291 billion. Even with this new agreement, do you foresee the trade undergoing any dramatic change?

[Maryscott Greenwood]

If you're looking at statistics about whether or not the Canada-U.S. Free Trade Agreement has impacted trade volumes, and then NAFTA, I think you have to actually go back to the 1965 Auto Pact and look at how free trade between our two countries—and then when we added Mexico—has created what is really the largest and most prosperous economic region in the world.

Once you have the tremendous growth—

[Chandra Arya, Liberal, Nepean, ON]

I understand. It does create a very stable economic zone, probably the biggest in the world. I understand that, but it has not increased the trade amongst these three countries.

[Maryscott Greenwood]

Are you saying that you don't think the North American Free Trade Agreement has increased trade between our three countries?

[Chandra Arya, Liberal, Nepean, ON]

Exactly. It has remained stable for quite some time.

[Maryscott Greenwood]

Well, I think the agreement itself actually did increase trade quite a lot. I think what you have to look at with the modernized agreement are cross-border data flows, professional services and some of the digital worlds. There are all kinds of areas where, were you not to modernize the agreement, you would see a backsliding, because the original NAFTA didn't address some of the more modern elements of the economy.

We know that there is an awful lot of competition that occurred—

[Chandra Arya, Liberal, Nepean, ON]

I'm sorry. You mentioned that the agreement didn't address certain modern elements of the economy. Can you elaborate on that, please?

[Maryscott Greenwood]

Sure. When the original Canada-U.S. Free Trade Agreement was passed, and then when the North American Free Trade Agreement was passed, e-commerce didn't exist. Now, e-commerce fuels a lot of our economy and a lot of different elements of how small businesses and large businesses operate and do business together.

The original NAFTA didn't address any of that. There are things like how we manage data, which is a really important topic. It's important in a lot of different areas that are subject, I'm sure, to reviews from a privacy point of view. There are all sorts of different elements of data, but the new North American free trade agreement does address elements like data flows and data localization, and that's enormously important in the economy today.

[Chandra Arya, Liberal, Nepean, ON]

Thank you.

My next question is for you, Mr. Milliard. You talked quite a bit about the aluminum sector and how we need more protection for the aluminum industry here in Canada, but the aluminum industry has not grown for quite a long time. If I am not wrong, during the last 15 years only one new smelter was added in Canada.

Even with this stable market that is there, do you see the aluminum sector increasing investments and increasing its capacity, not only to cater to the North American market but also to look for other markets in the world?