International Trade Committee on Dec. 11th, 2020

[The Chair, Liberal, Judy Sgro]

We have a second round, yes. You'll have two and a half minutes on that round.

[Matthew Green, NDP, Hamilton Centre, ON]

Just know, Mr. Watson, that I am going to ask you that in the next round, and you can have a great answer for it then.

[Rachel Bendayan, Liberal, Outremont, QC]

I have a point of order, Madam Chair.

I am very interested in what Mr. Green just mentioned, and I am not familiar with any motion by Mr. Blaikie to that effect, so perhaps Mr. Green could circulate that to me.

[The Chair, Liberal, Judy Sgro]

Thank you.

We will move on to Mr. Aboultaif for five minutes.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Thanks to the witnesses for great testimony this afternoon, in our last meeting for this year for our committee.

I believe Mr. Kingston and Mr. Kennedy mentioned the infrastructure and how ready we are. The government, of course, talks big about infrastructure. We believe that it's very important in facing the future, of course, to reserve a spot among the nations on the world stage in 2050, especially in trade. It's going to be a big challenge. We know that there is an economic shift toward Southeast Asia and the Indo-Pacific region.

The biggest worry here on my mind—and I am basically a former businessman in international trade—is the supply chain. The supply chain, before and after COVID, is an issue.

Mr. Kingston, do you believe that the federal government can do more to protect our supply chain? Can you give us an assessment on how we are doing overall?

[Brian Kingston]

We've had two recent examples of supply chain issues that have arisen that I think really underline how vulnerable we are with respect to our trade infrastructure. We had the rail blockades, then the port of Montreal strike and then, of course, COVID, which was a global disruption.

Those two instances really showed how critically important Canada's rail infrastructure is and the connections it then has to the ports and how narrow that band of infrastructure is across the country. When one element of it goes down due to disruption, whatever the reason may be.... The knock-on effects that we saw, not just in the auto sector but throughout the economy, were massive. Companies weren't able to say, “Okay, we'll divert to a different port” or “We'll divert to a different rail line.” There was no other option; that was the only way, so we ended up having to use trucks or airplanes at great expense to move goods.

I would just urge that, as the government thinks about a post-COVID trade infrastructure strategy, we think about building some resiliency into some of those key linkages across Canada to make sure we avoid those situations.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Thank you.

Why do you think the government hasn't done enough there yet? We are politicians. We know that policy really should drive everything. Yes, business people do the business, the suppliers will do the supply, and the importers and exporters will do their job, but at the end of the day it's about the policy.

What kind of advice would you give us, as parliamentarians and as a government, on how to protect the supply chain and how to make sure it's going to serve us very well, especially post-COVID?

[Brian Kingston]

Now that we've come through this scenario—well, not quite yet, but hopefully we're approaching a recovery—this would be a time to take stock of our infrastructure weaknesses, identify some of those choke points and identify areas in the supply chain that are potentially weakened. Now that we've gone through these instances, we can look at it and determine where we need that investment to be directed.

We've had great initiatives in the past, like the trade corridors, where the problems have been flagged, but what has happened is that we haven't seen the follow-through. There have been funds announced, but then getting shovels in the ground and building this additional infrastructure gets delayed, takes too long or doesn't happen.

I would just urge that now is the time to really think this through, particularly as the government is looking to stimulate the economy, as we saw in the fall economic statement. This is the type of stimulus that has economic benefits. It can be done relatively quickly, and it will serve the country going forward for decades.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

I'm from western Canada and I know that, as we look towards the future, there's not much that can be done without the oil and gas sector, which we do very well and it's our main bread and butter, basically, in the western provinces.

We know we're facing protectionism under different banners, with the new era, post-COVID, just the different names, the China bloc on the other side, and thinking again that for the economy the balance is going to tip to that region.

What should we do to make sure that we also maintain the oil and gas industry, going forward, to 2050 or 2100? We're talking 30 to 80 years from now, during which time we cannot survive without protecting this industry.

Do you have any comment on how we can do better to make sure that we protect this industry, at least for the short term to 2050?

[Brian Kingston]

Would you like me to answer that?

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Absolutely.

[The Chair, Liberal, Judy Sgro]

Mr. Kingston, can you give just a short answer, please?

[Brian Kingston]

Sure.

Number one, I know it has probably been said a lot, but infrastructure is critical for the oil sector, getting oil to tidewater. We have much more to do there on the protections front, working with the WTO and hopefully working with the new Biden administration to tackle trade barriers that we're seeing around the world. If we can partner with our strongest ally, the Americans, we will always be stronger.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Thank you.

By the way, Merry Christmas to all of you.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Aboultaif.

We'll go on to Mr. Sheehan, for five minutes.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much.

There has been some very excellent testimony as we deal with the realities of COVID-19 and how we can strengthen our position for the people you represent and we represent, so I truly appreciate it.

Keeping on the motif of supply chains, obviously Canada has more trade agreements than any G7 country, virtually with all G7 countries, but in remarks that I heard earlier in this discussion, I had to reflect on recent events.

Ron Irwin, who is from my riding, was a cabinet minister. He was a fairly bombastic fellow, but he was also the ambassador to Ireland. I remember when I was a young fellow and I was at a presentation at Algoma University, and the question was posed to him about trade, about what the opportunities are and where Sault Ste. Marie, and Canada itself, should look. He said, “Is it still a buck fifty for the bridge?” Obviously, the United States is always going to be one of our greatest places. Then he went on and explained the Irish situation.

I went on to actually work in different capacities, in both the public and private sector, doing inbound and outbound trade missions, including those with Ireland, and there's a ton of opportunity there. He was joking. However, the reality is that 80% of our population, the settlers, settled along the border for various reasons. The first nations have been coming to Sault Ste. Marie and area for thousands of years for the natural linkages through the Great Lakes and to fish. When they came here to fish, it became a sacred area where they did not do war; instead, they did trade and various things.

In particular, in reflection of that, I think about the example of the auto sector. What would have been the reality if there had been those section 232 tariffs on the auto sector? We heard it before the pandemic, but think in the context of what that would mean now, and in particular, speaking of supply chains, had we not gotten rid of the section 232 tariffs on steel and aluminum, which would affect ridings across Canada as well.

I'll start with that question to the presenters, and then I'll frame some other questions.

[Brian Kingston]

Thank you. It's an excellent question.

The effect of the section 232 tariffs on the auto sector in particular, if they had ever been unveiled directly on autos, would have been disastrous. Our industry is so tightly integrated into the U.S. Over 90% of the vehicles we're producing are going to the United States, so to have significant tariffs on those products would have been hugely damaging. Even with the section 232 tariffs on steel and aluminum, we saw the impact throughout the supply chain. It's a testament to the government that they managed to navigate through that and keep those tariffs off and then negotiate a trade agreement that has kept our auto sector trade duty-free.

Frankly, that has been a very big enabler of new investments in Canada. If you're considering a significant new auto mandate here, you don't do that because you're only going to service the Canadian market. We're too small. You have to be able to access the U.S. and to do so in a duty-free fashion.

Therefore, it's critically important that we keep those trade lanes open into the United States.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

My next question is for Mr. Watson. We heard testimony from Chief Perry Bellegarde, who apparently is not running again, about how important it was to have indigenous voices at the CUSMA table.

In your view, how has that benefited—or potentially continues to benefit, because it's a fairly recent agreement—indigenous peoples across Canada?

[Patrick Watson]

It's critically important to have indigenous leaders at the table, actively involved, not just taking information but also providing meaningful proposals to inform the negotiations.

It doesn't just stop at the negotiating table or once the ink is dry on the FTA. It's also about involvement in the implementation committees. We welcome invitations to participate in the various implementation committees of the CUSMA—chapter 4, rules of origin; chapter 25, small and medium-sized enterprises; chapter 26, competitiveness—because that's where the rubber hits the road. How are you interpreting the rules as articulated in the FTA? How are you doing that in a good way where you build relationships with indigenous peoples in the United States of America, as well as Mexico?

This is where I want to go, and I'm kind of anticipating Mr. Green's question. How do we see these things as opportunities to build indigenous capacity and involve indigenous peoples?

It's not just about the front end in terms of the negotiation—although that's very important, not just for CUSMA but also Mercosur, the Pacific Alliance and others—but also about how to include indigenous peoples, leaders, nations and institutions throughout the entire process, which sets them up for success to ensure they can move in a good way to showcase goods and services and take advantage of the provisions within those free trade agreements.

[The Chair, Liberal, Judy Sgro]

We're on to Mr. Savard-Tremblay, for two and a half minutes.

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

Thank you, Madam Chair.

Over to you once again, Mr. Groleau.

Basically, and this is very interesting, your presentation summarized the reasons why the agreement with Europe worked well on paper, but not in practice. I don't think that's an unfair summary of your comments.

If I have understood you properly, the problem really lies with the non-tariff barriers. This has been frequently mentioned in discussions of this agreement. As the agreement with the United kingdom is virtually a copy and paste of CETA, you're worried that it would give rise to the same problems.

Given the particular situation the United Kingdom is in—an agreement with Europe, after all, covers an entire continent—are there specific industries, sectors or areas that we should monitor and pay special attention to for the United Kingdom?

[Marcel Groleau]

In the United Kingdom, there are of course specialty cheeses of interest to Canadians. The United Kingdom will definitely target this market here in Canada. There is also beef. People may not know this, but we import more beef from the United Kingdom than we export to them. And yet Canada is a much larger producer on a world scale.

It all stems from the same phenomena. Firstly, market protection. The United Kingdom has applied the same non-tariff measures as Europe. We would not want to see this repeated in the renegotiation of a bilateral agreement with the United Kingdom.

Then of course, support for farm producers can take many forms. In Europe, such support often comes via green measures. This makes European producers more competitive in terms of exports.

The fact is that Canadian producers are not playing on the same hockey rink as European and American producers. It's as if we were on a different ice surface, with different skates, a different kind of stick and none of the goalie equipment needed to stop a puck. And yet we're compared to them.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Groleau.

We'll go to Mr. Green, for two and a half minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

On my earlier comments, I want to note that my colleague Daniel Blaikie, at the committee dealing with CUSMA, tried to move an amendment to include a clause in the enabling legislation that would “simply confirm the existing rights of Indigenous peoples”, which is an important step toward reconciliation.

He put it in a letter to Minister Ng, dated December 7:

“Indigenous peoples of Canada” has the meaning assigned by the definition “aboriginal peoples of Canada” in subsection 35(2) of the Constitution Act....

For greater certainty, nothing in this Act is to be construed as abrogating or derogating from the protection provided for the rights of the Indigenous peoples of Canada by the recognition and affirmation of those rights in section 35....

Mr. Watson, can you comment on the need to have these rights enshrined in our international agreements?

[Patrick Watson]

Thank you very much, sir.

I think that is very important, but also to use free trade agreements not just defensively but offensively in how we are creating opportunities when it comes to not just trade but also investment.

I just want to note—because I have had some time, thank you—that indigenous SMEs, from our research, were actually found to be twice as likely to be exporters as non-indigenous SMEs. We see that there's actually quite a lot of capacity there, potentially, to draw down the provisions of free trade agreements.

We really want to set them up for success and build that capacity, but we also want their involvement in the negotiation process to ensure that their needs are reflected at the table and also through the implementation.

I hope that provides a fulsome answer.