International Trade Committee on June 4th, 2024

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I am calling the meeting to order.

Welcome to meeting number 109 of the Standing Committee on International Trade.

Before we begin, I need to ask all members and other in-person participants to consult the cards on the table for guidelines to prevent audio feedback incidents. Please take note of the following preventive measures: Use only an approved black earpiece. Keep your earpiece away from the microphone at all times, and when not using the earpiece, please place it face down on the sticker placed on the table. Thank you for your consideration.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Tuesday, October 17, 2023, the committee is resuming its study of the 2026 CUSMA review.

We have with us today—hopefully—from the Brookings Institution, Joshua Meltzer.

From the Canadian Labour Congress, we have Siobhán Vipond, executive vice-president; and Elizabeth Kwan, senior researcher.

With us from the Canadian Trucking Alliance is Stephen Laskowski, president; and Lak Shoan, director, policy and industry awareness, by video conference.

From GT and Company Executive Advisors, we have Steve Verheul, principal.

Welcome in a different capacity, Steve.

From the Quebec Network for Inclusive Globalization, we have Claude Vaillancourt, member and spokesperson—again, by video conference.

While we're trying to get Mr. Meltzer connected, we will start with the Canadian Labour Congress.

Ms. Vipond, please, the floor is yours for up to five minutes.

[Siobhán Vipond, Executive Vice-President, Canadian Labour Congress]

Good afternoon, Chair and members of the standing committee. I am Siobhán Vipond, and I'm the executive vice-president of the Canadian Labour Congress.

The CLC is Canada's largest labour body and speaks on issues of national importance for three million unionized workers in every sector across the country. We welcome the opportunity to provide input on the 2026 CUSMA review.

The impact of CUSMA on Canadian workers cannot be overstated, and the importance of the 2026 CUSMA review cannot be overstated either. The review is one of the key priorities for Canada's unions.

CUSMA came into force on July 1, 2020, and no one could have anticipated the number and magnitude of global and domestic disruptions since 2020 affecting trade. The review will take place in potentially different political configurations, given that all three countries have federal elections before 2026.

Canada's enduring goal for the review must be strategic rather than perfunctory. Canada must align with the U.S.'s worker-centred trade approach that is beneficial for workers, powered by workers and directly engages unions from the start. A worker-centred approach will deliver good-paying jobs by increasing the growth of unions and helping strengthen obligations and implementation of CUSMA in labour, environment and inclusive trade chapters. For instance, strong climate change commitments and obligations must be added to the environment chapter at the review, given the significant impact on jobs.

Chair, our recommendations for the review engagement are as follows.

As part of a worker-centred trade approach, the government must actively engage with the CLC on a par with the current level of engagement in the U.S. between government and the AFL-CIO. The government should establish a tripartite CUSMA review task force of government, unions and businesses to identify, review and make recommendations on priority issues for Canada, and the government must conduct meaningful consultations with unions and other civil society stakeholders.

In the review, the government should elevate the worker-centred approach through the robust implementation of obligations in the labour chapter, which includes improving and expanding the application of the rapid response mechanism; advancing full compliance to prohibit the importation of goods produced by forced labour; addressing violence against workers exercising their labour rights; enforcing obligations regarding discrimination based on sex, sexual orientation and gender identity; and ensuring more labour rights and protections for migrant workers.

We wish to underscore that Canada is out of step with the U.S. in three key areas: a worker-centred trade approach, the utilization of the RRM—the rapid response mechanism—and a prohibition on the importation of goods produced by forced labour. The CLC urges the government to close these gaps in the review in order to deliver more benefits for Canadian workers and communities.

The agenda for the review is shaping up, with the U.S. and Mexico signalling the issues they intend to bring to the table. Mexico wants the rapid response mechanism to apply to the U.S. and Canada, which is not the case now. The U.S. plans to raise their concern with Canada's digital service tax and the long-standing tensions with supply management of dairy. The U.S. may also table the perennial trade irritants of softwood lumber and automotive rules of origin.

The threat of China's very aggressive moves to gain EV market share globally and in North America is anticipated to be prominently featured in the renewal discussions. In May, the U.S. imposed massive tariff increases on Chinese goods, including 100% tariffs on Chinese EVs, and substantial increases for lithium-ion EV batteries and semiconductors. Canada is contemplating whether it will follow suit. There are also fears that Chinese investments in Mexico EV manufacturing may be coming, and CUSMA may be used to enable exports to the U.S. and Canada, circumventing any direct tariff measures in place. The CLC agrees with the need to protect EV jobs and manufacturing against Chinese exports to North America and looks to the CUSMA review to shore up protections.

Canada's unions have two opportunities to propose worker-centred propositions to improve labour rights and obligations in CUSMA. The first is the upcoming five-year review of the implementation and operation of the CUSMA labour chapter in 2025, and the second is the 2026 CUSMA review, where labour can advocate for workers in the other chapters.

The CLC will be there, fighting for Canadian workers every step of the way.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We move on to Mr. Laskowski, please, for up to five minutes.

[Stephen Laskowski, President, Canadian Trucking Alliance]

Thank you, Madam Chair, and thank you, committee members.

I'm joined on the screen by Lak Shoan, our director of policy responsible for the files I'm talking about.

First off, I'd like to thank the committee for bringing it to our attention, and to the attention of the business sector and labour, that you are preparing for the CUSMA reviews well in advance of them. I congratulate you, and we look forward to the opportunity.

Very briefly, the Canadian Trucking Alliance is in fact that—an alliance of the seven provincial trucking associations across Canada. Together we have 5,000 members, representing about 250,000 employees.

With regard to NAFTA and CUSMA, they've benefited all three countries and, by extension, all three of the trucking sectors. The trucking sector in Canada and the United States moves Canada-U.S. trade primarily.

With regard to CUSMA itself, our main message is this: Let's not forget about the trucks that move the trade. A lot of focus, as it needs to be, is on the trade of goods between our countries and how they can flourish. However, they can't flourish if they can't get to market. One thing the pandemic showed everyone across society is what a supply chain is and who moves it. When the trucks have a problem, the supply chain has a problem.

What we want to do in the 2026 review is ensure that CUSMA looks at every opportunity there is to improve the efficiency of the Canadian trucking industry in moving U.S. exports into Canada and, obviously, our imports into the United States.

There are two main issues that we will be, and are, working on with the Government of Canada that may be an opportunity under the CUSMA review. One is the repositioning of foreign empty trailers. Currently, it is illegal for a Canadian trucking company to reposition an empty trailer in the United States, and vice versa. It is not illegal if you wait for that trailer to be unloaded and then move the same one. Folks, basically we have a trailer debate. The modern economy doesn't move like that in the supply chain. The most efficient way to move goods in the supply chain is to move a trailer in that's full, drop it and move an empty one. That's all we're asking on both sides of the border.

Minister Alghabra, a previous transport minister, has already indicated to the United States—in very different language, but I'll be more direct—that we're ready when they are. What we'd like to do under CUSMA is see how we can move the Americans towards this system. It's great for their exports and it's great for our imports, etc.

The other issue we would like to see addressed during the CUSMA review, if not before, is in-transit movements. Basically, this allows trucks in Canada to move domestically through the United States. Currently, we allow the Americans to do the same thing. If goods want to move between Michigan and New York State, they can move through Ontario. We allow it. The Americans do not allow us to move goods between Ontario and Vancouver. You can pick an example. It doesn't really matter. I used that example because as the floods happened, we were able to get temporary relief and 4,500 loads moved that way. There is a demand for it. If not before CUSMA, we are hoping that CUSMA addresses that.

There are other items that we will be working on with the Government of Canada. I'll just be very quick here. Under the U.S.-Canada tax treaty there are examples. There are U.S. legal system threats to trade. What we mean by that one specifically, really quickly, is that there are many “nuclear verdicts”. A nuclear verdict is defined as anything over $10 million. That is causing great concern for Canadian trucking companies moving goods into the United States. There are some domestic moves in the United States limiting these nuclear verdicts on trucking.

Can CUSMA deal with nuclear verdicts through the NAFTA-CUSMA agreement? That's a question that the Canadian industry has. Can international cargo and fraud theft be dealt with under CUSMA? Can joint border inspections and efficiencies at the border be dealt with under CUSMA?

Obviously, we have one question for which we do not have answers. For the other ones, we have some answers—or we think we do.

Currently for the emerging market of Mexico, most of that trade moves by rail, but will there come a time when there will be North American movement of trucks from Mexico all the way into Canada? If so, what needs to be done to examine that? We are asking the question during the CUSMA review to see what those opportunities are.

Those are my initial comments, Madam Chair. I look forward to taking questions, and again I just want to thank the committee for this opportunity and to mention how important it is that we be prepared, in our sector and in others, for this opportunity, because nothing has greater economic importance with respect to trade between the United States and Canada.

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Let's give Mr. Meltzer a try now and see if he's connected properly.

Go ahead, sir. You have five minutes.

[Joshua Meltzer, Senior Fellow, Brookings Institution]

Thank you.

It's my pleasure to be here today before the House of Commons standing committee to testify on CUSMA and the joint review in 2026.

I'm a senior fellow at the Brookings Institution, where I lead the USMCA initiative. This initiative was established shortly after the overwhelming bipartisan support for the agreement in Congress, where we saw an opportunity in this vote and its support by key U.S. labour unions to reset the conversation around North American economic integration.

We've done this by providing a tracker of all the trade investment and jobs from North America trade across all states, provinces and countries. For instance, we've found that CUSMA supports approximately 17 million jobs across North America.

We also track the parties' compliance with their CUSMA obligations and have established a scorecard that allows us to compare compliance by each government and assess how far each government is from compliance. It's actually my pleasure to report to you that the Canadian government is the least non-compliant party to CUSMA.

We also produce reports and analysis, including our annual “USMCA Forward” report, which assesses progress each year and looks forward to what more can be done to to build a more competitive, inclusive and sustainable economic relationship across North America.

We've had the honour of contributions from a number of very senior cabinet ministers, including Minister Ng, Minister Champagne and Minister Wilkinson, in addition to business leaders such as Paul Desmarais Jr., CEO of Power Corporation, and Goldy Hyder, president of the Business Council of Canada, as well as other Canadian thought leaders from civil society and academia.

This is clearly a pivotal time for the United States and the world when it comes to international trade. The current system of world trade, which is based on the WTO, is being challenged by geopolitical competition, heightened risks from dependence on trade with countries such as China, and unfair competition.

North American trade and investment ties have always been critical for the prosperity of Canada, the U.S. and Mexico. CUSMA is the agreement around which this economic co-operation is based. More than a traditional trade agreement, it is a blueprint to realize the potential of an integrated, competitive North American region. Since it was signed three and a half years ago, it has contributed to boosting trade and investment across the region, creating thousands of jobs and raising labour standards.

I know this is not news to you, but worth stating for the record is that CUSMA is the most important trade agreement for all three countries. In Canada, 78% of exports go to its North American partners, over 85% of Mexico's exports go to its North American partners, and around 30% of U.S. exports go to Mexico and Canada, which is over four times the U.S. exports to China. A lot of this is in intermediate goods crossing back and forth to make complex goods like cars, medical equipment, IT products, pharmaceuticals and more.

In 2023, trade in North America was about $1.85 trillion, or about $3 million a minute. There's been a 47% increase in North American trade since 2020, when CUSMA came into effect. Since 2020, an estimated additional four million jobs have been created across North America, on top of the total of 17 million jobs noted before. The economic importance of CUSMA is clear.

I want to turn briefly now to the geopolitical importance of CUSMA.

On the one hand, the last few years have shown us some of the risks as well as the resiliency of supply chains across North America. COVID-19 showed the risks of relying on China for medical equipment compared with the strong performance of North American supply chains in delivering on medical equipment and more.

Russia's invasion of Ukraine has impacted trade in agricultural commodities and demonstrated the global trade impacts of even localized conflict.

Trade relations have been fundamentally rethought in light of geopolitical competition with China. This is due to a number of challenges, including the need to respond to China's economic model, which provides enormous subsidies to manufacturing, which leads to an oversupply of products—increasingly in high-tech areas such as EVs. With low domestic demand, the result of this economic model is increasing reliance by China on exports to North America and Europe, in particular, to absorb the excess production.

China has also demonstrated that when countries rely on it as a source of supply or as a market for its exports, China will use this leverage to coerce co-operation to achieve other political objectives. The U.S. talks about de-risking trade with China by creating alternative sources of supply, particularly for products that are critical for economic and national security, but to de-risk will require even closer North American co-operation, even more trade and investment, and a bigger vision for what we can achieve together on climate, digital, labour, worker training and more. This is where CUSMA is so important, both economically and as a geostrategic opportunity.

Let me now turn to the joint review briefly. I'm not going to list what the joint review will require, but I just want to make the following points.

Failure to renew CUSMA in 2026 will increase business uncertainty, increasing the risk and cost of investment, and thus reduce the trade needed to achieve the economic and geostrategic goals outlined below.

Between now and 2026, there will be elections in the United States and in Canada. The outcome of the U.S. presidential election is perhaps the most important in determining whether there will be a successful renewal in 2026. What is clear is that for whoever is in the White House, the need for renewal of CUSMA will be used to push for resolution of specific trade issues.

The joint review provides an opportunity to develop a forward-looking agenda on what the three countries can do to strengthen North American competitiveness, build more secure and more resilient supply chains, make progress on building a more digitally aligned North American market, and further develop North America as a source of investment stability and strength when it comes to geostrategic competition with China.

To achieve this will require addressing outstanding trade irritants, where possible, before the joint review. Bringing outstanding issues arising from past CUSMA disputes into the joint review would risk missing this opportunity to use the joint review to build a forward agenda and increase the risk that we will not achieve renewal of the agreement in 2026.

Thank you. I look forward to answering any further questions you may have.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Verheul, go ahead for five minutes, please.

[Steve Verheul, Principal, GT and Company Executive Advisors]

Good afternoon. Thank you for the invitation to speak with you this afternoon.

The CUSMA review on July 1, 2026, is shaping up to be a potentially critical turning point in Canada's trading relationship with the U.S. How the review turns out could go a long way towards determining if we will continue down the path towards a more integrated North American market or whether the U.S. will go further down the track of going it alone.

No matter what happens in the U.S. election on November 5, Canada will face significant challenges with the U.S. on trade. Both Republicans and Democrats, though seemingly more divided than ever, are both more protectionist and more interventionist than previous U.S. administrations.

The joint review, which is unique among trade agreements, requires that all three parties commit in writing that they want the agreement to continue. If any of the three do not make this commitment, there will be annual reviews until the agreement expires in 2036, or until all three parties agree to extend it for another 16 years.

The review clause is not a good fit in a trade agreement. Trade agreements are intended to last indefinitely so as to give confidence to businesses and investors about the rules of the game. Like NAFTA, CUSMA already has a withdrawal clause and a clause that allows provisions to be added, changed or removed at the agreement of parties. The only reason the review clause is in the agreement is that the U.S. wanted to build in leverage for it to seek changes to the agreement on an ongoing basis, but this undermines confidence in the agreement and introduces ongoing uncertainties.

The review is still more than two years away, but already business communities in all three countries are concerned about it. That uncertainty around the review clause is compounded by elections that will take place in all three countries before the review, and we know that Mexico just finished their election a couple of days ago.

Mexico and Canada will almost certainly support continuation of the agreement, given their reliance on the U.S. market. With the world increasingly trending towards regional markets, it is also in the U.S.'s interest to support a strong North American market. However, both Democrats and Republicans in the U.S. have suggested that the review could be used to renegotiate some elements of the agreement. Both Katherine Tai, the current U.S. trade representative, and Robert Lighthizer, the former U.S. trade representative, have suggested that the review could be used to address the panel decision the U.S. lost on the automotive rules of origin.

Katherine Tai has also suggested that the issue of dairy could be revisited after the U.S. failed to achieve its objectives in two dispute settlement panels. If the U.S. seeks to reverse dispute settlement decisions in the review, it will undermine confidence not only in the dispute settlement process but also in the agreement overall.

There are also various other contentious issues that could be part of the review—more so with Mexico than with Canada—but a better approach would be to focus on common challenges to the North American market. Three weeks ago, the U.S. took action against imports from China of electric vehicles, batteries, critical minerals and some other products, but all three CUSMA parties face challenges from China because of unfair trading practices and security concerns. Rather than all three parties following their own paths on these issues, it would be far better for them to take a more coordinated approach to these challenges.

USTR Tai has also talked about addressing challenges posed by new dynamics caused by the pandemic and by climate change in the review. A North American approach to addressing these kinds of issues would have a positive impact and open up new opportunities for growth.

The review clause in itself creates unwelcome uncertainty for business. More significant impacts will depend on whether or not a fractious review can be avoided, what specific issues may be opened or reopened in the review, and whether the parties can instead pursue a more common forward-looking North American agenda.

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Our last witness is Mr. Vaillancourt, please, for up to five minutes.

[Claude Vaillancourt, Member and Spokesperson, Quebec Network for Inclusive Globalization]

Thank you very much to the committee for the invitation to appear before you today.

I represent the Réseau québécois pour une mondialisation inclusive, or RQMI, formerly the Réseau québécois sur l'intégration continentale, and we are union organizations and individuals concerned by the need for fair trade. I am also a member of ATTAC‑Québec, an association that advocates for tax, social and environmental justice.

With regard to the Canada-United States-Mexico Agreement, or CUSMA, the irritants for us are not so much trade-related. They concern human rights, the common good, the environment, democracy and people's living conditions. In the past, free trade agreements have too often worked against these priorities in order to satisfy commercial interests. We're not the only ones saying this.

In CUSMA, we recognize some progress from the North American Free Trade Agreement, or NAFTA. We especially appreciated the elimination of the investor-state dispute settlement mechanism, or ISDS, in chapter 11, although it was not as complete and quick as we had hoped. Canada is still being sued by the Ruby River Capital company. In addition, Mexico is not entirely immune to this type of lawsuit. Despite this, CUSMA set a good path forward. From now on, Canada should no longer include an investor-state dispute settlement mechanism in its free trade agreements.

CUSMA makes it possible to better regulate working conditions, particularly with a view to eliminating forced labour and violence against workers and labour organizations. However, several aspects of CUSMA remain problematic. The chapter on the environment, for example, seems woefully inadequate to us. Given the climate emergency we're experiencing and the loss of biodiversity, the agreement needs a significant update. It should be more restrictive to achieve environmental protection objectives.

In our view, it's important that the text of the agreement not hide the realities we're facing and that it contain certain keywords, such as “global warming”, “climate change”, “hydrocarbons”, “methane” and “greenhouse gases”. CUSMA should also refer directly to the recommendations of the Intergovernmental Panel on Climate Change, or IPCC, and add two agreements signed by the three parties to the list of multilateral agreements on the environment in chapter 7: the Paris Agreement and the Kunming‑Montreal Global Biodiversity Framework. Article 24.9 on the protection of the ozone layer is a good example to follow.

We're concerned about chapter 28 on good regulatory practices, which makes it more difficult for governments to regulate in favour of the common good. The parties must publish a list of the regulations they want to adopt within a year, pursuant to article 28.6. They must also justify regulations proposed by scientific analyses, which may be contradicted, as unanimity does not always exist in cutting-edge science.

During the regulatory impact assessment, article 28.11 requires the parties to justify the need for a proposed regulation, to consider other regulatory and non-regulatory alternatives, and to explain the benefits and costs of the selected alternative over other feasible alternatives considered.

Finally, article 28.13 sets out procedures for determining whether regulations made should be amended or repealed. All of these procedures, which are very cumbersome and open the door for corporate lobbyists to influence decisions, urge governments to regulate less to avoid engaging in a process that's not very encouraging. That's why we're recommending that chapter 28 be repealed.

Other aspects seem problematic to us. We regret the weakening of supply management, which affects dairy farmers' incomes, product quality and rural life dynamics. CUSMA tends to favour large farms over small and medium-sized family farms, which has a detrimental impact on the local environment of communities due to feces management, widespread pesticide use and contamination of soil, water bodies and groundwater.

While CUSMA may seem more socially advanced than NAFTA, there are still significant irritants that prevent us from seeing it as a truly beneficial agreement for all Canadians.

Thank you very much for your attention.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go on to the members. We have Mr. Seeback for six minutes, please.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Thank you very much, Madam Chair.

I want to talk about some of the issues that I see that I kind of call as “own goals”, as we look at the review that's coming in 2026.

The first one was the threat to implement a unilaterally implemented digital services tax, which has raised a lot of unhappiness in the United States. Ten members of Congress wrote a joint letter to Katherine Tai with respect to it—this was from both parties. Michael Plowgian, the top U.S. Treasury official, said this is a critical issue, and that “Implementation of a DST by Canada would seriously undermine the Pillar One negotiations.”

I just wonder if perhaps Mr. Verheul and Mr. Meltzer would like to comment on this. Do you think this is a productive thing for Canada to be doing, going outside the OECD negotiations, threatening to implement unilaterally a digital services tax, and retroactively collect it for the three previous years? Is this something that's going to enhance our position when we're negotiating the CUSMA review with the United States?

[Steve Verheul]

Well, I think certainly the DST issue has the potential to cause some friction if things continue as they are.

As members are probably aware, pillar one discussions at the OECD are under way now, and they are seeking to reach an agreement within the coming weeks or months.

If they do reach an agreement, then I think that issue gets very much easier and Canada could be able to land in the right spot. However, if those discussions fail at the OECD, then I think Canada does have a dilemma. Do they go ahead and implement it—because, as you know, it's not implemented yet—or do they find some other kind of approach? In a scenario where the pillar one discussions fail entirely, there's a tough choice.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Mr. Meltzer, would you comment?

[Joshua Meltzer]

I agree with that observation by Steve. I think, where possible, doing this multilaterally through the OECD is clearly the best outcome. I think that there are a couple of concerns with digital DSTs from a U.S. perspective. One is that there have been various DST proposals, not just in Canada but in other countries, so part of the concern that the U.S. has with the DST in Canada, I think, is its precedential implications. It green-lights and provides cover for other countries going down that pathway. Whatever the actual economic impact of that tax is going to be, I think the precedential implications will focus minds in the U.S. as well.

I don't want to get into the weeds, but I think there are genuine questions around the retroactivity elements to it, which you mentioned. The fact that it's a tax on revenue rather than profits can create various perverse incentives for businesses. That's a genuine issue, I think, for Canada in terms of the design of the DST. However, it's clearly one of those irritants that will come up, I would expect, in the lead-up to the joint review.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Would both of you describe that as something that the United States would raise as an irritant in the renewal of CUSMA, if Canada did unilaterally implement this tax?

[Joshua Meltzer]

I think that everything's on the table, potentially. My view is that whoever's in the White House next year will have a list of bilateral trade arrangements with Canada that we may try to resolve in some shape or form before the joint review, but they will certainly be carried into the review if they're not resolved.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Mr. Verheul, I'm sure you're familiar with Bill C-282. It was passed by Parliament, but I'm certainly not a supporter of that piece of legislation. I think it's another trade irritant with the United States that could cause trouble in a CUSMA review. If that bill receives royal assent, do you see that as irritating our American trading partners as we get into this CUSMA review and something that they would raise in a renegotiation?

[Steve Verheul]

Well, I'm not sure it will be a significant concern for the U.S. in the current context, because both of the panels that they took against Canada had to do with allocation policies for quotas under the tariff rate quotas.

Bill C-282 talks about prohibiting increases in tariff rate quotas and reductions in tariffs. Those issues aren't really under discussion between Canada and the U.S. when it comes to the dairy concerns that the U.S. has. Their concerns are about the allocation policy. Setting aside what Bill C-282 may imply for other negotiations, I don't see it coming up in the review, because that's not the target of the U.S. at this point.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

The CLC mentioned forced labour.

Canada has a terrible track record, as it exists right now, of stopping goods made with forced labour from coming into the country. The United States has seized billions of dollars in goods. They created an entities list. They update it. They have a reverse onus. If they suspect any goods coming into their country of being made with forced labour, the company bringing those goods in has to prove they're not.

Canada decided, under the current Liberal government, that the threshold would be that Canada has to prove they're made with forced labour. They don't have an entities list and they've set the threshold very high.

I think this is a huge problem. It's taking away Canadian jobs, good union jobs. I think it's also going to be an irritant with the United States.

Do any of the witnesses want to comment on that, if you share my view?

[The Chair, Liberal, Judy Sgro]

Unfortunately, your time is a minute over. You were on such a roll that I really didn't want to interrupt you.

The witnesses could possibly answer Mr. Seeback's question while we're going on here at some point or another.

We can go on to the next questioner. Go ahead, Mr. Arya.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Madam Chair.

Madam Chair, I'm sure all witnesses are aware of a bill currently passing through the Parliament of Canada, Bill C-282, that bars the minister of trade from concluding any free trade agreement that results in opening access to the supply-managed sector. Basically, it makes supply management non-negotiable.

I'll start with you, Mr. Verheul, because of your background in the negotiations of many trade agreements that Canada has signed with many other countries.

Right now, it has passed second reading in the Senate. I was hoping it would die in the Senate, but apparently it's still alive in there, so it may even get passed and it may even get royal assent. If that bill becomes a reality, what impact do you think it will have during the review of CUSMA?

[Steve Verheul]

I mentioned a little earlier that in the review of CUSMA, it won't really that much impact, in my view, because Bill C-282, as you mentioned, talks about opening access. Every indication I've heard from the U.S. is that they're content with the access that was negotiated in the CUSMA. It's just about where that access goes and how the allocation of import quotas is done. Currently, it mostly goes to processors.

I've not heard that the U.S. is going after further tariff reductions or further tariff quota expansion, so I'm not sure it's going to be an issue.

[Chandra Arya, Liberal, Nepean, ON]

When you mentioned dairy before, it was not about having a bigger quota or changing the quota.

[Steve Verheul]

That's right.