International Trade Committee on June 6th, 2024

[Flavio Volpe]

I've said publicly, I've said privately and since last October I've been saying to the various departments of government that are responsible for this that we need to be in sync with the Americans. Eighty per cent of the market for our finished goods is the American market. I think the Americans understand it to mean that we have access to their market and that we need to protect access of their goods to our market.

In the first week of November 2023, the APMA went to Washington to meet White House officials—energy, treasury and economy officials—to say that the Chinese are aggressively eroding market-driven companies' market in Mexico, displacing market-driven FDI into North America via Mexico. They've really shown us what their intentions are with a very aggressive triple-digit increase in Europe, and we should do something about it.

We are very glad that the Americans have come up with a 100% tariff on EVs and a 25% tariff on some critical materials. We think the Government of Canada should do your consultation, but very quickly conclude that consultation, which is rather public. Everybody—all the related parties in our industry—says that we need to match it and show the Americans that we're just as dedicated to protecting their market access as they are to ours.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Cannings, you have six minutes, please.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

Thank you to everyone for being here today.

I'm going to start with Mr. Lemaire of the Canadian Produce Marketing Association.

I represent a riding that has a lot of fruit growing, a lot of soft fruits like cherries, peaches, apricots, etc. You mentioned the particular problem of perishable food. In crossing the border, you can't have it sitting there waiting for some dispute to be worked out. You can't go to a CUSMA panel and see what those cherries are going to face. What is in the present CUSMA to deal with that? Is there some sort of rapid-action mechanism that can be applied?

What often happens is that when there is a big cherry crop in Washington state, suddenly our market is flooded with Washington cherries at very low prices. We call it dumping, and that has a huge impact on our domestic market.

I'm wondering what mechanisms are available to the Canadian industry to counteract that, and whether we use them. If they're not in the present agreement, should they be?

[Ron Lemaire]

The agreement does hold anti-dumping mechanisms in place. The complexity of those mechanisms requires demonstration of production and sale of underpriced products. The process that we need to ensure is in place is that we're always looking at valid data, sound science, and expediency of review when putting it in play.

The expediency of review you've hit on the head; it doesn't exist. It's a very slow process, and it's many years after the.... Whether it is a dumping situation or suspected dumping, it's already completed, and we're working in the past as opposed to the present.

What is the solution? A complex rapid-action group would be ideal. The formation of that group within a CUSMA framework is a highly innovative way of approaching it.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Yes. If we suddenly see this happening, we need to put those anti-dumping levies on right now, and we can worry about the panel decisions perhaps later, I'm assuming. However, we need action before those cherries turn to mush.

[Ron Lemaire]

We have to ensure, in the imposition of.... We go back to some of the discussions on the retaliatory tariff for digital media. It's the one watch-out that we have to be careful of, relative to imposition of any levies or duties without the data and the science to validate. It's the only caution I would give, but working with a rapid-action format could provide us with the springboard into delivery of the right response in the situation of a dumping environment.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

The other perishable fruit situation with regard to crossing the border is the PACA.

[Ron Lemaire]

Yes, it's a deemed trust.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

It's a deemed trust agreement. We have a bill put forward, this time by Scot Davidson of the Conservatives, that's in the Senate right now.

[Ron Lemaire]

Unfortunately, it's stalled.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Well, I was just going to ask you where that is. What can we do to get that going?

[Ron Lemaire]

We have to give the House and parliamentarians credit. You kept the Senate very busy, and they made the decision to focus on House priorities only. We were moving into the banking committee to review Bill C-280, and that has been postponed now until the fall.

I was actually to testify this morning around the benefits of market stabilization and trade, because if we can introduce the bankruptcy tool for the fresh fruit and vegetable sector, we will regain a trading tool, preferential access to a trading tool with the U.S. that, in the event of a dispute, will provide a clear strategy on sustainability for our fruit and vegetable growers when we ship south.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Are you still confident that will happen in the fall? Is it just a timing issue?

[Ron Lemaire]

We had full House support. I understand we have support from the Senate. However, I am not a gambler: I like to see discussion. I'd like to see it cross the finish line as fast as possible and see the Senate move it back with support but without amendments.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I will go to Mr. Volpe again.

Can you help me understand this situation with the change in the roll-up agreement and the panel win by Canada and Mexico? You say the U.S. is not in compliance. What does that really mean for us, and where is that process?

[Flavio Volpe]

Well, you went to the wrong guy with one minute left.

The difference between our interpretation and their interpretation—and their interpretation was deemed to be wrong by the panel—would require more local content. I think they were trying to drive for more American content, in part to be able to qualify a vehicle. The challenge is that in a lot of important component classes like electronics or wiring harnesses, they don't exist in North America. You can drive a carmaker to a number that is unachievable, and the only penalty, if that carmaker doesn't achieve it, is a 2.5% tariff, and so we said that if they choose not to go on the 2.5% tariff, then they don't even have to meet the 75%: They could go to 65% or whatever works.

We really hope the Americans listen to their own industry, which is telling them that they all agreed on the interpretation that we all negotiated and that they should do the right thing and comply with the panel.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

I will go to Mr. Hoback for five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

I want to thank the committee members for giving me five minutes here to talk about the USMCA. I have a passion for this trade deal, for seeing it go forward and making sure that we thin that border as much as we possibly can.

I will start off with you, Mr. Lemaire. In regard to plastics, we heard, when we were down in the States, about it as an issue—from California, of all places, the most environmental state there is. How do you see the legislation coming forward on plastics? What could be the possible outcomes? What does that mean for the cost of food here in Canada?

[Ron Lemaire]

Deloitte published a report showing a 30% increase in food costs based on the P2 notice and plastic strategy currently being proposed. Congressman Sessions provided a letter to the ambassador identifying concerns under CUSMA relative to chapter 24 in sections 2, 4 and 5 that articulates concerns that I noted in my testimony. It's significant.

No one is saying that they don't want to try to address problematic plastics and find its path—

[Randy Hoback, Conservative, Prince Albert, SK]

I'll stop you there because I have only so much time.

Mr. Volpe, we talked about electric vehicles and about the fact that the U.S. put a tax on electric vehicles coming in from China. What happens if we see circumvention starting to happen? To use an example, there were 800 containers that were rejected at U.S. ports that are now rumoured to have possibly come through Canadian ports because they never were inspected. What would that mean for the Canadian auto sector, and what could it mean for other sectors in regard to a relationship with the U.S.?

[Flavio Volpe]

I don't know about the specific issue you're talking about, but in general, if we're seen as the place for Chinese vehicles to land at a lower price, and then that displaces sales of vehicles manufactured by market-driven players in the U.S., if I were sitting at USTR, I'd take that as a signal that Canada isn't as committed to this partnership in defending “fortress North America” against subsidized centrally planned players.

[Randy Hoback, Conservative, Prince Albert, SK]

Even if we see, for example, Chinese steel and Chinese electronics starting to creep in through Mexico, would that not also be a concern for Canadian manufacturers?

[Flavio Volpe]

Sure. Canadian manufacturers are heavily invested in Mexico and are out buying raw materials at market-driven prices. I think we've expressed that concern for years during the NAFTA renegotiations and since, and the Americans are very sensitive to that on both sides of the House.

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Davies, you talked about the CRTC's ruling this week. What does that mean for companies like Netflix and those doing video productions here in Canada that have already invested heavily in Canada in doing productions here? If they're now paying a 5% tax, will they still continue to invest in Canada and have productions happening here in Toronto, Vancouver and Montreal, or will that money dry up and just be used to pay for the CRTC tax?

[Graham Davies]

My response is on behalf of the music streaming companies, but I think your question applies to video production as well. Our members have invested really significantly in teams and lots of infrastructural investments to support music streaming in Canada. That's all because consumers want access to Canadian music. That's good for the experience—