International Trade Committee on June 6th, 2024

[Graham Davies]

We're raising a concern that if this does continue and feeds into the CUSMA review, it could impact other industries.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

I'm trying to get a sense, then, as to why you would include that in part of your testimony. Is it because of experiences or conversations you've had that if this continues, there will be ramifications on other sectors?

[Graham Davies]

Correct. I was raising the fear that there will be ramifications on other sectors. The reason for mentioning those groups was simply that they're on this panel with me here today. There's been no dialogue with them. There's no research into whether they would be directly targeted. That was not the intended inference. It was more by way of example.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Okay. I'm going to then ask Ms. Tranberg for her comments on those particular comments from Mr. Davies when he references that there could be ramifications on your sector.

[Janice Tranberg]

I can't speak for his industry, but I'm making the assumption, listening to his testimony, that he is simply saying that there would be ramifications on the general public, part of which would be our sector and our industry. That's my assumption.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Would you be concerned that some other levies are being put on U.S. organizations, such as the streamers, and that there could be potential on your industry or other industries?

[Janice Tranberg]

I would need to understand what those ramifications would be before I could comment.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Let's hypothetically say that the CRTC imposed a 5% base tax on streaming services. We have a letter from I think 19 congressmen who have indicated that they are concerned about this.

I understand that you and Mr. Davies are in two different sectors, but in his comments he's indicated that he's concerned that this might have a larger impact, and that's where I would like your opinion. Could you also indicate whether you're also concerned that this would have a larger impact on sectors like yours?

[Janice Tranberg]

It's a very difficult thing to answer, but I will say that right now in the agriculture industry we're very concerned about a number of different pile-on activities that seem to be adding up, making our industry much less competitive than it certainly has been in the past, and so if this is an additional tax that would add to that, then obviously we would be concerned.

At this point in time, however, I can't specifically answer because I don't understand what the specific ramifications would be.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Sidhu, you have six minutes.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you, Madam Chair.

Thanks to the witnesses for being here today and for sharing your insightful comments with us.

My first question would be for Mr. Volpe, who is on the screen.

Mr. Volpe, I've talked a lot in this committee about the importance of having healthy and vibrant trade corridors, and we know that the one in Windsor is definitely very vibrant. Lots of trade flows through that crossing. It's a crossing that's very important to Canada. Now the Gordie Howe bridge is coming up there. The two spans are mere metres away from being connected.

What would this bridge mean for your industry and what do you think it would mean for trade, especially considering that you've now opened your first office in Windsor?

Congratulations on that.

[Flavio Volpe]

Thank you.

We don't have to look too far to understand why having one bridge privately owned by a foreign entity is an issue. In terms of the volume of traffic that could get across the Ambassador Bridge, the decision to widen that bridge comes from a private party. For years, I think the industry has said that it would benefit from that. That private party is motivated by things that private parties are motivated by, like return on investment, etc., and they are raising the capital to do it.

The industry lobbied successive governments for decades to construct another bridge. This Gordie Howe bridge provides some insurance that if the next band of lunatics that want to barricade a bridge shows up, maybe there will be another one that's open. Also, this is a modern, wider infrastructure that provides a couple of logistics options to get across.

Every day, $100 million worth of goods in the automotive sector travels in either direction between Windsor and Detroit, so I think it's probably the best money that could have been spent on infrastructure for the Canadian auto sector.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you, Mr. Volpe.

I know we're all looking forward to the completion of the bridge, which I think is slated for next year.

I'll turn now to Mr. Harvey.

Our government has launched our team Canada U.S. engagement strategy, which is being led by Minister Ng, Minister François-Philippe Champagne and Ambassador Hillman.

In terms of what you're hearing in your advocacy efforts with some of your U.S. counterparts, what do you think the government should be doing? Where should we be focused, in terms of some of your conversations?

[Michael Harvey]

I think the most important thing is to explain to the Americans why CUSMA is good for them and not always come at it from the perspective of explaining to them why CUSMA is good for Canada.

If you look at some of our members, you see that we're in these deeply integrated supply chains. For instance, Ms. Tranberg was mentioning the connection between the cattle feeders here and the plants on the other side of the border. We're really producing together. There are Americans who have a deep interest in the bilateral trading relationship. We need to be bringing that up with them and getting them to speak up in favour of the relationship. We're doing things together. It's not just that we're exporting things to the U.S.

[Maninder Sidhu, Liberal, Brampton East, ON]

Absolutely.

I'd like to hear from Mr. Lemaire on some of his conversations and ongoing advocacy in the U.S.

[Ron Lemaire]

I'll reiterate Mr. Harvey's comments.

We're a fully integrated market, with greenhouse producers, as an example, operating in all three countries. Whether it's automotive, beef, grains or whatever the case may be, we need to ensure that we have a free flow and open delivery of product across jurisdictions, with limited or no regulatory burdens to slow the movement of those products, especially when we're talking about perishable food.

[Maninder Sidhu, Liberal, Brampton East, ON]

In terms of the regions or states down in the U.S., is there a focus on certain regions that you would like the government to focus on or regions you're interested in?

[Ron Lemaire]

With the strength and influence of the region, with the potential change of administration in the U.S., and with the strength of voice of Florida and some of the stronger Republican states, I think we need to pay attention to those voices and understand what they're saying.

To Mr. Harvey's comments, we need to ensure that they understand the benefits of the trade agreement and where the opportunity for market is in the collaborative delivery of business.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you for that.

Mr. Volpe, I'm going to turn back to you. I have about a minute left.

I have the same question for you, in terms of your advocacy efforts with your counterparts down in the U.S. What's working? What do you think we need to focus on?

[Flavio Volpe]

We spend a lot of time with our counterparts in the U.S., as well as in Mexico, in a coordinated effort to align our messaging. Parts suppliers in all three countries really have the same dynamics. We're all trying to serve carmakers that are selling to an American consumer.

I think the Canadian embassy has done a very good job, including the trade commissioner service, which serves the various auto states in coordinating the message that we do all this work together.

I did note that the ISED minister and the minister of trade are part of a coordinated effort with the ambassador to move that team Canada effort forward. I will note that it includes members of the opposition parties over the last couple of years, who have been very active and very helpful, as the message coming from Canada is non-partisan. I'll note the work of people like Randy Hoback there.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Thank you.

We have Mr. Hoback filling in at our committee today, so it's nice to see that he's here.

We'll go to Monsieur Savard-Tremblay, please, for six minutes.

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

Thank you, Madam Chair.

I want to thank all the witnesses.

Mr. Harvey, I jumped a little when you said that the House hadn't thoroughly studied Bill C-282. First of all, you have every right to come and tell us that you oppose the bill, that it's not a good idea and that the Senate should reject it. There's nothing wrong with that. That's why we're here.

On the other hand, it can't be said that we haven't done a thorough job. We undertook it twice: once during the last parliament and once during this one. Both times, I was one of the two critics in favour of the bill, and we even went on a fact-finding tour around Quebec on the subject.

The latest process, which went further than the previous one, was perfectly normal. First, the bill was introduced at first reading. Then it was debated and passed at second reading. Then it was referred to committee, where we carried out a study over an appropriate number of meetings. We heard from experts and interest groups, some in favour of the bill, others opposed. We heard all possible arguments. We weighed them, then reported the bill back to the House, where it passed on third reading and was sent to the Senate, where it is currently under consideration.

In my opinion, that was a good thing, but not in yours. That's fine, that's part of democracy. But that doesn't mean there hasn't been a thorough review. Of course, you may find that this process is insufficient, but if that's the case, your criticism applies to the process in general because it's the same for all bills. Otherwise, I invite you to consider your words carefully before you speak.

Now, I'd like to ask Mr. Volpe a question.

In January 2023, following a complaint from Mexico and Canada, a panel ruled in our favour concerning a difference in interpretation of U.S. requirements for calculating the regional value content of certain products. The dispute concerned a technical provision of the trade agreement requiring that, by 2025, 75% of automotive parts known as “essential parts” must be manufactured on U.S. soil to qualify for duty-free treatment.

In your opinion, what irritants are still present and could be discussed or even resolved during the CUSMA review?

[Flavio Volpe]

Thank you.

On that specific issue, all three countries agreed that in the original text and interpretation of the USMCA that there were specific local content thresholds for different types of parts. Once those parts were deemed to have met those thresholds, which was ostensibly 65% to 75%, then those parts would be deemed to be 100% compliant in the vehicle calculation. The local content requirement in a vehicle is set at 75%, so if I qualified my armrest, my wheels or my transmission, then that number would start for that component at 100%. “Rolled up to 100%” is the term that we use.

The new administration, the Biden administration, said that they would like to see the real local content number to be the one used, whatever that is—66%, 83%, 94%. Canada and Mexico successfully appealed that and said that this was not what we agreed on and that this is not the way the industry works.

Even though I represent component suppliers, we always argued during the NAFTA negotiations that if we tighten the restrictions too much, the penalty for automakers for not meeting the compliance number is a 2.5% most favoured nation tariff, so just turn around and pay the tariff and then maybe not be guided at all by the rules of origin. Canada and Mexico won that. We're waiting for the Americans to give a report on how they're going to comply with that, but they've been silent since.

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

Perfect.

Three weeks ago, the United States also took steps to impose significant new tariffs on imports from China, notably on electric vehicles, batteries and essential minerals.

How can we prevent Canada from becoming a gateway to China? We're well aware of Canada's lax attitude, particularly with regard to imports of goods produced using forced labour and control over investments.

In short, how can we prevent Canada from becoming a kind of sieve, given the growing mistrust of Americans?