International Trade Committee on June 13th, 2024

[Mary Ng, Liberal, Markham—Thornhill, ON]

Canada is enviable. We used to be able to say that we were the only G7 country with a free trade agreement with every other G7 country, but now we're the first because others have joined that as well. We continue to negotiate agreements because, I think now more than ever, the rules-based international order and the rules that govern trade are what investors and businesses are looking for. They're good for businesses, and they're good for workers. Rules matter because they give predictability and certainty to businesses and to investors. Canada is so well placed for that as a country that respects the rule of law, particularly around open and free trade under a rules-based system.

However, having a strong North American competitive trading bloc, together with those countries and those trading partners in Asia—including Japan, Australia, New Zealand, Singapore, Vietnam and Malaysia—and then the entire European Union means that Canada is in this well-positioned place. I talk to countless investors and businesses that look to Canada as a destination to invest in, to grow in and to partner with because of our access to a number of trade agreements. It is also the incredible talent that we have in this country. It is the excellent investment environment that we have, particularly for the economy of the future, that has a greater reliance on services and a greater reliance on solutions that will actually deal with climate change. They're solutions that, on the one hand, deal with climate change but actually also will grow those incredibly innovative entrepreneurs and businesses—I know that you have a bunch of them—certainly all across Canada.

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

Thank you for that.

You mentioned the Japanese investments, but we've seen German investments as well. I'm an MP for Ontario, and you talked about the supply chain. We have Algoma Steel and Tenaris in Sault Ste. Marie. Algoma Steel feeds 50% of its products into the United States, but it also does the car industry on both sides of the border. Because of CUSMA, the Japanese and the Germans are choosing Canada over other places in North America. What is our competitive advantage, and why are they doing that?

A second part of that question, since we're on steel and I only have a limited amount of time.... Regardless of what CUSMA looks like, when a president put section 232 tariffs, under the guise of national security, on all the world just to hit everybody, we hit back dollar for dollar with our anti-tariff actions on sleeping bags, Jack Daniel's or whatever, and it worked. Meanwhile, the Conservatives called our anti-tariffs dumb. They thought we should roll over and play dead.

Can you explain why those anti-tariffs worked so well and got us back on track to free trade?

[Mary Ng, Liberal, Markham—Thornhill, ON]

This relationship is a really important one, and a balanced relationship is also an important one.

We're very proud that we worked very hard with the Americans at the time to get those tariffs removed, because they were harmful to Canadian industry.

What you saw there and will continue to see, and what people should continue to expect to see, is Canada standing up strongly for Canadian sectors like steel and aluminum and, indeed, for all of the sectors that form this great economy in Canada from coast to coast to coast.

It was really terrific to spend the time with you at Tenaris because of its further expansion into Canada.

At the heart of your question is really what makes Canada so competitive and what makes the investment environment such a good one. If you look at industries in mining like Algoma, or Tenaris, which is actually producing steel components for the value chain, it is because Canada has a strong agreement like the one we have in CUSMA and it is through that clean energy and the skilled workforce that we have here in abundance.

I spent some time earlier this week with a handful of American CEOs who told me that Canada is the investment destination because they know they can count on us. They know there's the ability to train the workforce and have the workforce here in their organizations, and there is also the fact that we have a plan on climate that is going to produce the kind of energy that will be necessary for the industries of the future, all the way from advanced manufacturing to IT, AI and quantum, and the list goes on.

That's the attraction to Canada, which is why you hear me and so many, from the Deputy Prime Minister to the Prime Minister, talking up Canada. We're simply echoing what others are saying about Canada, because they are making the choices with their investments right here.

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

For the CUSMA review, you talked about the supply chain and, in particular, the critical minerals. It has been said that we are going to overtake China now as the most important critical mineral source in the world.

Can you please comment on that briefly?

[Mary Ng, Liberal, Markham—Thornhill, ON]

We have all of the critical minerals necessary to go into a battery. The investments we've made as a government in investment tax credits and the various incentives are actually creating an environment that is enabling that investment. Bloomberg has ranked Canada as the top investment destination, particularly for critical minerals, and our American partners are counting on Canada to be a supplier of critical minerals, which is a direct input into their green economy growth.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll move on to Mr. Blanchette-Joncas.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Madam Chair.

Good afternoon, Madam Minister. It's a pleasure to have you at committee today.

I'm going to talk to you about something that's very important to Quebeckers. You're probably familiar with it: the softwood lumber dispute. It's been a constant battle for 40 years now. Despite repeated rulings in our favour at the World Trade Organization, nothing is happening. We have trade agreements, including the Canada‑United States‑Mexico Agreement, which we are discussing today.

I'd like to know whether you acknowledge that Quebec is being penalized by the tariffs that the Americans find unjustified.

[Mary Ng, Liberal, Markham—Thornhill, ON]

I agree that they are unjustified. They're hurting the industry, they're hurting businesses and they're hurting the communities and the workers for which this important forestry sector and the softwood lumber industry provides.

That's why I had a meeting yesterday with probably the entire softwood lumber industry in Canada to keep working on how we can bring the Americans to the table so we can arrive at some kind of a negotiated resolution. That, in our view, is the best approach. At the same time, we are being aggressive with all of the other tools that we have, including mechanisms through dispute settlement panels. We're going to continue to do that.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Okay.

Madam Minister, I am presenting hard facts. Quebec is being particularly hard hit, as you know. We're responsible for about 20% of Canada's softwood lumber exports, but our businesses account for 48% of the funds currently being withheld in the United States.

I'd like to hear what you have to say about that. Do you acknowledge that, compared to the other provinces in Canada, Quebec is more penalized when it comes to softwood lumber?

[Mary Ng, Liberal, Markham—Thornhill, ON]

It was excellent to have the leaders of the softwood industry, particularly from Quebec. I hear directly from them on how important their contribution is, not only to the Quebec economy but also to the Canadian economy. I have been very clear with the Americans, and we've done this at all levels—the Prime Minister and I—to register how harmful this is and how unjustified these tariffs are.

We're going to keep working on that. It is a priority. I continue to work with the industry across Canada and certainly in Quebec.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Madam Minister, Quebec is more penalized than the other provinces with respect to softwood lumber.

What have you done to try to resolve this situation? You must know that it's not working, given the figures I just mentioned. Also, what are you going to do as part of the review of how this agreement is working?

[Mary Ng, Liberal, Markham—Thornhill, ON]

Well, what we were able to do very recently was get the Americans to agree to the establishment of a dispute settlement panel. They've worked in our favour because the rulings that come out often indicate that Canada doesn't subsidize its softwood industry.

Having an aggressive strategy there—along with continuing to work with Quebec and the industry for resolution with the Americans—is something that is on my top-priority list.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Madam Minister, you say you represent all Canadians, including Quebeckers. In that case, why do you accept that Quebeckers are being penalized more on softwood lumber, a crucial economic sector for Quebec and its regions? I'd like to hear you talk about it in person.

[Mary Ng, Liberal, Markham—Thornhill, ON]

I don't accept that at all. I have to stand up for Quebec as I stand up for the sector all across Canada. We are fighting it.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

How do you explain the following figures?

In New Brunswick, J.D. Irving pays 4% tax on its exports. In British Columbia, the Canfor tax rate is 5% and the West Fraser Timber Co. Ltd. tax rate is 9%. In Quebec, however, Resolute pays 19.86% in tax. How do you explain this imbalance between the provinces?

You advocate for Canadian unity and your party goes on and on about it. How can you accept this inequity in international trade and in an economic sector that's crucial for Quebeckers? Why are you unable to negotiate concrete measures to counter this inequity, which is hurting the economy of Quebec's regions?

[Mary Ng, Liberal, Markham—Thornhill, ON]

If we are a country of rule of law, I also have to accept the rule of law when the Department of Commerce in the United States does its review. The U.S. has its investigation methodology, and we object to it on a regular basis.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

You also need to face up to reality, Madam Minister. Right now, as the data I just mentioned shows, your government is incapable of concretely defending an important economic sector in Quebec, its forestry sector. You can tell us that you have good intentions, but clearly, even though the World Trade Organization has repeatedly ruled in Canada's favour, you're unable to meaningfully defend our economic interests. Do you recognize that?

[Mary Ng, Liberal, Markham—Thornhill, ON]

Well, I don't accept that. All I can say to you is that I stand up for Quebec industries, as I do for all Canadian industries.

However, I will also say that, in Quebec, we have seen tremendous growth in the Bromont to Albany corridor, where semiconductors—precisely between Canada and the Americans—are a growing area that is creating hundreds of jobs and greater competitiveness for Quebec more than anywhere else in that sector because of the expertise that's been developed. The aerospace industry is seeing tremendous growth between our two countries. Quebec is attracting incredible investments for green aluminum.

Those are the other areas of the Quebec economy that we have stood up for and made investments alongside, precisely to grow the economy, so those excellent jobs are accruing for Quebeckers.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We're over to Mr. Cannings for six minutes, please.

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

Thank you, Madam Chair.

Thank you, Minister, for being with us today.

I'm sorry I'm not there in person, but I can assure you it's a beautiful day in the Okanagan.

I just want to start with a question not directly related to CUSMA—it is related, and I'll get right to that—but it relates to our study we've just completed on the negotiations that are under way now between Canada and Ecuador for a free trade agreement.

As you know, Ecuador, in 2018, basically tore up its investment protection agreement with Canada and other countries because of the investor-state dispute mechanisms that are contained in them. After that, their courts found that it was unconstitutional to have investor-state dispute mechanisms in free trade agreements with Ecuador.

Finally, last month they had a referendum that put that to bed once and for all. The people of Ecuador resoundingly rejected investor-state dispute mechanisms once again.

I'm just wanting to get your assurance that Canada will not be pursuing an investor-state dispute mechanism in that free trade agreement with Ecuador.

[Mary Ng, Liberal, Markham—Thornhill, ON]

Well, thank you very much.

It would be great, Richard, if you were here too, but I totally understand why being in the Okanagan is something a little bit more desirable than being here in the committee room in the basement of West Block.

I want to thank the committee for doing the study on the free trade agreement with Ecuador. In principle, what I would say is that Canadians should certainly expect free trade agreements negotiated by Canada to respect the values that are important to Canadians, and the Ecuador agreement will be no different.

On this particular issue, through the negotiations, we certainly are going to need to talk to our Ecuadorian counterparts here because a negotiation is exactly that. It has to work for Canada, and it has to work for our trading partner. As you know, we need to balance the rights of investors, on the one hand, with those of a state able to govern in its own sovereignty.

On this one, we will make sure the negotiations will be in keeping with the values that are really important to all Canadians.

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

Thank you.

I do hope you will keep the views of the Ecuadorian people in mind when you do that.

This directly relates to CUSMA, because in the first version of CUSMA that we're thinking of looking at again right now, one of the major things that came out of it was getting rid of section 11, the ISDS part that was in NAFTA, and eliminating that for trade between Canada and the United States.

I hope that we will continue that. Minister Freeland made a big point of saying what a wonderful thing it was not to have that ISDS provision in CUSMA. I hope that we retain that. Those ISDS provisions remain in place in regard to trade with Mexico, and there are some people who would like to make sure that those are made stronger and expanded. I'm just wondering if you could comment on that. What would Canada's stance be on investor-state dispute mechanisms if we did reopen CUSMA for renegotiation?

[Mary Ng, Liberal, Markham—Thornhill, ON]

It bears repeating and clarifying that the 2026 review is not a renegotiation. It is a review. We were very proud of the work that was done when it was renegotiated. ISDS is no longer there, and that position hasn't changed for us.

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

I will move on then to some of the other provisions in CUSMA.

One of them in the labour chapter is the rapid response process, which seems to have been working well at least to some extent. I'm wondering if you have any lessons learned there, how that has worked and how it could be improved. Again, we've heard from some witnesses who would like to see those mechanisms broadened to include other industries, especially big agriculture and agriculture workers so that agriculture labour is treated properly and their rights are respected, as the rapid response mechanism is supposed to protect.