International Trade Committee on June 13th, 2024

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

I call the meeting to order.

This is meeting number 112 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 preventative measures in place to protect the health and safety of all participants, including our interpreters.

Use only a black, approved earpiece. Keep your earpiece away from all microphones at all times. When you're not using the microphone, please place it face down on the sticker on the table.

Today's meeting is taking place in a hybrid format. For anyone who wishes to speak, please raise your hand. If any technical issues arise, we will suspend until those are corrected.

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're very happy to have Minister Ng with us today, the Minister of Export Promotion, International Trade and Economic Development.

It's terrific to have you here. You haven't been here for a little while, so it's especially nice to have you here today.

[Mary Ng, Liberal, Minister of Export Promotion]

I was just here. I always feel like I was just here.

[The Chair, Liberal, Judy Sgro]

That's because we welcome you, and we appreciate you so much when you come.

Also with the minister, we have, from the Department of Agriculture and Agri-Food, Matthew Smith, chief agriculture negotiator. From the Department of Foreign Affairs, Trade and Development, we have Rob Stewart, deputy minister, international trade; Aaron Fowler, associate assistant deputy minister, trade policy and negotiations; Mark Allen, director general of North America; and Mary-Catherine Speirs, director general, North American trade policy and negotiations bureau. We look forward to being able to ask them questions.

Minister Ng, we turn the floor over to you.

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

Thank you, Madam Chair.

Good afternoon to you and to all of the members of the trade committee.

Let me begin by commending the committee for the unanimous decision to study the upcoming 2026 CUSMA review. There are some things we may not agree with in this place, whether it be climate change, tax fairness or reproductive rights, but one thing I think we call all agree on is the importance of free trade with our North American allies to the Canadian economy.

Canada, the United States and Mexico are blessed with shared borders, shared values and unprecedented levels of cross-border trade and co‑operation. This partnership has deepened and evolved over the decades, with the Canada‑United States‑Mexico Agreement, or CUSMA, serving as the latest chapter in this relationship.

The modern era of free trade in North America began with the Canada-U.S. Free Trade Agreement in 1988 and deepened with the historic creation of NAFTA in 1994 to include Mexico. Following a lengthy and intense negotiation, CUSMA emerged as the successor agreement to NAFTA and continues to safeguard Canada's preferential access to the United States and Mexico while driving integration and competitiveness in our North American market.

[The Chair, Liberal, Judy Sgro]

Excuse me, Minister, can you just hold on a second? I think we're having a problem with translation.

We're testing the translation, so please say something in French.

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

Okay. Canada, the United States and Mexico are blessed with shared borders.

[The Chair, Liberal, Judy Sgro]

That's fine.

Please proceed now, Minister.

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

The numbers speak for themselves. CUSMA, that market, represents 506 million consumers and a combined GDP of $42 trillion. Trilateral merchandise trade between our three countries reached $1.9 trillion in 2023. That's a 3.5% increase over 2022, but nearly a fivefold increase since 1993. The result is one of the most unique and successful trading blocs in the world, one that has benefited Canadian exporters, businesses, innovators, producers and workers, and the communities across Canada from coast to coast to coast that are supported by trade. It's why our government fought so hard for CUSMA.

Despite the short-sighted pleas from the opposition to capitulate to the White House, we stood firm and we delivered an ambitious and progressive agreement that will benefit Canadians. We stood up for Canada when others told us not to bother.

Earlier this year, the Prime Minister announced that the minister of industry and I would spearhead a team Canada engagement strategy to reinforce the value of this trade agreement and what it brings. In my discussions with businesses and workers across Canada and throughout North America, one message stands out: our trade relationship is not just a special one, it is an essential one. We must do everything we can to preserve, to strengthen and to deepen it.

Quite simply, CUSMA provides certainty and stability, an increasingly rare and important asset in the face of global uncertainty. The international community is still coming to terms with the realization that global supply chains are more fragile today. To strengthen our supply chains and make them more resilient in the face of future global shocks, we must work closely with our allies and with our neighbours.

Last month, I joined the U.S. Trade Representative and the Mexican Secretary of Economy in Phoenix for the fourth CUSMA Free Trade Commission meeting. These meetings are a recognition that this complex and ever-evolving trading relationship requires maintenance. This year, we agreed to strengthen our joint preparedness to address emergency situations, ensuring free trade can remain a source of predictability and resiliency. We also agreed to strengthen trilateral co-operation, including the integration of small and medium-sized businesses into supply chains, bolstering North American competitiveness and increasing opportunities for our workers. We agreed to jointly collaborate on issues related to non-market policies and practices that could undermine CUSMA and harm our workers. Perhaps most importantly, we agreed that CUSMA is a high-standard ambitious agreement that creates new opportunities for all.

However, to ensure that CUSMA remains the gold standard agreement, it contains a requirement to review its operations. The 2026 review will allow us to ensure CUSMA remains effective and responsive to the current economic conditions. This joint review process is not a renegotiation, but rather it's a focused checkpoint to ensure that CUSMA remains relevant and continues to strengthen our region's competitiveness and resilience, all while serving Canada's interests. This type of co-operation is made easier by the fact that our countries enjoy shared values and a shared respect for the rules-based international order, including high environmental and labour standards.

A shining example of this is the auto sector. From Oshawa to Oakville to St. Thomas to Windsor, we know Canada's auto sector has long been a global leader. We also know that the auto sector is undergoing a profound transformation. Blessed with a tremendously talented workforce and people, a reliable and clean energy grid, access to critical minerals and a deep integration with the American and Mexican markets, our focus is to produce electric vehicles and their components right here in Canada. It's why we're building Canada's comprehensive EV supply chain and creating thousands of good-paying jobs.

Ultimately, this review process is an opportunity to ensure that CUSMA remains up to date and adaptable. Since CUSMA was ratified, we've grappled with a global pandemic, Russia's illegal invasion of Ukraine and other geopolitical shocks. The stability provided by CUSMA is more crucial than ever. Quite simply, our economic interests, our trade interests, our national interests and our national security are inextricably linked, and CUSMA mutually reinforces each and every one of them.

I look forward to this review process and to ensuring that the agreement and its implementation continues to proceed well, and that trilateral co-operation remains strong.

Thank you very much, Madam Chair, and I look forward to taking questions from the committee.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Minister Ng.

We go now to members.

We go now to Mr. Baldinelli, for six minutes, please.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

Minister, thank you for being with us this afternoon.

Forgive me for not joining the chorus and singing along with your notion on your Liberal side of Kumbaya. Instead, during your time in office, your record is one of failure. Sadly, under your watch, Mexico has now become the United States' biggest trading partner. No longer is it Canada.

Given your record, Canadians can be excused for harbouring some concerns regarding your government's negotiating skills. You talked about standing up for Canada in CUSMA. Essentially, you were presented the deal. The United States and Mexico had come to an agreement. It was either take it or leave it. That's what your stand had taken.

Despite CUSMA being negotiated, there are still issues such as rules of origin, dairy, steel and aluminum, digital services tax, forced labour, softwood—softwood for nine years now.

We've had past witnesses testify that the U.S. is most likely to use this review to push its views on current trade disputes to obtain more favourable outcomes. How does Canada respond when the U.S. trade representative, Katherine Tai, has already indicated, at a Brookings Institution event in March, that “the question is always going to be, do you have enough, have you changed the leverage composition, to get to the political solution that you need.”

Minister, how do you respond?

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

Let me start with your contention that we took any deal. To the contrary, we wanted a good deal and only a good deal for Canada. You might remember that you and your colleagues suggested that we just take any deal. We didn't do that. We protected dispute settlement. We protected the cultural industries, and we protected IP. That's what we did in renegotiating CUSMA.

Today, it is and continues to be a hallmark agreement to create competitiveness for our workers and for our people, while fighting climate change and transitioning our economy so that they can be strong in creating jobs.

The various issues that you raised are, of course, important ones. In a trade relationship that's nearly $2 trillion, you would expect that there are issues, and those issues are being dealt with. I'm happy to answer each of them individually, but suffice it to say that in this review, the work that we need to do...in all of my conversations with American businesses, with American labour workers, with Canadians, providing stability and certainty is what we must do, because our competition is not in North America. It's what we need to strengthen in our competitiveness.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Let me just build on that.

One recent witness who appeared at the last hearing, Meredith Lilly, the Simon Reisman chair of international economics at Carleton, talked about this review and taking a three-pronged approach: first, be proactive, and that's why we're meeting here today; second, demonstrate for the three parties how the agreement is beneficial to all, including dispute settlement; and third, address the elephant in the room, which is China, and the recent tariffs that both the U.S. and the EU have undertaken.

Canada needs to address Chinese overcapacity. Minister, on May 14, the U.S. acted and placed tariffs not only on steel and aluminum, but also on EVs coming in from China. Then the EU responded, just yesterday. Why is it taking so long for Canada to respond and look into this matter?

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

Canada has been at this matter from day one.

Let me be clear to everyone here in this committee and to Canadians who are watching: Canada is not going to be a back door to the U.S. market or a dumping ground for unfairly traded goods. We've been very clear about that.

Canada is committed to building an EV supply chain for the future of North America. Canada and the United States have been building automobiles for over 100 years. The auto sector is changing dramatically, but Canada is well positioned, from critical minerals to batteries to the assembly and the production of electric vehicles. It's going to be made in Canada and we're going to protect our Canadian workers. We have—

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Minister, just building on that, if I could, then, why has the Ford Motor Company said that it's going to slow its EV production to 2027? The GM facility in my community, just next to my riding, has already indicated that it's going to slow down the timing of its EV battery production. There are 300 employees who have been laid off. Their V6 line has already been torn out, and GM has made the decision that it's not ready to proceed.

We've had witnesses like Brian Kingston come forward in saying that there's a disconnect between this government's environmental policies and its investment policies. We're looking for alignment with what's going on in the United States, for example, in terms of the EV.

How can we facilitate the growth of the EV market in Canada when we can't get a critical minerals mine built for 15 years? Our supply chain is not there. We're not getting sales by Canadians to buy EVs because the cost is too high in this country. We're going to become a dumping ground for China, which has dominated the EV market. How are we going to respond to that?

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

Well, I would like to talk up the Canadian economy on this side and—

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Tell that to the 300 workers who are now laid off—

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

Well, why don't we talk about—

[Tony Baldinelli, Conservative, Niagara Falls, ON]

—at the GM facility, a place where I used to work. There are 300 people who are no longer working there.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I have a point of order.

[The Chair, Liberal, Judy Sgro]

Please allow the minister to respond. You have also no time left as it is.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Madam Chair, I have a point of order.

We have to be mindful of the interpreters. We've already been through this. If two people are talking at the same time, that's not good for the interpreters. Therefore, when questions are asked of the minister, I would ask that we let the minister respond and that we respect the folks who are interpreting for those who are trying to have a conversation.

[The Chair, Liberal, Judy Sgro]

Thank you very much for raising that issue.

Minister, I'll turn the floor over to you.

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

It is precisely a plan for the environment that has created the billions of dollars of investment into the EV supply chain, all the way from critical minerals to processing to the building of the batteries. I don't need to repeat the investments, whether they're from Stellantis or most recently with Honda or Volkswagen, some of the most significant....

Those batteries and those cars are going to be built in Canada. It's going to create thousands upon thousands of jobs in Canada. It isn't just in the automobile shop floor. It is going to be the entire value chain and supply chain, which is also very exciting. The kinds of investments that are being made to make sure that workers in places like Windsor, which were not seeing growth.... They are now so excited. Small businesses are growing. Workers and homes are being built. It is exciting, and it is because of a plan on the environment, a plan to be able to build electric vehicles, and the investments that are here. That work is very well under way.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Minister.

We'll move on to Mr. Sheehan, please, for six minutes.

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

Thank you very much, Minister, for your presentation and for being here for the CUSMA review.

I would be remiss not to mention that under your tenure you've seen other trade deals that have come to fruition. Could you speak to how having CUSMA and all these other trade deals is good for Canadian workers and the Canadian economy?