International Trade Committee on Oct. 30th, 2025

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

I'll share my time with my colleague, Mr. Naqvi.

My first question is for Mr. Verheul.

Mr. Verheul, you mentioned predictability and how concerned everyone is about it. The current situation is very different from what you experienced during the first round of negotiations.

I myself have been talking about predictability for 20 years in the banking sector. One thing I have learned is to always prepare for the worst and hope for the best. Right now, Canada is negotiating with the United States. I heard you say that we need to reach an agreement with Mexico and the United States. At the same time, many companies are telling us about the need to diversify markets.

I've heard a lot of advice about negotiating. Beyond that, what would you advise Canada to do to prepare for the worst?

[Steve Verheul]

I think that there are a multitude of things that we have to do. It's a complicated network of various actions that we have to be pursuing.

When it comes to the U.S., without a doubt, we have to keep lines of communication open. We have to engage in discussions on what might seem like a negotiation, because we might learns some things from that, even if there is not likely to be a great outcome to that. We have to keep that process going.

On the diversification of exports, we have to pursue that at the same time, but I think we have to recognize that the way our economy is structured now in many sectors it is all oriented towards the U.S., for example, U.S. regulatory requirements or U.S. consumer expectations. A lot of what we send to the U.S. is to be further processed in the U.S. Transitioning to other markets on a large scale is a big issue. I think we need to be paying more attention to that.

If we're going to get into Europe more, for example, then I think we need to think about how we can help Canadian businesses make the transition to producing to other standards, the requirements of the buyer in Europe, and make sure that they can really make progress there. I don't think that's happening to a great extent either.

We have to pursue both. We have to do as much as we can with the U.S. without sacrificing interest, which would happen with a bad deal. We have to pursue diversification and think a bit more about what that means and what it's going to require. As we've all heard, we need to do more with respect to getting what we can out of the domestic market. That, too, needs some more thought than has been given to it so far.

Those are the three real avenues that I think we need to be focusing on.

[The Vice-Chair, Conservative, Adam Chambers]

Mr. Naqvi, go ahead, please.

[Yasir Naqvi, Liberal, Ottawa Centre, ON]

Thank you, Mr. Verheul, for being here.

I want to go to section 232. You talked about it a bit. It's clearly been weaponized. The use is illegal.

I'm interested in your thoughts on how we make CUSMA or any agreement moving forward 232-proof. Is this a trend you see being used often, moving forward? We'll find out the legality of it by the U.S. Supreme Court at some point, but I think it's a serious vulnerability that we're seeing, and I'm interested in your thoughts as to how we proceed and not find ourselves in the same place.

[Steve Verheul]

Yes, that's the big challenge in front of us.

I'm not aware of any challenges out there now with respect to the legality of section 232. The broad tariffs are a subject that has gone to the Supreme Court. It will decide on that in January. I think there's a good chance the case will be decided in our favour. The law is very strong in that particular case.

However, on section 232, even though it talks about threats to national security as justification for imposing tariffs on Canada for things like steel and aluminum—which, on its face, seems kind of ludicrous—it is on more solid legal ground, so we have to deal with those. Looking back briefly to the first negotiation, the U.S. imposed those same section 232 tariffs against us on steel and aluminum. We managed to get them removed, but it took time.

Our biggest challenge right now is that we have to stop putting ourselves in the position of being in too big a hurry, because the timing, in many ways, isn't quite right. There's no decent deal on the table from the U.S. for Canada right now. There may be in the future. I think there's a good chance there will be, but we're going to have to see some of those economic indicators change in the U.S. We're going to have to see more bad job numbers and more bad inflation numbers.

I always keep in mind that, while President Trump certainly loves tariffs, as he frequently says, that love isn't shared by many others in the U.S. in the same kind of way. I've talked to many Republican congressmen. U.S. industry doesn't share this love, by and large. The U.S. population is against it. Therefore, we have to let some of that discontent get stronger and stronger. As hard as it is, we're going to have to wait for better conditions.

[Yasir Naqvi, Liberal, Ottawa Centre, ON]

Thank you very much.

[The Vice-Chair, Conservative, Adam Chambers]

Go ahead, Monsieur Savard-Tremblay.

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

Thank you, Mr. Chair.

Mr. Verheul, when you were a negotiator, you were a key player in the CUSMA renegotiation, during which the investor-state dispute settlement mechanism was dropped. You referred to it as a relic from another era.

I agree with you on that. We should never have put that in in the first place.

Do you think that mechanism should not be part of the next version of the agreement?

[Steve Verheul]

The dispute settlement mechanism should absolutely be part of the new version. We made great improvements over the NAFTA—

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

I'm talking about the investor-state dispute settlement mechanism that was dropped.

[Steve Verheul]

Investor-state provisions.... As you know, we ended up dropping those in the new agreement. Effectively, not having those provisions isn't causing us that much difficulty. We still have them with Mexico because of the CPTPP. We generally have some degree of confidence in U.S. courts when it comes to those types of issues. I don't think we need the investor-state provisions.

I'd also mention that the U.S., not entirely on understandable grounds, has never lost an investor-state decision. We've lost many against the U.S. I have further views about that, but I won't expand on them.

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

So you're not suggesting we bring that back. You're glad you were a key player in the negotiations during which it was dropped.

[Steve Verheul]

I don't think there's any need to bring that back, no.

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

I completely agree with you. I don't think we should even have put it in there in the first place.

As you know, we also have a problem with imports from China. Chinese exporters often engage in dumping to pass their products off as North American. That's often the case with metals, which go through Mexico.

Do you think we should change the rules on dumping?

Are the CUSMA rules good enough? Should we go even further and have even more measures in place?

[Steve Verheul]

Without a doubt, we need to go further. This is one of the issues on which we can work with the U.S.

Mexico will be a bit more difficult, but I think they won't have a choice but to join in.

China is dumping products in our markets, overproducing, being forced to find other markets for the various things they produce and subsidizing products very heavily. This is one of the areas where we can have common effort with the U.S., which would put us on the same page, in part, in the upcoming negotiations. We can take common approaches against China so that we have a coherent North American approach to deal with these issues. Don't just do it country by country, because there's always going to be one country that's weaker than the others. Let's have a common approach to deal with this.

[The Vice-Chair, Conservative, Adam Chambers]

Thank you very much.

We have time for one final round. We'll have three minutes each for Mr. Lefebvre and then Mr. Fonseca.

Mr. Lefebvre.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

Thank you, Mr. Chair.

I thank all the witnesses for being with us.

I'm sitting in for my colleague, Jason Groleau, and I'm very happy to be here. I'm usually at the Standing Committee on Finance, which is closely connected to this committee. I'm also happy to see Mr. Caron and Mr. Gobeil here.

In my central Quebec riding of Victoriaville, agriculture is important. I'm worried because there's a lot of talk about steel, aluminum and the auto sector in the negotiations, but not much is being said about agriculture, supply management and forestry.

How worried are you about the negotiations that are under way?

My question is for Mr. Gobeil and Mr. Caron.

[Daniel Gobeil]

Thank you, Mr. Lefebvre.

Mr. Carney and Mr. LeBlanc have actually made public commitments. However, as Mr. Verheul said, consultations happened at a very high level with the provincial premiers' teams. We represent the producers, and we have a lot of information.

I would point out that, during the previous negotiations, concessions were made to cap Canada's exports around the world. That was unprecedented: a three-country agreement that prevented Canada from exporting around the world.

Our door is definitely open. We're ready to participate in consultations, but we definitely won't be making any concessions.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

As you said, concessions were made during the previous negotiations. You've already done your share.

[Daniel Gobeil]

That's right. Mr. Wiens said that the concessions represented more than 18% of our production. The dairy sector is at a breaking point.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

There's no more room.

[Daniel Gobeil]

It has compromised the growth of dairy farms. We know entrepreneurs need to grow to fight inflation and keep their businesses profitable.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

What do you think, Mr. Caron?

[Martin Caron]

Let's remember that we rank ninth worldwide for agri-food exports, which is significant, especially since Canada spends less than 1% of its total budget on the agri-food sector. That contribution will have to go up if the government really wants to invest in our systems.

Keep in mind that we believe agri-food's contribution to the GDP could rise by $100 billion over the next 10 years.

That said, we need predictability and investment, as well as agreements like CUSMA. We're in many of the same markets as Mexico and the United States. For example, we're on the same exchange for grains. The prices are established. The same goes for pork. We're integrated, but—

[The Vice-Chair, Conservative, Adam Chambers]

Thank you very much, Monsieur Caron et Monsieur Lefebvre.

Go ahead, Mr. Fonseca.