International Trade Committee on Sept. 22nd, 2025

[Randy Hoback, Conservative, Prince Albert, SK]

I'm just kind of curious, because that's one of the questions I get, back in Saskatchewan, when talking to a lot of the canola producers and manufacturers. This time last year, before the tariffs ever hit, they were saying, “We have to be proactive. We have to be on the ground. We have to be taking steps to mitigate this.”

Were any steps taken proactively to offset these tariffs possibly coming into play for either the canola or the fisheries industry?

[Aaron Fowler]

There have been long-standing conversations with China, both bilaterally and in a variety of multilateral forums, to set out clearly the nature of Canada's concerns related to the sectors in which the government has felt compelled to take action. I don't think those concerns would have come as a surprise to China. Frankly, I would say that the political and market risks associated with that market, particularly for canola exporters, would already have been very well known by that sector.

[Randy Hoback, Conservative, Prince Albert, SK]

So then there should have—

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Hoback. You have three seconds.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

[The Chair, Liberal, Judy Sgro]

All right.

Mr. Lavoie will be the last member asking questions on this segment.

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

Thank you, Madam Chair.

Mr. Fowler, thank you for joining us today.

My name is Steeve Lavoie and I'm from the Quebec City area. To provide some background, I worked for 20 years in the banking industry and for a long time in small and medium‑sized enterprises, or SMEs. My questions will focus more on SMEs in Canada.

My colleague spoke earlier about economic and geopolitical upheavals.

In your experience, what major challenges are our SMEs currently facing in international trade?

[Aaron Fowler]

Good question.

It's always difficult for small and medium‑sized enterprises to know which free trade agreements are in force and to navigate their way through them. There are 15 agreements, which are all slightly different. There are also rules established by the WTO, which differ slightly in 51 markets around the world. Most SMEs are fairly familiar with the agreements that they use often. However, identifying opportunities within other agreements is challenging for them.

When unexpected changes occur, it takes them a while to adapt. Yet there's a cost associated with not knowing how a change will affect their commercial interests in the market.

Our department is working hard to provide our SMEs with the information that they need to make decisions and to use the agreements available to them.

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

Would you say that their greatest challenge is understanding the agreements and knowing the tools that provide access to funding? They must also spend time building this knowledge.

What are the biggest challenges and how can we help them?

[Aaron Fowler]

The main challenge is the time involved. The agreements are highly technical and lengthy. The rules that apply to companies such as SMEs, notably country of origin rules, are really quite complex.

Depending on their interests, the companies may need expert advice, for example. We try to support them and give them plenty of information on CUSMA.

The introduction of American tariffs forced companies to face reality after operating in a completely free trade environment for almost 30 years. They must now use CUSMA, even for products not previously subject to tariffs.

We've implemented many systems. We've set up a 1‑800 telephone line, posted information on our websites and given courses to SMEs so that they fully understand the impact of American decisions and how to get around these agreements. We've also done similar things in other situations.

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

SMEs are the driving force behind our economy. If you could give SMEs just one piece of advice in the current climate, what would it be?

[Aaron Fowler]

It would be to understand their situation and use the services of trade commissioners around the world.

A network of offices across Canada, in your communities, is there to help you. Nearly 1,000 professionals around the world are ready to help you navigate the complexities of international markets.

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

Thank you, Mr. Fowler.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Fowler, thank you and your officials for coming before us today. From being on the international trade committee, I'm used to seeing you here quite frequently, and I think you can rest assured that we will be inviting you back before too long, so thank you all very much.

We will suspend while we prepare for the next witnesses.

[The Chair, Liberal, Judy Sgro]

I call the meeting back to order.

For our second hour of committee, we have with us Lawrence Herman, counsel for Cassidy Levy Kent. I'm so glad you were able to rearrange your schedule, Mr. Herman, so that you could appear before us today. I believe they've tested your mic and it's in fine shape. Thank you for finding the time to come before us today.

We have Meredith Lilly, full professor and Simon Reisman chair in international economic policy at Carleton University.

From the Canadian Agri-Food Trade Alliance, we have Michael Harvey, executive director.

Welcome to you all. We appreciate very much your finding the time to be with us today.

Mr. Herman, I invite you to make an opening statement of up to five minutes, please.

[Lawrence Herman, Counsel, Cassidy Levy Kent LLP, As an Individual]

Thank you, Madam Chair.

I'm pleased to have the opportunity to speak today. I think that you're carrying out a vital study for Canada.

I just want to make a few brief comments, and then we can deal with some of the points during the question period.

I know that you are looking at very broad issues, and I really want to talk about some rather smaller issues, if I can put it that way. However, let me just comment on the state of the world as I see it. I'm not a diplomat or an insider, so what I'm saying is based on my experience and knowledge of the trading system.

The problem we're facing is that there are no rules that apply, as far as the United States is concerned. Their policy is to use tariffs, through the president's office. It is a trade policy based on tariffs, and that is what Canada has to face. The reality is that, because of the policies of the U.S. administration—not just the U.S. administration, as there are other factors, but largely because of the policies of the U.S. administration—the WTO as an institution is dysfunctional, and the rules-based system that we used to know no longer exists. That is a fact. That's the way the world is, and Canada has to be prepared to deal with it.

Now, others have some more optimistic views, but that is the way I see it. In my view, that's the challenge Canada has to deal with: a world where the old GATT- and WTO-based rules no longer apply, or at least we cannot have faith in those rules being applied, certainly, by the world's most important economy.

I want to talk about what is happening as a result of the tariff wars that the Trump administration has been waging against the world. We—Canada and our manufacturers—now face a world where huge volumes of product once destined for the United States are on global markets—and I mean it, huge volumes of product. They will find their way into the Canadian market one way or another. Many of those products, not all, are unfairly traded. When I say “unfairly traded”, I mean either dumped or subsidized, and that is putting huge pressures on Canadian manufacturers.

We have a system of trade laws that deal with these—we call them trade remedy laws. They are basically laws that give the private sector the opportunity to take action against unfairly traded products. We have not adjusted our trade remedy laws to deal with the changes in the world order, and that is something this committee, I believe, needs to address. We have those laws—which, as I said, are driven by the private sector—but they are putting enormous burdens on our companies, and I think the committee needs to look at ways in which those laws can be adjusted to take into account the new reality. Those are the trade remedy laws.

We also have laws in Canada that allow the government to respond to international trading circumstances that impact Canada, and those laws can be used by the government in power, by order in council. Those laws also need to be looked at. They can be updated to make them stronger, more certain and more embracive, to deal with a changed world order. This is not the old GATT- or WTO-based order that we knew for decades. It is a new world, and it has put enormous burdens on Canadian companies.

Now, I'm talking about the manufacturing sector. We need to address—and this can be done, I think, by others who are going to be speaking today—a whole range of issues beyond manufacturers, concerning intellectual property, artificial intelligence, etc. There's a whole range of issues concerning sectors other than the manufacturing sector that are at stake.

Canada is faced with a new world, and we have to find ways in which we can effectively deal with those new circumstances.

I'm going to leave it at that, and I'd be happy to answer any questions.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Herman.

You referenced the new reality and some of the new rules that you think the government needs to look at. Could I suggest that you put pen to paper and maybe send something to the clerk for the reference of all committee members? It would be appreciated if that is possible.

[Lawrence Herman]

I did send in something, Madam Chair. I don't know if it was possible to have it translated and circulated, but I did send in something. Bearing in mind that you have so many people appearing and so much to look at, I didn't want to inundate you with too much detail, but I put in a three-page paper, and it is there. The clerk will have it.

[The Chair, Liberal, Judy Sgro]

Mr. Herman, it's with translation, so we will get it in the next 10 days or so. Thank you very much.

[Lawrence Herman]

I should say that there's a lot of detail that I left out because I thought it wasn't appropriate to go into the details, but we can address that at a subsequent stage.

[The Chair, Liberal, Judy Sgro]

We may just do that. Thank you very much.

Ms. Lilly, the floor is yours.

[Meredith Lilly, Full Professor and Simon Reisman Chair in International Economic Policy, Carleton University, As an Individual]

Thank you, Chair.

Good afternoon, everyone.

Thank you for inviting me to appear before you.

My name is Meredith Lilly, and I have been a professor of international trade at Carleton University since 2016. Prior to that, I served as foreign affairs and international trade adviser to Prime Minister Harper, and I have worked on many of Canada's trade issues and agreements.

In my opening statement, I'd like to focus on the government's immediate plans for special measures on trade. Our two largest trading partners, the United States and China, are in their own ways disrupting long-established rules for international trade while also creating new rules for themselves and potentially for others. The United States is Canada's largest and most important trading partner by far, and its tariff policies are negatively impacting many Canadian industries, especially the steel, auto and softwood lumber sectors.

As your committee reflects on upholding rules-based trade practices, I would encourage you to consider several issues.

First, while rules-based behaviour is foundational to our society, Canada must face the reality that the game has fundamentally changed. In a new game where the big players are breaking rules and writing new ones to protect themselves in a manner that hurts or undermines other players, including Canada, we must revisit our own rules and determine if adherence to them serves Canadians. If not, you, as lawmakers, can create new rules that better protect and promote Canadian interests.

For example, China has engaged in rule-breaking for decades around steel exports, resulting in overcapacity and dumping on global markets, including Canada's. Rules-based appeals to the WTO have been ineffective. Despite years of warnings by the Americans about this problem, including transshipment through Canada, only the U.S.'s recent imposition of steep tariffs on steel imports globally has spurred action by others.

To protect the Canadian market from further dumping, the Carney government also moved to limit steel imports from most countries this summer. While Chinese steel is subject to an immediate tariff of 25%, most of our FTA partners and all of our non-FTA partners are also subject to quotas and tariffs beyond 2024 volumes. Canada has announced these rules under special provisions in the Customs Act. However, many of our valued trading partners see Canada as a rule-breaking outlier in this instance and are bewildered by what they view as Canada's sudden about-face on the importance of rules.

Second, the Carney government recently announced new policies to support the industries most impacted by U.S. tariff policy, which include a buy Canadian plan to boost Canadian content in government procurement and strategies to increase trade diversification to new markets beyond the U.S. While I support the government's intentions and believe that action is necessary to protect Canadian jobs, these policies also come with great risk.

If buy Canadian procurement policies are ambitious in their design, they will almost certainly violate our trade agreements with friends and allies in Europe and Asia, which are built on foundational international trade principles around non-discrimination and “most favoured nation” status. In addition, as Canada seeks to protect its market through tariffs and buy Canadian rules, we could also potentially undermine our own goals for trade diversification. After all, what countries will be open to Canadian exports if we block our market from their products? Worse, will we all just replicate the protectionist contagion started by the U.S.'s own buy American policies? Shortly after Prime Minister Carney announced buy Canadian for steel, the European Commission president, Ursula von der Leyen, announced the EU's buy European steel plan.

I encourage the government to develop its new rules in a manner that does not invite protectionist retaliation. If poorly enacted, these policies could result in fewer exports for Canadian firms, less trade with allies and higher costs for consumers.

Finally, it's important that Canada not simply follow the Americans down their path of protectionism. The U.S. has a much larger internal market and relies on trade for only 25% of its GDP. Canada is simply in a different class. Fully two-thirds of our GDP and three million Canadian jobs rely on trade. For Canada to succeed as a trading nation, we must co-operate with our trading partners and adhere to mutually agreed-upon rules. As the government further develops its plan to protect the economy through special measures on trade, I encourage it to work with allies to ensure that we can continue to trade successfully with our FTA partners.

Thank you, Chair. I'd be pleased to answer questions from the committee.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Lilly.

Mr. Harvey, the floor is yours for up to five minutes, please.

[Michael Harvey, Executive Director, Canadian Agri-Food Trade Alliance]

Good afternoon, everyone.

I want to thank the committee members for inviting me to speak today.

The Canadian Agri‑Food Trade Alliance, or CAFTA, is a coalition of national organizations that support a more open and fair international trading environment for the agriculture and agri‑food sector.

CAFTA members include farmers, ranchers, processors, producers and exporters from major trade‑dependent sectors such as beef, pork, cereals, oilseeds, sugar, pulses and soybeans.

Agri‑food accounts for one in nine jobs in Canada. Most of these jobs are in the export‑oriented agri‑food sector. Canada exports about $100 billion a year in agriculture and food products. Over half our agricultural production is exported or processed for export.

The Canadian agri‑food sector is in a particularly strong position to boost Canada's economic prosperity and diplomatic influence on the international stage.

However, profound geopolitical shifts are rapidly reshaping the international trading landscape, creating uncertainty and amplifying the risks for Canadian agri-food exporters. Canada's management of these shifts should avoid protectionist measures that weaken our credibility as supporters of the global rules-based trading order. Canadian agriculture remains underleveraged in Canadian international diplomacy and trade policy.

CAFTA is of the view that Canada requires a clear strategic framework for agri-food trade that strengthens and grows our agri-food exports and that champions the global rules-based trading system. This strategy should shape all of our trading relationships, from established to growing and potential markets. The Canadian government must explicitly prioritize agriculture as central to its diplomatic and economic strategies. Trade-liberalizing agri-food trade objectives must be central to all trade negotiations and reviews. Protectionist measures, both domestically and internationally, should be rejected, as they undermine the principles of free, fair and open trade.

As we prepare for the upcoming 2026 CUSMA review, protectionist pressures threaten the trade provisions that underpin trilateral agri-food trade. To reinforce a rules-based North American market and to avoid unintended negative impacts for Canadian agri-food, Canada must defend critical aspects of CUSMA for agri-food exporters, such as tariff-free trade, dispute settlement, TRQ and tariff preference levels, ambitious SPS measures and commitments, science-based decision-making, and regulatory co-operation.

Beyond CUSMA, CAFTA believes Canada requires a strengthened, proactive and innovative market access infrastructure to meet 21st century trade challenges. Non-tariff barriers, NTBs, have become the most important barrier in most markets, as tariffs were largely eliminated through negotiation of agreements. NTBs often require deep engagement with the regulatory systems of potential markets to be resolved.

I look forward to answering your questions.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will move on to our members.

Mr. McKenzie, you have six minutes, please.