International Trade Committee on Oct. 9th, 2025

[Yasir Naqvi, Liberal, Ottawa Centre, ON]

Thank you, Chair.

Let me start by thanking the three witnesses for their very thoughtful deliberation. I think it's very helpful to us as we're looking into the benefits of a rules-based trading system to Canada.

I was listening to all of you quite intently. Correct me if I'm wrong, but I heard that you are supportive of a rules-based trading system. You feel that it has helped Canada and Canadian businesses like the cattle sector and the steel sector immensely.

We find ourselves in a very precarious time, when rules are being changed and rules are being violated, starting with our biggest trading partner. Of course, we are trying to manage that circumstance in a way that is most beneficial to Canadian businesses and farmers.

I have a question that I'll ask all three of you. I have only a few minutes, so please be mindful of each other's time.

Can you give us advice as to what we as parliamentarians and the Canadian government should be doing in this moment in order to maintain the Canadian advantage and the rules-based trading system as we navigate through these really challenging times?

Perhaps I can start with Mr. Fulton and then go to Mr. Desmarais, followed by Mr. Collins.

[Tyler Fulton]

For agricultural commodities in particular, I think investments in things like the Indo-Pacific trade office, which allows a jumping-off point for ag commodities from Canada, are a great starting point. That's where we see the opportunities.

In the beef sector, we found that many of the Indo-Pacific nations have a strong desire for our product. Quite simply, it's about deals like the CEPA deal that was recently signed to provide access to the Indonesian market, which represents more than 300 million people. That is where we need to be. In the long run, we can be a massive economic driver in the Canadian economy if we continue to hold the standard of the trade agreements, similar to the original CPTPP agreement, which provided us preferred tariff-free access to Japan and Vietnam, for example.

[Yasir Naqvi, Liberal, Ottawa Centre, ON]

Go ahead, Mr. Desmarais.

[François Desmarais]

Most of our members would definitely appreciate a rules-based order when it comes to trade. You will have a hard time finding a supporter of the WTO within our group. We have been quite disappointed in the WTO in the last 20 years, especially since they welcomed China on board in 2001. It was done with the promise that China would liberalize its economy, but clearly that has not materialized. We don't see China as becoming a market economy any time soon, and a lot of the decisions that have been made by the WTO throughout the years have negatively impacted our own protection of our market here. I'm thinking about particular market situations, for instance, or cross-cumulation decisions that have been made.

That being said, what Canada can do—and what seems to be important for us to protect or at least show the way when it comes to respecting rules and known principles—is to improve our trade remedy system, for instance. Our anti-circumvention legislation needs to be modernized, for one. We need to better align our trade remedy system with the U.S. I think the U.S. has the gold standard in terms of trade remedies, and by following their lead and modelling the tools we have a little bit more, we would send a clear signal that we believe in a fair trading system.

[Yasir Naqvi, Liberal, Ottawa Centre, ON]

Thank you.

Mr. Collins, could you answer the same question?

[David Collins]

Very briefly, I think I have an interesting insight as an outsider looking at Canada from another country. I can tell you, quite optimistically, that Canada has an excellent reputation as a champion of world trade. A lot of countries look up to Canada, and it's doing a great job upholding the world trading system.

My advice would be that Canada needs to continue to engage at these forums, like the World Trade Organization, show leadership at the CPTPP and continue to negotiate free trade agreements as it has been doing.

My one piece of advice for what Canada could do better is that a number of countries I've spoken to around the world often suggest that Canada goes too far and tends to include things in trade negotiations that are not really trade-related. It turns these international trade treaties into general instruments of policy—things like climate change, accessibility and inclusivity. I'm concerned that perhaps there's a little bit of mission creep in some of these trade negotiations when Canada is involved, and I think that makes these agreements much harder.

Stick to the core mission of liberalizing trade, lowering barriers to trade and investment and promoting open markets, and be less concerned about these public policy issues that are actually not trade-related.

[The Chair, Liberal, Judy Sgro]

Thank you.

Madame DeBellefeuille, go ahead for six minutes, please.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry—Soulanges—Huntingdon, QC]

Thank you very much, Madam Chair.

Mr. Fulton, I found your presentation very interesting. We know that beef producers produce quality beef. We also know that in Quebec and the other provinces, the traceability system is very rigorous. It takes into account parameters related to the environmental footprint and animal welfare, among other things.

It offends me when I hear Mr. Collins say that we're putting so-called philosophical elements in our free trade agreements. I think to myself that we can't compete with other countries if we agree to sign agreements with beef producers who disregard all the environmental and traceability standards. It creates a non-reciprocal agreement. Your business can't be competitive if we import beef from a country that has no standards to comply with. Obviously, beef from that other country will be cheaper.

Can you tell us about the importance of reciprocal agreements in free trade agreements?

[Tyler Fulton]

Thank you very much for your question.

I think your assessment is accurate. Reciprocal trade can only happen when there is a common standard, and, quite simply, we don't have that confidence, for example, with Mercosur. The countries connected with that trade negotiation, for example, do not have the same labour standard.

The labour advantage in Brazil, for example, would be about threefold to fourfold in cost relative to our per head cost of processing that animal. There's a reason for that: They're not meeting the same standards as we do here in Canada. You can also take another approach from a sustainability or environmental standpoint, but I think that would be how I would respond.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry—Soulanges—Huntingdon, QC]

Thank you. I share your opinion.

Contrary to what Mr. Collins said, I think it's important to maintain our quality standards and to encourage the countries we want to do business with to raise theirs, somewhat like Europe is doing. It's very difficult to penetrate the European market, because the quality standards there are much higher than elsewhere.

The government really wants to open up other markets in other countries. What surprised us was the rather abrupt end of negotiations with the United Kingdom in 2024. We don't really understand what's going on right now. Progress seems very slow.

Are you aware of the developments? Have you been consulted by the federal government on the fact that the negotiations for our free trade agreement with the United Kingdom have really slowed down and that it is working against beef producers right now?

[Tyler Fulton]

You're well informed. It is not favourable for the U.K. to have been admitted to the CPTPP. It very much lowers the standard of that agreement from what it was previously.

The non-tariff barriers that prevent access to the U.K. for our beef producers have been raised time and time again. There have been no improvements on that. When the agreement was signed, those issues were very obvious and front of mind. It was ineffective for us to sign any agreement with the U.K. without addressing those barriers.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry—Soulanges—Huntingdon, QC]

Thank you.

Do I have any time left, Madam Chair?

[The Chair, Liberal, Judy Sgro]

You have one minute and 20 seconds.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry—Soulanges—Huntingdon, QC]

Okay.

My question is for Mr. Desmarais.

You talked a lot about the overproduction of Chinese steel. Could you be very specific about the damage that China is doing to our industry and the impact on consumers?

[François Desmarais]

China is the source of all the problems in the global steel industry. More than half of the steel production capacity is in China.

It's true that China consumes a lot of steel, but its consumption is decreasing without it adjusting its production accordingly. It continues to build steel mills and even invest in industrial capabilities in some neighbouring countries. As a result, it continues to produce at a level above demand and floods all global markets with its surplus steel.

Groups of countries like the European Union are trying to protect themselves from Chinese dumping. Right now, we're dealing with a trade remedy system that is completely inundated with Chinese products. It's not just steel, by the way, because there are other products.

We're also seeing that China is becoming increasingly sophisticated in its industrial approach. This is the case not only for primary steel, but also for by-products or products containing steel.

It comes as no surprise to many that a large number of our industry's customers in Canada no longer exist. Take mattress manufacturers, for example, whose products used to contain steel. Now, instead of exporting raw steel, the Chinese simply ship products containing steel.

As a result, there is a multiplier effect in other sectors. Moreover, if the U.S. steel tariff measures also have a huge impact on derivative products, it is partly because of their added value. The repercussions are being felt here at home as well.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Gunn, you have five minutes, please.

[Aaron Gunn, Conservative, North Island—Powell River, BC]

Thank you, Madam Chair.

Thank you to the witnesses for being here.

Mr. Desmarais, in your view, is the average quality of steel produced here in Canada the same, better or worse than the steel we import from China?

[François Desmarais]

There's no question there: I believe our steel is way better. Also, we have higher standards when it comes to environmental issues or even labour standards. Even in that regard, it's better quality.

[Aaron Gunn, Conservative, North Island—Powell River, BC]

I echo that. There have been issues in B.C. In Victoria, there's the Johnson Street Bridge. There are now concerns with the steel used in the Pattullo Bridge. This is all against the backdrop of the current Liberal government pursuing a policy of “building Canada strong”, as they like to say.

Were you disappointed at all to see the $1-billion deal to send shipbuilding jobs to China with a below-market interest rate loan to create thousands of shipbuilding jobs in China and use Chinese steel instead of building the ships here in Canada, using Canadian steel?

[François Desmarais]

Thank you for the question. It's a very good one. It shows how difficult it is to address China and its trade policy.

I think it would be absolutely impossible for anyone to believe that we can compete with China on many aspects. Just on steel alone, they're highly subsidizing their steel industry. They also have poor labour and environmental standards. Trying to compete with them on steel directly is impossible, as it is for any other type of product or sector where they use steel because, at the base, the commodity they're using is highly subsidized and impossible to compete with.

[Aaron Gunn, Conservative, North Island—Powell River, BC]

Can you go into a bit more detail on how the Chinese steel is subsidized?

The same thing happened in shipbuilding: 20 years ago, they were at 5% of world capacity, and now they're at 50%.

Could you maybe compare the environmental and labour standards employed by Chinese steel companies versus our Canadian steel companies here at home?

[François Desmarais]

I'm not necessarily going to go into the details you're asking me to, but clearly we all know that the average Chinese employee is not earning the same wages that we pay in Canada. That's one.

With regard to energy, we know that they are subsidizing a lot of the energy consumed in the steel sector. Steelmaking uses a lot of energy, and in China they're highly subsidizing the energy they're using.

They're also investing massively in R and D at rates or loan parameters that we cannot match either.

[Aaron Gunn, Conservative, North Island—Powell River, BC]

Is the steel that we produce here in Canada of the quality that could have been used in shipbuilding?

[François Desmarais]

We have capacity in shipbuilding in Canada. As for the specifics of the steel that was used, I cannot assess if we do, but we do have shipbuilding capacity when it comes to steel in Canada.

[Aaron Gunn, Conservative, North Island—Powell River, BC]

Is the steel industry here in Canada subject to the industrial carbon tax?