International Trade Committee on Oct. 20th, 2025

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

I'm calling the meeting to order.

Good afternoon, everyone. I hope everyone had a great Thanksgiving. Welcome back. This is meeting number seven of the Standing Committee on International Trade.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, September 18, the committee is resuming its study of Canada and the forthcoming CUSMA review.

We have with us today, as an individual by video conference, Barry Appleton, a professor. From Unifor, we have Lana Payne, national president, and Angelo DiCaro, director, research department. From the Canadian SHIELD Institute, we have Vass Bednar, managing director.

Welcome to you all.

We will start with opening remarks.

Mr. Appleton, go ahead with your opening remarks for up to five minutes, please.

[Barry Appleton, Professor, Balsillie School of International Affairs, As an Individual]

Good afternoon, Madam Chair and members of the committee.

I am Professor Barry Appleton. I am a trade law expert and professor of international law. I'm the co-director and distinguished senior fellow at the Center for International Law at New York Law School, as well as a scholar and fellow at the Balsillie School of International Affairs in Waterloo, Ontario. I'm also the managing partner of Appleton & Associates International Lawyers LP in Toronto. I advised the Ontario cabinet committee on North American free trade during the initial negotiations of NAFTA. I've written two books on NAFTA and have guided governments on international trade and economic issues over the years. I also gave oral and written testimony to U.S. executive agencies twice this year on trade, and I plan to do so yet again before the year's end.

I appear before you today to address a critical vulnerability in Canada's preparation for the CUSMA review. This is not a routine administrative exercise but the decisive moment for Canada's economic and digital sovereignty.

The U.S. strategy was never hidden. In 2020 Jared Kushner explained that CUSMA's sunset clause was deliberately designed to provide Washington with recurring leverage. It was a “16-year lease”, in his words, not a “permanent” partnership. The full quote is in my brief. I've had it fully translated for you. Mr. Kushner said, “Why lock in today’s market rates if you will be able to charge more in the future?” He concluded by saying that “the shortening duration gives the leverage to the stronger party, which, given the relative sizes of our economies, likely will always be the United States.” This was in 2020, some five years ago.

Canada, in my view, has been playing the wrong game. Canada must now respond with foresight, not with improvisation. CUSMA is, in essence, a 16-year lease. It's not a permanent treaty. The agreement was designed with a review cycle that advantageously shortens time horizons. Under CUSMA article 34, any party may terminate the agreement on six months' notice. The six-month review cycles lock Canada into uncertainty. A six-month cancellation clause is key. This is leverage by design.

Canada has an institutional disadvantage. Canada enters this review with a structural deficiency in advisory intelligence. The U.S. maintains 15 industry trade advisory committees, or ITACs, that provide security-cleared, sector-specific advice with direct access to negotiating texts. They are comparable to mechanisms in other trade partners of ours—the EU, the U.K., France and Australia. Canada once had parallel capacity through the SAGITs, the sectoral advisory groups on international trade. That machinery was dismantled by various governments over the last 20 years. We now rely on ad hoc consultations that are transparent yet insufficiently technical, confidential or continuous.

Digital sovereignty is my second point. It's inseparable from trade policy. After tariffs, the decisive contest is digital. Silicon Valley declared victory in CUSMA, and they're ready to do so in round two. CUSMA's digital chapter constrains Canada's authority over cross-border data flows, data localization and access to source code and algorithms. In practice, this narrows parliamentary space to govern platforms and cloud infrastructure that increasingly shape our economy and our democracy.

What should Canada do? I'll give you three suggestions.

First, we need to rebuild foresight capacity. Re-establish a legislated advisory system, a Canadian trade and economic security council supported by modern SAGITs with classified access, continuous engagement and balanced representation across industry, labour, indigenous governments, civil society, provinces and security agencies. I wrote a recent paper that is referenced in the brief I filed with the committee today. I also note that the Balsillie School of International Affairs in Waterloo has been partnering with think tanks and public policy schools across Canada to create a supportive trade advisory sectoral secretariat. You can ask me about that in questions, if you're interested.

Second, adopt a whole-of-government strategy. Appoint a trade czar and an innovation czar. Their function would be to coordinate a whole-of-government response and to work with provinces, industry and civil society. We need to take bold action to link economic security, technological governance and industrial strategy with trade.

Third, legislate a digital sovereignty framework. Ensure statutory authority to govern algorithms, data and cloud. I've referenced a paper on this in my brief. I think this is a central priority.

Foundationally, Parliament faces a defining choice: build strategic capacity or keep improvising from weakness. Trade policy without intelligence is guesswork. The window's closing, but it's not over.

I hope I've given you something to think about, and perhaps we'll have an opportunity to talk about this in questions.

Thank you, Madam Chair, for the time.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Appleton.

We'll go to Ms. Payne.

Welcome back to our committee. I didn't expect you back here quite so quickly, but we're glad to have you.

[Lana Payne, National President, Unifor]

Yes, it's very good to be here. Thanks for having me, Madam Chair and members of the committee.

I would say that I agree with the professor's comments. We're in an economic war, and we need an economic war room. That's what he's referring to.

I'm Lana Payne, as you know. I'm the national president of Unifor, Canada's largest private sector union, representing 320,000 workers across this country, including about one-third who work in trade-exposed areas of the economy.

We are nine months into this unprecedented trade war. I would say that I'm here to remind you again that Canada's industrial economy is at risk, and I don't say that lightly. I see it every day in the faces of our members, in the layoff notices they receive and in the plant insecurity that they face.

It's at risk despite CUSMA, which is a trade agreement almost in name only at the moment.

Last week, as you all know, disaster struck auto workers in Ontario. After months and months of false assurances and delay, global automaker Stellantis announced plans to relocate vehicle assembly slated and negotiated by our union for Brampton at a 3,000-worker facility to the United States. Thousands more are now facing job losses in the supply chain.

This is the latest blow to Canada's 100-year strong auto sector. It follows plans announced by General Motors to move some of its truck production from Oshawa to Indiana in early 2026. All of these moves are designed to appease Donald Trump with our jobs.

If we allow these corporations to shift production to the United States without applying equal pressure to keep production in Canada, the jobs will go. We must play hardball, and we can, because we have the tools and leverage to do so. This shift compounds pressures facing the auto supply industry, the aluminum and steel industry and the forestry industry, which is dealing with crushing softwood lumber duties and, more recently, 232 tariffs from the Trump administration.

Trump's attacks on Canadian industries are happening despite commitments made in writing to the contrary. A bilateral CUSMA trade side deal granting Canadian cars and parts reprieve from the section 232 tariffs, for instance, has been totally ignored by the Trump administration. It was a side letter that they signed, I might add. I raise this example because it begs a question. If Trump's end goal here is to dismantle Canada's industrial sector, what exactly is CUSMA for?

Unifor understands that, at least for now, CUSMA compliance provides a tariff shield for many Canadian exports to the United States. However, as Trump imposes national security tariffs on more and more sectors, the shield is greatly weakened. We should not condition ourselves into thinking that having the best of a slew of bad deals with the United States is somehow good. This would be a mistake and will lead to more lost investment and jobs in our country.

That's why our position as a union has been that we must be willing to use Canada's considerable leverage to fight back. What angers me and should anger all of you is a campaign waged right now by Bay Street to secure CUSMA's survival no matter the cost to our most important industrial sectors. We cannot fall into the trap of thinking that CUSMA is guarding the economy against tariffs, because it is not. The last nine months should teach us that it is not. It is Trump, through his executive orders, who created the carve-out for CUSMA, and he can remove this at any time.

I think we can agree that the U.S. President telegraphs his moves by short-term thinking, self-interest, gaining the upper hand and, of course, furthering his own leverage. In what scenario, then, must the U.S. offer a full endorsement of CUSMA next summer? Will they? We must ask ourselves that.

In fact, the scenario is very real that we may face more extortion and more losses to our industrial economy. It's possible that Trump even triggers CUSMA's six-month termination clause. It's also possible that the U.S. opts not to renew CUSMA in July, starting a 10-year countdown clock to the deal's elimination.

We need to be honest with ourselves about what our priorities must be. We must work towards a new CUSMA deal that better regulates trade, but not a deal at any cost and not a deal that sacrifices the industrial economy of our country. We don't need a trade deal that's right for Bay Street. We need a trade relationship that's right for working people.

Formulating a CUSMA strategy means a full-scale defence of our industrial economy, and that includes workers' rights. It involves Canada communicating red lines in key industrial sectors. It means telling folks like Howard Lutnick that, no, our auto industry is not yours to take, and, yes, America does need our resources. It does need our aluminum. It does need our energy, and it does need our lumber. Canada has great leverage, including in strategic resources like aluminum, energy and potash. We shouldn't strike deals that give the U.S. unconditional access to these resources, and if the right CUSMA deal isn't to be had, then we have to prepare ourselves to reject its renewal ourselves.

Yes, we will also need to make bold plays because that is what you do during negotiations. We have to ask what's truly important for this country—building things that add value or serving as a storehouse of resources for the United States. Which side are we indeed on? I think we can all agree that we must be on the side of working people here.

Thank you very much. I'm happy to answer any questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Payne.

Ms. Bednar, you have the floor for up to five minutes.

[Vass Bednar, Managing Director, The Canadian SHIELD Institute]

Thank you, Madam Chair and members of the committee.

Thank you also, Lana, for your remarks, and Barry.

My name is Vass Bednar. I'm the managing director of the Canadian SHIELD Institute for public policy, a new policy studio that's focused on strengthening Canada's economic sovereignty—our ability to produce, to govern and to know on our own terms.

Incidentally, I'm also a co-author of The Big Fix: How Companies Capture Markets and Harm Canadians, which means I'm always happy to talk about policy as marketcraft, because that's what public policy does. It helps us to govern markets.

The framing that I'd like to offer the committee today is that sovereignty begins with freedom of thought.

Trade policy isn't just about goods and tariffs anymore. It's about the governance of knowledge. When we have situations where algorithms are determining prices, foreign firms are hosting our data, and proprietary software is mediating communication and consumption, the question for us becomes, whose systems are shaping how we know, decide and compete? That's epistemic sovereignty, the freedom of thought in a digital economy.

It's the right of a country and its citizens to maintain their own cognitive and regulatory independence to be able to audit, to verify and to understand the tools and information structures that govern citizens and markets. At present, as I believe you know, Canada has little of it. Why is that?

Partially it's because legacy trade rules now limit our ability to think and govern freely. CUSMA and similar trade agreements were drafted just before this reality really set in for Canada. As Barry emphasized, the digital trade chapter locks in cross-border data flows and prohibits data residency mandates. This prevents governments like ours from requiring access to source code or algorithmic logic. They even bar duties on electronic transmissions, blocking the fiscal tools needed to tax digital services fairly.

These clauses are technical. They have profound constitutional effects. They mean that Canada cannot fully investigate, audit or even understand the algorithmic systems shaping our markets and public sphere without potentially violating trade rules.

We have, effectively, ceded this right to know, and that increasingly translates into the right to self-govern. That's the opposite of epistemic sovereignty. This next CUSMA review, to the extent that we'll truly and fully have one, is a real chance to reclaim that policy space.

Canada could treat, should treat, the digital trade chapter as a foundational element of our future. We must secure clear, unambiguous language within any new agreement, text specifically in the core articles or reservations that explicitly preserves Canada's unqualified right to engage in policies that promote and secure national security and personal data protection, algorithmic transparency and auditability, and domestic authority over sovereign digital infrastructure from cloud compute to AI oversight. These are the conditions for trust, security and fair competition.

Our exposure runs a little deeper than regulation. Canada's communications and payments, and other systems.... Our stacks rely on U.S. infrastructure providers, at nearly every layer, verification, hosting and transaction networks alike. These interdependencies create a kind of soft capture. Canada is technically independent but operationally dependent. Maybe we're independent on paper. I think we saw that with the outage this morning.

The goal should be governable interdependence. We need the ability to act, innovate and secure ourselves within one coherent, lawful Canadian economy. Something else, as we think about what Canada can do from a policy perspective that's complementary to the trade review, other than me getting an exercise band for my glasses when I look down, is that we should amend Canada's Income Tax Act to broaden the definition of “permanent establishment”. This would mean it would apply to situations where an entity has a significant digital presence; thus, establishing the necessary tax nexus that we still don't have.

I'll echo Barry and state that, yes, we also need to rebuild trade, intelligence and epistemic capacity. The last time we faced a major trade reset during FTA and NAFTA, we built the SAGITs. They had a lot of merit. They gave policy-makers structured access to expertise across industries, labour and academe. We need that kind of infrastructure again, but for the digital era.

A modern SAGIT system could integrate technologists, academic experts and economists, ensuring that Canada negotiates from a position of knowledge sovereignty and not asymmetry. As many have argued, Canada desperately needs a modernized national economic council, an institutional home for long-term, cross-sector strategy that restores our capacity to think and act for ourselves in a 21st-century economy. Otherwise, we're going to keep importing foreign assumptions about how our markets should work.

I'll wrap up by saying that the sovereignty fights of our past, and Canada has a very interesting and important history with that word, tended to be about borders or factories. However, the sovereignty fight of our future is about freedom of thought—the right to design, regulate and understand these systems that are governing our everyday lives. This review is a chance to restore and reassert Canada's epistemic and economic sovereignty to ensure that, in the digital age, we remain the authors of our rules.

I look forward to the discussion. I'll be making a more fulsome brief to the committee.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will go now to our members, and we will go to the new father we have at the table.

Mr. Mantle, congratulations from all of us, as a committee, on the birth of your first baby girl.

[Some hon. members]

Hear, hear!

[The Chair, Liberal, Judy Sgro]

I suspect that, when you come to committee, you'll have to take this bit of time to rest a little. You probably won't get much otherwise.

[Jacob Mantle, Conservative, York—Durham, ON]

No. There's too much to do for the next generation, Madam Chair.

Thank you all for the kind congratulations.

My questions are initially for you, Mr. Appleton. You described Canada's current approach as “the delusional belief that good intentions and polite dialogue will somehow protect our...daily trade relationship”. Is the current government's approach based on “hopium”?

[Barry Appleton]

Thank you for your question.

It's sometimes difficult to get outside the wonderful things that you write in your op-eds. Yes, I worry about “hopium”, the belief that we're playing a game that we can deal with, just like I hope for the Blue Jays, but I just don't know. However, the Blue Jays have a better chance right now than we do in trade, and the reason is that we're playing the wrong game. We're playing a game in which we believe the Americans are going to follow the rules that we worked on with them for so many years.

We built something together, but no longer do we have trade monogamy. We have something that's transactional, and this is “whatever is good was last night”. That's what's going on. There's no marital therapy. We have no dispute resolution, no way of making this work, so we need to really rethink this.

The one difference I have with Ms. Payne—and only one that I want to point out—is that chapter 34 doesn't mean we have to wait until the end of the CUSMA review for CUSMA to be ended. CUSMA could end at any point. The President can end it. There are some constitutional issues. I've been having discussions with my constitutional colleagues at the New York Law School as to whether it's appropriate for the President to do it. However, the President ended the treaty with India without going to Congress, and I suspect that he would end the treaty with Canada also without going to Congress. Maybe we'll go to the courts, but we would be stuck for six months or with no treaty.

I don't think we're prepared, and that's what I worry about. I have given specific suggestions, in my brief and in other writings, as to what we can do to do better. I am an optimist. I think we can do better, and I think this committee can make a big difference. That's why I'm here.

[Jacob Mantle, Conservative, York—Durham, ON]

Thank you, Mr. Appleton.

To pick up on some of your further writings, you describe Canadian negotiators arriving with “fragmented notes”, while American negotiators arrived with “sharpened strategies”. In fairness to our negotiators, you do explain, in some of your writings, that this is the result of 10 years of not having sufficient institutional capacity.

If I can summarize your approach under the current government, you said it lacks “routine, structured and ongoing engagement”. It has “slower responses, fragmented input and gaps in practical knowledge”, so that “US negotiators consistently entered [the room] with more substantial leverage”, and that leaves “critical gaps in negotiation preparedness”.

Mr. Appleton, given that, is it your view that Canada, under the current approach, is unprepared for the CUSMA review?

[Barry Appleton]

Simply, yes, we are unprepared. The reason is that we're tying one arm or two arms behind our back. The Americans have a thousand people available in these ITACs, waiting for them, able to advise on drafts as they go along and to give real, meaningful, committed types of focused information. We gave that up over 20 years ago, and that is not what we need to do to be prepared.

I note that public policy schools across this country, working with the Balsillie school, are trying to create capacity building right now to help give us that, but the government has to take the offer. We can give a handout, but they have to give their hand back if they want to do this. I don't know why we would not be doing that and why we'd walk in with less precise information and capacity. That is exactly the way to failure, and we can't let that happen if we want to succeed in the oncoming negotiations.

[Jacob Mantle, Conservative, York—Durham, ON]

Ms. Bednar, I have a question for you in a similar vein.

In your writings, you've suggested that our current consultation approach is being co-opted by companies that, although they appear Canadian, are, in fact, foreign because they are located elsewhere and their CEOs are beholden to other jurisdictions. You describe it as an untrustworthy approach.

My question to you is this: Is it your view that the current government's approach to the CUSMA consultation is untrustworthy?

[Vass Bednar]

It's not my position that the current approach is untrustworthy, but I think we're in a new paradigm where we have to take that advice with the grain of salt that it deserves. I resent and feel annoyed by the fact that large, foreign multinationals—and not just the largest companies in the United States of America but the largest companies in the world—can be shielded by certain councils and advisory groups that they embed themselves in while they're also doing their own lobbying. I worry that a form of capture happens where these groups aren't able to reflect Canada's best interests but are diluted by those other voices that are running a full-court press on us.

[Jacob Mantle, Conservative, York—Durham, ON]

Thank you.

I have one last question for Ms. Payne.

You raised the issue of our economic industrial capacity being at risk, and, of course, you mentioned the issue with Stellantis that has arisen.

Is Unifor aware of whether the government has received from Stellantis any commitment to maintain jobs in Canada for the billions of dollars that it provided that company?

[Lana Payne]

I was part of an effort to try to get investment in the auto industry during that time. Our push was that there needed to be strings attached, obviously, to subsidies or support to attract that investment, and that those strings attached were jobs.

[Jacob Mantle, Conservative, York—Durham, ON]

Are you aware of that commitment or not?

[Lana Payne]

No, I haven't seen the written contracts. Nobody has seen them. What I will say to you is that we were very clear that the government, in its negotiation with Stellantis at that time, needed to make sure they were fighting to have jobs attached to those commitments. I believe you've seen the letter that Minister Joly wrote to Stellantis last week, which is exactly the kind of response we need right now from our government to push back hard against corporations who think, in this moment, they can shift production south of the border. We need to use every lever we have, including the fact that they received government funding to support Brampton, Windsor and the battery plant, to leverage that to make sure we're keeping production and jobs in Canada.

We need more of that, please.

[The Chair, Liberal, Judy Sgro]

Thank you, Ms. Payne.

Madame Lapointe, go ahead for six minutes.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you, Madam Chair.

I would like to welcome the witnesses. Their comments so far have been very informative. They really strike a chord with me.

Mr. Appleton, you spoke earlier about the government's strategy. You said that bold measures were needed. I would like to hear your comments on this and on legislating digital trade.

[Barry Appleton]

I thank you for your question.

First, let's talk for a moment about digital sovereignty and then I'll talk about the “bold” of what we need to do because they go together.

The most important thing I can say about digital sovereignty is that, foundationally, a country that does not have a policy, that cannot act and does not act to be able to control what we feel, how we act and what we see, is not governing. The foundation of sovereignty is the need to govern. When we don't do that, either because we have not enacted laws or because we have decided not to enact laws, that area is a vacuum and is taken up by others. In essence, we become colonized and we lose our rights. That is very problematic.

The interdependence and the interconnectedness we saw today with the outage was a good example. In Canada, the Canadian companies are affected by American cloud companies. We are affected by them not only in this way—in this interconnectedness—but also with respect to U.S. laws that govern what goes on with Canadian data. As a Canadian, I find that very troubling and very problematic.

The problem is that now in the trade negotiations, this has become a very important issue. After tariffs, the focus is trade. If you look at the terms in the fine print of the EU-U.S. deal, one-quarter of the terms is about digital. We have to be ready for that and I am afraid that we're not. I've written a paper on this. I've put it in the brief. It's called “Code Before Clause”. We must have our own code and our own approaches before we negotiate the digital ones, or we will find ourselves in terrible trouble.

With respect to a bold strategy, one of the most important things we can do is understand that we need to go outside of the old approaches of governments. We need not only to have whole-of-government, but to go outside to work with our provinces, our partners in the innovation community, the business community and the labour community. We must go far outside. For that I am calling for a trade czar or a high commissioner—someone who would be able to bring that together. We need a high commissioner for innovation as well. It's the two things.

I'm talking about exactly what Ms. Bednar has been talking about today. We need to do that. If we are going to succeed, we must understand that there is a new game. Think about how to deal with that boldly, but we need to have everything going with us inside. We have the capabilities, but we're not using them. That is my greatest concern.

I have spent the last three months and will spend the next three months not teaching in New York but working here in Canada to do capacity building inside Canada with anybody who will ask, so that we can build more, do more and be able to respond better to these very significant threats.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you. That's quite helpful.

I would now like to speak to Ms. Payne from Unifor.

I represent the constituency of Rivière‑des‑Mille‑Îles, in the Basses‑Laurentides region. We used to have a General Motors plant in Sainte‑Thérèse. We now have a Nova Bus plant and a PACCAR plant. As you know, we're affected by everything going on.

You said that Ms. Joly did indeed respond to these companies in her letter. You didn't talk much about the digital aspect. With an eye towards following the example of the Americans with their Buy American Act, do you have any suggestions for the “buy Canadian” policy?

[Lana Payne]

Thank you for raising Paccar. As you are probably all aware, we received another executive order on Friday night from the United States on section 232 dealing with heavy-duty trucks and buses. This has another impact on the broader auto industry but also on the buses and heavy trucks that we build in Quebec.

The impact of what Donald Trump is doing right now is broadening with every single new section 232 attack on Canada. In addition to buying Canadian, we don't have a choice right now. We have to buy Canadian. We have to build Canadian. We need nation-building projects, but we also need to make sure that, if we're building transit in this country, we're using the manufacturing facilities in Canada to build that transit. We should be building trains in Thunder Bay, not having them go to an American contractor like Siemens. Why would we do that in this moment?

The same thing is true of municipalities across Canada. They must work very hard to make sure that their buses are being built in facilities we have here in Canada. There needs to be a coordinated strategy to make that happen. We can't leave any of this to chance, but all of that still will not be enough. There's only so much we can do through government procurement. We need to also have corporations in Canada acting as patriots as well and making sure they also have a buy-Canadian approach to what it is that they do and what it is they're purchasing. We could make a very big difference in the short term with this kind of approach.

We need to do that, of course. In the meantime, we also have to use leverage to try to make sure that we are protecting our industrial economy in the moment we're in. I can tell you that every single day our union is dealing with decisions that have been made at boardroom tables, because these corporations are trying to figure out how to mitigate these tariffs at the moment. They're only feeling pressure from one side, and that's from Donald Trump to shift those jobs south of the border. We have to do what we can here in Canada, using the levers that we have and the tools that we have, to make sure they're feeling pressure from the other side.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Next we have Monsieur Savard-Tremblay for six minutes.