EVIDENCE

Standing Committee on International Trade NUMBER 012 1st SESSION 43rd PARLIAMENT Wednesday, February 26, 2020 Le mercredi 26 février 2020 Standing Committee on International Trade CANADA [Recorded by Electronic Apparatus] EVIDENCE February 26, 2020 Committee NUMBER 012 NUMBER 012 NUMÉRO 012 12 26 02 2020 2020/02/26 15:40:00 House Of Commons Comité permanent du commerce international Standing Committee on International Trade CIIT Chair The Honourable Judy A. Sgro 1 43

(1540) [ English ]

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

I call the meeting to order. Pursuant to the order of reference for Thursday, February 6, 2020, we are studying Bill C-4 ,

an act to implement the agreement between Canada, the United States of America and the United Mexican States. Welcome to our witnesses who are here by teleconference and those with us in the meeting room. By video conference from Niagara Falls, we have CanadaBW Logistics, Kevin Jacobi, executive director; and from Tanzania, Eddy Peréz, international policy analyst with Climate Action Network Canada. Here with us in Ottawa, from DECAST, we have Jim Tully, executive vice-president. We are expecting Bob Benner, from Hamill Agricultural Processing Solutions, shortly. We will go with the video conference. Mr.

Peréz, you are in Tanzania and I understand that you don't have the best connection in the world, so we will open with your comments, sir. Please go ahead.

Mr. Eddy Peréz (International Policy Analyst, Climate Action Network Canada) :

Thank you very much. My apologies for the quality of the video. I am in Tanzania, in the traditional land of the Wa-arusha. On behalf of Client Action Network Canada, we thank you for the invitation to address the Standing Committee on International Trade. Climate Action Network Canada is the country's largest network of organizations working on climate policy, and the sister organization of the world's largest network of environmental organizations, regrouping more than 1,300 groups around the world.

I'd like to begin these remarks by standing in solidarity with, and highlight and support the work throughout 2018 and 2019, and the comments by member organizations like the Canadian Labour Congress, Unifor, the Assembly of First Nations, the steelworkers, and many other members who participated in the consultations and worked closely on NAFTA 2.0. I also support comments by our allies such as the Council of Canadians. For over 25 years, NAFTA has contributed to climate change, toxic pollution, economic insecurity, and social inequality and environmental deregulation.

This is a result of a trade system that Canada has prioritized in favour of corporations over people. In the current climate crisis, we can't continue to promote trade models that lock ourselves into multi-decade trade deals that add fuel to a house on fire. The questions that we have for you are as follows. Is the current CUSMA on the right side of history? Can we seriously use this trade deal to tackle climate change and toxic pollution? How is the new version of NAFTA different from the last one?

Will it reassure those who are working inside and outside of this Parliament to ensure Canada upholds its climate obligations and responsibilities? We therefore recognize, however, that the absence of any energy proportionality provision in NAFTA 2.0 is a clear win in environmental terms. The same applies to the deletion of ISDS. But is this enough? Democrats in the United States voted against the ratification of the agreement because it does not address climate change, the greatest threat facing our planet.

Now that Canada is contemplating its ratification, we should focus on how to create domestic safeguards to ensure that while Canada implements this agreement, it does so while upholding its environmental and climate obligations. Let me just remind the committee of the current state of play. CUSMA fails to address, acknowledge or even mention the climate crisis. Most of the provisions in the environmental

chapter are vague and remain largely unenforceable.

Chapter 28 provides new avenues for corporations to influence regulation. Considerable attention was given to fishing subsidies. However, that is clearly not the case for fossil fuel subsidies, which are similarly destructive and tell a sad story of North American's ongoing support for the high-carbon-intensive economy. CUSMA shows again the deep deprioritization of the environment

chapter to a point where specific wins, like the elimination of ISDS, are undermined by the complete lack of reference to environmental governance; and there is no mention of UNDRIP. This deal hardly mentions pollution, and it does not include specific and binding terms to address documented pollution dumping. There are no independent and binding enforcement systems for environmental terms and it does not create an independent body to investigate and initiate cases against environmental abuses. How do we move forward? These are quick recommendations from Climate Action Network.

For us, climate action alone won't stand if it does not ensure that trade deals protect the rights of workers and also recognize the rights of indigenous peoples. Acknowledging that because of the current political context, Canada was not able to ensure meaningful progress to include climate in the current text is not enough. Canada must ensure that this trade deal does not block our ability to respect our climate obligations and commitments. How do we move forward? Canada has committed to increase its climate targets and to reach net-zero emissions by 2050.

Canada has committed to provide new nationally determined contributions, and those new NDCs rely heavily on expanding renewable energy, so there may be more disputes to come and we need to be prepared. Here is what we encourage you to do. Parliament should request an analysis on how this trade deal can support further climate policy, particularly in three key areas. The first is how CUSMA facilitates, or not, the trade of climate friendly goods and services and further strengthens the promotion of Canada's climate objectives.

The second is how trade rules, at the very least, are not a barrier to climate policy goals. The third is how trade deals impact the international transfer of mitigation outcomes under

article 6 of the Paris Agreement, particularly in the context of the Quebec-California cap and trade system.

(1545) Finally, we are way behind where we need to be. In this climate crisis, achieving climate objectives should be considered to be a legitimate reason for departing from trade rules. Such considerations are being considered in the EU. Weak clauses, even when enforceable, are not a guarantee that a trade deal can be seen as a tool for climate action. Thank you very much.

The Chair :

Thank you very much, Mr. Peréz. On to Mr. Jacobi.

Mr. Kevin Jacobi (Executive Director, CanadaBW Logistics Inc.) :

Thank you very much. I appreciate being asked to be part of this conversation. My name is Kevin Jacobi. I'm executive director for CanadaBW Logistics, located in Niagara Falls, Ontario. To put it in context, my company is an import-export development company. We help local businesses support expansion of their exporting needs, as well as international companies find a home here in Niagara, for them to be part of our community and develop their businesses within the Canadian infrastructure.

I'm here to speak in support of the USMCA and the ratifications that are being done, in the hopes that it's going to give stability to our companies here. We have a number of companies whose opportunities have been greatly impacted by changes in tariffs subjugating such things as steel and aluminum. Our client base here develop contracts between their suppliers and the people they're selling to that can last more over two to three years. When tariffs come in the middle of a contract, we don't have the opportunity to adapt or to evolve what we're trying to do as businesses.

It impacts our margins or it dissolves our company. Working with our chambers of commerce here, as well as being the executive director for both the Niagara Industrial Association and the World Trade Center Buffalo Niagara chapter, we see there being dramatic impacts from this uncertainty without this deal being ratified. What we're hoping to see through ratification is stability in the market. We understand that there are going to be pluses and minuses, depending on the sector of business that our companies are in.

However, we'll have the rules in place to allow us to make decisions that we can impact and can forecast beyond just the short term. We're firmly in the process of having.... I think we have a very small window for us to ratify, based on the political climate in the United States. If we don't take action soon, we may lose that window of opportunity.

Niagara—and Niagara is one of the largest trade networks across Canada, being a border community—has the busiest border crossing for people coming back and forth from Canada and the U.S., but it is also the second most important border crossing when it comes to total value of freight. We are one of the few areas in Ontario with a trade surplus. The ratification of the NAFTA 2.0 or USMCA will solidify our ability to impact Canada's economy, as well as attract businesses and investment into our Canadian business cycle.

One thing we do with my company—what we try to accomplish here—is to develop a landing point for international companies to develop manufacturing and marketing opportunities within our region to better impact their ability to do business with both Canada and the U.S. We understand that Canada is a very small market compared to the U.S.. However, we are seen across the world as a stable market, a place of doing business in an environment that respects fair trade and other cultures. We give a landing point that allows them to have fair access to both Canada and the U.S. and, of course, Mexico, to a limited extent.

We don't really have as much going here for Niagara in that respect. We hope that the committee will take the advice of the people who are presenting to move forward with ratification and give Canadian businesses a stable platform for us to grow our communities. Thank you.

(1550) The Chair :

Thank you very much, Mr. Jacobi. On to Mr. Tully, for Decast.

Mr. Jim Tully (Executive Vice-President, DECAST) :

Good afternoon. Thank you for allowing me to present before this committee. My name is Jim Tully. I'm the executive vice-president of DECAST Limited. DECAST is a manufacturer of precast concrete infrastructure products and is located just outside of Toronto. We directly employ over 500 people, and our supply chain affects another 3,000 people. While NAFTA and now CUSMA should provide open markets to both sides of the border, history has shown us that this is not the case.

There are several existing U.S. policies that have affected small to mid-sized companies like DECAST: buy America; buy American; the American Recovery and Reinvestment Act; and President Trump's executive orders on U.S. content. We've been affected over the last few years in the following ways. Under buy American, for construction projects, contractors must use construction materials that are 100% manufactured in the U.S., with greater than 50% of materials coming from the U.S. Canada is exempt for contracts greater than $10 million; however, most of the projects that we bid on fall under this amount.

Many states and municipalities also use similar geographic production requirements. Under President Trump's executive orders, President Trump has clearly stated that he wants to buy American first and has incorporated this concept into three executive orders affecting buy America and buy American policies. These executive orders create more uncertainty for companies like DECAST. The direct result of these policies has been that the Canadian market for infrastructure products is wide open to U.S. companies, allowing for predatory pricing and dumping.

In 2018, DECAST lost the equivalent of 41 full-time jobs on projects lost to imports of U.S. steel pipe. Our understanding of the pricing by U.S. manufacturers is that it was at or below the cost to manufacture. Just last week in Winnipeg, a U.S. pipe manufacturer from Texas undercut local pipe producers. Given the distance they had to ship, they are selling at or below their cost. In conclusion, to help manufacturers like DECAST Limited, Canada should impose domestic content preference on its infrastructure funding to provinces and municipalities, as recommended by the Canadian Manufacturers & Exporters.

This type of domestic content preference could be implemented under the concept of reciprocity to account for true and open free trade. Thank you for your time.

(1555) The Chair :

Thank you very much, Mr. Tully. We'll go on to our members with Mr. Dowdall.

Mr. Terry Dowdall (Simcoe—Grey, CPC) :

Thank you, Madam Chair, and I thank my colleague Chris Lewis for allowing me this time today. As a former mayor and a deputy warden and warden of the County of Simcoe, I've had the opportunity through the years to work with the organization that is here to present today. I want to thank you, Mr. Tully, for being here. I know you're a very busy man. As you said at the beginning, yours is a company that's grown quite a bit through the years. We had expansions in 2011, 2012 and 2016, and in 2019, I believe it was a $12-million expansion and 35,000 square feet as well. It is a growing company.

It has done very well and in fact celebrated its 35th anniversary. It is incredible in today's economy to have that length of time. It's a large employer and, as well, during its 30-year anniversary, presented cheques of $15,000 to two local charities, the Women's and Children's Shelter of Barrie and, in Alliston, My Sister's Place. Through the years, this organization has donated much time and energy and is one of the key cogs, quite frankly, in Simcoe—Grey.

I had the opportunity through the Federation of Canadian Municipalities to help with that growth you were having in the industry to build upon what you have, and I know that through the years there sometimes has been a lot of red tape from organization. As well, we had the steel policy for a while and, at the end, the buy American policy. Certainly our party believes in free trade, and ideally with less government involvement. I just wondered if you could speak a little more on how free trade affects you and, if we could make the playing field even, how that would work. I have another question.

I know that there's a $186-billion rollout for municipalities for infrastructure projects that, from what I gather, aren't getting out there in time. Could you speak also to the amount of business you get through the cities and the municipalities, how important this is for the municipalities that need that infrastructure and how important it is for you and for your organization to grow and expand once again?

Mr. Jim Tully :

From our perspective, the real effect on us has been that we have no ability to bid on U.S. jobs. We have no ability because of the uncertainty that's caused by buy America and buy American policies and by these executive orders that have come out. By the time the local proponent who's asked us to give them a price figures out whether they can use us as a supplier, the bids are closed. It's too late. So, we're blocked on bidding on pretty well any project.

How this affects us is that our U.S. competition—and I'm all for open and free competition when it's equal—has the ability to come into Canada to bid on jobs, and they use predatory pricing when they come up here. They use pricing that covers maybe their overheads, and they don't look at profit. They're just dumping. If I told you the prices that went in to Winnipeg last week, it's ridiculous. They're coming out of Texas, and they're 25% below the local guy. It's unacceptable. They do this freely, knowing that we have no ability to retaliate. That's our real problem.

Like I said, from my perspective, reciprocity is the answer: If you put this kind of policy on us, we do the same back. That's the only clear answer. It worked about a decade ago when the FCM canvassed the federal government and was able to put a reciprocity clause into force. Right away, the U.S. took off the limitations on Canada. If we can do that again, especially in this climate that we're sitting in today, that would have a great effect and help companies like ours.

(1600) Mr. Terry Dowdall :

Just to follow up on the importance of infrastructure to the City of Toronto, as an example, our large cities that need it as well, and the type of work that you're doing and how it could have an effect, the American part of it, if you're not bidding on those contracts, how it will hurt you.... All of those expansions were pretty much in line with tender contracts at the time. You do the major subway. You do the major girders that people see when they're driving in Ontario here on the 401. I don't know if you can give an update on the importance of that as well.

Mr. Jim Tully :

It's hugely important to us. The infrastructure is a massive part of what we produce for. I'll give you some examples. In the Ottawa area, we're working with the two LRT proponents. We're supplying all of the girders that will be used in those elevated sections of those LRT lines that are being built in Ottawa. Any delay in infrastructure projects that come out is a delay of work for us. We're always pushing to see that funding flows freely and flows in a proper amount of time.

The Chair :

Thank you very much. Mr. Dhaliwal.

Mr. Sukh Dhaliwal (Surrey—Newton, Lib.) :

Thank you, Madam Chair. My first question is for Mr. Eddy Peréz. Can you hear me?

Mr. Eddy Peréz :

Yes.

Mr. Sukh Dhaliwal :

Okay. First of all, I want to thank you for your advocacy on the environment. That's great. As you very well know, we believe in the environment. You mentioned already that by 2050 we will have zero net emissions. We believe that the commitments to high levels of environmental protection are an important part of the trade agreements as well, as they protect our workers and our planet, particularly when we talk about CUSMA. This is the first-ever trade agreement with an enforceable environment chapter. This replaces the separate agreements that we had in the previous agreements.

As I come from British Columbia, marine environment is very important to me—Randeep comes from there as well. It upholds air quality and fights marine pollution. Wouldn't you agree that these are the positive steps moving forward?

Mr. Eddy Peréz :

It's fair to say, as I mentioned in my statement, first of all, the approach of Canada and the U.S. on trade does require some type of enforceability—for example, for the environment

chapter and other chapters. That said, enforceability does not mean that the clauses that countries agree to respect are ambitious enough to ensure that trade between two or three partners continues to negatively impact climate change. Let me just give you a couple of examples of things that are not in CUSMA, and while this deal in some ways brings some key, important elements of progress, it does not allow for greater climate protection. First, there are no binding climate standards within the text. Key Democratic leaders, such as the head of the Senate for the Democrats, voted against this deal.

He said it did not address or mention the climate crisis. The current NAFTA 2.0, far from including any climate standards, fails to even mention climate change. It is a glaring omission, with in fact NAFTA's incentive for corporations to dodge the hard-fought clean energy policies of the U.S. by moving to Mexico, for example, and eliminating jobs and perpetrating climate pollution. You mentioned marine protection, and that is great.

As I said in my statement, the three countries that are partners for the CUSMA actually address subsidies for fisheries, but there is no mention, for example, of how fossil fuel subsidies are going to be tackled by countries and reduced in order to encourage, and actually stop distortion in, the markets on renewables. On clean air, water and land standards, the deal barely mentions pollution and it fails to include specific and binding terms to actually address documented dumping of pollutants.

For example, the text recognizes that air pollution is a serious threat to public health, and in that sense, you and I agree. However, it fails to include a single binding rule to reduce the air pollution that NAFTA has exacerbated. From the 2018 version of the text to the 2019 revision, this revision actually repeats these failures and omits essential limits on air, water or land pollution. These are just some examples for you.

(1605) Mr. Sukh Dhaliwal :

Mr. Jacobi, yours is a border town. So is Surrey, British Columbia, and we have a lot of logistics companies as well. I appreciate you supporting CUSMA. Could you tell logistics companies in my part of the world how this will benefit them when they trade or move goods across the borders?

Mr. Kevin Jacobi :

I'd be happy to. We have to look at the idea of the ratification of this NAFTA 2.0 as being greater than just our trade between Canada, the U.S. and Mexico. I'm very proud of what this government and past governments have done to create free trade agreements across the world.

What we allow through our participation in the North American free trade agreements is access for our partners in other countries to develop their presence within our communities using logistics companies such as mine, in my area, and the logistics companies in your area as well, to be able to attract these other countries to develop partnerships for existing manufacturing and develop products that are syntheses of ideas and of working components between multiple countries to become products of Canada that would then have greater access to the Canada-U.S.-Mexico ability of a supply chain.

That's how we direct ourselves—

The Chair :

Thank you very much, Mr. Jacobi. Mr. Dhaliwal, you're out of time. We'll go on to Mr. Savard-Tremblay.

[ Translation ]

Mr. Simon-Pierre Savard-Tremblay (Saint-Hyacinthe—Bagot, BQ) :

I thank all presenters and witnesses today. I wanted to direct my questions to Mr. Peréz, but the screen seems to be frozen. I don't know if we still have a connection.

Mr. Eddy Peréz :

I'm here.

Mr. Simon-Pierre Savard-Tremblay :

Hello, Mr. Peréz. Thank you for your presentation, which was very informative. Correct me if I am wrong as I do not want to misquote you. To summarize, you stated that, with respect to the former NAFTA, some progress has been made but it is far from what it should be in the current era of climate change.

Mr. Eddy Peréz :

That's exactly right. That was a very good

summary. I believe that there are two main points to make. First, despite some progress having been made, such as investor arbitration and other small improvements in environmental protection, when we look at the agreement as a whole, this treaty does not do nearly enough for Canada to meet its climate commitments. In my view, this is a major weakness of this agreement. Second, there is absolutely no guarantee that certain provisions of the current treaty will not be strengthened once the current U.S. president is no longer in power.

At present, there is no process for reviewing, for example, the co-operation of the three parties. There is also no mention of the climate crisis. Generally speaking, these are major weaknesses.

(1610) Mr. Simon-Pierre Savard-Tremblay :

There is no mention of the climate crisis or any reference to global environmental agreements.

Mr. Eddy Peréz :

Seven multilateral environmental agreements are mentioned, but they are the very same ones mentioned in the former agreement. There have not really been any changes or updates despite the fact that Canada's position on these issues has changed significantly in the past 25 years. The commitments Canada made in 2019 demonstrate a willingness to make more ambitious commitments. Unfortunately, they are not reflected in the agreement with the country's largest economic partner.

Mr. Simon-Pierre Savard-Tremblay :

You say that the agreement does not contain firm climate commitments, but does it set out some standards on related elements, for example air, water and land quality?

Mr. Eddy Peréz :

Yes, it does. There is a desire to reduce air pollution. As I mentioned earlier, there are different provisions with respect to fishing subsidies, but no specific provision forces states to meet specific commitments for air pollution. With the exception of the proportionality provision, there are no provisions that tackle the issue of oil subsidies.

Mr. Simon-Pierre Savard-Tremblay :

All right. With respect to disputes or problems, you seem to be pleased that

Chapter 11 on investor-state dispute resolution has been removed.

Mr. Eddy Peréz :

Of course I am pleased, and for two reasons.

Chapter 11 fostered a serious lack of transparency. Since you studied it, you know that this

chapter made it possible for companies to abuse in the extreme their rights vis-a-vis governments. Its elimination is a win that I am very happy about. We worked on this with unions and other groups. However, it is not enough. I know that the NDP member has already asked for greater transparency when negotiating future agreements. I am pleased about that, but it shows that other issues need to be resolved in connection with how Canada engages in, signs and ratifies other trade agreements.

On the issue of the arbitration system, I would say that there is cognitive dissonance on the part of the Government of Canada, which chose to withdraw this mechanism when dealing with the United States, but continues to value and promote it when negotiating trade agreements with other partners.

Mr. Simon-Pierre Savard-Tremblay :

Thank you very much.

[ English ]

The Chair :

Thank you very much, Mr. Peréz. Your time is up. We'll go on to Mr. Blaikie.

Mr. Daniel Blaikie (Elmwood—Transcona, NDP) :

Thank you. First of all, thanks to all of our witnesses for appearing here at committee today. I want to continue with Mr. Peréz for a moment. I think you alluded to some examples, so I'm wondering what some of the kinds of mechanisms are that Canada might look at advocating for in trade agreements that might be able to deliver a concrete impact on the environment. In particular, we know that the United States is not a signatory to the Paris Agreement, and that's something we would like to see in the agreement.

What are the kinds of mechanisms that we ought to be pitching to our international partners to try to tie environmental goals to economic goals? I think that's crucial to success on the environmental front.

Mr. Eddy Peréz :

Thank you, Monsieur Blaikie, for the question. I think a lot of the context for the lack of climate provisions within CUSMA relates to the [ Technical difficulty--Editor ]. We need to be aware of that. That said, there are ways for Canada to address this question at the domestic level. I know that members have been asking for information on the economic impacts of CUSMA and how CUSMA impacts specific industries, and the same applies to climate.

As I mentioned at the beginning of my comments, it might be important to specify how CUSMA ends up favouring or maybe not favouring climate friendly groups if CUSMA is able to encourage the exchange of goods that help to reduce carbon emissions over time. This is something that Canada could engage in at the domestic level. That is just for the context of CUSMA. Internationally speaking, the inclusion of binding commitments in trade agreements is the first step for Canada and partners who sign trade agreements with Canada to respect their commitments under the Paris Agreement. Why is this necessary?

Because all partners that signed the Paris Agreement do this at the domestic level. Nationally determined contributions are domestically decided and agreed on. There's no issue of sovereignty in the kinds of things that Canada could be wary of because other countries might be pushing these to us because Canada's climate commitments are domestically based. Including these binding commitments so that both Canada and the other partners respect their nationally determined contribution could be a first step.

(1615) Mr. Daniel Blaikie :

Being mindful of the cost of paperwork and all that, I couldn't help but listen to one of our other witnesses who was here at committee talking about products coming up from Texas being sold at prices that undercut ours—but, of course, the other cost to something like that is the environmental cost of shipping pipe from Texas instead of buying locally.

It seems to me that, when we talk about environmental provisions and having some kind of carbon budgeting or a way of trying to account for that environmental cost, there are real issues about not having reciprocity on the pricing side, but it seems to me that there is also the issue that we don't want to be incentivizing people to get products from farther away when there are good local alternatives.

There are environmental costs, and trying to work with countries to have some way of assessing those—at least for certain kinds of products or above a certain threshold—might be the kind of mechanism that we're talking about when we're talking about trying to incorporate environmental measures into a trade agreement. I don't know what you think about that, or if you have some other concrete proposals, but I'd be glad to hear them.

Mr. Eddy Peréz :

What you mentioned is a first step. You might remember, for example, that when Ontario wanted to prioritize its own renewable energy products, Ontario got sued. I think one key element that we need to understand is that if we don't address this properly—the way you explained it is very clear—as we continue to commit to climate targets and to reduce our emissions, we're going to be forced to buy goods that allow us to reduce those emissions.

If that is not properly addressed in trade agreements, we're already allowing for future disputes to take place, because we don't have the necessary mechanisms to let these products come to the country or, for example, as you said, encourage local renewable energy products. The current CUSMA continues to give corporations handouts and the ability, for example, to modify laws and regulation, and that could have an important impact on the evolution of the renewable energy industry in Canada, the United States and Mexico.

The Chair :

Thank you very much. Thank you, Mr. Peréz. We'll go on to Mr. Kram.

Mr. Michael Kram (Regina—Wascana, CPC) :

Thank you very much, Madam Chair. Thank you to all the witnesses for joining us today to share your perspectives. Mr. Tully, I'm particularly interested in your experiences in bidding on U.S. government contracts. Could you walk us through the process that your company goes through when you're bidding on a U.S. government contract as opposed to a Canadian one?

(1620) Mr. Jim Tully :

Typically, we get approached by a constructor or a large engineering firm asking us if we would provide a quotation into a particular job. I would say, for 99% of the jobs we've been asked to quote in the U.S., at the end of the day our bid wasn't taken, simply because they couldn't verify whether they could accept the product because of the uncertainty put out there by these policies that exist in the U.S. It's a real, real struggle for us. Where we have been successful is when we partnered with local U.S. producers and kind of subsidized what they were producing into a project. Other than that, we really have not been successful.

Mr. Michael Kram :

Which policies of the U.S. in particular are the most problematic for you?

Mr. Jim Tully :

Buy America. Buy American.

Mr. Michael Kram :

Okay. Are you experiencing this at the state level too or just the federal government level?

Mr. Jim Tully :

It's right down to the municipal level—

Mr. Michael Kram :

Okay.

Mr. Jim Tully :

—because when you go to the municipal level, a lot of the time you end up dealing with people who believe that buy America has to mean built in America, sourced in America. They don't really understand the fine mechanics of it, that it's the raw materials that are used within the product that have to be sourced from the U.S.; for example, the steel that's used in the product. We could theoretically meet the requirements, but by the time everyone figures that out and you file all the necessary paperwork, and you're sitting in a three- to four-week bid process, it's not going to happen.

Mr. Michael Kram :

All right. You've talked about your idea of reciprocity with domestic content preference. Were you planning that on both the federal and provincial levels in Canada? Could you explain what you had in mind for how that would work?

Mr. Jim Tully :

A lot of what we've done in the past is that we've been focusing on the FCM and trying to deal at that level and saying push for reciprocity as you did a decade ago when you were able to get around these policies and Canadian products were accepted. We're not a massive exporter. We make concrete. Concrete's big and heavy. It's a tough thing to export, so our focus would be in the northeastern U.S. when we would sell stuff. We've gone as far south as Myrtle Beach. When we talk about reciprocity, we just want to have the ability to go if we can. Right now we don't.

Our market's being taken away from us in Canada by predatory pricing because it's open. I'm a strong believer in free trade. I've worked in 50 different countries in the world in my career, and I'm a strong, strong believer in it, but if you want to put some caveats on what you're considering as free trade, as the U.S. often does, then we should reciprocate and say that as soon as they drop theirs, ours are dropped. To me, it's a simple and effective way of ensuring that free trade is free trade.

I sat in front of Peel Regional Council back a number of years ago, and Hazel McCallion got up and she said, you know, there is no such thing as free trade and there never has been. That happens a lot of times because of these little side agreements that pop up, and they affect different businesses in Canada. If there's any way within the new Canada-U.S.-Mexico agreement that some kind of understanding could be put in that, if you start putting these side agreements in, then we're going to reciprocate....

Mr. Michael Kram :

Okay.

The Chair :

Thank you very much, Mr. Kram. We'll go on to Ms. Bendayan.

Ms. Rachel Bendayan (Outremont, Lib.) :

Thank you very much, Madam Chair. Just quickly, and with the greatest respect I have for the witnesses who have come before the committee this afternoon, I would like to make sure that the record is clear on the point that an overwhelming majority of Democrats in the United States—193 Democrats—voted in favour of this deal, and only 38 did not. My question is for Mr. Jacobi of CanadaBW Logistics. Thank you very much for joining us today. If I understand correctly the nature of your business, you help local Canadian businesses expand their export operations. Is that right?

(1625) Mr. Kevin Jacobi :

One of the challenges we have, being a border community, is that we rely heavily on interaction between Canada and the U.S. That has been our ideal place to export, because it's fast and it's easy. We can literally see the other country across the river in the Niagara region. In these past few years, there's been a lot of uncertainty for us being able to ship goods or get contracts in the U.S. Through the Canadian consulates around the world, we've been helped to find other opportunities in other countries to export our products—those longer supply chains. We've relied too heavily on a specific path.

We have to start building these other chains so that if something goes wrong, we still have other opportunities. It's the diversification that is necessary. Furthermore, if this is ratified, the resulting diversification will allows us to develop partnerships and build bridges between the other trade agreements for us to have better access into the U.S. market with trade partnerships from our other pacts, such as CETA and the like.

Ms. Rachel Bendayan :

Approximately how many of your clients—Canadian businesses that you help export—are exporting to the United States and/or Mexico?

Mr. Kevin Jacobi :

Our client base is a little over 70 clients whom we work directly with here, who actually touch ground in Niagara itself. I would say roughly about 60% of those would go into the U.S. Into Mexico.... We don't have very many who go that far down the pathway, but we do have clients developing their pathways into Brazil and into Britain. Through the free trade agreement with Ukraine, we have that pathway developed, as well as China and other Asian countries that we're working with.

Ms. Rachel Bendayan :

You mentioned that you're located in the Niagara region. I saw that your location is about one hour away from three different border crossings with the United States. Was that location strategically chosen to be close to our largest trading partner?

Mr. Kevin Jacobi :

It was, very much so. I was born and raised in Niagara, so I'm very lucky to have that option here. Within a ten-hour drive—basically a truck's drive away from Niagara—we have over 140 million people from the North American consumer market available to us. That's a significant portion. Not only does it help our local businesses develop those trade routes into the U.S., which we've relied on, it also allows us to build those partnerships and manufacturing opportunities with international companies to grow our community here as well.

Ms. Rachel Bendayan :

You touched on an earlier question on the need for stability and certainty. Does the existence of a certain agreement, like the one negotiated now—the CUSMA agreement—help businesses such as yours? Would you say that there was concern or anxiety around the situation in which we found ourselves when the United States indicated it did not want to continue with NAFTA?

Mr. Kevin Jacobi :

Very much so. Basically, business went into a holding pattern. We weren't sure what the climate was or how things were going to be moving forward. Is it going to be ripped up and not ratified? Are we going back to basically the default of the World Trade Organization, which has lost a lot of its teeth in its ability to actually enforce any of its rules and regulations? We had a lot of people sitting on their projects and sitting on their money.

International investment was reduced because international companies never saw the advantage of investing in infrastructure or manufacturing in our region, because they never knew if they would have access to the market they were attracted to. This uncertainty just puts us in that pattern. We need to know. We understand it's not going to be perfect for every sector. It's going to be a living document that's will need to be ratified, developed and evolved, but at least it gives us a pathway and a firm base to help build those conversations.

Ms. Rachel Bendayan :

Thank you very much.

The Chair :

Thank you. We'll go on to Mr. Carrie.

Mr. Colin Carrie (Oshawa, CPC) :

Madam Chair, I'll be splitting my time with Mr. Lewis. I want to put something on the record as well. The parliamentary secretary continues to put on the record that the Democrats and the Republicans voted for this deal in the United States and, of course, they would. When the United States did their economic impact study, CUSMA was a net positive for the United States, a $68 billion net improvement.

The last time I checked, we're Canadian MPs whose job it is to analyze this agreement for Canada, and I don't know if the witnesses watched earlier, but we just got the economic impact study today from the government The C.D. Howe organization last week was quite clear that this deal, compared to the deal we already have, is a net negative of $10 billion U.S., which is $14 billion Canadian. What we're trying to do on this side.... Mr. Jacobi, I want you to know that the deal will pass. It's going to pass this week and move into the Senate, so we are going to be moving this along, but unfortunately we have to...

Well, I'm not saying “unfortunately”, but fortunately we are going to do our due diligence and make sure that for the families and businesses negatively affected by the deal, at least we'll hold the government's feet to the fire in making sure that programs and supports are there for them. As far as Mr. Tully is concerned, you are right. Ten years ago Mr. Harper did negotiate an exemption for Canadian companies from buy American, and there was an opportunity in this agreement to do the same and, unfortunately, because of the weak leadership of our Prime Minister, he didn't do that.

I want to make that clear because I hear over and over that the Democrats and the Republicans supported this and that's why we should do. No. We're Canadian MPs. We're here to do the job for Canadians, to make sure Canadians' interests are looked after in this agreement. Mr. Lewis.

(1630) Mr. Chris Lewis (Essex, CPC) :

Thank you, Madam Chair. Thank you to my colleague, Mr. Carrie. I echo his words. Mr. Perez, again, this morning we finally did get an economic analysis study from the government. The interesting thing was that they did not compare it to anything. They didn't compare it to NAFTA or to the low, or how.... They didn't compare it to anything. It might seem a bit odd, but specifically with regard climate change, the way it's written in CUSMA, we don't know if it's going to meet the targets or what it's going to do, because it wasn't compared to anything. What would you like to see it compared to? Would you like to see it compared to NAFTA? Do you have thoughts on that front?

Mr. Eddy Peréz :

There's no climate reference in the current text, so at this moment we can't have any kind of analysis on how this trade deal impacts climate and Canada's objectives related to the Paris Agreement, for example, or other multilateral environmental agreements that are not mentioned in the revised text. We can compare it to many things, not necessarily in relation to NAFTA, but for the past two years, the Liberal government and Mr.

Trudeau have been travelling around the world to sign new trade deals that are called progressive by including some kinds of provisions, for example, on the environment, labour rights, gender, indigenous rights and so on. If you do that kind of comparison between how Canada signs these trade deals, there is a great discrepancy between what Canada negotiates with the United States and what it does with Mercosur and what it does with the EU, particularly when it comes to the investor-state dispute settlement mechanism.

So at this moment, I think Climate Action Network is asking for a domestic clause so that Canada will have an assessment on how CUSMA either helps renewable energy companies invest in the U.S., or, if there are goods that come from the U.S. to Canada or from Mexico to Canada, that help Canada reduce greenhouse gas emissions. When you start doing that kind of analysis, you already get information that frankly hasn't been there in the past.

And the other element that I would bring to the table is that within the Paris Agreement, Canada has developed a nationally determined contribution, which is the pan-Canadian framework on climate change and the way Canada brings this pan-Canadian framework into force, compared with how other countries implement their climate targets. So there are many opportunities for Canada to explore and compare how the trade deals it signs with the EU, Mercosur and the U.S. are impacting Canada's objective when it comes to climate change.

(1635) Mr. Chris Lewis :

Thank you very much. I'm sure that's time.

The Chair :

It is. I always manage to give you a little bit of extra time. Mr. Dhaliwal.

Mr. Sukh Dhaliwal :

Thank you, Madam Chair. My question goes to Executive Vice-president Tully. It's my understanding that you provide engineering services as well. Do you?

Mr. Jim Tully :

That's correct.

Mr. Sukh Dhaliwal :

When we have had previous agreements, anyone we heard from, such as the architects who came here as witnesses here, said that agreements like this will help engineering companies to do better. Would you agree with that?

Mr. Jim Tully :

I probably would agree with that, but unfortunately the engineering that we provide we restrict to our own products, so we're not exporting engineering services. Our services are internal. We are a registered consulting engineering firm, but we limit it to our own products.

Mr. Sukh Dhaliwal :

That is good to hear. Mr. Carrie was saying that we should be helping companies like yours. Our government put $125 billion in funding into infrastructure. How does that help companies like yours?

Mr. Jim Tully :

Well, the funding is fantastic. I'm going to make a protectionist kind of statement now. It's Canadian tax dollars that are paying for Canadian infrastructure. It would be nice to see Canadian companies have a fair shake at obtaining that work. When Canadian companies are kind of handcuffed to go to other countries, and those countries are allowed to come in and take those infrastructure dollars, which I am happy to say that I participate in supplying through the taxes that I pay, I get a little upset. I'm very happy that the government puts all that money into infrastructure funding. I'd like them to protect the Canadian businesses to ensure that they get their fair shake at that.

Mr. Sukh Dhaliwal :

You said that you employ 500 people directly and 300 indirectly.

Mr. Jim Tully :

It's 3,000 indirectly.

Mr. Sukh Dhaliwal :

For those 500, once CUSMA is ratified, do you think your company will face layoffs, or do you think you will be able to survive?

Mr. Jim Tully :

My issues with the free trade agreement are really with the side things that happen. If it were purely free trade, we would probably benefit. We would benefit if you could say that our doors are open to the U.S. participation and the U.S. is wide open to Canadian participation. If that were truly the case, then we would probably benefit because we have a state-of-the-art facility and we consider ourselves one of the best producers in the world and we think we can be cost-competitive and certainly competitive in our marketplaces.

However, as I said, we don't have that even playing field right now, and if there is any way the federal government can ensure that we have that even playing ground, then that's going to be a benefit to all Canadian companies. Free trade, if it's truly free trade, is fantastic. If there are allowances within an agreement to have these subagreements, as we've seen happen in the past, then that's not really free trade, and we get handcuffed by that.

Mr. Sukh Dhaliwal :

Okay. My question is for CanadaBW Logistics. Mr. Jacobi, you were talking but your time was up when they asked you the question about companies that can take advantage. Is there anything you think you would have said that you couldn't say?

(1640) Mr. Kevin Jacobi :

Certainly. I think the main thing is to look outside. We have great opportunities through our consulates around the world to make connections with entrepreneurs and people who see Canada as a positive place to land. That's not just to land their goods in to sell in the market but actually to make this a second home or to set up a factory. My company has been growing the ability to show these companies that Niagara is a very positive place to do business, to raise a family and to have a successful manufacturing centre for them to access a very large consumer market.

We're very lucky in Niagara that we have a trade surplus. We export more than we import into our region. We're a pathway for many of those spaces. There is value to that, and I would say there is value to many of our core communities in looking at these other countries and developing those relationships to build their community and bring in new resources and new pathways to help further the other companies around them.

The Chair :

Thank you very much, sir. On to Mr. Savard-Tremblay.

[ Translation ]

Mr. Simon-Pierre Savard-Tremblay :

I'd like to continue my conversation with Mr. Peréz about the environmental aspect. As everyone knows, and as someone pointed out earlier, the United States did not sign the Paris agreement. You said that the environmental agreements mentioned in the

chapter on the environment date back to NAFTA. As the standing committee that will be studying future agreements, we need to think about that. When we sign an agreement with a country that is a signatory to the Paris agreement, must the new agreement explicitly state that all of the provisions have to comply with the Paris agreement?

Mr. Eddy Peréz :

Yes, that's exactly right.

Mr. Simon-Pierre Savard-Tremblay :

Perfect.

Mr. Eddy Peréz :

Actually, I think it should go a bit further than that.

Mr. Simon-Pierre Savard-Tremblay :

Go ahead.

Mr. Eddy Peréz :

As I said in my opening remarks, we need to think carefully, just as we do when we sign free trade agreements. A free trade agreement can be suspended if parties don't abide by the provisions. This aspect needs to be added when we're talking about how states that sign free trade agreements respect their environmental and climate-related commitments in the Paris agreement. I would say yes to your first point, but I would take it further and look at how suspension can be used to strengthen these measures.

Mr. Simon-Pierre Savard-Tremblay :

Let me make sure I understand. You're saying that, if a trade situation fails to comply with environmental standards, free trade in that sector would be suspended?

Mr. Eddy Peréz :

The EU is a perfect example. A significant number of EU countries have proposed that a free trade agreement with a third party be suspended. A state can suspend the entire agreement, not just the environmental chapter, when the other party fails to uphold its obligations under the nationally determined contributions in the Paris agreement. Those discussions are already under way. I think suspension would be a last resort, but many other measures ranging from the option you proposed to suspension can be taken to ensure that both parties commit to honouring their commitments and to making their targets under the agreement much more ambitious.

(1645) [ English ]

The Chair :

Thank you very much, Mr. Peréz. I'm sorry I have to interrupt. My apologies. On to Mr. Blaikie.

Mr. Daniel Blaikie :

Thank you very much. Mr. Tully, I want to engage you a little bit more on the subject of reciprocity. I think that's maybe a more comfortable notion for New Democrats. In a lot of cases, we have tended to be critical of free trade. I don't think your story is unique. We have heard from cattle producers, for instance, under CETA, who thought they were going to have unfettered market access. Indeed, dairy farmers were asked to make sacrifices in order to open that market access.

Now we find out there are objections to some of the sanitizing practices here in North America, so they don't actually get that market access to Europe. Do you think it's fair to say that governments of different stripes have been overly enthusiastic about the idea of free trade and have let that sometimes blind them to the realities of what our trading partners are doing?

Mr. Jim Tully :

From my perspective, from what's happened in the past, free trade agreements struck between different countries have always left openings, and those openings are taken advantage of time and time again to—as in the case of the dairy farmers—hit different sectors with some little clause that makes it difficult for them to truly have free trade.

Mr. Daniel Blaikie :

Maybe I'm wrong about this, but Canada seems unique in offering pretty much unfettered market access under the auspices of a trade agreement, and in not really responding when trading partners don't provide that same access. Domestically, we're told as a political argument that “Oh well, these sacrifices are justified because we're getting equal market access”, and then in fact we hear.... Are there a lot of people in the United States saying that they can't get access to the Canadian market, that those tricky Canadians are blocking them, and likewise with Europe?

I'm interested to know who your counterparts are across international borders who would be feeling the same way about Canada that Canadian businesses are feeling about some of our trading partners.

Mr. Jim Tully :

I agree with your first statement when you say that we Canadians tend to be too nice and we open our doors so that everything can come in. I sit as the chairman of the American Concrete Pressure Pipe Association, and I'm also the chairman of the Canadian Concrete Pipe & Precast Association. From the American Concrete Pressure Pipe Association, I'll give you a bit of the feedback I get from my counterparts who are the presidents or senior vice-presidents of our competitors from the U.S. They laugh at us. They know that they can come here openly, and they know that we don't have a hope in hell of going down there. That's my struggle.

Mr. Daniel Blaikie :

Canada needs to get a bit more hard-nosed.

Mr. Jim Tully :

You can hear my frustration a bit because of that.

Mr. Daniel Blaikie: Yes.

Mr. Jim Tully: I've talked myself hoarse at the municipal level. I've gone in front of numerous councils and said, “Just give us fairness.” That's all we're asking for. We're not asking to be protectionist. We're asking them to react and to react quickly when things are put in place that restrict our trade. Just be equal—

Mr. Daniel Blaikie :

Fair enough.

Mr. Jim Tully :

—that's it.

The Chair :

Thank you very much. This completes that round. Are there any other questions? Mr. Fast.

Mr. Daniel Blaikie :

Thank you.

Hon. Ed Fast (Abbotsford, CPC) :

Thank you, Madam Chair, and thank you for the opportunity to ask a few questions. First of all, I have a clarification for the record. Mr. Dhaliwal suggested that about $125-billion worth of infrastructure investment has gone into our economy. In fact, the most recent report from the PBO, the Parliamentary Budget Officer, says it's less than $14-billion worth. This is a 2018 report, and only $14 billion worth of infrastructure investment had actually gone into our economy. Quite frankly, I don't think the figure is that much higher since then; we would have seen a much more significant economic boost.

I have a question for you, Mr. Tully. Thank you for appearing. The North American Free Trade Agreement could have addressed buy America provisions. This has been an ongoing problem and friction between our two countries, with the United States imposing restrictions on the opportunity for Canadian companies to participate in large infrastructure projects, while we as Canadians don't reciprocate with those kinds of restrictions on American companies doing business up here. The North American Free Trade Agreement was the perfect opportunity to fix this problem.

Are you disappointed that the agreement didn't address this issue?

(1650) Mr. Jim Tully :

Absolutely, and like I said, there are these windows of opportunity to come in and make some little side agreements or agreements that affect it. Buy America goes back decades, but to not address that and to say that Mexico and Canada are exempt from any of these clauses, that to me seems.... Maybe I'm naive, but when I originally got into this business and got involved with that, I thought, “Oh, free trade, everything is open.” Then you start seeing these little side agreements that are out there and you go, “Well, maybe it's not quite so free.” That's a huge struggle. If it could have been agreed, or if were simple to do that, it would be fantastic.

Hon. Ed Fast :

When the Prime Minister spread his arms wide open and said, "Donald Trump, I'd be glad to renegotiate NAFTA", I took him at his word when he said he was going to bring back a better deal than we had before. Sadly, the economic impact statement that was just released doesn't compare what Canada will be getting under the new agreement with what we had under the current NAFTA. It says it's the difference between what Canada would get under the new agreement and what we would have if there were no NAFTA at all, which is not the standard that was set when the TPP was negotiated.

It's not the standard set for economic impact assessments when the CPTPP was negotiated. In fact, in my time as trade minister, I don't believe we ever used that as the benchmark. We always compared the new agreement to what it was like before that agreement was signed. It's very disappointing to me that in this agreement that was supposed to be a win-win-win—those are the Prime Minister's words—we have an agreement that by any measure is actually less favourable to Canada. When the American officials talk about it, they say they finally got a much better deal out of this, implying that Canada is the loser.

We lost an opportunity to address buy American provisions that continue to plague our bilateral relationship. I have a question for Mr. Jacobi. Thank you for being so patient in waiting for this.

The Chair :

Make it a short question.

Hon. Ed Fast :

You had talked about the value of NAFTA as being a global platform for Canada to access global markets, especially in light of CETA, especially in light of the CPTPP. Could you expand on that a little bit more?

Mr. Kevin Jacobi :

Sure. Maybe I'll start with an example. We have an American company that moved up here in the beginning of 2019. They made a proprietary fabric that was antimicrobial, anti-inflammable, so it doesn't burn very easily. They had developed these threads and they were doing it in the U.S. They were a U.S. company, but most of it was going to Europe. Because of some of the challenges with trade between the U.S. and Europe, they found that a lot of their contracts were being stalled or stopped.

They found out that they could produce in Montreal and move up to Canada and, through CETA, have better access to that market again. This is what we're seeing. It's a challenge. I wish we had more in NAFTA. I do agree with that. I am proud of what past governments have done. I'm also proud of what they tried to do with this here as well, because I think we're in an undocumented time with regard to how the U.S. negotiates based on their president.

The Chair :

Mr. Jacobi, I'm sorry but I have to interrupt you. We'll go on to Mr. Sheehan.

Mr. Terry Sheehan (Sault Ste. Marie, Lib.) :

Thank you very much. It's a great discussion. We've been talking about American politics, Canadian politics and other comparisons. I've been 23 years in politics, with a majority of that time spent at the municipal level, so I understand when Mr. Tully or my friend from Niagara is talking about bidding on contracts and municipal processes and whatnot.

One thing that's important to clarify is that a lot of the difference between the American and Canadian systems is when you talk about a buy local program—let's call it a buy local program, namely, buy America versus buy Canada—the vast majority of infrastructure programs are actually under the purview of the provincial and territorial governments where they exist. In our federated system—I also studied political science at university in Michigan—it's quite different. Our federal government, through our historic infrastructure funding programs, transfers said dollars to the provinces and territories.

The provinces then reach agreements with municipalities, etc., and it is implemented locally. The reason I know this, too, is that I come from Sault Ste. Marie, where we make a whole bunch of steel. I'm always very interested to see the maximum amount of steel in the infrastructure program. In fact, I had a private member's motion I put forward on the floor to do this, and in doing so, I learned a whole bunch more.

In fact, a vast majority of infrastructure programs are under provincial or territorial jurisdiction, so we need to work closely with our Ontario or Alberta or Northwest Territories counterparts to enact those provisions to see those local benefits. You would need to see a buy Ontario campaign for Ontario infrastructure programming. I know the previous Liberal government had put forward such a program, but it was undone by this current Ford government. That is one of the issues at hand here. This is an important discussion to have, but this is a big difference between our governments.

Sure, there is still federal programming, including around defence. In fact, Algoma Steel was successful in garnering a federal contract—a buy Canada program, if you will. Around things related to security, certain provisions can be instructed by the minister to said businesses involved in the contract process. They can't influence and say that Algoma Steel or Stelco or this engineering firm gets it, but they can say that special provisions, under national security advice, will be garnered towards a Canadian company. Algoma Steel was...not lucky, but successful.

The definition of luck is when planning meets opportunity. I remember hearing that once. They were successful in garnering the royal shipbuilding program for the current program. That's going to mean jobs. That's going to mean a whole bunch of engineers. Canadian engineers in Sault Ste. Marie are hard at work figuring out the—

(1655) Mr. Sukh Dhaliwal :

They could be from British Columbia.

Mr. Terry Sheehan :

Yes, British Columbia could bid on it, too. That's what I think we need to underline and highlight. We don't want to leave this on the table. If we go forward—and I'm going to present the question to Mr. Tully—perhaps we could also put forward a recommendation, through to our analysts and to our clerk, to suggest that this committee recommend that provinces and territories instruct to have a buy Ontario or a buy Alberta program with this historic infrastructure funding that we're announcing. Do you think that would be a worthwhile recommendation, Mr. Tully?

Mr. Jim Tully :

Absolutely. I'm going to answer two different things. You talked about how a lot of the funding comes out of the provinces and the territories. The buy America ties back to federal funding, whether it flows through a state or through the municipal level. They put in that overriding thing. That would be the buy Canadian option. You're absolutely right that there's also funding that comes out of Ontario or comes at a municipal level on certain projects. That's why we've spent so much time—and I've spend so much time—over the last few years with the FCM and at the municipal level, canvassing them to do that.

To Daniel's point earlier, as Canadians, we're too nice. We are. We roll over and we say that we have a free trade agreement and we shouldn't do anything about it. That's why my big push was reciprocity. Don't do it unless they're doing it to you. I agree with that, but do it if they're not.

(1700) The Chair :

Thank you very much, Mr. Sheehan. Mr. Tully, and the others, thank you all. It's very informative. We appreciate your taking the time and effort to share your thoughts with us today. We will suspend for a few minutes while the other panel comes to the table. Thank you all very much.

Mr. Jim Tully :

Thank you.

The Chair :

We are suspended.

(1700) (1705) The Chair :

I will call the meeting to order. Pursuant to the order of reference from Thursday, February 6, 2020, we are here to study Bill C-4 ,

an act to implement the agreement between Canada, the United States of America and the United Mexican States. Thank you to the witnesses for coming today. We have Brian P. McGuire, president and chief executive officer of Associated Equipment Distributors, by video conference from Illinois; and from Toronto, we have Greg Johnston, President of the Songwriters Association of Canada, by video conference as well.

Here with us at the committee are Garry Neil, cultural policy consultant from Neil Craig Associates, and from the Canadian Union of Public Employees, we have Angella MacEwen, senior economist, national services. We will start with Mr. McGuire via video conference. The floor is yours, sir. Go ahead, please.

Mr. Brian P. McGuire (President and Chief Executive Officer, Associated Equipment Distributors) :

Good evening, Madam Chair, members of the committee and fellow panellists. I am honoured to bring remarks on behalf of the Associated Equipment Distributors, AED, to the committee this evening. Madam Chair, I also want to publicly recognize your work on construction and infrastructure policy issues over many years and to, of course, thank you for taking the time to address our association's membership during their visit to Ottawa in the last Parliament. Your leadership is very appreciated by our members on both sides of the border.

AED is the international trade association representing companies that sell, rent, service and manufacture equipment used in construction, mining, forestry, power generation, agriculture and industrial applications—products essential to building and maintaining critical infrastructure, including roads, bridges, pipes and waterways. Additionally, we provide equipment vital to natural resources and agricultural sectors across Canada. Our member companies operate and have locations in Canada, the United States and Mexico.

In Canada, our members have more than 420 locations that employ 27,000 hard-working men and women in rewarding careers. In North America, every year these predominantly small and medium-sized, family-owned businesses generate over $60 billion U.S. in revenue. While based in the United States, AED is truly an international trade association. In fact, in 2021, AED's board chair will be an executive from a Canadian-based company. AED has been a leading advocate for modernizing a trilateral North American trade agreement both in Canada and the United States.

As a pro-free trade organization, we made the accord's ratification a top policy priority in Washington. AED worked closely with congressional leaders in a bipartisan manner, and I was honoured to be present last month at the White House when the President signed the agreement into law. I'd like to congratulate all parties for their efforts to deliver a trilateral trade agreement that will continue to align Canadian, American and Mexican interests.

However, it's now time for Canada to join its partners in the United States and Mexico to complete ratification of the Canada-United States-Mexico agreement by swiftly approving the enabling legislation in the House of Commons, and ultimately the Senate of Canada, to provide much-needed trade certainty for the Canadian equipment sector. The Canadian equipment sector, which relies on cross-border trade between the United States and Mexico, is particularly susceptible to economic uncertainty because essential goods and commerce flow across the southern Canadian border every day.

This makes quick approval vital to our industry's prosperity. Efficient delivery of heavy equipment, machinery parts and services helps keep costs low for our customers—the farmers, the road builders, the contractors—and provincial and local governments across the country. Rising costs result in less capital to invest in businesses, employees and job creation. Delays in product delivery create inefficiencies and postpone major infrastructure projects that benefit Canadian citizens and commerce.

Ratification of CUSMA would be a win for all Canadians, and its prompt ratification is essential to the prosperity of the equipment sector. AED believes that CUSMA strikes the right balance between protecting Canada's interests and ensuring the free flow of commerce and goods in North America. We have advocated for a quick resolution of these negotiations both in Ottawa and in Washington, D.C., and have promoted the benefits of reaching a deal quickly in both countries to deliver business confidence, which is a key driver of new investment in the construction, energy and agricultural sectors.

We have made every effort to ensure that both Canada and the U.S. are aware of the difficulties that would come from a bad deal or a long, drawn-out process. I am appearing before you today to appeal to your sense of urgency and to underscore the point that we need a resolution quickly. Mexico and the United States have ratified this agreement and are ready to proceed. AED is calling on parliamentarians to ratify the agreement promptly. If amendments are suggested, the deal will have to be reopened. Businesses operating in natural resources, construction and agricultural sectors will be facing delays.

Stakeholders from across industries have been broadly supportive of concessions made in Canada and the U.S. to arrive at this agreement. It is time to move forward.

(1710) In closing, I wish to commend the efforts of Canada's negotiating team for its approach to working with its counterparts in the United States and Mexico. I also wish to express thanks to the members of this committee from all parties who are working to ensure that the agreement receives a comprehensive hearing while also taking measures to ensure that it can come into force quickly. By modernizing and strengthening the trade ties among the three countries, CUSMA will help restore predictability and trade certainty to North American equipment markets, creating an environment for greater investment, well-paying jobs and sustained growth. I thank the committee for its time.

The Chair :

Thank you very much, Mr. McGuire. We go now to Mr. Johnston from the Songwriters Association of Canada. Please go ahead, sir.

Mr. Greg Johnston (President, Songwriters Association of Canada) :

Thank you, Madam Chair and honourable members. Apologies for not appearing in person today, but Mother Nature obviously had different plans for us. It is a privilege to speak with you this afternoon, and, as always, I congratulate the committee for allowing and welcoming input from creators directly. I would like to focus my remarks today specifically on copyright term extension and the benefits that immediate and unencumbered ratification would have for the creative community.

It is important to note that term extension is widely supported by the creative community in both French and English Canada, in North America through Music Creators North America, and globally by CIAM—the International Council of Music Creators based in Paris, France, which represents some 500,000 professional music creators globally. Beyond the creator community, ratification is supported by the Canadian collectives SOCAN and CMRRA, and also by our publishing partners Music Publishers Canada in English Canada and APEM in Quebec.

This is significant in and of itself, and I urge the committee to recognize this unanimity throughout the remainder of its deliberations. The importance of copyright: Copyright is not an abstraction for us. It is not merely the work product of policy experts or the musings of law professors. It is also not a mechanism to punish consumers. Copyright is quite simply our currency, our lifeblood, our ability to feed our families and to pay our taxes. It is our survival. The reality: If I may be direct, Canadian creators are under threat.

Digital disruption, safe harbours, and overreaching exemptions have all contributed to an environment that can be described only as precarious. In an increasingly global marketplace, the dominance of American-owned streaming companies further exacerbates the problem due to lack of Canadian discoverability and the absence of investment towards the creation of domestic content.

The government's recent Yale report, in addition to the EU copyright directive, provides solutions critical to creator sustainability and a much needed return to a more balanced digital marketplace, one that is sustainable for creators in Canada and globally. Why term extension? Term extension is only one of many problems creators face, but it is one of vital importance. Over 60 nations, including France and the EU, the U.S., Australia and the U.K., have adopted the “life plus seventy” model.

Harmonization with our trading partners eliminates market confusion, promotes international investment, and provides critical leadership on the importance of IP protection. Many creators struggle to achieve long-term financial stability. RRSPs and many other financial mechanisms are simply not possible for some members of our community. Term extension increases the worth of our copyrights, as their valuation is often calculated on the amount of time a catalogue may be monetized into the future, therefore increasing our ability to leave meaningful financial legacies to our heirs.

One can simply look to the tragic and premature death of Stan Rogers, who left behind a widow in her twenties and a small child, to grasp the very human and moral implications term extension can have for our music community. Our publishing partners: For many Canadian creators, music publishers provide important partnerships and sources of career investment. Term extension increases the window of monetization for publishers. This long-term financial predictability for our partners will provide critical support to invest in the careers of creators.

This committee has heard arguments that term extension is of benefit to only publishers. This is a serious distortion. It is critical to remember that every dollar a publisher makes is directly tied to a creator's work. We are also beneficiaries. In most cases we music creators receive from 50% to 75% of the revenue generated from the uses of our works. Independent self-published Canadian music creators will often receive 100% of revenues.

To omit the creator's involvement from the equation dehumanizes the process, excludes us from the discussion, and minimizes our already undervalued involvement in the value chain.

(1715) I'll turn to the burdens of registration. Through our collection societies, our works are already registered accurately and robustly. To add another level of bureaucracy is not only inefficient and wasteful but also onerous and prohibitive to our heirs and publishing partners. Extra layers of registration can only lead to confusion, redundancy and potential abuse. In conclusion, progressive IP protection is a cornerstone to innovation and creativity. Healthy and fair copyright law promotes stable, sustainable and democratic ecosystems for creators.

Currently, Canadian creators are better treated in many other territories than here in our own. Countries that have adopted the life plus 70 standard enable dynamic, cultural communities that benefit consumers and creators alike—without the dire and hyperbolic negative consequences some would mistakenly predict. I urge this committee to recognize the economic, cultural and moral benefits that unencumbered ratification would bring to our community and to the countless many who enjoy and are inspired by our works.

I'd like to thank you, Madam Chair, and the honourable members again for the opportunity to speak directly to creator concerns. I'd be happy to answer any questions. Thank you.

(1720) The Chair :

Thank you very much, Mr. Johnston. We'll go on to Angella MacEwen, senior economist, national services, the Canadian Union of Public Employees. Welcome to the committee.

Ms. Angella MacEwen (Senior Economist, National Services, Canadian Union of Public Employees) :

Thank you very much. Thank you for inviting me here to speak on behalf of the Canadian Union of Public Employees, or CUPE. CUPE is the largest union in Canada. We represent over 700,000 workers across the country in about 2,000 different local unions working in diverse sectors for both public and private sector employers. CUPE welcomes the improvements to the updated NAFTA, but we believe that some flaws remain, ones that create barriers, for example, to effective climate action and for protection of public services.

Furthermore, one that we don't think there's enough information about is the language on regulatory co-operation. In our view, the agreement falls short of a progressive deal. Instead, it could be better thought of as moderate improvements to an outdated and ineffective model of trade and investment treaties. We do applaud the changes to the intellectual property

chapter that House Democrats in the United States were able to negotiate in December. That will avoid projected cost increases to medicines. Under the initial text, we would have been required to extend data protection periods on biologic medicines from the current eight years to 10 years. Those longer data periods extend the time it takes for cheaper generic versions of biologics to be available. That will be helpful when we introduce a universal national pharmacare program, making it more affordable to do that. The IP

chapter also allows for domestic regulation of evergreening now, which was a practice where drug companies made small and medically inconsequential changes to medicines to obtain a new patent. The previous version had not allowed regulations to prevent that, but now we will be able to regulate against that practice, which inflates drug prices at no benefit to patients. We're really glad to see those particular changes, as we think that a national pharmacare program is really important. Labour rights have been strengthened through the new rapid-response mechanism between Canada and Mexico.

As you know, if a specific workplace is suspected of violating freedom of association or collective bargaining rights, which are constitutional labour rights in Canada, an independent panel of labour experts can investigate. One gap in this mechanism is that it's restricted in terms of what work it covers. The facilities that are covered don't include agriculture, forestry and fisheries, which are where a lot of labour rights violations involving migrant workers would occur. This rapid-response mechanism basically leaves out migrant workers, even though migrant workers rights are in the full

chapter on labour rights. We're encouraged that the burden of proof for labour and environmental violations has shifted; all violations are now assumed to impact trade and investment unless proven otherwise. What had been shown in United States history is that in including that little clause, you had to prove it was connected to trade violations. That made it virtually impossible to ever meet that burden of proof. Removing that gives the potential for the labour

chapter to be enforceable. We'll have to see how that plays out, but it's definitely encouraging. It's a significant improvement over the original NAFTA labour side deal. It includes clear language that commits each country to implement policies that protect workers against wage and employment discrimination on the basis of sex, including with regard to pregnancy, sexual harassment, sexual orientation, gender identity and caregiving responsibilities, which is really important. This mainstreams a gender lens into the labour chapter. We're encouraged that the environmental

chapter now recognizes the obligations that nations may have from some international environment treaties. We think that what often tends to happen is that we sign these international treaties, but we can't be held to them; they're not as binding as a trade treaty and so a trade treaty always trumps the environmental treaty. If we can include references in our trade treaties to the importance of these environmental treaties or labour treaties that we've signed onto, that would help balance the playing field. It's problematic that the Paris climate agreement is not one of the recognized treaties.

That means that NAFTA continues to ignore the threat of climate change and limits government responses to deal with the crisis. We know that Canada has to act quickly to respond to the climate crisis and that transitioning the economy in a fair and rapid manner will require expanded public services, increased public ownership and revitalized not-for-profit sectors.

There would also be benefits to a much stronger role in government regulating the economy and providing direction through green industrial strategies, for example, as Ontario tried to do but was not able to because of trade deal restrictions in procurement.

(1725) We definitely think that, for a new generation of trade to transition quickly, we need to look at how trade agreements are putting barriers in place. The regulatory co-operation

chapter locks in Canada's current approach to regulating. It gives multinational industrial interests several entry points into Canada's regulatory system. One of the key issues is the focus on regulating based on scientific evidence. This sounds like it's good but limits your ability to use the precautionary principle, which is what Europe uses in order to regulate health and safety. If you can imagine, make a case for why something could possibly cause harm if you can't regulate it until you've let it out into the marketplace and it has actually caused harm. We think that's problematic.

We think that, overall, our approach toward trade and investment should be to view it as means to enhance our financial and social well-being, not as an end in its own right. We think that proposals for a progressive trade agenda, as we're going forward, should be judged against principles such as human rights—including social, cultural and environmental human rights—and that people's rights and their environmental rights should have primacy over corporate and investor rights. There need to be legally binding obligations on transnational corporations.

These treaties should not just be about the rights of transnational corporations; they should also enforce their responsibilities. Democratic governments need to maintain their policy space to pursue and prioritize acting in the public interest. We're often told that we're able to, but again and again we come up against governments that say they cannot do something because they've signed a trade deal and are restricted. When that is the case, there's a conflict there. A climate friendly approach should be adopted whenever we're pursuing trade and investment.

That's absolutely unquestionable from this point forward. We're also disappointed that there will not be a full and transparent public process of consultations prior to the federal government's ratifying the deal. We recommend that, in the future, the committee's deliberations should be informed by an independent analysis of the deal's impact on our economy. The analysis should look at the critiques of the current CGE model for economic assessment, and it should look at, as was pointed out in the previous

section of the panel, what you are comparing it to. Are you comparing it to no NAFTA or to what we had before? Thank you very much.

The Chair :

Thank you very much, Ms. MacEwen. We will now hear from Mr. Neil from Neil Craig Associates.

Mr. Garry Neil (Cultural Policy Consultant, Neil Craig Associates) :

Thank you very much, Madam Chair. Thank you, honourable members of the committee. This is at least the fourth time I've had the pleasure of appearing before this committee, following appearances in April 1999, December 2002 and May 2018. I think I appeared a couple of other times earlier in the 1990s, but I can't find a record.

Each time I've been here to talk about the cultural exemption, l'exception culturelle , to discuss why it is essential to preserve Canada's sovereignty to implement the public policies we need to support Canadian artists; film, television and record producers; publishers of books and magazines; musicians; actors; visual artists; and others who are so vital to nation building. I want to note that each political party that's with us today has played an important role in ensuring that our cultural policies are more or less exempt from the provisions of our international trade obligations.

The original exemption in the Canada-U.S. Free Trade Agreement was negotiated by Brian Mulroney's Conservative government. I served on the arts and culture SAGIT when John Crosbie was trade minister and the FTA became NAFTA. Successive Liberal governments have continued the exemption and supported Canada's lead role in negotiating the 2005 UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions. Quebec played a critical role in negotiating the UNESCO convention, and the Bloc Québécois has been an outspoken advocate of l'exception culturelle .

The NDP has been a strong supporter of Canadian arts and culture, and the cultural exemption. I also want to note that in the room today is the Honourable Ed Fast . When he was trade minister, the Canada-Korea Free Trade Agreement was negotiated, and it includes the a cultural exemption. I want to leave the committee with three key messages today. One, the committee should endorse the earliest possible ratification of CUSMA.

CUSMA's cultural exemption is far stronger than the original NAFTA and, given the weakness of the cultural provisions in the CPTPP, it's critical for Canada to have an exemption in its most contemporary trade agreement. Two, please understand the limitations of CUSMA's cultural exemption. It's not perfect. It has an antiquated and problematic definition. It comes with obligations to change policies, and it has other limitations. Three, this committee needs to address the link between CUSMA and other trade agreements, particularly as we continue to deal with our powerful southern neighbour on cultural matters.

Why is it important to ratify CUSMA? While it surprises many people, the reality is there is no cultural exemption in the original NAFTA. Instead, it incorporates the cultural provisions of the Canada-U.S. FTA by reference. Since CUSFTA was a bottom-up agreement, its scope was narrow. NAFTA is a top-down agreement, meaning it covers every economic sector, including those that develop in the future. Arguably, the cultural exemption, then, related only to the limited number of economic sectors in CUSFTA, putting at risk more contemporary policies related, for example, to online, on-demand services like Netflix.

This significant problem is solved in CUSMA, and I congratulate Steve Verheul and his team for understanding this, because the cultural exemption is direct and comprehensive. Measures adopted or maintained by Canada with respect to a cultural industry are exempt. This includes the

chapter on digital trade. While it's important to ratify CUSMA, please do so fully understanding the limitations of its cultural exemption. In all of our important trade agreements concluded since 1987, we've done the same thing. In theory we have a cultural exemption. In practice we trade away some cultural policies and limit our capacity to implement new ones. This is the case with CUSMA. The definition of “cultural industries” is unchanged from the original NAFTA. This is a 1987 definition that does not cover visual arts, performing arts and crafts.

Most of you around the table are too young to even know what the antiquated term “machine readable form” is, but you'll find it in the definition. Such a definition is unlikely to sustain policies and programs Canadians will need for a medium future artists will use to create their works.

(1730) The notwithstanding clause is continued. This is a clause authorizing retaliation of equivalent commercial effect against any measure supporting the cultural industries that Canada should implement in future. There's a new dispute settlement provision. While it's good that Canada could now challenge a retaliatory measure, the powers of the arbitrator include determining if Canada's measure properly falls under the cultural exemption in the first place. There is incredibly convoluted and obtuse language in

article 32.6.3 that would seem to permit the U.S. to retaliate against Canadian cultural industry firms in a greater amount than the standard of equivalent commercial effect. CUSMA contains a number of specific broadcasting policy changes. These include a requirement to overturn the CRTC's Super Bowl simultaneous substitution decision. I'd love it if somebody asked me about that, because I could tell you the secret story of the simsub ruling. This is a good thing, by the way.

It includes expansion of the rights of U.S. border stations under our retransmission rules, and it guarantees U.S. home shopping services will be carried by Canadian cable, satellite and Internet protocol television distributers. CUSMA also requires Canada to make changes to the Copyright Act, as you've already heard. Some of these are very positive, as my colleague Greg Johnston has pointed out about the increase in the term of copyright protection, but some of them are a little bit more problematic.

For example, while the changes respecting technological protection measures and rights management information are minor, the detailed rules concerning civil and criminal remedies for tampering with digital locks and watermarks are likely to put pressure on Canada's system to implement stronger penalties. The agreement also allows us to maintain our notice and notice system of liability when an Internet service provider is advised of a copyright infringement, but it establishes the U.S. notice and takedown system as the standard. This too will limit Canada's ability to evolve its own laws.

Finally—and I'd urge my colleague Greg to take a look at this one—there is a new provision in the agreement that requires national treatment, a national treatment obligation for all copyright measures. This will overturn our existing ability to distribute royalties only to Canadians unless there is a reciprocal right in the partner country, and this will erode payments to Canadian artists. Although it's not a huge amount of money, it will erode some payments. Given all of these issues and challenges with CUSMA, why am I still recommending urgent ratification? The answer, quite simply, is CPTPP.

Put bluntly, that agreement is by far the worst trade deal for culture that Canada has ever negotiated. CPTPP, of course, started life as the trans-Pacific partnership and most TPP terms are included in CPTPP by reference. TPP's treatment of culture is atrocious. There is no cultural exemption, and the

preamble provision recognizing the importance of cultural diversity is simply factually incorrect when it says “that trade and investment can expand opportunities to enrich cultural identity and diversity at home and abroad”. I tell you that, left unregulated, trade and cross-border investment bring cultural homogenization and not cultural diversity. Canada tried weakly to protect cultural policy-making space by taking a reservation against commitments in a number of TPP chapters, but it's critical to understand that a reservation is not an exemption. It's one-way.

It's not mutual, and in international trade law it's subject to the principles of standstill and rollback. If you change a policy reserved in an agreement, you cannot make it stronger, only weaker, and it is assumed by all parties that the reservation will eventually be eliminated.

(1735) The Chair :

Could you please close your comments, Mr. Neil?

Mr. Garry Neil :

Okay. The reason I'm raising CPTPP as an important issue here is that it's related to CUSMA. We all know it's inevitable that the United States will seek to rejoin CPTPP, and there is another principle in international trade law that Canada must enforce against what will be tremendous pressure from our allies. It says that the latest agreement reached by two parties on any particular topic prevails when there are contradictory rules, because that is their most contemporary understanding of the relevant issues. With respect to Canadian cultural issues—

The Chair :

Mr. Neil, I have to cut you off.

Mr. Garry Neil :

One sentence.

The Chair :

Go right ahead.

Mr. Garry Neil :

With respect to Canadian culture, that would be the CPTPP, if we fail to ratify CUSMA. If we move expeditiously to ratify CUSMA, the far stronger culture provisions of CUSMA would prevail. Thank you.

The Chair :

Thank you very much, Mr. Neil. I'm sure there will be a lot of questions. Mr. Carrie.

Mr. Colin Carrie :

Thank you very much, Madam Chair. I want to thank all of the witnesses for being here. I'd like to start today with Mr. McGuire. First of all, I want to thank you, sir, for all of your work and support in making sure that there is an agreement. We on this committee travelled down to the United States a few times, and it was really nice to see the support in the American business community for making sure that we got a deal done. You made a couple of comments—I want to correct the record a bit—that there may be a delay in passing this.

There was a bit of a whisper campaign in Washington that the Conservatives were trying to slow this down. If you're talking to any of your friends down there, just so you know, the Conservatives moved this through the House in six sitting days. That's compared with 16 days for the original implementation legislation, which was our Bill C-100. The Conservatives offered to do a prestudy back in the spring, but the Liberal government declined to do that before the election. We also offered to come back in early in December to deal with it, and the Liberal government declined that offer as well.

I just want that to be clear. This will eventually pass, but it's not because of anybody on this side of the table slowing things down. I want your comment on the buy American clause. Our former prime minister, Mr. Harper, was able to get a Canadian exemption from that. My understanding is that with this agreement, Mexico has an exemption and Canada doesn't. What are your thoughts on that and what do your members think, given that many of them who buy your equipment build infrastructure, bid on infrastructure? Do you have comments on this buy American clause?

We had an opportunity to negotiate it out—this is supposed to be a free trade agreement—but unfortunately we weren't successful.

(1740) Mr. Brian P. McGuire :

Thank you for the opportunity to comment. AED has traditionally opposed such provisions, whether they arise as part of proposals in the U.S. Congress or as part of trade deals. Our stance on those types of provisions is that we have not been supportive of them, and we continue that opposition. Most of our equipment is multi-sourced, as you might imagine, so such provisions don't foster good business practices in the equipment sector.

Mr. Colin Carrie :

It was extremely disappointing to many of our stakeholders. On the panel just before you, we had a gentleman involved in building infrastructure. He was very concerned that because the government was unable to negotiate it out of this agreement, it could be problematic for him. Thank you for your comments on that. It's nice to see there are similar thoughts on both sides of the border. We can maybe do something to move that forward. Mr. Neil, I want to talk to you. First of all, thank you for coming in. We had another witness—I think you know Professor Michael Geist—who is a leading expert in the world.

He's done work not only in Canada, but in the United States and the U.K. He mentioned challenges with CUSMA as well. He had a more, let's just say, grave comment. He said that we have this cultural exemption, but the cost is that we open ourselves to retaliatory tariffs. I believe he cited CUSMA

article 32.6.4, which I think you mentioned in your opening remarks. There are some wording issues in 32.6.3 as well. There is a big concern that it would limit our policy options as the digital field evolves. I am wondering if you could comment on that. I realize that you want this passed, and I understand the rationale for it. From our standpoint on this side, we are certainly not going to do anything to slow it down, but we want to do our due diligence. In your opinion, sir, is there a fix to this glaring, I would say, failure in this agreement?

Opening ourselves up to these retaliatory tariffs or limiting our policy options in the digital field and how it's evolving so quickly are problematic. Do you have a [ Technical difficulty--Editor ]?

Mr. Garry Neil :

Thank you. It's interesting, because I know Michael Geist very well. He and I have been on the opposite side of many issues, but I don't really disagree with him on this one. The question you have to consider is the degree of threat that any retaliation clause represents. NAFTA had a retaliation clause. There was only one case in our history when the U.S. even threatened to retaliate. They didn't retaliate, but the threat was put on the table. That's the only case. Yes, if they are still able to retaliate, I'm worried about that. I think we should all be worried about that.

I would have felt far, far better had it been removed from the agreement, but it wasn't. I think on balance, when you have the strength of the cultural exemption versus the theoretical risk of additional retaliation, which we have never experienced in our history, I think it's work pursuing. My greater concern is the limitations we've already agreed to and impose. We're kind of narrowing our cultural policy scope as we go through each of these trade agreements.

The Chair :

Thank you very much, Mr. Neil. I'm sorry, Mr. Carrie, but your time is up. Mr. Sarai.

Mr. Randeep Sarai (Surrey Centre, Lib.) :

Thank you, Madam Chair. I want to thank all of you, obviously. You all come from a range of different fields and have analyzed this. My first question is for Ms. MacEwen. I want to say that you're very well-informed on this. On behalf of your membership, you made a very broad analysis in a very concise period of time for us. You've stated that it helps labour rights much more than ever before. I think on biologic drugs it's much better, as you have stated, which will help with future plans for pharmacare. There was some other stuff, I think.

I can't quote you on that exactly, but, in terms of pharmacare, it would help, from what you stated. Have you, your union or other unions like yours been consulted in this much detail with other trade agreements or is this a first? Has it been ongoing?

(1745) Ms. Angella MacEwen :

Before being the economist at CUPE, I was the economist at the Canadian Labour Congress. I definitely was involved in consultations around previous trade agreements under Stephen Harper's government. Those consultations were very much one-way. It would be a webinar. You would try to ask questions, and they would just ignore your questions. Definitely, during the process for NAFTA, we were able to come to negotiating rounds. We could ask the negotiators questions. The staff took lots of time with us and were willing to meet with us regularly. I just want to say that the labour folks were amazing.

They took a lot of time with us and really were great, but so were other people. They were happy to have us challenge their perspective on the trade deal and engage with us in a really productive way, which was valuable. I would definitely hope to see that continue, because there's nothing that mandates it. The political will of the current government allowed it to happen.

Mr. Randeep Sarai :

I'm glad to hear that. I'm hopeful that all future governments, whether this government or any other future government, always consider labour as an important and integral factor. Were you able to do, or did you do, an economic analysis for your membership or the Canadian public sector on the ramifications of having a deal, not having a deal, this current deal, etc.? Would you be able to elaborate on that? Would the deal protect the current jobs that are here or perhaps enhance more? Have you done that sort of analysis?

Ms. Angella MacEwen :

That's one of the problems with the way that we negotiate trade deals, because you don't know what the changes are going to be until it's kind of.... We didn't know the whole deal until December because the United States made changes to it. It's very difficult to do any kind of economic impact assessment until you have the deal finalized, so we haven't had an opportunity to do that. What we have had is some projections around the cost of medicines. We know that this will improve, especially compared to what was in the TPP. That's fantastic.

Apparently during the first NAFTA negotiations under Brian Mulroney's government, there was a lot of data that was available to people and shared with the public around modelling and what type of industrial impact that would have. Maybe talk to people who were in government at that time and knew what was very open in terms of the public modelling and allowed that to happen as negotiations were going forward. We didn't have access to that type of data, but we definitely did our best.

Mr. Randeep Sarai :

Thank you. To Mr. Johnston from the Songwriters Association, I understand that your concern is over copyright—namely, copyright life plus 70 years versus copyright life plus 50 years. If I'm right about what I've been hearing, not just in the cultural world but also in other copyright sectors that have come here, it's more of a fear that if ever we were to change it, the Americans may retaliate. However, am I correct in saying that the U.S. has a copyright of life plus 70 years and that, if we were to match them, it would not be of any detriment or threat to them?

Mr. Greg Johnston :

In fact, us ratifying our copyright term extensions to theirs creates investment opportunities for Canadian publishers to administer the rights on American copyrights for the full term allowed,

whereas, as it stands now, you could have a work approaching public domain, which would happen sooner in Canada than in the U.S., and that would be a disadvantage for a Canadian publisher. They would not be able to collect and administer the rights for the same amount of time that a publisher in the U.S. would be able to.

Mr. Randeep Sarai :

This is something that you could probably have ongoing.... I guess it would fall under ISED. I haven't really delved into this for too long, but it would be something that, even post-ratification of CUSMA, we could continue to do. I don't think the copyright provisions per se are negotiated in this.

(1750) Mr. Greg Johnston :

I'm not a policy expert or a lawyer. I'll defer to Mr. Neil's more precise understanding. In general terms, though, we're looking for ratification, and we're looking for an unencumbered ratification. We don't want there to be a re-registration process after the 50 years. We would simply like to harmonize it with the majority of our trading partners.

The Chair :

Thank you very much. Mr. Savard-Tremblay.

[ Translation ]

Mr. Simon-Pierre Savard-Tremblay :

I want to thank all the witnesses for their presentations. I would like to ask Mr. Neil about the cultural exemption. As you said, my party was an outspoken advocate on this front, as was Quebec, because we wanted it recognized by UNESCO and included in the convention. You said CUSMA is a step forward compared to NAFTA because it mentions the cultural exemption, but there are different ways of including exemptions in agreements. In some cases, such as the Canada-European Union Comprehensive Economic and Trade Agreement, CETA, it was

chapter by chapter. That means the cultural exemption applies not to the whole agreement, but only where it is mentioned. What kind of exemption is in CUSMA?

[ English ]

Mr. Garry Neil :

It is a universal exemption. It's an exemption from all of the provisions. Let me briefly compare it with CETA. The difference with CETA, the difference between CETA and the CPTPP, is that the chapter-by-chapter cultural exemptions were mutual. Both Canada and Europe agreed that cultural industries would be exempt from those obligations. There is an asymmetrical definition—for us it's cultural industries and for Europe it's audiovisual services—but it's a mutual understanding. Those chapter-by-chapter mutual exemptions are underpinned by a strong recognition of our mutual support for the UNESCO convention.

It's a very, very powerful way to exempt, but it's unique because it's basing it, in some ways, on the UNESCO convention. In my opinion, a future progressive trade strategy for culture would be to base it on the UNESCO convention, where both parties are signatories to the convention, as the fundamental underpinning.

[ Translation ]

Mr. Simon-Pierre Savard-Tremblay :

Perfect. Generally speaking, you seem fairly satisfied with the provisions governing culture in the agreement. Is that right?

[ English ]

Mr. Garry Neil :

Yes.

[ Translation ]

Mr. Simon-Pierre Savard-Tremblay :

Okay. My next question is for Ms. MacEwen, national services senior economist at the Canadian Union of Public Employees. You seem equally satisfied with the labour-related parts. Last week, witnesses told us that most of the labour-related provisions with actual teeth affect only the auto industry and that the rest is merely intention. Do you agree with that criticism?

[ English ]

Ms. Angella MacEwen :

Definitely there are parts of the labour

chapter that are aspirational, but there are also requirements, especially concerning Mexico and the right to collective bargaining. Right now, only about 1% of trade unions in Mexico are democratic, independent trade unions. The current government had wanted to make some change on that front, and the labour

chapter and the side agreement with Mexico and the rapid-response mechanism all give them a forum and will help them get that done domestically. It will make a big difference in terms of bringing democratic trade unions to workers in Mexico, but it also sets a floor and it gives us somewhere to bring complaints about labour violations and hopefully get some changes to happen. There is more enforcement than there has ever been in a trade agreement.

(1755) [ Translation ]

Mr. Simon-Pierre Savard-Tremblay :

Those mechanisms apply only to Mexico. You only mentioned Mexico. Does that apply only to Mexico?

[ English ]

Ms. Angella MacEwen :

There is a unique side agreement with Mexico that deals with they what they call “yellow unions”. The rapid response mechanism is between Canada and Mexico, and between the United States and Mexico; it doesn't apply between Canada and the United States. So there are those two parts, where, in terms of Canada's concern, it's just with Mexico. The labour

chapter is trilateral; it's between all three countries. We can bring complaints of labour violations through the labour

chapter and we'll have a much better chance of those being successful. The way the burden proof had been, it was impossible to ever win a labour dispute settlement, but we now have the hope that it's possible.

The Chair :

Thank you very much. We'll go on to Mr. Blaikie.

Mr. Daniel Blaikie :

Thank you, Chair; and thank you very much to all the witnesses for appearing here today. Ms. MacEwen, I want to go back to some of your comments about consultation. Granted, we have heard that a number of organizations typically are not satisfied with the level of consultation, more than those that feel they were more included. However, as you say, that depends upon the political culture of the day and the whims of government. It's always nice when winds tend in the right direction, but it's not the same as a guarantee.

It's something that we, in the NDP, have tried to make part of this process of talking about trade. We're happy to get some commitments from the government on making at least their initial negotiating objectives public before entering into negotiation, and having to provide an economic impact assessment—which seems like an odd victory, because you'd think it was common sense. Certainly, in a lot of other jurisdictions with which we trade, it is part of their process. We have that coming now in Canada. It's a good first step.

Could you speak a bit more about the importance of civic engagement and what it means to have, as matter of policy or law, clear expectations about what type of information Canadians can expect to get from their government with respect to trade agreement negotiation, and the difference that can make?

Ms. Angella MacEwen :

This is a difficult issue. The United States has a much more transparent process that includes legislators. Canada doesn't have that. There's also a process in the United States whereby lobbyists, or people who want to be included in the consultation process, can get clearance to have information that the negotiators have but that isn't public. They can sign for it and then provide advice on how that might impact their particular area of expertise. Those are useful things that we might draw from the United States.

I think it's an excellent move on the part of progressive trade to have more transparency, especially to include legislators early on. I think more transparency is useful. We found that people who have the resources and the knowledge to be able to attend these meetings were able to go, and so you're less likely to hear from, say, anti-poverty groups than you are from the Cattlemen's Association. You often have negotiators surrounded by the more powerful interests and they're less likely to hear from less powerful interests. It's unbalanced in that sense.

Canada and the United States especially have such an integrated economy that the dividing line isn't always on national grounds. The industry on both sides of the border can be on the same side. It's between the public interest and corporate interest, and so the way the consultations are structured doesn't provide a balance to that effectively, as does not having an independent economic analysis. An economic analysis is useful. An independent one would be better because they would be using better choices. Right now you can make a lot of assumptions in a CGE model.

If you make a few different assumptions, you'll end up with 3% growth instead of 2% growth. You want those choices to be made based on the best information available, not your political outcomes. You may want the Parliamentary Budget Officer making those assumptions. I think that's useful for transparency and for the public debate because often people cater to the top line, so it's going to affect dairy farmers or trade across the border, slowing down lines at customs. It will have a significant impact on their lives, but we won't know until after it's been signed and is already affecting us.

(1800) Mr. Daniel Blaikie :

Right on. Thank you very much. Do I have a little more time left?

The Chair :

Yes, you still have a minute and a half.

Mr. Daniel Blaikie :

We had another witness—I think it might have been the CCPA—who said that if we wanted to leverage the most possible out of the state-to-state dispute resolution mechanism, it was important to have a domestic process that essentially allows intervenors to make a case there's a good reason to pursue one of our trading partners under CUSMA.

That would be an independent process and if there were a finding that there was cause to pursue this, then there would be an obligation or resources to be able to do that so that it's not just up to government or to the people with the resources to pressure government to take on their cause. Do you have an opinion on that kind of mechanism and would other aspects of the deal be assisted by having that kind of domestic process?

Ms. Angella MacEwen :

Yes, that domestic process definitely needs to be strengthened. In many trade deals or under the OECD rules, we have a national contact point where they can offer good offices. If there's a disagreement, they can say they'll provide a neutral place to meet. However, there's no power of investigation; there's no mandate for them to take it on. When I was at the CLC, we brought forward a complaint under the labour

chapter between Canada and Colombia. The labour department investigated. They took it on and produced a fantastic report, but nothing mandated them to do that.

The Chair :

Thank you very much.

Ms. Angella MacEwen :

Because of the goodwill, it happened, but....

The Chair :

Thank you. We'll move on to Mr. Fast.

Hon. Ed Fast :

Thank you, Madam Chair. I want to follow up on Mr. Blaikie's question about process. Mr. McGuire, do you recall when United States legislators, members of the House, received the economic impact assessment that was done with respect to this agreement?

Mr. Brian P. McGuire :

No, I do not. I wouldn't be able to comment on that. I'd have to get back to you.

Hon. Ed Fast :

If I said that it was in April 2019 and that it was actually published publicly online in April of 2019, would that sound right?

Mr. Brian P. McGuire :

I would trust your statement on that.

Hon. Ed Fast :

That's where the process question comes in. The impact assessment was done for American legislators many, many months ago, before the House of Representatives actually had to vote. In fact, the House of Representatives demanded changes to the agreement, got changes to the agreement—presumably based on their reading of not only of the agreement but also the economic impact assessment—and then the matter was in Canada's hands to ratify. Are you aware that this is our last meeting to discuss this agreement here at committee before we go to clause by clause?

Mr. Brian P. McGuire :

That is my understanding.

Hon. Ed Fast :

Are you aware that the department's economic impact assessment was table-dropped today for parliamentarians to review?

Mr. Brian P. McGuire :

Again, I would trust your statement on that.

Hon. Ed Fast :

Well, you understand that the process on the two sides of the border is quite different. The one on the American side clearly provided decision-makers in the United States with an opportunity to look at the agreement, look at the impact assessment, suggest additional amendments, and then ratify it. Now it's placed in our care, and we have no opportunity, quite frankly, to make further amendments. You yourself said that you're encouraging urgency; you're encouraging us to act promptly. Now, as my colleague, Mr.

Carrie, said, we want to deal with this in a respectful but deliberate way, and do our due diligence to make sure that this agreement is actually in Canada's interest. I think your organization straddles the border. It has members on both sides of the border, correct?

(1805) Mr. Brian P. McGuire :

That is correct.

Hon. Ed Fast :

I want to assure you that we are not in any way attempting to delay this agreement, but we are going to do our due diligence to the degree we're able to, based on our process here in Canada. I will tell you that, quite frankly, I'm very disappointed that it is only now, just before midnight, that we actually get the economic impact assessment from