EVIDENCE

Standing Committee on International Trade NUMBER 009 1st SESSION 43rd PARLIAMENT Tuesday, February 25, 2020 Le mardi 25 février 2020 Standing Committee on International Trade CANADA [Recorded by Electronic Apparatus] EVIDENCE February 25, 2020 Committee NUMBER 009 NUMBER 009 NUMÉRO 009 09 25 02 2020 2020/02/25 09:05:00 House Of Commons Comité permanent du commerce international Standing Committee on International Trade CIIT Chair The Honourable Judy A. Sgro 1 43

(0905) [ English ]

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

I'm calling the meeting to order. Pursuant to the order of reference of 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. For witnesses this morning, we have Maryscott Greenwood from the Canadian American Business Council, by video conference from Washington. Welcome and thank you for joining us. Then we have, by teleconference, Jennifer Mitchell, a director on the board of directors at Music Publishers Canada. From the Society of Composers, Authors and Music Publishers of Canada, we have Andrea Kokonis, general counsel, and Gilles Daigle, consultant.

We are waiting for some folks from the Fédération des chambres de commerce du Québec who have not arrived. We will start now with Maryscott Greenwood from the Canadian American Business Council. Please proceed.

Ms. Maryscott Greenwood (Chief Executive Officer, Canadian American Business Council) :

Good morning. Thank you, Madam Chair and members of the committee. Happy Fat Tuesday. Thank you for inviting me to speak with you today, and for allowing me to beam my testimony from Washington, D.C. It is an honour to advise parliamentarians on a topic as important for our two countries as the one under discussion, the most significant trade agreement on Earth, updated and modernized for the third decade of the new millennium. You will recall that the new North American free trade agreement was first announced on October 1, 2018.

As you've had a number of experts provide background on the elements of the agreement, I'm not going to take up your time with a recap of the history of the rather tortuous path that brought us to this moment. We know what made it into the deal and what didn't. We know that it didn't hit 100% of every constituent's wish list, including ours at the Canadian American Business Council, but a deal that doesn't fully satisfy any party is called a compromise, and compromise is the soul of trade.

Further, I think everyone acknowledges that CUSMA substantially improves not only our trade policies but also government relations in North America. It reaffirms our commitment to the rule of law, our commitment to our economic interdependence, and our belief that Mexico is a crucial partner in our shared prosperity. All three governments agreed that NAFTA needed updating, and frankly, the successful negotiations were a tremendous relief to business. As you can probably guess, the Canadian American Business Council wants to see it become law sooner rather than later.

I speak for businesses in both countries, and I am here to tell you that this new deal is a set of stable rules that we will be able to depend upon for years. Business loves stability. Business loathes uncertainty. You've probably heard that formulation before. A lot has been written about how companies and financial institutions have been sitting on capital since the 2008 meltdown, despite efforts by central banks to encourage spending and lending. It's because of uncertainty. The global trade environment at the moment is volatile. Stable, mutually agreed-upon trade rules are reassuring.

Don't we all want to see businesses confidently spending on growth and expanding commerce right here in North America? As a former American diplomat to Canada, and someone who has woken up every single morning for the last two decades working on the Canada-U.S. relationship, it is my mission to know the pulse of both Congress and the White House on the issues of bilateral concern that affect our business coalition. Believe me when I tell you that we are in a rare moment today. If anyone thinks it's still possible to find leverage and rewrite CUSMA, I think they misunderstand this moment in time.

We are truly at a point where the Parliament of Canada must say “yea” or “nay”, up or down. That said, let me go a little bit further and tell you what I think would happen from a Washington perspective if the vote in Canada is "nay" and the deal goes down. You all know that the U.S. House of Representatives and the Senate ratified what we in Washington call the USMCA in December and January. Do you know how many bills have been introduced so far this session in Congress? There have been thousands. Do you know how many have passed the House? There have been nearly 500.

Do you know how many have made it through the House and the Senate so far? There have been 91, and most of those were to name post offices or veterans affairs buildings. We really don't have much agreement down here on anything. Do you remember when Speaker Pelosi actually tore up the State of the Union address, moments after the President delivered it on live national television? Well, she didn't tear up the modernized NAFTA, as some in her party would have wanted her to do. Instead, she led a comprehensive, thoughtful effort to pass it.

The USMCA didn't just pass; it passed with overwhelming bipartisan majorities. In the current political climate here, that was an achievement. Then, President Trump signed it into law at the end of last month, and as you know, President Trump doesn't always do what Congress asks him to do, so the stars in Washington have aligned. Now let me put my advocate hat back on for a moment and speculate on what might happen if, now that the agreement has passed both chambers of Congress, has been signed at the White House and, importantly, has been ratified in Mexico, it were to fail in the Canadian Parliament.

As you have probably heard, President Trump instinctively tends toward protectionism. His slogan is “America First”. He has described himself as “a Tariff Man”. He doesn't react happily when he's embarrassed, which he certainly would be if the new agreement fails in Canada. He rightly regards the agreement as his signature legislative accomplishment in his first term. His fallback would be tariffs. Canada, Mexico and the United States have already been through that unfortunate chapter.

If trends in the current democratic primary race continue, President Trump's opponent this fall may well be Senator Bernie Sanders. Senator Sanders describes himself, as you know, as a democratic socialist. Like other people on the political left, he not only dislikes trade deals, like the original Canada-U.S. Free Trade Agreement and NAFTA, but he has made his opposition to this new agreement plain. He, too, would prefer to rely on tariffs to protect what he sees as America's economic interests. Let's not forget that Senator Sanders was one of the few members of Congress who voted against the USMCA.

I imagine you can see where I'm going here. Does anyone really think it's a good idea to prod this president or his potential rival into a tariff war with Canada and Mexico? An irritated president, with the snap of his or her fingers, can thicken our international border, clogging traffic and giving businesses in both countries migraines. But given the size of our respective economies, I'd submit that the migraines would be worse in Canada. As someone who speaks for leading Canadian and American businesses, I would point out here that our members already have a few headaches.

There is the rather delicate issue of the rail blockades. And there are questions about the ability to site and fund new infrastructure projects, particularly in the energy sector, as you know. I would suggest that rejecting the new trade agreement in this environment would amount not just to an unforced error but to a serious self-inflicted wound. That said, let me take a more optimistic tack here just for a moment. Unlike the United States, Canada has, since the 1980s, seen free trade agreements as being in its crucial national interests.

Given the relative size of your market, Canadians have had a greater interest than most in clear, transparent, agreed-upon rules, which is probably why Canada has had free trade agreements with Europe, Chile, Jordan, Israel, Costa Rica, Honduras, Korea, Panama and Peru. Otherwise put, Canadian businesses have clear and preferential rules with markets representing trillions of dollars. Does it not make sense to update and pass an agreement with Canada's single largest trading partner? I dare say a long list of other countries would love to have preferential access to the American market at this point.

Proximity without access is frustrating, to say the least. An agreement with the biggest market in the world is ready and available right now. Everyone is waiting. The position of the Canadian American Business Council is that your choice is clear. The updated agreement strengthens a commercial relationship that has existed since the earliest days of our countries. The effort of the last three years has been intense, sometimes nerve-racking, but we are nearly there. Canadian parliamentarians have a simple question before them, and I submit that to ask it is to answer it. Thank you very much.

I'm happy to take your questions.

(0910) The Chair :

Thank you very much, Ms. Greenwood. Now we will go on to the Fédération des chambres de commerce du Québec, with Charles Milliard, chief executive officer; Kathy Megyery, vice-president, strategy and economic affairs; and Louis Lyonnais, adviser, strategy and economic affairs. I will turn the floor over to you. Thank you very much. Go ahead, please.

[ Translation ]

Mr. Charles Milliard (Chief Executive Officer, Fédération des chambres de commerce du Québec) :

Allow me to introduce myself. My name is Charles Milliard, and I am the president and CEO of the Fédération des chambres de commerce du Québec, or the FCCQ for short. Joining me is Kathy Megyery, vice-president of strategy and economic affairs. I'd like to thank the committee for having us despite a few technical problems. We had a bit of trouble with the connection for our appearance this morning, so I thank you for your patience. The Fédération des chambres de commerce du Québec represents 132 chambers of commerce across Quebec and 1,100 member businesses.

The federation's members are active in every sector of the economy throughout the entire province. As Quebec's largest network of business people and businesses, the federation also serves as a provincial chamber of commerce, advocating for public policies on behalf of its members. I want to start by saying that the federation welcomes the signing of the trade agreement between Canada, the U.S. and Mexico, which, as we know, puts an end to more than a year of business uncertainty. The prevailing uncertainty prior to the conclusion of the agreement was quite detrimental to business and investment in Canada.

While the federation fully recognizes the importance of the new agreement, it has serious concerns about certain aspects that warrant rigorous federal oversight. The federation recognizes that the agreement was unfortunately concluded to the detriment of our supply management system and Quebec's dairy farmers, who were to some extent sacrificed. That is true of the negotiations leading to all three of the major trade deals recently signed, the Canada–European Union Comprehensive Economic and Trade Agreement, or CETA, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, and CUSMA.

In addition, despite the very clear calls of Quebec's aluminum sector regarding regional content rules, it will not see its fate improve under the agreement. Conversely, the steel sector, 53% of which is based in Ontario, obtained the protections it had been calling for. Going forward, interprovincial equity should be the guiding principle for any concessions the federal government makes in negotiating international agreements. What's more, this agreement causes a third breach in supply management, thereby undermining the system's viability and long-term sustainability, especially for the smallest farms.

Government announcements regarding compensation for CETA and the CPTPP were long in coming, and the payments have taken even longer, unfortunately. To date, dairy processors and poultry and egg farmers continue to wait for their compensation payments. Nothing has yet been announced in connection with CUSMA. The FCCQ is calling on the government to swiftly establish the terms of the compensation program for dairy farmers and producers further to CUSMA.

The federation also submits that Quebec farmers should receive compensation commensurate to the share of Quebec's agri-food sector in the Canadian economy as a whole. As for the aluminum sector, the government must remain vigilant. Initially, CUSMA contained a provision requiring that 70% of steel and aluminum originate in North America. Accordingly, Mexico was supposed to purchase 70% of its supply from North America. However, a grey area in the definition would likely have allowed Mexico to continue buying cheap metal from China, as it has been for months now.

The flaw was corrected in the new version of CUSMA, but only for steel, not for aluminum. This new dynamic will impact Quebec's market share. American companies supplied by Quebec have already begun relocating operations to Mexico so they can pay less for metal. Consequently, we will probably lose more and more of the U.S. market as we watch metal processing capacity move to Mexico.

The FCCQ is therefore calling on the federal government to ensure the industry maintains its competitiveness in a market that has just undergone a significant change, by engaging the Americans through all diplomatic channels necessary to force Mexico to play by the rules. Under the provisions of CUSMA, Canada agreed to an increase in the duty collection threshold, the de minimis threshold, which went from $20 to $150 for duties.

A longtime demand of online retailers in the U.S., the increase could lead to a spike in cross-border shopping, which would have obvious consequences for Quebec retailers and their employees. The higher threshold could prompt U.S. online retailers to start offering customers free shipping to Canada, something many already offer their customers in the U.S. The FCCQ is therefore calling on the federal government to pay close attention to the retail sector overall to ensure it can remain competitive with foreign companies.

Furthermore, the federation's members, especially small and medium-size businesses, share a common concern, one we want to convey to the government today: information on the benefits of these trade agreements is lacking. They feel the government should be doing a better job when it comes to the trade deals and after-sales service.

(0915) Although a number of mechanisms are in place, the information doesn't always seem to flow as effectively as our business network in Quebec would like. The government should be more proactive when it comes to educating companies about the benefits of leveraging trade agreements and conquering foreign markets. Accordingly, it is necessary, in our view, to provide businesses with support as they enter the export market for the first time. It would also be a good idea to provide smaller businesses with more online support and high-potential companies with tailored support.

The FCCQ has always advocated the importance of diversifying export markets and leverages its network of well-established local chambers of commerce across the province to help Quebec companies discover the benefits of export markets and seize new business opportunities. Against the current backdrop of American protectionism, it's important for Quebec companies to focus on other high-potential markets and increase their proportion of non-U.S. exports. As you know, 70% of Quebec exports last year were destined for the U.S.

Diversifying our trade partners is even more important considering the uncertainty caused by American surtaxes, which has taken its toll on our economy in recent years. Finally, I want to highlight the fact that numerous products that are not compliant with current regulations seem to be making their way across the border, because the Canadian Food Inspection Agency is short on resources. With added restrictions, it's essential to increase the level of screening and analysis to make sure imported products adhere to the same requirements our products do.

Clearly, the purpose of Canada's regulatory framework is to foster better consumer health, but to do that, companies subject to the regulations must incur the associated costs. Harmonization is thus vital to the competitiveness of Quebec's agri-food industry. The FCCQ is recommending that the government increase controls and inspections by the agency to ensure imported products meet the same standards and rules as Canadian products. Thank you. We would be pleased to answer any questions you have.

(0920) [ English ]

The Chair :

Thank you very much. Now we go on to the Music Publishers Canada, with Jennifer Mitchell by teleconference. Good morning.

Ms. Jennifer Mitchell (Director, Board of Directors, Music Publishers Canada) :

Good morning and thank you, Madam Chair and honourable members, for this opportunity. I'm sorry I'm not available to be there in person. I've had the pleasure of owning and running a Canadian-owned independent music publishing business for almost two decades. I'm here today with Casey Chisick of Cassels, who is external legal counsel to both Music Publishers Canada and my companies. I'm here to talk to you about the need to fully implement copyright term extension, in accordance with CUSMA, immediately, completely and with no conditions.

This will allow songwriters to succeed and small businesses like mine to thrive. Quickly ratifying CUSMA and implementing copyright term extension goes straight to the heart of their and our creative and business efforts. Bill C-4 would extend the term of copyright for a few works but would leave out musical compositions—otherwise known as songs. On behalf of Music Publishers Canada and the songwriters and composers I work with, I urge committee members to amend Bill C-4 to align Canada with its global trading partners by including all musical, literary, dramatic and artistic works.

Canadian music publishing is a $329-million industry, just one sector of the $53-billion creative industry. Music publishers are innovators. Their strong export strategies have allowed entrepreneurs like me to better compete internationally. A total of 67% of music publishers' revenue now comes from foreign sources, a dramatic increase from 28% in 2005. The key to dealing with changes in technology has been our ability to expand globally. In order to do so, we take financial risks and invest our time, energy and money in building the international careers of songwriters, including emerging songwriters.

For example, we signed 23-year-old Tom Probizanski, which allowed him to move to Toronto. We then paid for him to go to L.A. and Denmark to co-write, and we set up his co-writing sessions. We also paid for his blog and playlisting promotion so that he was featured in Clash magazine, Earmilk and various Spotify playlists.

We were able to take these risks and invest that money only because I could rely on the income of several songs for which my companies hold the copyright—for example, Imagine by John Lennon; What a Wonderful World ; My Way ; Y.M.C.A. ; Start Me Up by the Rolling Stones; Skinnamarink by Sharon, Lois and Bram; and even the theme to The Simpsons . But a number of songs will soon fall into the public domain because Canada's copyright legislation is not aligned with international standards.

Holding on to these valuable copyrights for an extra 20 years would translate into hundreds of thousands of dollars to pay for good middle-class jobs, reinvestment in the Canadian economy and Canadian songwriters, and the ability to scale our business and export our music to international markets. Immediate action should be taken to prevent countless valuable works from falling into the public domain between now and the end of 2022. Otherwise, we risk stifling innovation, creativity, export potential and growth for small businesses like mine.

We also risk creating more confusion, as remaining out of step with our international trading partners continues to complicate licensing for users instead of providing any relief. I would like to quickly speak about the industry committee's report on its review of the Copyright Act in the last Parliament. Some believe that copyright registration is needed in order to have a seamless transition. I respectfully disagree. Publishers and songwriters already register all of their works with SOCAN and CMRRA in Canada in order to be paid.

A second government registration system would create nothing more than an unnecessary burden for copyright owners and the potential to introduce abuse into a system that already works very well to the benefit of creators, users and the public. Mandatory registration would also violate Canada's international treaty obligations, even if it only applies to the last 20 years of an extended term. It is a basic tenet of copyright law internationally that protection must be granted without formality.

In conclusion, adding another 20 years to the life of a copyright means a robust creative sector, more Canadian cultural exports, and the growth of many innovative businesses that have embraced the digital market.

(0925) It is long past time for Canada to catch up to its international trading partners in this respect. We urge committee members to amend Bill C-4 to include immediate implementation of copyright term extension, with no conditions. Music Publishers Canada has prepared draft legislative language to accomplish this, which we've submitted to the clerk for the committee's consideration. I understand that SOCAN will be presenting shortly. We've read their submissions and are in full agreement with them. Thank you again for the opportunity to speak to this important issue. Casey Chisick and I are happy to answer any questions you may have.

The Chair :

Thank you very much, Ms. Mitchell. We'll now go on to Andrea Kokonis and Gilles Daigle from the Society of Composers, Authors and Music Publishers. Welcome.

[ Translation ]

Ms. Andrea Kokonis (General Counsel, Society of Composers, Authors and Music Publishers of Canada) :

Thank you, Madam Chair and members of the committee. My name is Andrea Kokonis, and I am the chief legal officer and general counsel at the Society of Composers, Authors and Music Publishers of Canada, or SOCAN for short. With me is Gilles Daigle, a lawyer with more than 30 years of experience in Canadian copyright law. SOCAN is Canada's largest music rights society and administers public performance, communication and reproduction rights of authors, composers and publishers of music.

We currently have more than 160,000 Canadian members and clients, and we also represent the repertoire of all foreign performing rights societies and several reproduction rights societies in the Canadian territory. SOCAN is deeply committed to fair compensation for Canadian music creators and their business partners for the use of their work, under a protective regime in Canada that is in line with that of its biggest trading partners.

The new NAFTA has opened the door to implement an important and long-awaited change in the term of copyright—extending it from 50 to 70 years after the life of the author—and to do so immediately. Yet, despite the clear intention and wording in the new NAFTA, Bill C-4 as it now stands does not address basic term extension. There is no valid reason for Canada to delay, yet again, term extension of copyright in our country. We therefore urge this committee to recommend, in the strongest possible way, that the necessary term extension amendments be added to Bill C-4.

As it stands, Canada's copyright protection term is not meeting the current international standard. This places our members and all Canadian creators at a disadvantage compared with our major trading partners. An extension to copyright term would increase Canadian investment and business in copyright-based industries located in Canada by removing disparities between Canada and other major economies. [ English ] The current term of copyright protection in Canada—life plus 50 years for creators of musical and other works—is out of line with modern copyright law.

After the original NAFTA was ratified, the United States, in 1998, increased its term to life of author plus 70 years. In 2003, Mexico increased the term of protection to life of author plus 100 years. As part of the NAFTA renegotiation, we asked for provisions that reflected this new reality, recommending that the minimum term of copyright protection be life plus 70 years. Our position was supported by all major organizations in the North American music ecosystem.

While in Canada protection for musical works is life of the author plus 50 years, by contrast the majority of Canada's largest trading partners recognize a general standard of the life of the author plus at least 70 years. These countries include all of the European Union members, the United Kingdom, Australia, Israel, Norway, Switzerland, Peru, Brazil, Iceland, Japan and even Russia. Canada's current law is consistent with only the minimum protections set out over a century ago in the Berne Convention for the Protection of Literary and Artistic Works.

The intention at that time was to establish a term of protection that was enough to benefit two generations of descendants of the creator of the work. With longer life expectancies, a term of life plus 50 years no longer reflects the underlying intention of that treaty. Around the time that Canada joined the Berne Convention, in 1928, the average life expectancy was 60 years. It rose to about 81 years between 2007 and 2009.

As a result, the current term of protection afforded under the Canadian Copyright Act is insufficient to cover two generations of descendants of a songwriter, and the current term is therefore out of line with the policy objectives of the Berne Convention. As mentioned, this has been recognized and remedied by Canada's major trading partners. Canada's shorter term is also out of step with the emphasis and value that Canada has otherwise placed on the creation of works, both domestically as part of our heritage and internationally as leaders of cultural exports.

Canadians authors and composers of music, and their publishers, can be at a disadvantage as cultural exporters because their works may be subject to lesser protections internationally because of Canada's outdated term of protection. This is unfair and most unfortunate, as Canada's laws should not place limits on the ability of Canadian creators to exploit their works around the world.

(0930) A longer term of protection in Canada would better allow music publishers to reinvest the revenues they derived from the exploitation of copyright-protected works in the discovery, support and development of songwriters and composers. Additionally, from a multinational perspective, longer terms of protection in a market provide incentives for foreign companies to invest in repertoire in that market.

In both cases, providing for a longer term of copyright protection in Canada would strengthen domestic reinvestment in cultural development and diversity, as well as foreign investment in Canada's substantial local talent. There is no justifiable reason to further delay the implementation of the extension. The government should fulfill its commitment immediately.

When Bill C-100 was introduced in the House last year, replaced by Bill C-4 in this Parliament, SOCAN and other music organizations were disappointed to see that, while some copyright modifications were made in the implementation bill, the term extension was not modified. It is our understanding that Canada has two and a half years to fully implement all of CUSMA, but we strongly believe the term extension was—and remains—a key piece of the renegotiation in light of the same extensions that our trading partners have implemented in their own home copyright laws.

The embarrassing reality at the moment is that Canadian authors have the same limited copyright protections as creators from countries such as Iran, Liberia, Pakistan, Syria, Zimbabwe, Afghanistan, Angola and the Democratic People's Republic of Korea. Our members deserve better than that. All Canadian creators deserve better than that.

SOCAN, therefore, recommends that Canada amend the Copyright Act to extend the term of copyright protection for musical works to the life of the author plus 70 years, in recognition of current international copyright norms as well as the underlying intention of the Berne Convention and other such benchmarks for valuing intellectual property. Specifically, SOCAN recommends that the basic term of copyright be extended under

section 6 of the Copyright Act, as well as the very few other provisions that need to be added. As part of the submission that we have handed out, we have also included with the speaking notes the chart that Music Publishers Canada created to show where the amendments should be made. Thank you very much.

The Chair :

Thank you very much, Ms. Kokonis. Before I open it up to the members, I've had confirmation for the chief economist, Dr. Paquet. Her availability tomorrow would be from 12:45 until 1:45. Is the committee in agreement with that?

Some hon. members: Agreed.

The Chair: Thank you very much. We'll go on to Mr. Hoback.

Mr. Randy Hoback (Prince Albert, CPC) :

Thank you, Chair. That's good news. We're actually going to get that economic analysis. Parliamentary Secretary, can we get a copy of the economic analysis before she comes? Can you check to see if that's possible?

Ms. Rachel Bendayan (Outremont, Lib.) :

I'll certainly check. As I committed to last week, I did request an update on where that report stands. I spoke to officials. I understand that they're working very hard to get it to us as soon as possible. I had encouraged them to come as soon as possible. I think they were supposed to come on Thursday, and now they are coming on Wednesday at 12:45.

Mr. Randy Hoback :

I only have five minutes, so....

The Chair :

This is not part of your five minutes.

Mr. Randy Hoback :

I look forward to seeing it. If we could have it the day before or even later this afternoon, that would give us a chance to at least go through it tonight. I'm sure it's a big document, so it's a lot to go through, but we'll do our best. Hopefully we can see it. Witnesses, thank you for being here this morning. Scotty, we've been friends for five years, but we usually just meet in airports. I can't believe we're actually meeting somewhere other than an airport. It's an inside joke: It seems like she has a seat at the Ottawa airport and my seat is right next to hers. I going to start off with you, Scotty.

Can you give us a sense, in the U.S., of how many times Lighthizer actually went over to talk to Nancy Pelosi and the Democrats before they went to renegotiations?

(0935) Ms. Maryscott Greenwood :

I don't have the exact number, Mr. Hoback, but I would say quite a few times. One of the underappreciated elements of the Trump administration's negotiation strategy is that Ambassador Lighthizer, who has been a real trade warrior for many years, knew that the opposition party controlling the House would hold the fate of this agreement in its hands. He absolutely did a lot to coordinate with the Speaker and also the members of the Ways and Means Committee.

Mr. Randy Hoback :

That's where we get frustrated here. People are being told that we're stalling and delaying, which is far from the truth. In fact, I offered to bring a pre-study to it last spring. The Libs said no. We offered to come back in the summer if we needed to; there was no need to. When it was renegotiated, we asked for more information. We got a briefing. When we asked questions at the briefing, we didn't get a response until January. In fact, Wayne Easter and I were at a CABC meeting when you were here in Ottawa, and we both said we could do this as a committee of the whole and have it done in December before Christmas.

Ms. Maryscott Greenwood :

I do remember that.

Mr. Randy Hoback :

Of course, there was no appetite from the Liberal Party to do that. This will pass, and I want to make sure that you understand that we are not going to vote against it. That being said—and you would understand this too—Trump got elected by the Rust Belt states that felt neglected, that weren't included or thought about after the last NAFTA agreement, and I don't want to make that same mistake.

We've had some 200 submissions to appear in front of this committee, and we were proposing March 5 to have it out of committee, which would have been during the break week, which means it would have hit the House at exactly the same time it will right now. The Liberal Party said no, and I can see why, because as we start to go through it, we start to see the economic analysis that the C.D. Howe Institute did. It said it will be a $10-billion hit for Canada. If you compare it to TPP, if we had all signed on as Obama wanted us to, it would have been a $4-billion plus. So there's lots to absorb.

When you're looking at this $10-billion hit, there are a lot of groups and organizations and companies that are negatively impacted. I'm not going to vote against it and they understand that, but they at least want a mitigation plan. They want to understand what it means for them and how the government is going to help them, and that's all we're trying to do here. So we will get through this, and I hope we will be in clause-by-clause by Thursday and it will be back into the House and then hopefully the Senate. Now, I can't control the Senate. That's a different can of worms, and good luck there.

One of the things we talked about before was the de minimis and the changes to the de minimis, going from $20 to $40. I know you probably wanted it to be $800, but it's not there. Then there's the tax-free status to $150, but a lot of people don't understand that Canada Post, which is the biggest carrier here in Canada, is not included in that. Do you have any thoughts on that and why Canada Post wouldn't have been included and only private couriers were included in that scenario?

Ms. Maryscott Greenwood :

Mr. Hoback, I don't know what the puts and takes were with the various carriers. You are right to say that we thought very strongly that it would make sense to align the de minimis level among all three countries. Why was that? Quite simply, we didn't think it made sense to penalize Canadians who engage in e-commerce. When you think about all the remote communities and all the places in the vast country that is Canada, there just aren't retailers that have every single item that somebody might want on a given day.

Our thought was that it didn't make sense to penalize Canadians for that, and actually the government loses money when it does that. As for your particular question about why some carriers were included and not others, I don't know. I think you'd have to ask the negotiators themselves.

Mr. Randy Hoback :

Okay. So you have no insight on that, then. I'll go to the composers, SOCAN. You were talking about the changes to copyright, and you mentioned an amendment. Both you and the Music Publishers are saying we should try to amend it. Now that's not an option, from what I understand. We can't amend it. We don't have that choice, but we can make a mental note to lay down some talks and discussions moving forward. Maybe even in implementation we can look at doing that. Maybe it's just Canadian legislation that needs to change. So maybe this should go back to the industry committee and go that route. Is that fair to say?

Mr. Gilles Daigle (Consultant, Society of Composers, Authors and Music Publishers of Canada) :

To be clear, our request would not require a change to CUSMA. It's Bill C-4 , the implementation act, and we're talking about changing the number five to the number seven in about half a dozen places or fewer. This is as simple as can be. We could do it here in less than five minutes. I would hope that this committee, taking that fact into account, will do everything it can to change those few numbers. I have to say that our organizations have been told many times that this change was coming. I've been in this industry for 30 years now. That's where the grey hair comes from.

(0940) Mr. Randy Hoback :

You've heard it for 30 years.

Mr. Gilles Daigle :

And throughout the early 2000s, how many times were we told that, as part of this now ongoing copyright revision process, they'd extend the term? The final output of that came in 2012, with major changes to the Copyright Act. Term extension was left out.

The Chair :

I'm sorry, Mr. Hoback, but your time is up. Mr. Dhaliwal.

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

Thank you, Madam Chair. I want to thank the presenters as well. My first question is going to Washington, for Ms. Greenwood. Ms. Greenwood, you said businesses love stability. I come from a small business background. It is my understanding that workers love stability as much as the businesses do. How do you feel that CUSMA will help not only businesses but also middle-class workers?

The Chair :

Ms. Greenwood? I think there was a translation issue, or something, because it's showing in French rather than.... I think that's what the delay was. Ms. Greenwood, did you hear the question?

Ms. Maryscott Greenwood :

Madam Chair, I [ Inaudible—Editor ] French. I apologize. If I could hear the question in English, I'd be happy to answer.

The Chair :

I think something happened to our system, because I have French here rather than English, and I don't know why. Let's do a restart here. It was only a minute and 22 seconds anyway, so we're going to start again.

Ms. Maryscott Greenwood :

I apologize. It's my fault.

Mr. Sukh Dhaliwal :

It's not your fault.

The Chair :

No, it's not. We had a bit of a problem on our end. Please start again, Mr. Dhaliwal.

Mr. Sukh Dhaliwal :

Thank you, Madam Chair. Thank you to all the presenters. My question goes to you, Ms. Greenwood. You said that businesses love stability. I come from a small business background, being a professional engineer, a land surveyor and into land development. I personally see that the workers love stability as much as businesses do. Do you agree with that? The second question will be, how would this agreement help the middle-class workers, not only the businesses?

Ms. Maryscott Greenwood :

Absolutely. To your first question, absolutely, workers love stability as much as business owners do. We all have to figure out how we're going to balance our chequebook at the end of the day. We have to figure out how we're going to pay our bills, pay for our kids to go to college—and, in the United States, pay for health care. Certainty an ability to predict that you're going to be able to make it through to the end of the month and pay your bills is absolutely important to everybody, to every family—workers, ranchers, farmers, you name it.

In terms of how it benefits workers, in addition to business owners, it's interesting to note that for the first time in our modern history, the AFL-CIO, the big umbrella trade union in the United States, came out in favour of the USMCA, the new NAFTA. I also note that there are representatives of workers in Canada, including Mr. Jerry Dias, who have been strong proponents all along.

Whether it's for large manufacturers of automobiles, which is a huge part of our economy in Canada, the United States and Mexico, or some mom-and-pop shops, there is benefit, absolutely, to not only knowing what the rules of the road are, but also knowing how you address a dispute if you have one, which this agreement also has—at Canada's insistence, I would add. But it's just knowing what your cost of inputs are and that you're going to be able to keep doing what you do at the end of each month.

(0945) Mr. Sukh Dhaliwal :

Thank you. My next question goes to Mr. Milliard. You said that SMEs don't take full advantage of all these agreements and they need to be aware of the advantages they have. Could you elaborate on some of the things government should be doing, and you as an organization representing small businesses should be doing, so that the small and medium-sized businesses can take full advantage of CUSMA?

[ Translation ]

Ms. Kathy Megyery (Vice-President, Strategy and Economic Affairs, Fédération des chambres de commerce du Québec) :

Thank you for your question. For businesses big and small in Quebec, the United States is usually their first export market. Two-thirds of Quebec's exports go to the U.S., so it's important that all small and medium-size businesses, not just large sophisticated companies, be able to take advantage. In order for that to happen, we are recommending that the government do a better job of supporting small and medium-size businesses by helping them understand the business opportunities available to them. They often don't know in which parts of the country those opportunities lie.

We are also recommending financial support to help those businesses as they endeavour to break into new markets, something that is often new to them.

[ English ]

Mr. Sukh Dhaliwal :

Thank you. My next question is for the music publishers. It is my understanding that CUSMA is an agreement that has protected cultural communities throughout Quebec and British Columbia. Could you elaborate? Do you agree with that?

Mr. Gilles Daigle :

In respect of the particular issue that is of concern to us, which first and foremost is term extension, CUSMA does; the implementation legislation, Bill C-4 , does not, or at least it does not today. It is not acceptable to our constituency that we have to wait perhaps as long as two and a half years, because, as I don't have to tell this group, in politics and in government a lot could happen that could potentially change that obligation. In a response to Mr. Hoback, I started talking about the fact that we've been told on so many occasions that the extension was going to be implemented.

In 2012, it didn't happen. For the TPP, the extension was in the draft text. Canada pulled it. We now get to the new NAFTA. It's in CUSMA, but not right away. We're going to take as long as two and a half years to implement it. Why? The message it sends to our members and to Ms. Mitchell as a publisher is “Your music is not as worthy of protection, the longer protection, as that of your peers.” In the U.S., Bruce Springsteen's works are protected for 70 years. For Bryan Adams and Jim Vallance, it's 50 years. In Canada, we are not prepared to make that change today.

We're going to see if we can do it in the next two and a half years. That's not good enough for our members anymore. We've heard that too many times. I'm sure that Ms. Mitchell, as a publisher, would probably have some thoughts on that as well.

The Chair :

Thank you very much, Mr. Daigle. Mr. Savard-Tremblay.

[ Translation ]

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

I, too, would like to thank all the witnesses for their varied and relevant comments. My question is for the FCCQ representatives. I think the picture they've painted thus far is consistent with how the Bloc Québécois sees the situation. Far from being anti-free trade, we nevertheless believe the agreement, as it stands, contains some irritants. You did a good job of explaining that, contrary to repeated statements, the agreement does not treat aluminum and steel in the same way, and that the bulk of the aluminum sector is in Quebec, unlike the steel sector, which is concentrated in Ontario.

You also brought up supply management and the fact that it took a beating further to the negotiations, as with so many negotiations in the past. You talked about the importance of swift and adequate compensation. That brings me to my question, since you are still in favour of ratifying the final agreement. Yesterday, we heard from the Dairy Farmers of Canada, and I asked its representatives about an appropriate ratification date. They said no earlier than May 1, to comply with the coming into force date of three months, which would take us to August 1, the beginning of the fiscal year in the dairy sector.

Is there a particular date you would prefer, or do you also think it's urgent and should be done swiftly?

(0950) Ms. Kathy Megyery :

You summed up our comments well. Indeed, it's not an ideal agreement, but it's the best one we were able to get. It's important that it be ratified in a timely manner, in other words, as quickly as possible, to put an end to the uncertainty hanging in the air. It's also important, of course, that the government put in place the necessary compensation programs for affected sectors, especially the aluminum industry and supply-managed sectors.

Mr. Simon-Pierre Savard-Tremblay :

I'd like you to tell me what you mean by “as quickly as possible”.

Mr. Charles Milliard :

We mean the soonest that the current legislative process would allow. I think the feeling of urgency has to do with the compensation package. As we pointed out, compensation further to the other agreements was long in coming, and the payments even more so. Consequently, the feeling is that the compensation plan is urgently needed and must be implemented. As for the ratification of the agreement, it depends to some extent on how fast you work.

Mr. Simon-Pierre Savard-Tremblay :

Believe me, we are doing our best. This week, we are spending 40 hours on it, and last week, we spent about 30 hours. Everything else has been put on hold. Something else you talked about was the need to educate small and medium-size businesses, mainly. What form should that education take? What would be the right way to convey that information?

Ms. Kathy Megyery :

As you are aware, we have trade commissioners in Quebec and in Canada. In Quebec, we strengthened their role in the world by giving them an increasingly economic mandate. We think that is an important way to reach out to businesses and help them better understand the opportunities available to them under trade agreements.

Mr. Simon-Pierre Savard-Tremblay :

I want to be sure I understand correctly. When you say that you gave trade commissioners an increasingly economic mandate, who are you referring to?

Ms. Kathy Megyery :

I am referring to the commissioners that are active in various cities around the world.

Mr. Simon-Pierre Savard-Tremblay :

You're referring to Quebec's trade commissioners abroad.

Ms. Kathy Megyery :

Precisely.

Mr. Simon-Pierre Savard-Tremblay :

Great. I see now. I'd like to ask Ms. Greenwood the same question. You talked about the importance of moving very quickly, as soon as possible, and not challenging the agreement. Conversely, don't you think that sometimes it's a good idea to give the more disadvantaged sectors the time they need to at least adjust to the agreement?

[ English ]

Ms. Maryscott Greenwood :

It is important to seize a moment in time to ratify. I don't have a particular view on accommodations that will be made to sectors that are impacted, and what that should look like in each of the three countries, although I understand it's very important. My point was about the legislative process at the federal level, recognizing that Mexico has already begun and the United States has been through a process. I worry that we'll miss a window in time if not ratifying. I understand your point, and it's an important one, about how affected sectors are impacted, and I'm not speaking to that point.

[ Translation ]

Mr. Simon-Pierre Savard-Tremblay :

I must say I'm a bit surprised by your answer. On one hand, you're telling us how important it is to ratify the deal quickly, to move forward without question and not to raise any red flags. On the other hand, you're telling us that you didn't consider the compensation issue and avenues to correct certain areas where the agreement went too far. I have to tell you I'm extremely surprised by your answer.

(0955) [ English ]

Ms. Maryscott Greenwood :

The agreement was negotiated over almost a year, and there was a lot of back and forth between the three countries. As trade agreements go, it was a fairly fast negotiation, but now that we are at the end of that process, the negotiation period is really over. I don't have an opinion, and I'm not an expert on what the compensation, accommodations or phase-in period should be for any particular sector within Canada. I'm not saying it's not important; that's just not my expertise. I'm only talking about the legislation, and the negotiations of the trade agreement itself.

The Chair :

Mr. Blaikie.

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

Ms. Greenwood, in your opening remarks you talked a bit about the interplay between the executive and the legislature in the United States, and the effect that had on this particular deal. You may know, being familiar with Canada's trade process, that there really isn't much interplay at all between the legislature and the executive. Members of the NDP have worked in this process to create some, because we think that would be to the benefit of Canadians. Could you expand a little more on that interplay? What is it that the executive owes to the legislature in the United States with respect to trade agreements?

How do you see that having played out, not necessarily in the context of this agreement but if you have some thoughts on other instances where that has been a productive interplay?

Ms. Maryscott Greenwood :

Sure. Thank you for that. What I would note at the outset is the difference between our constitutional form of democracy and your parliamentary form. They're very different. In the United States, our system was set up to have separate branches of government that truly have different power bases. They were designed by our founders to be really jealous of each other, and they have different authorities. The states came first in our system. Then when the federal government came, historically, Congress was set up as a check to the executive branch, and you really need both to get anything done.

As you know much better than I do, the parliamentary system is a completely different animal. It's different in a majority government, as you know, versus a minority government. I'm not an expert on the parliamentary system, and I wouldn't want to weigh in on the appropriate level of back and forth between the parties. What I will say is that, in our system, even when you have the same parties in the White House administration as in Congress, they're still separate branches of power, and they have to negotiate with each other.

That's a long-standing tradition here, so the Trump administration knew that it would have to negotiate with Congress because that was baked in ever since the founding of our democracy.

Mr. Daniel Blaikie :

Right on. Thank you very much for taking a little time to offer those reflections. I want to ask our guests from the publishing industry a question. I certainly hear your representations loud and clear with respect to term extension. Clearly, there's frustration there that it hasn't happened sooner. Presumably, government isn't acting simply out of spite towards your industry. Who would you say are the winners of not moving ahead quickly with term extension?

Mr. Gilles Daigle :

I think we'll let our colleagues from Toronto address the question. They're trying to get into the fray, but it's hard.

Mr. Daniel Blaikie :

Sure, that works for me.

Ms. Jennifer Mitchell :

Who would I say are the winners from not extending the copyright term? I'm not sure that there are any winners, to be honest. The songwriters themselves, of course, are not the winners because what happens when you extend copyright is that we are able to continue to receive revenue on hit songs and songs that we have been publishing for many years. We take that revenue, and we reinvest it in songwriters. For example, when I find songwriters, those songwriters don't just sit at home and write songs.

If they want to be successful, I need to send them around the world to write with other writers—which is called co-writing—which is fairly expensive. We need to have those relationships in place so that they are able to write songs that are then going to be recorded by artists who generate revenue. My inability to do that would definitely impact their ability to have careers. It would also mean less Canadian content for Canada, so I'm not sure that the public benefits either.

(1000) Mr. Daniel Blaikie :

Am I to understand from that, then, that successive Canadian governments of different political stripes have stubbornly refused to grant a copyright extension and nobody's asking for that?

Ms. Jennifer Mitchell :

I don't know if I would quite phrase it that way, but we have agreed through certain conventions, including the Berne Convention, where we were supposed to be aligned with our international trading partners. I'm sure that there are a lot of reasons why they decided not to proceed, including the point that copyright is kind of a complicated subject. Certainly, it's something that should have been done. Now that we have agreed, we'd like to see it implemented right away and not wait the 30 months.

Mr. Casey Chisick (Legal Counsel, Music Publishers Canada) :

If I may, there are criticisms from academia in particular and concerns raised about the importance of a robust public domain. The difficulty with that argument is that there's very little evidence in practice that the economic or other implications of term extension are in fact a net negative for creativity in the public domain. Then there's also the very practical consideration that, in reality, all that happens is that third party commercial entities end up taking advantage of works that fall into the public domain.

The most recent example that I can think of in Canada was a record label that began to put out re-releases of public domain sound recordings for its own commercial gain, with no benefit for the artists who recorded them or for the entities that originally financed those recordings. It's very difficult to see who wins from the refusal of the government over the last many years to follow suit and join its international trading partners with a longer term for copyright.

Ms. Jennifer Mitchell: I would also add that—

The Chair :

I'm sorry, but I have to cut you off. I'm going on to my next member here. Thank you very much. Go ahead, Mr. Carrie.

Mr. Colin Carrie (Oshawa, CPC) :

Thank you very much, Madam Chair. I want to thank all the witnesses for being here. I wanted to start off, too, by thanking Scotty. When these negotiations started, we all knew we were on a tight timeline. Whenever we went down to the U.S., you were always very quick to get good groups together so that we could get our input, and I want to thank you very much for that. You mentioned in your opening that business loves certainty. We certainly are in agreement with that.

We know that there has been a bit of a campaign in the U.S. saying that Conservatives are going to try to slow down this deal, but we want to be very clear with you: We're not. What we're trying to do is our due diligence. It was very frustrating for us here in committee. Mr. Hoback actually wanted to do a pre-study on this last spring before the election. We were unable to do that. We knew that the U.S. International Trade Commission came out with some numbers saying that this deal would be a net positive for the U.S. and the number is about $68.2 billion. We were just trying to get some Canadian lens on it.

We were told before the election it was a win-win-win. We were told it was going to be a victory for Canadians, a positive. We've been asking the minister , and she's been very uncooperative in releasing any advice she's had. Just Friday, the C.D. Howe Institute came out and said this would be a $10-billion hit to Canadians' GDP. Even though that is a hit, they also commented that, if we don't have an agreement, it's going to be far worse, so we're in agreement with you that we do need to pass this and move on from there.

I was wondering if the Canadian American Business Council has any independent economic analysis that you might be able to share with this committee. As you heard, we're only going to get that information from the Canadian lens tomorrow, and we expect to go through clause-by-clause by the end of the week. Do you have anything you could share with us, even today, or over the next couple of days, that would enlighten us somewhat?

Ms. Maryscott Greenwood :

I wish I had a barnful of economists I could make available to you for this. We're a pretty lean and mean operation here. That said, our members have done analysis over the last year about this. We're happy to provide that, or I'm sure the committee can avail itself of information from the chief economists of the various banks in Canada, for example, each of whom has looked at this. I think it's important to do your homework, but I also think people can take statistics out of context sometimes. I think you have to think about, as you did in your remarks, the big picture and what the alternative is.

It's not just in a vacuum. You either have the status quo or you have this new deal, but if you don't pass the deal, what happens then? What would be the impact of that? That gets into the realm of speculation. There are some think tanks that have done some work on it, but the only data I have would come from our members, and we're happy to provide that to everyone. The economists of TD, RBC and CIBC would be the relevant Canadian economists.

(1005) Mr. Colin Carrie :

That's great, and if you're able to flip that over, that would be wonderful. I know we've had conversations and I know you guys were very supportive of the original TPP. One of the frustrations occurs when you look at that analysis through the Canadian lens. It was going to be a net positive, over $4.3 billion to our GDP, and now to see the only Canadian lens we have seeing a net negative of $10 billion is a little bit frustrating for us.

We will do our due diligence, but we want to make sure that, for Canadian families, businesses and sectors that are negatively affected, the government puts in programs and supports to help them get through the implementation of this agreement. Thank you for that, and thank you for your continued support. I wanted to talk to SOCAN as well, because the minister was here saying she consulted extensively with all the different sectors—

The Chair :

Make it not too long a question, Mr. Carrie.

Mr. Colin Carrie :

Basically, we had the dairy people and the pharmaceutical ones, who said they really weren't listened to when this agreement was formalized. Would you be able to comment on whether your industry was listened to and whether what you said to the government was indicated in the agreement?

The Chair :

Make it a short answer, please.

Mr. Gilles Daigle :

They heard us, but they did not want to hear what we had to say.

The Chair :

Thank you very much. We will move on to Ms. Bendayan.

[ Translation ]

Ms. Rachel Bendayan :

Thank you, Madam Chair. Thank you all for being here. My question is for the FCCQ representatives. First of all, thank you for supporting the agreement and calling for its swift ratification. As you know, trade between Quebec and the U.S. is extremely important, valued at more than $90 billion. As you so eloquently mentioned during your presentation, we need to provide businesses with the support they need to understand the opportunities that trade deals open up to them.

We strengthened the role of our trade commissioners, and to be clear, they are federal trade commissioners who work in more than 160 cities worldwide with a mandate to help small and medium-size businesses navigate international markets. We also have the Economic Development Agency of Canada for the Regions of Quebec, which provides funding and highly specialized tailored support to business owners with a focus on small businesses. As well, we have Export Development Canada and CanExport, which provide support to small and medium-size businesses.

I'd like to know what you and your members think about all of those organizations and how we could make them more effective.

Ms. Kathy Megyery :

You're right to acknowledge all these organizations. These people are doing a very good job. Furthermore, what our members are telling us concerns the agreement with the European Union. Businesses are finding that France has a much greater presence in Quebec than Quebec businesses have in France. That's one example.

This shows once again that, despite everything in place, we must still do more to ensure that Quebec businesses benefit from a very natural relationship with France, for example, and, of course, with the United States, which is the first choice of businesses, especially in northern and northeastern United States. However, SMEs are often unaware of the opportunities. They don't necessarily have the funding needed to proceed with exports. With all the mechanisms in place, we must do more and better.

(1010) Ms. Rachel Bendayan :

Thank you, Ms. Megyery. [ English ] Ms. Greenwood, my colleague raised some private sector research and I've seen that research, as well as others, as I'm sure you have. Significant private sector research demonstrates the potential impact of U.S. withdrawal from a North American free trade agreement. As you mentioned at the beginning of your testimony, that was a very real possibility at the beginning of these negotiations. I refer here to Scotiabank, which said that a U.S. withdrawal from NAFTA would have created a situation where “the Canadian economy would stand a strong chance of falling into a recession”.

Similarly, the Royal Bank of Canada raised alarm bells. The research appears clear to me that the preservation of a free trade agreement with our largest trading partner can't be understated. I was wondering if you could comment on that.

Ms. Maryscott Greenwood :

I completely agree with you. The question is, what are the possible scenarios? You as policy-makers quite rightly look at that. It's not just whether we like the new agreement better or whether we like it less than the current agreement. The question is what happens if you don't go along with this agreement that you've been negotiating for the last year. What does the United States do then? What does Mexico do? You're right that the current situation is quite volatile.

You can't underestimate the current occupant of the Oval Office in retaliation, in self-inflicted wounds in the United States, with the purpose of gaining leverage or punishing our partners and our allies. It's the largest economic relationship in the world, and it hangs in the balance, quite frankly, with this agreement. From a United States point of view, what the policy-makers look at is this: If we can't get to an agreement with Canada and Mexico, our neighbours and close allies, how are we going to trade with the rest of the world? As goes the U.S. economy, so goes the economy of our friends and neighbours.

We really are interlinked. There is quite a huge stake in our thriving together with this agreement.

The Chair :

Thank you very much, Ms. Greenwood. We will move on to Mr. Kram.

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

Thank you to all the witnesses for joining us here today. Ms. Greenwood, I would like to address some of the concerns you mentioned in your opening statements. I am completely confident that the House of Commons is going to pass the new NAFTA. You seemed a bit uncertain of that in your opening statement. Certainly the Conservatives, and I'm sure the other parties, will support this agreement. You also mentioned the importance of certainty in the marketplace so that businesses can function. The new NAFTA has a lifetime of 16 years and then it will be up for renewal.

What can the Government of Canada and politicians do over the lifetime of this 16-year agreement to facilitate a greater degree of certainty in the marketplace so that businesses can do business?

Ms. Maryscott Greenwood :

Institutionalizing our agreements as much as we can is a key to extending the life of the agreement. Going deeper on things such as regulatory mutual recognition, all the details in how we collaborate, how our regulators work together or work at cross purposes, those are the types of things that will help ensure that the agreement lasts well beyond the sunset period.

Mr. Michael Kram :

Could you talk a bit about the relationship, the back and forth between the business community and the government? Should we be having more regular meetings? What can we do to facilitate all of that?

Ms. Maryscott Greenwood :

We believe that dialogue with all of your stakeholders and constituents, including the business community, workers and advocates from all walks of life is a good practice in a democracy, and we try to facilitate that, as many of you have experienced. Having an honest dialogue where you can exchange ideas and concerns and help educate each other is really important.

By the way, we believe it's not just the politically elected officials and their staff, but also the civil servants, the back and forth between the civil servants in our three respective countries, to figure out where there are areas in which they can learn from each other and recognize each other's regulations. That's a huge area of co-operation that in some areas goes well and in some areas needs a lot of improvement.

(1015) Mr. Michael Kram :

You also raised the possibility of Bernie Sanders being the next president after November. What advice could you give to the Government of Canada to facilitate free trade and cross-border trade in the event that we see Bernie Sanders in the White House in November?

Ms. Maryscott Greenwood :

The Government of Canada—and not just the government but all of Canada, Canada as a country—did an extraordinarily good job after the election of President Trump, which is not something that I think anybody, including Donald Trump, predicted. The whole-of-Canada approach to engagement in the United States to remind all types of people, inside the Beltway and outside the Beltway, of how interconnected we are was a really good effort. It wasn't just one party or another. It wasn't just federal leaders. The premiers and mayors were involved.

It was quite a comprehensive effort to remind Americans that we are in this together and that you can't just turn your back on Canada. That type of intensive effort to help continually remind Americans is something that we do at the Canadian American Business Council, but it's also something that is incredibly important for you, as policy-makers, in your travels and in your interactions with your counterparts. I would imagine that type of effort would continue regardless of the outcome of this year's presidential election here.

Mr. Michael Kram :

Thank you. Madam Chair, how much time is left?

The Chair :

You have 30 seconds.

Mr. Michael Kram :

I'll be very brief. I have a question for the representatives from Quebec. You have raised the issue of the dumping of aluminum from Mexico. Could you briefly give us an idea of some of the tricks they play to get Chinese aluminum into the Canadian and American markets by going through Mexico?

The Chair :

Give a very short answer to a difficult question.

[ Translation ]

Mr. Charles Milliard :

I didn't fully understand your question. However, we discovered that, between May and July 2019, Mexico obtained its aluminum directly from China. Unfortunately, the new agreement hasn't resolved this issue. The steel issue has been resolved, but the Canadian government must verify the situation, because we've seen an increase. Chinese aluminum imports into the United States have decreased by 60%,

whereas Chinese aluminum imports into Mexico have increased by 240% in a few months. We can see that Mexico is really exploiting this gap—

[ English ]

The Chair :

I'm sorry, sir. I have to interrupt. Thank you very much. Mr. Arya.

Mr. Chandra Arya (Nepean, Lib.) :

Thank you, Madam Chair. My question is for Ms. Greenwood. Ms. Greenwood, before this new NAFTA, we had the old NAFTA for decades, but the trade between Canada and the U.S. has not gone up much. It has remained fairly stable. To quote some numbers, in 2011 Canadian exports were at $315 billion, and in 2019 they were at around $319 billion, so basically Canadian exports to the U.S. have remained stable. U.S. exports to Canada are also stable, between $281 billion and $291 billion. Even with this new agreement, do you foresee the trade undergoing any dramatic change?

Ms. Maryscott Greenwood :

If you're looking at statistics about whether or not the Canada-U.S. Free Trade Agreement has impacted trade volumes, and then NAFTA, I think you have to actually go back to the 1965 Auto Pact and look at how free trade between our two countries—and then when we added Mexico—has created what is really the largest and most prosperous economic region in the world. Once you have the tremendous growth—

(1020) Mr. Chandra Arya :

I understand. It does create a very stable economic zone, probably the biggest in the world. I understand that, but it has not increased the trade amongst these three countries.

Ms. Maryscott Greenwood :

Are you saying that you don't think the North American Free Trade Agreement has increased trade between our three countries?

Mr. Chandra Arya :

Exactly. It has remained stable for quite some time.

Ms. Maryscott Greenwood :

Well, I think the agreement itself actually did increase trade quite a lot. I think what you have to look at with the modernized agreement are cross-border data flows, professional services and some of the digital worlds. There are all kinds of areas where, were you not to modernize the agreement, you would see a backsliding, because the original NAFTA didn't address some of the more modern elements of the economy. We know that there is an awful lot of competition that occurred—

Mr. Chandra Arya :

I'm sorry. You mentioned that the agreement didn't address certain modern elements of the economy. Can you elaborate on that, please?

Ms. Maryscott Greenwood :

Sure. When the original Canada-U.S. Free Trade Agreement was passed, and then when the North American Free Trade Agreement was passed, e-commerce didn't exist. Now, e-commerce fuels a lot of our economy and a lot of different elements of how small businesses and large businesses operate and do business together. The original NAFTA didn't address any of that. There are things like how we manage data, which is a really important topic. It's important in a lot of different areas that are subject, I'm sure, to reviews from a privacy point of view.

There are all sorts of different elements of data, but the new North American free trade agreement does address elements like data flows and data localization, and that's enormously important in the economy today.

Mr. Chandra Arya :

Thank you. My next question is for you, Mr. Milliard. You talked quite a bit about the aluminum sector and how we need more protection for the aluminum industry here in Canada, but the aluminum industry has not grown for quite a long time. If I am not wrong, during the last 15 years only one new smelter was added in Canada. Even with this stable market that is there, do you see the aluminum sector increasing investments and increasing its capacity, not only to cater to the North American market but also to look for other markets in the world?

[ Translation ]

Mr. Charles Milliard :

Good question. However, we're more concerned about GHG emissions, and this will continue over the next few years. The Quebec market, particularly the aluminum market, is developing technology to make aluminum almost carbon neutral. This could increase—

[ English ]

Mr. Chandra Arya :

I'm sorry, but my question is not about that.

The Chair :

You have 10 seconds left.

Mr. Chandra Arya :

I will give up my 10 seconds.

The Chair :

For our guest, you have a short time. Would you like to try to complete an answer to Mr. Arya's question?

[ Translation ]

Mr. Charles Milliard :

I was saying that Quebec aluminum will become more and more appealing because it's clean aluminum. Given the climate crisis, I believe it will become more and more appealing to sell on the markets.

[ English ]

The Chair :

Mr. Savard-Tremblay, you have two and a half minutes.

[ Translation ]

Mr. Simon-Pierre Savard-Tremblay :

My question is again for the representatives of the Fédération des chambres de commerce du Québec. If people from Quebec are here, we might as well make the most of it. I want to acknowledge Mr. Lyonnais, whom I've known for years. I hope that he's doing well. You said earlier that this agreement wasn't perfect, but that it was the lesser of two evils under the circumstances. This agreement contains many new provisions, including a

chapter on the environment. However, this

chapter is very weak. We know that the environment is, in many ways, the issue of the day. Would you be ready to say that this agreement, unfortunately, doesn't meet the standards of an agreement in 2020?

Ms. Kathy Megyery :

Good question. We surveyed our members regarding this agreement. The survey very strongly indicated that industries are afraid of losing their competitiveness because of this agreement. That's the message that we want to get across today.

(1025) Mr. Simon-Pierre Savard-Tremblay :

You're basically saying that, with respect to aluminum, there hasn't been any progress in relation to the former NAFTA when there should have been, and that there has been a setback for agriculture. That's your assessment to some extent.

Ms. Kathy Megyery :

We must ensure that compensatory measures are put in place and implemented, because in the case of the other agreements, these measures are slow to take effect.

Mr. Simon-Pierre Savard-Tremblay :

Perfect. Thank you. Do you have anything to add, Mr. Milliard?

Mr. Charles Milliard :

I was simply saying that, regardless of the growth of the aluminum industry, the bulk of this industry is in Quebec. I think that organizations such as ours must highlight the importance of preserving the strength of this industry in Quebec. The federal government must remain vigilant with regard to both compensatory measures and diplomatic efforts to promote this industry, regardless of its growth.

Mr. Simon-Pierre Savard-Tremblay :

It's very—

[ English ]

The Chair :

Thank you. I'm sorry, your time is up. Mr. Blaikie.

[ Translation ]

Mr. Daniel Blaikie :

I'll continue on the same topic. What should the federal government do to promote the aluminum industry, both in Quebec and in British Columbia?

Ms. Kathy Megyery :

We fear that Mexico is importing aluminum from China and processing this aluminum in a very minor way so that it will be considered aluminum made in the signatory countries. We must keep a very close eye on this situation so that this doesn't happen, because this would really reduce aluminum exports to the United States and Mexico.

Mr. Daniel Blaikie :

Do we have the necessary data to know how much aluminum from China is entering Mexico? Should the federal government put measures in place to ensure that it has the necessary information?

Mr. Charles Milliard :

The information is already available. As I was saying, between May and July 2019, aluminum exports from China to the United States decreased by 60%,

whereas exports from China to Mexico increased by 240% and exports from Mexico to the United States increased by 260%, all in just a few months. We wanted this issue addressed in the free trade agreement. The steel matter was addressed. However, unfortunately, because of the unclear definition of aluminum, we're still concerned about this issue. CUSMA stipulated a minimum of 70% North American content. Given the failure to address the lack of clarity with respect to aluminum, this type of unfortunate consequence could happen again. However, there are still legislative foundations.

The government must work with the Americans and Mexicans to ensure that they comply with the minimum content of 70%. That's our option for now. We would have preferred something stronger, such as the protection provided for steel. We don't have this, and we must take steps in that direction. That's what we can do for the time being.

[ English ]

The Chair :

Thank you very much. To all our witnesses, thank you for a very interesting morning, and for taking the time to contribute. I will suspend until the next panel.

(1025) (1035) The Chair :

I call the meeting back to order. We are continuing our study of Bill C-4 ,

an act to implement the agreement between Canada, the United States of America and the United Mexican States. With us for this segment, we have the Canadian Centre for Policy Alternatives, Stuart Trew, researcher and editor; the Chamber of Commerce of Metropolitan Montreal, Michel Leblanc, president and chief executive officer by video conference; and the Dairy Processors Association of Canada, Mathieu Frigon, president and chief executive officer, and Dominique Benoit, treasurer and member of the board of directors. Welcome to you all. We're going to start with the video conference. Mr. Leblanc, the floor is yours, sir.

[ Translation ]

Mr. Michel Leblanc (President and Chief Executive Officer, Chamber of Commerce of Metropolitan Montreal) :

Good morning. Thank you for your invitation. If I had received it sooner, I could have joined you. The Chamber of Commerce of Metropolitan Montreal has been in place for nearly 200 years to represent the business community of Metropolitan Montreal. For 36 years, we've been connecting businesses to export markets. To do so, we're supported by the Government of Canada through Canada Economic Development for Quebec Regions. We raise funds from businesses and the private sector. We're also supported by the Government of Quebec.

This experience in international markets first led us to understand the importance of the American market. For decades, Montreal's business community has been acutely aware of the importance of American markets, both for their growth and supply and, in the case of many businesses, for the efficiency of their production chain. This chain is well integrated and it crosses the border in both directions. As a result, for more than 20 years, the Chamber of Commerce has supported the implementation of free trade agreements in a sustainable, strong and permanent manner.

From our point of view, the agreement with the United States is obviously the cornerstone of our economic development. Seventy percent of Quebec's exports are destined for the United States. We estimate that 20% of Quebec's GDP depends on this fluid trade relationship with the United States. Over the years, the number of jobs here directly related to trade with the United States has grown steadily. In many cases, these positions are very well-paying jobs, either in the Montreal region or throughout Quebec. The free trade agreement that needed to be renewed and that became CUSMA was crucial.

We supported this renewal from the beginning. In addition, nearly two years ago, we invited 24 chamber of commerce leaders from major North American cities—eight leaders from the United States, eight from Canada and eight from Mexico—to Montreal to discuss what we could do to ensure that the agreement was renewed. We were extremely pleased to see the progress made and, ultimately, the renewal of an agreement. As part of the renewal of this agreement, we've heard that things could have been even better, particularly with regard to aluminum.

Similarly, during the negotiation of the agreement with the European Union, issues arose among agricultural producers. We believe that no agreement is perfect and, in this case, we probably have the best agreement that we could have hoped for with the United States. We believe that some areas could have been improved, with regard to aluminum, for example. However, our challenge is to find out how we can help the aluminum sector and not in any way to block, reject or delay the implementation and ratification of the agreement.

Our message to you and to all politicians is that there's no ambiguity from the point of view of the economy of Quebec, the Montreal region and Montreal-based businesses, and that the agreement must be ratified without delay and implemented as quickly as possible. Thank you.

(1040) [ English ]

The Chair :

Thank you very much, Mr. Leblanc. I appreciate your comments. We'll go to Mr. Trew from the Canadian Centre for Policy Alternatives.

Mr. Stuart Trew (Researcher and Editor, Canadian Centre for Policy Alternatives) :

Thanks very much to the committee on behalf of the CCPA for the opportunity to present here on the CUSMA ratification legislation. The CCPA is Canada's longest-standing independent research institute. In fact, we're celebrating our 40th anniversary this year. From our earliest days, the CCPA has rooted its policy recommendations in values of social justice and environmental sustainability. That goes for our trade and investment research as well. We've been recently working internationally on the NAFTA negotiations with some friends in the United States and Mexico as well.

I'd like to start by agreeing with something that Michael Geist said to the committee last week, which is that the most important thing here is maybe not the implementing legislation itself, but the impact that the agreement is going to have on Canadians and Canadian public policy in the future. This is something that I think multiple witnesses have brought up as well. At this point, Parliament obviously has little leverage to alter the CUSMA. Still, there are steps that Canada can take on its own without reopening the deal to enhance the treaty's positive features and to mitigate the harm from its worst.

I'm going to briefly list some of those here today. The first issue is making medicines more affordable. The original intellectual property rights

chapter in CUSMA would have required Canada to increase data protection term limits on biologic drugs from eight to 10 years. Biologics are increasingly important for the treatment of Crohn's disease, rheumatoid arthritis and many other illnesses. The Parliamentary Budget Officer predicted that the original CUSMA data exclusivity extension would have increased their costs through public and private drug plans by about $160 million a year. Thanks to U.S. Democrats, that change was dropped from the agreement.

The Democrats also successfully removed provisions in CUSMA that would have facilitated patents for new uses on existing drugs—the evergreening issue—which blocks cheaper generics from hitting the market. Canada should build on these victories to get serious about the high costs of medicines here in Canada. We can do this by moving forward on the proposals to improve the way that we regulate brand name drug prices.

Health Canada estimates, for example, that simply by removing the U.S. and Switzerland from the basket of countries it uses to determine prices in Canada, we could save, on average, about $1.2 billion a year in drug costs. Second, I think we should swiftly adopt a universal, single-payer pharmacare program, as recommended by the government's expert panel on pharmacare, since this would significantly reduce drug costs by increasing the bargaining power of public buyers.

Both of these measures are already in the sights of the USTR, for example, which is looking to pressure Canada not to introduce these things, because their pharma industry will take the hit on them. So I think we need to move fast. The second issue is on enforcing labour rights in the new CUSMA. As the committee has heard from several witnesses already, CUSMA's labour provisions are a significant improvement on NAFTA. The challenge to all three countries now is enforcement.

Beyond a commitment to receive and consider public complaints of labour violations in Canada, Mexico or the U.S., CUSMA's labour provisions are enforceable only through government-to-government dispute settlements. For a number of reasons, this isn't ideal. Governments can't always be relied on to bring cases forward on behalf of workers. A way that Canada could address this would be to set up an independent, domestic complaint process that would allow labour unions, citizens and citizen groups to initiate complaints when international labour standards are violated.

There should be an impartial body that could hear these complaints in the same way that impartial bodies hear procurement complaints under other parts of trade agreements. If they're credible, the complaints will move forward no matter what. On environment and the climate emergency, we would say that the new NAFTA is decidedly less satisfactory. This reflects, obviously in part, the fact that we were negotiating with a climate-denying U.S. administration.

Still, the CPTPP, the trans-Pacific partnership, and the EU trade deal are not all that much better on the environment, so not all of the blame can go on the obstructionism of the U.S. administration. CUSMA's environmental

chapter is technically enforceable through state-to-state dispute settlement, but again, what's the likelihood? Its obligations are so weak it really hardly matters. Outside of a few hard rules regarding matters like fisheries subsidies and wildlife trafficking, the chapter's commitments are mostly vague and voluntary. It also contains a gigantic loophole in the sense that it only applies to three federations, three federal states. It only applies to the federal level in all three countries.

CUSMA's most significant step forward on the environment was getting rid of ISDS, the investor-state dispute settlement process. Canada has faced dozens of ISDS cases, more than any other country in the NAFTA region, and many of those have challenged legitimate, lawful and non-discriminatory environmental and resource management decisions. The elimination of ISDS in CUSMA is indeed important, as Minister Freeland told committee last week, and it should be precedent setting. The challenge now is how Canada removes ISDS from its many dozens of investment treaties with other countries.

(1045) I want to speak a bit about deregulation in CUSMA. CUSMA's chapters and annexes dealing with how governments regulate in general have gotten relatively less attention in all three countries than other parts of the agreement, yet they may prove to be as significant and controversial as ISDS became in NAFTA. Remember, we didn't know much about investor-state dispute settlement when NAFTA was signed or how it would operate.

The same logic is at play with the good regulatory practices chapter, which, for the first time in any free trade agreement, locks in a very specific ideology about regulation, which says that commerce should reign supreme and precaution should take a back seat or be thrown to the wind. Central regulatory agencies, for example Treasury Board here or OIRA in the United States, are required in CUSMA to ensure that federal agencies avoid unnecessary restrictions on competition in the marketplace when they're deciding on appropriate health or environmental protections.

There is significant potential for multinational companies to abuse a new notice and review process in CUSMA, which requires regulators to seek and respond to any recommendation to modify or repeal a regulation that is set to create a burden on business. Global producers of chemicals, pesticides, pharmaceuticals, GMOs, cosmetics, tobacco, food additives, etc., are continually disputing good science on the risks that their products pose to human health and the environment.

Now under CUSMA, a government could be taken to dispute settlement, by another country on behalf of one of its industries for example, for sustained or recurring unwillingness to heed corporate complaints about public interest regulations. The so-far voluntary Canada-U.S. regulatory co-operation council, a process that is now enshrined in CUSMA, can lead to delays in removing known toxins, known carcinogens, bioaccumulative compounds and endocrine disruptors from consumer products due to pressures to harmonize across borders for the sake of commerce, again, built up into the good regulatory practices chapter.

As the CCPA's former executive director Bruce Campbell has expertly shown, such pressures led to the downward harmonization of rail safety standards in Canada and aviation safety standards, leading to the tragedies of Lac-Mégantic and the Boeing disasters. In theory, CUSMA's good regulatory practices

chapter leaves the door open for government to regulate in a more cautionary, protective way, however the primary objective of the

chapter is clearly to reduce the burden on business. In fact, regulatory co-operation is defined in CUSMA as, first and foremost, a means to facilitate and promote economic growth, not as a means to enhance public protections. It's more important than ever, therefore, that Canada counterbalance the deregulatory pressures in this agreement and other free trade agreements by enshrining the precautionary principle in law.

A directive reasserting our regulators' authority to give the benefit of the doubt to protecting public health; removing potentially toxic substances from circulation, plastics for example; protecting animal populations; etc., would fit most Canadians' understanding of what good regulation means. In conclusion, CUSMA is a mixed bag, at least from a progressive point of view. But is it a model for future Canadian trade deals? We would say no, not at all. Canadians recognize that securing this deal was a defensive measure. Despite the new agreement, just like NAFTA, our access to the U.S. market remains precarious.

The U.S. is the most powerful country in the world. It will do what it wants to do. There is no way out of this reality for Canada. Canada's challenge now is to find ways to work around and outside of CUSMA to improve working standards and environmental protections across North America, lower drug costs for Canadians, rapidly decarbonize our economy in line with the Paris Agreement commitments and fully recognize the UN Declaration on the Rights of Indigenous Peoples on a path to real reconciliation. Thanks very much.

(1050) The Chair :

Thank you very much, Mr. Trew. We'll move on to the Dairy Processors, Mathieu Frigon and Dominique Benoit.

[ Translation ]

Mr. Dominique Benoit (Treasurer and member of the Board of Directors, Dairy Processors Association of Canada) :

Good morning, committee members. On behalf of the Dairy Processors Association of Canada, I want to thank you for the invitation to appear this morning to discuss the bill to implement the Canada—United States—Mexico Agreement, or CUSMA, and the impacts of the agreement on Canada's dairy processing industry. I'm the treasurer and an executive member of the board of directors of the Dairy Processors Association of Canada. I'm also the senior vice-president of institutional affairs and communications at Agropur, the largest dairy cooperative in Canada.

With me today is Mathieu Frigon, our president and chief executive officer. This morning, we first want to bring to your attention to the harm that CUSMA will cause to our industry. We then want to focus on the government mitigation measures that would help our industry adjust to the new market environment that we're now facing as a result of CUMSA and other recently signed agreements.

[ English ]

Mr. Mathieu Frigon (President and Chief Executive Officer, Dairy Processors Association of Canada) :

As the second-largest food processing industry in Canada, dairy processing contributes more than $14 billion annually to the country's national economy. Dairy processors directly employ 24,000 Canadians in 471 facilities across the country, with an aggregate payroll of $1.2 billion. Our industry is a major employer in rural and urban communities, providing high-paying jobs to middle-class Canadians. Canadian dairy processors have invested $7.5 billion over the past decade in their business.

This includes capital investment to expand and update existing facilities as well as to build new ones to support increased production. It also includes investment in research and development to spur innovation and bring new products to market. Dairy processors are dedicated to investing in a vibrant industry to support Canadian jobs and the Canadian economy. However, recent trade agreements threaten to curb this growth and diminish the long-term competitiveness of the Canadian dairy industry.

[ Translation ]

Mr. Dominique Benoit :

At full implementation, access granted under CUSMA, in addition to existing concessions pursuant to other agreements, will represent about 18% of our Canadian market. When considering the latest three trade agreements, Canadian dairy processors will lose $320 million per year on net margin once the agreements have been fully implemented. On top of the market access concessions, CUSMA includes a clause that imposes export caps on worldwide Canadian shipments of milk powder, protein concentrates and infant formula.

For example, for skim milk powder and milk protein concentrates, a cap of 55,000 tonnes will be imposed for the first year, and 35,000 tonnes for the second year. Considering that, in the 2017-18 dairy year, Canada exported more than 70,000 tonnes of skim milk powder, there's no question that a clause in CUSMA limiting our exports worldwide will drastically impact Canadian dairy processors and domestic milk supply requirements from Canadian dairy farms. We estimate that the export caps could result in an annual loss of $60 million for dairy processors.

We also want to note the extremely peculiar aspect of imposing caps on Canadian exports of milk powder to all countries, including countries that aren't part of the Canada-United States-Mexico Agreement. This is a first in an international trade agreement, and a dangerous precedent for Canada. One way for the government to mitigate the negative impact of the export caps is to ensure that CUSMA enters into force on August 1, 2020, or later, so that the industry operates an additional full year under an export cap of 55,000 tonnes.

(1055) [ English ]

Mr. Mathieu Frigon :

To mitigate the negative impact of the increase in market access under CUSMA, we propose a twofold approach: first, the allocation of dairy import licences to Canadian dairy processors; and second, a dairy processor investment program. We want to reiterate today that dairy import licences, commonly known as dairy TRQs, must be allocated to dairy processors. Dairy processors possess the expertise and the distribution network to import a wide variety of dairy products that complement the domestic offering, as opposed to replacing it.

The government must refrain from repeating the same mistake it made for CETA, where it allocated more than half of the CETA cheese TRQ to non-dairy stakeholders such as retailers and brokers. Those non-dairy stakeholders do not have a vested interest, as dairy processors do, in importing dairy products that would minimize the impact on existing production line and manufacturing platforms in Canada without displacing Canadian farm milk. In addition, dairy processors continue to invest, maintain and generate well-paying jobs across the country, particularly in rural areas.

Additional imports that are poorly planned or poorly targeted will undermine the survival of many businesses. The second mitigation tool we recommend is a dairy processor investment program. The diary-processing industry is made up of businesses of various sizes and product mixes, all of which will experience the impact of these trade agreements in different ways. As such, we recommend that the government create a program for dairy investment and compensation that would aim at supporting investment in dairy-processing capacity, competitiveness and modernization.

That program would include tools such as non-repayable investment contributions and refundable tax credits. The program would work on a matching principle basis. In order to receive funds, a dairy processor would have to commit to making investments here at home.

[ Translation ]

Mr. Dominique Benoit :

Last year, recommendations were submitted to the Department of Agriculture and Agri-Food by the mitigation working group—created by the government in October 2018—on programs to address the financial impact of the three trade agreements on the dairy processing sector. We actively participated in this work. We made recommendations based on the government's commitment to provide full and fair compensation to the sector, meaning to both dairy producers and dairy processors.

We're hopeful that the coming budget will instill much needed confidence in the future of dairy processing through an announcement regarding a dairy processing investment program. Rightly done, these two measures—the allocation of import quotas to processors and a dairy sector investment program—taken together could fairly and fully compensate Canada's dairy processing industry for the negative impact of the trade agreements.

Only through these types of mitigation measures will the dairy processing industry be able to safeguard existing jobs and significant investments in Canada, while continuing to develop our future. Thank you for your time and consideration. We're ready to answer your questions.

[ English ]

The Chair :

Thank you very much. We'll move to Mr. Lewis.

Mr. Chris Lewis (Essex, CPC) :

Thank you, Madam Chair, and to all the witnesses for coming out today. Let me start by saying we certainly are the party of free trade. It's not our intention at all to hold up CUSMA in any way, but we also have to do our due diligence. It's for our families, our businesses and our country. That's why we ask a lot of these questions. As many of you will know, unlike the U.S. Congress that was provided with an in-depth economic study, Canadian parliamentarians have received no analysis despite repeated requests. We've had to depend on other studies, most recently the C.D.

Howe Institute's report and the testimony before this committee. Some industry leaders have described CUSMA in less than glowing terms, saying the deal is better than no deal, while others have offered their enthusiastic support. Most have welcomed the stability it will provide after three years of uncertainty. Some have said the devil is in the details. To the chamber of commerce, sir, you represent a number of sectors in Quebec. Does the level of enthusiasm for this agreement differ from sector to sector?

(1100) Mr. Michel Leblanc :

It does, because it's not the same, but in general, it's a very high level of enthusiasm. It's not equal in every sector, but as a community, it is really behind this accord.

Mr. Chris Lewis :

Have you or has the chamber done its own economic impact analysis? Does it line up with the C.D. Howe's assessment that Canada's GDP will drop by 0.4% and that the Canadian economy will lose up to $10 billion?

Mr. Michel Leblanc :

No. From various exchanges that I've had over the years, the impact of not having an agreement was immense. If we had numbers, they were more about the impact on our export businesses, on our companies here, if we were not to have such an agreement with the U.S. Of course, the CGI of Montreal, the Couche-Tarde of Montreal, the Saputos of Montreal, are all businesses that are now very active in outside markets, including the U.S. Clearly, the signal from all of our companies was that the price we would have to pay as an economy if we were to not have an accord would be immense.

Mr. Chris Lewis :

I heard you say the word “export”. Does the chamber have any concerns about implementation, particularly the short 90-day time frame from ratification to implementation? Do you share the C.D. Howe Institute's concern about the potential for a thickening at the border, in other words, issues with tariffs, issues with the CBSA not having additional resources and/or funding to implement all this stuff?

Mr. Michel Leblanc :

We do have concerns, as always, when there are new agreements and new rules, that they will have an impact. We have what we call “trade missions”, and one of our most attended trade missions brings new exporters to the border, where they get a chance to understand the processes and the treatment of exports. Clearly, we expect over the next months to have lots of demand to make sure that everybody understands what, if anything, has changed. In effect, there will be probably an adaptation period, but again, this is seen as a positive evolution from our community's standpoint.

We were very concerned that because of President Trump's position, we might not have such an agreement. We're very happy that we do have one, and we want to move forward as quickly as possible.

Mr. Chris Lewis :

Thank you very much for your answers. Thank you, Madam Chair.

The Chair :

We'll go on to Mr. Sarai.

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

Thank you, Madam Chair. Thank you all for coming. I'll start with you, Mr. Trew. My question is on the ISDS. When it originally was implemented, a lot of people thought it would be helpful for Canadian companies and protect them against any regulatory changes that might be imposed in the U.S. Later on, it was actually the reverse. We faced more. Do you think the absence of that, though, might have some implications going forward, where it might get abused just because we might have taken an action thinking it was more discriminatory to Canadian businesses and less the other way around? Do you think that not having that dispute settlement system might pose a challenge in the future?

Mr. Stuart Trew :

If I understand the question, do you mean is it going to be more bad for Canadian business than for the United States if we don't have the ISDS?

Mr. Randeep Sarai: Yes.

Mr. Stuart Trew: The record is pretty bad for Canadian companies using ISDS to challenge U.S. policies. They've never won a case. I think that probably says something about how it works going up against a country as powerful as the United States. There are many opportunities, many means that Canadian companies have to assert their rights under U.S. law, their rights to do business in the United States, which are extensive. The U.S. legal system is one of the most established and elaborate in the world with respect to protecting private property. I don't think Canadian businesses are under any threat operating in the United States without ISDS.

(1105) Mr. Randeep Sarai :

Thank you. That's what I wanted to hear. In terms of labour, you said the new improvements are a lot better having it in there. Do you think there could be improvements on how we can access those? I think your concern was the fact that a government would have to bring the labour complaint. This would be at national levels, not on perhaps individual levels. How do you see the labour provisions being enforced?

Mr. Stuart Trew :

The idea we're thinking through—and I just mentioned it briefly in my presentation—would be to have some kind of prima facie means by which labour unions, individuals or community groups could bring forward a challenge related to the labour protections and have it decided in an independent way. Is there a value to this? Is there a reason to move forward with this? If the panel said there was, and they do this similarly with procurement disputes, then the government would be obliged to take this forward to government-to-government dispute.

Mr. Randeep Sarai :

That is currently not in the system. That would be something that would have to be devised amongst the three countries.

Mr. Stuart Trew :

Exactly.

Mr. Randeep Sarai :

My next question is to you, Mr. Leblanc. In terms of small and medium-sized businesses, how can you, in your experience as the chamber representative, increase the knowledge of and access to those new opportunities and, quite frankly, some of the existing opportunities that were there in NAFTA to help Canadians, especially SMEs, increase their businesses in the other two countries?

Mr. Michel Leblanc :

We do several things, and perhaps we could do more. Of course it always depends on the funding. I would send a message that the federal government can play a role here. First, at the entrepreneurship level, we try to put in place everything we can to have them “born global”, as we call it, which means that right from the inception and the development of their initial business plans, we incite and work with those SMEs to make sure they take into account the possibility of exporting, which means if they develop their website, to make sure it's transactional. From Quebec it can be transactional in English.

Internationally we make sure that, if they hire people, they hire people with the intent eventually to develop their international markets. That's one. Second, we have lots of training activities, and as part of those training activities, as I was mentioning, we have all those groups that we take to the border. It's really to explain it and make it as simple as possible for those SMEs to see the American market as part of their backyard, part of their growth area. Last, we organize missions in the U.S., where we take SMEs....

Usually we do not take large companies—they don't need us—but we will take SMEs into the U.S., into the New York area or to Silicon Valley. There we facilitate with the personnel who are either from the delegation of Quebec, the embassies or the consulate. We work with them to make sure we develop those one-on-one contacts. The whole strategy is to make sure that, as quickly as possible, our SMEs realize that their growth opportunity is to have access to that market. Now with the new—

Mr. Randeep Sarai :

Have you also—

The Chair :

I'm sorry, Mr. Sarai, your time is up. I was just waiting for a moment to interrupt our witness. I have to go on to Mr. Savard-Tremblay now.

[ Translation ]

Mr. Simon-Pierre Savard-Tremblay :

My first question goes to Mr. Trew, from the Canadian Centre for Policy Alternatives. You are delighted with the disappearance of

chapter 11, on the settlement of disputes between investors and states, which was fundamentally designed to ensure stability for investors at a time when different places had less stable governments. Basically, it was seen to threaten the ability to adopt social measures dealing with the environment and public health. It was realized that there were quite strong adverse effects, and Canada was the champion in terms of the number of claims against it. In those cases, the multinational is always the complainant and the state is always the defendant. These treaties have no recourse the other way around to protect citizens harmed by a multinational. This

chapter in NAFTA was a first, but the measure has been imitated in basically all subsequent agreements. Do you believe that the disappearance of the

chapter foreshadows anything good as things proceed? As of now, we cannot consider that it is a given when future agreements are signed.

(1110) Mr. Stuart Trew :

Thank you very much for your question. I will answer it in English. [ English ] Yes, I really do agree with the minister that this should be precedent setting. Say what you will about whether the rule of law is as strong in other countries as it is in Canada, the fact is that Canadian companies have abused this system—like they did in Canada—to challenge completely legitimate environmental and resource management decisions.

I would say that in the kind of world we're operating in, where it's becoming obvious that certain types of economic activity are harming the environment, contributing to the climate crisis and, in some cases, contributing to inequality in other countries—or at least not giving the benefits that are meant to come from investment from northern countries—we really need to think about scaling back or rebalancing the kinds of rights we have in trade agreements. Corporate rights are obviously very strong in these processes.

We need to rebalance so that environmental rights, indigenous rights and human rights are much more prominent.

[ Translation ]

Mr. Simon-Pierre Savard-Tremblay :

Thank you. My questions now go to the gentlemen from the Dairy Processors Association of Canada. You said that there has been compensation for many producers. That is often said, although, with the current agreement, no compensation has yet been paid. With preceding agreements, it took time, but payments were eventually made. But the processors were not compensated. First, what form would you like the compensation to take and in what timeframe? Then, how is your community reacting to the elimination of class 7? We know that milk protein has been an issue for a long time. I think you are from Agropur.

Before it was politically fashionable to criticize the issue, you were one of the first to ban diafiltered milk, if I am not mistaken. The fact remains that a lot of processors have been using the practice for some time.

Mr. Mathieu Frigon :

Yes, indeed, last summer, money was announced for dairy farmers only. Nothing was announced for dairy processors, and that was certainly a great disappointment for us, as we said in our brief.

Mr. Simon-Pierre Savard-Tremblay :

Are you talking about the previous agreement?

Mr. Mathieu Frigon :

Yes, I am not talking about CUSMA. We were disappointed. We hope that it will be in the next budget. As we said in our brief, we were part of the working group that looked at the financial impacts and the ways to mitigate them. We need an investment program and tariff quotas, import licences, as we call them, to be given to our members, the dairy processors. We would like compensation measures in two areas.

[ English ]

The Chair :

I'm sorry, your time is up. Mr. Blaikie.

Mr. Daniel Blaikie :

Thank you very much.

[ Translation ]

Mr. Simon-Pierre Savard-Tremblay :

We will talk about that later.

[ English ]

Mr. Daniel Blaikie :

Mr. Trew, I just wanted to follow up on something that Mr. Sarai said at the end of his remarks. He said that what you were suggesting was something that would remain to be negotiated among the three parties. In terms of what you were saying, my understanding was that this was actually something Canada could do domestically without having to consult the other two parties. I just want to be clear, for the record, which version is true.

Mr. Stuart Trew :

That's right, and I apologize if I implied we would negotiate. No, this would be something Canada could establish on its own. It could be made available, for example, to citizens from any country, possibly from Mexico and the United States, to bring cases. That's in the event that, for example, a similar process isn't established in the United States and Mexico. It shouldn't preclude people being able to enforce the labour rights that are in this agreement. Canada could be a leader there.

Mr. Daniel Blaikie :

It might be a process that involves interested persons from the other parties, but it's something that Canada could do on its own to help mitigate some of the impact of this agreement.

Mr. Stuart Trew :

Yes.

Mr. Daniel Blaikie :

With respect to

chapter 28, the NDP salutes the removal of investor-state dispute settlement clauses from NAFTA, but there's some concern that

chapter 28 is quite prejudicial against public interest regulation. I'm wondering if there might be some remedial work that Canada could do on its own, including a more wide-ranging definition of who an interested party, or an interested person would be, so that it's not narrowly defined as someone with a business interest in the regulation, but also recognize the interests that citizens might have.

It is with respect to the environment or indigenous people worrying about any infringement of their rights, or workers who are concerned about the effect that a regulation, or lack of regulation, of a particular sector might have for them. Could you offer some remarks to that effect in terms of how we might try to mitigate some of the potential negative impacts of

chapter 28?

(1115) Mr. Stuart Trew :

In one sense, yes, there's a lot of room in CUSMA for Canada to change how it regulates. The good regulatory practices

chapter is meant to enshrine a very specific kind of pro-commerce way of regulating that does push the precautionary principle quite far down the list in terms of priorities. There are parts of the CUSMA that require Canada, in perpetuity, to regulate in the area of cosmetics, for example, in what they call a risk-based way, so it would be in contrast to a precautionary way in, say Europe, or other jurisdictions, or in a hazard-based way, which can be more protective of public health in other ways.

For the most part, Canada could simply issue a cabinet directive, as it has done every few years now on regulation, changing the way it regulates, so that these other interest groups are brought more into the picture, and so that regulations do a better balance between the commercial interests of companies that will be affected by these rules and the interests of the environment, the animals, the people who are affected by some of the products that get put on the market.

Mr. Daniel Blaikie :

As we look past this particular CUSMA process to future agreements, whether it's a Canada-China agreement, or Canada-U.K.—there's certainly talk about other kinds of agreements—how important do you think it is that we learn some lessons from this process? We were talking earlier with a witness from the United States who described that interplay between the executive and legislative branch in the United States.

We've negotiated with the government to get it to be more transparent about the negotiating objectives up front, and to provide an economic analysis, as a matter of course, with future agreements when it tables ratifying legislation. What can we learn from what hasn't gone right with this process, and how important do you think early civic engagement is in order to get better deals for Canada in the future?

Mr. Stuart Trew :

One thing that the CCPA and others have advocated for in the alternative federal budget for the past few years is that we need to rethink our trade policy, in general, for this era of climate emergency and growing inequality. We need to rebalance how these agreements work. Parliament has a role to play in that, and Parliament should have a stronger role in determining our objectives whe