Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue No. 28 - Evidence - Meeting of June 14, 2017
OTTAWA, Wednesday, June 14, 2017
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 4:20 p.m. to study foreign relations and international trade generally.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: Honourable senators, the Standing Senate Committee on Foreign Affairs and International Affairs is called to order.
The committee is authorized to examine such issues as may arise from time to time relating to foreign relations and international trade generally.
Under this mandate, the committee has invited the Canadian Ambassador to the United States, His Excellency Mr. David MacNaughton to discuss issues relating to his mandate. The diplomatic appointment of the ambassador was announced in January 2016. He presented his credentials to then-President Barack Obama in March 2016 and has served as our ambassador in the United States since then.
Ambassador, welcome to the committee. We did initially contact you to speak about the mandate, but time has passed. We are still interested in your mandate but we're very interested in the country in which you serve and our interests there. No doubt, the questions will range beyond your mandate, perhaps on particular areas of interest to any one of these senators.
I am going to make a bit of a qualifier: We normally would fill this room but this is the time of year when any of the pieces of legislation that we've been working on for quite some time come to fruition. So we are seized with a number of important government bills in the chamber. Unfortunately, that means that those who have responsibility for the bills have to stay in the chamber.
We just wanted, on the record, to note that we put our duties to the Senate first. It is in no way disrespect to your office and our overwhelming interest in our relationship with the United States. It impacts particularly this committee time and time again. Your name has been raised in conversations with witnesses here in the articles we read.
We are very grateful that you did find the time to appear, and appear in person, which is very helpful.
Those committee members who are not here will, of course, receive transcripts. They may wish to follow up with you. We're very pleased to have you representing us in Washington, but we're also very pleased that you're here in person today. Welcome to the committee.
If you have an opening statement you would like to make, and perhaps introduce the officials who are with you, we can then proceed to questions. As you know, senators love to ask questions, particularly of government officials.
Welcome to the committee and the floor is yours.
David MacNaughton, Canadian Ambassador to the United States, Global Affairs Canada: Thank you very much. I am delighted to be here. It's an honour and a privilege to be able to speak with you today. I will introduce the officials after I make my opening statement. I thought it would be useful to at least get some things on the record so that I don't forget to bring up some things that might be of interest. Obviously I'm happy to answer any questions. The relationship with the United States is extremely important and there are quite a number of issues that we're dealing with at the present moment. So I'm happy to answer questions.
I'd like to start by saying as a Canadian that I am proud that Canada's outreach with the new administration has transcended political parties and brought governments of all stripes, from coast to coast, in support of the initiative that we have with the United States.
Just last week, the embassy welcomed eight Canadian premiers to Washington and members of the Commons Committee on International Trade.
We are taking our message outside the capital as well. Supported by our network of missions across the United States, we are undertaking high-level outreach in key states, selected in terms of their political impact and economic ties to Canada.
The skepticism voiced by the new administration toward traditional trade policy and the fairness of U.S. trade partners has united Canadians who want to share our story — a history of making things together, building prosperity together, forging a trade relationship that is truly a model to the rest of the world.
We are driving home a central message: Canada and the United States have the broadest, deepest and most comprehensive relationship of any two nations on earth, and Canada will defend the interests of its citizens by insisting on reciprocal, win-win approaches to our common challenges.
Every single day, we do over $2 billion worth of goods and services trade, and almost 400,000 people cross the Canada-U.S. border every day.
As I've emphasized with the Americans on many occasions, approximately 9 million U.S. jobs depend on Canada- U.S. trade and investment.
Canada is the leading energy provider for the United States, delivering secure, reliable and responsibly resourced oil and gas, hydroelectricity and uranium. We also provide critical inputs to U.S. manufacturing and construction, including softwood lumber, aluminum and steel.
All of this means that we have a deeply interdependent relationship with the United States.
So while "America First'' may invite a more protectionist or nationalistic stance on trade and international issues, it doesn't prevent us from forging meaningful, productive relationships.
"America First'' by no means precludes the possibility of a stronger, more successful Canada-U.S. partnership. Why? Because a strong relationship with Canada is in the best interests of the U.S.
The Prime Minister's successful visit to Washington is perhaps the best example of this. I would encourage everyone to look closely at the joint statement released by Prime Minister Trudeau and President Trump following their meetings.
The document provides a sense of the scope of our cooperative efforts. It serves as a roadmap for an engagement that is strategic, targeted and already paying dividends.
Regulatory co-operation is one example. Canadian officials are working closely with their U.S. counterparts, building a framework for stronger collaboration and better regulation to support our integrated economies.
In transport and infrastructure, we have engaged the new administration to showcase Canadian approaches that can help them move forward on their agenda of regulatory reform and economic growth.
Pre-clearance is another area where we are making progress. Bill C-23, now being examined in the House of Commons, will be instrumental in further expanding the benefits of pre-clearance, now at eight Canadian airports. We are working to expand the arrangement to new sites and eventually bring pre-clearance to cargo.
We have also seen Canadian concerns addressed quickly when the new U.S. administration approved the Keystone pipeline. We're working to ensure that no buy-American requirements would apply to this important cross-border infrastructure.
In another example of direct personal importance for many Canadians, we obtained rapid clarification that Canadian citizens and permanent residents, regardless of their country of birth, were outside the scope of the travel measures that are now under review in the U.S. courts.
Let me now turn to our relationship with the United States out in the wider world.
Canada and the United States have worked closely together on issues of peace and security throughout the post-war era. That co-operation continues to this day, in NORAD and NATO, in a range of multilateral institutions and in regional hot-spots like Iraq and the fight against Daesh.
As Minister Freeland noted in her speech last week, we will continue that co-operation with the United States, whenever possible and when it is in our best interests, which is most often.
How our cooperative effort evolves will depend on how the U.S. engages in the world. Here again "America First'' appears to be an underlying principle but doesn't tell us how the administration will act in specific contexts.
On some issues, we have not seen the actions that were predicted. There has not been a significant rapprochement with Russia or any lifting of sanctions for its actions against Ukraine.
U.S. relations with China are not ablaze. The President himself has spoken of the need for co-operation on the critical issue of North Korea. There are indications of progress in the U.S.-China dialogue on trade and economic issues.
In some areas, we are facing challenges. As Minister Freeland and the Prime Minister said, Canada is deeply disappointed by the U.S. decision to withdraw from the Paris Agreement on climate change.
Canada hopes that this decision is not a harbinger of broader U.S. withdrawal from multilateral action. We know global issues are almost always best addressed with the U.S. on board. The U.S. administration greatly values our contribution to the fight against Daesh. It is deeply appreciative as well of our leadership in the Ukraine, and now Latvia.
The investments announced last week in our New Defence Policy statement have been well received as a sign that Canada is serious about dealing with key international security challenges.
The defence review is homegrown, the fulfilment of a commitment made by a new Canadian government. But from my seat in Washington I can see that it's something that the U.S. administration highly values and it will support the long-standing tradition of co-operation between our countries' armed forces.
In closing, I'd like to touch briefly on the path forward.
There will, of course, be challenges. In the coming period, we can expect to see the results of the U.S. national security investigation on steel and aluminum imports and another softwood lumber decision, this time on dumping.
A bipartisan effort to expand trade enforcement actions is gathering steam in the United States. In some areas, including in addressing unfair trade from third countries, our governments will find common cause.
In other areas, including recent actions that unfairly target our aerospace and solar industries, we will employ the full range of tools to defend Canadian interests.
As you all know, the administration has formally notified Congress of its intention to modernize NAFTA. Public consultation processes have now been launched both here and in the United States to consult with the public in the lead-up to these important talks.
Canada welcomes the opportunity to consider updates to NAFTA that recognize the rapid evolution of our economy. We can build on the progressive, inclusive approaches to trade that Canada has pioneered in our CETA agreement with Europe. This includes recognition of our digital economy and the importance of strong, enforceable rules on worker rights and the environment.
In speaking with members of Congress and the American business leaders, I find a deep reservoir of support for NAFTA and for the trade relationship with Canada. The key message I hear across every sector of the U.S. economy is that a modernized NAFTA must reduce trade barriers between our three countries and enhance the ability of North America to compete in the rest of the world. Put simply, American business is telling their government that the cardinal rule for NAFTA renegotiation is to do no harm to an agreement that has delivered prosperity. Rather, we must deepen it.
There are uncertainties and we should not discount the potential for unexpected change, but the enduring fundamentals — our shared interests — are firmly in place.
I am confident that these interests, supported by the important and ongoing work of the Canadian government and our many partners, will serve us well into the future.
Thank you all very much.
I'd like to introduce the officials here. There is Mark Gwozdecky, Assistant Deputy Minister, International Security; Kirsten Hillman, Assistant Deputy Minister, Trade Agreements and Negotiations, who was the lead negotiator on TPP, I believe; Martin Moen is Director General, North America trade policy, who has also been involved in the softwood lumber discussions for many years; and Martin Benjamin, Director General, North America Strategy Bureau at Global Affairs Canada.
I'm happy to answer any questions. In terms of the NAFTA situation, somebody asked me: "What do you mean by modernization?'' My favourite line in that regard is in 1994, when NAFTA was negotiated, if you'd asked people what Amazon meant, they'd say it was a river in South America. If you ask people what Amazon means today, they'd have quite a different answer. I think it's evidence of the changes of our economy and how we have to update that agreement to reflect the new realities of our economy, not just here but in the United States and in Mexico.
The Chair: Thank you, ambassador. I should assure you that you're flanked by very competent people who have had to come before our committee many times on many issues. We welcome them to the table again.
I'm going to resist asking you a whole bunch of questions because I have a very long list of senators who want to put their questions first. I hope I will have time at the end.
Senator Dawson: Thank you. How can we help?
Mr. MacNaughton: One of the things that has impressed me is the degree to which parliamentarians of all stripes, the business community and the premiers have offered to help. What we are trying to do is identify the places where, whether as individuals or groups of parliamentarians, they can actually go and make a difference.
One of the things I found in the early stages was that everybody wanted to come to Washington. My observation would be, yes, it's worthwhile coming to Washington, but it's also worthwhile going to things like the Western Governors' meetings; the Great Lakes governors and the premiers, when they meet; the Atlantic premiers and New England governors.
What I've noticed I find, because I've been to all of those sessions, is there's a real camaraderie there and some practical things that go on.
We've got Brian Clow in the Prime Minister's office who is in charge of the outreach. We've been trying to identify the key states and some of the events that you might attend. If there are senators who want to go and help in terms of the outreach, we're more than happy to do our best to make your time there the most valuable it can be. It depends on what your particular interests are or if you have any relationships.
We had Premier Wall go to Des Moines, Iowa, because they were having a celebration of Canada's one hundred and fiftieth birthday. He went with the parliamentary secretary and did a great job of promoting Canada at the time.
We'll see if we can find things where we think having Canadian presence would really help. So we're available.
Senator Dawson: I've learned over the years that Canadian senators have a better reputation in Washington than they do sometimes across the street. I'm certain we can be helpful in opening doors, and having developed relationships through the Canada-U.S. parliamentary groups, some of us are going to be participating in those. I guess what we need is some key messaging.
On a more practical level, I'm from Quebec City and one of the requests for pre-clearance is for the Quebec City airport. I know the legislation is coming slowly from the house, but how is the legislation proceeding in the U.S.?
Mr. MacNaughton: It's done.
Senator Dawson: It's a done deal?
Mr. MacNaughton: We had full-court press on the U.S. before their recess at Christmas time. It actually passed unanimously. They're waiting for us.
Senator Dawson: If can you get it sent to the Transport and Communications Committee of the Senate, we'll be happy to do the same thing.
Mr. MacNaughton: I was talking to some of the members of Parliament in the House of Commons yesterday about hurrying it up because I'm a bit embarrassed. I leaned on the Americans so heavily and now they're coming back and saying, "Where is yours?''
Senator Housakos: Welcome, ambassador, to our committee this afternoon. My first question is with regard to NAFTA. Obviously, we know that the United States has expressed an interest in renegotiating and they have identified a number of areas they want to address.
Can you share with us what the key areas would be that we would like addressed? There seems to be this propensity for Canada to always run on its knees in order to make sure that the Americans understand that we need access to the free market. I'm sure there are areas in this agreement, which is already more than a decade old, that need to be addressed. What would those areas be that we want addressed in the renegotiation?
Mr. MacNaughton: The focus of some of the things we've been looking at are really around the freer movement of people and goods back and forth across the border. There were job categories that came and were identified in 1994 that don't apply anymore. There are new opportunities for us to streamline the movement of people and goods back and forth across the border.
We obviously want to maintain and strengthen the independent dispute resolution process. I could go into great detail about some of the things that we're thinking about but I'd prefer not to do that in a public forum. I think that we are consulting with the provinces and with industry across the country. If there are some specific things that you think we should be including in it, I'm happy to hear them. However, I would rather not talk about our negotiating strategy in public. I will let the Americans talk about theirs because it helps when somebody talks about what their negotiating strategy is.
Senator Housakos: I will accept that answer; I think it is a good one. I will ask a question on a public issue. I suspect we can address this. We know our current government in Canada will soon be bringing legislation forward and they have expressed an interest in legalized marijuana. All of us know that in the United States marijuana is still a federal criminal offence.
Given the fact that this government is so adamant about legalizing marijuana in an expeditious fashion in this country, what kind of obstacles would that create in our relationship at border crossings, especially since it has been a challenge in the last few years because of security concerns to ensure there is a free flow of people and trade?
Do you think that this would be another element that would create more difficulty in our relationship?
Mr. MacNaughton: In all honesty, this has not been raised with me much at all. When Secretary Kelly of Homeland Security was here for his visit a few weeks ago, he talked about how thinning the border is important. That is the focus of our efforts.
The one time the marijuana issue came up, I was in Denver. I went out to Colorado Springs to see the change of command at NORAD and I did an interview with the Denver Post. It was all about trade. At the end of it the journalist said to me, because they legalized marijuana in Colorado, "Do you think there is anything Canada can learn from your experience in Colorado?'' My answer was complicated. I said "yes'' and that was it. The next day the big headline was "Canadian Ambassador comes to Colorado to talk pot and trade.''
Senator Housakos: Regardless of that particular exchange, I think the federal government in Washington would take exception with Canadians trying to cross the border with elements that, once they cross that border, are considered criminal.
Mr. MacNaughton: I wouldn't advise any Canadian to try that. Obviously, there are things for which we have different laws. Anyone who is travelling from Canada to the United States should be well aware of the federal laws, whether they apply to marijuana or to anything else.
Senator Ataullahjan: Ambassador, thank you for being here. You said that Canada would defend the rights of its citizens. That ties in with the question that I wanted to ask. Since President Trump began his term, there have been many reports of Muslim Canadians being denied entry into the United States.
I would like to know whether statistically there has been an increase in the number of Muslim Canadians being turned away at the U.S. border since the beginning of Trump's presidency and, if so, by how much?
Mr. MacNaughton: Mark, I don't know if you have any of those statistics, but we had a discussion about this last week, when I was in Ottawa. My recollection is that the absolute numbers of rejections at the border have gone down.
Let me take that away and get back to you because I don't have the exact statistics at my disposal right now. I do know that it is obviously something where, if Canadians face that, we want to make sure that Canadians, regardless of their background, are not discriminated against. Let me take that away and I will get back to you with the exact numbers.
Senator Ataullahjan: Another way to ask is this: Has there been an increase in Muslim Canadians seeking Canadian consular assistance from within the United States?
Mr. MacNaughton: I will have to check. I don't think so, but I will get back to you with any stats that we have. I am sure we do record that, so we will know.
Senator Ataullahjan: I am just doing a search and there are a lot of people.
Mr. MacNaughton: We don't ask people what their religion is when it comes to consular problems. I will get back to you with the numbers.
Senator Ataullahjan: Thank you.
Senator Cordy: Ambassador, thank you very much. In light of what is happening in the United States, you might be a frequent visitor to our committee. Thank you for coming early in the process.
When Colin Robertson appeared before the committee, he spoke about the myth of all the jobs being lost due to NAFTA. He also said this myth is being amplified by President Trump. Political junkies read his tweets and the newspaper articles, and so on.
How do we, as a country, sell the value of NAFTA, keeping in mind you said earlier that definitely changes have to be made; technology would be a prime example. I think one of the other things that I read was Americans certainly would be looking at intellectual property, specifically pharmaceuticals, because their period of time for ownership of it is much longer than that of Canada and longer than that of most countries.
How do we dispel this myth about the number of jobs being lost because of NAFTA?
You spoke about outreach to key states. I am wondering what the key states are because another thing that Colin Robertson told us was that for 30 of the 35 states that voted for President Trump, their biggest traders would be Canada and, for the other five, Canada would be their second highest. Would they be considered your key states?
Mr. MacNaughton: Very much so.
I grew up in Hamilton. When I was a kid growing up, most of the people I went to school with didn't have aspirations to go on to college; they knew they could get a good job in the steel mill. At one time there were approximately 17,000 people who worked in the steel mills in Hamilton. Clearly there are not that many now. If you look at a place like Kitchener, it was heavily manufacturing oriented and a lot of that has gone away. The big fear was that when we went into the Free Trade Agreement with the United States, we would lose all these jobs. Now you look at a place like Kitchener-Waterloo, and it has a dynamic economy; the lowest unemployment, certainly in Ontario.
Shifts are taking place and, frankly, with the transformation that is going on in the economy today with technology, there will be more changes. There will be more disruption to jobs right across our economy.
You have to be able to feel for those people who end up being dislocated because of changes, whether it be technological or trade-related. They are human beings. Sometimes they lose their homes. Certainly if you lose your job and you aren't trained to do something else — with modern communication — opposition can grow quickly with social media and the like.
We have to find a way, from a governmental point of view to deal with people who, through no fault of their own, are victims of technological or trade-oriented changes. Also, we need to get our young people to understand that learning doesn't begin and end with a college degree. You have to be in lifelong learning. We have to be able to sell the benefits of trade in a different way than we have done it, because clearly what we have done hasn't worked in terms of persuading a lot of people that this is worthwhile.
We have had a threefold increase in trade in Canada, the United States and Mexico since NAFTA came into being. That message hasn't come across. We need to find a way to create North America as the most competitive economic unit in the world because our competition isn't across the border; it's around the globe.
We all need to learn from what has been going on, not just in the United States, but in Europe and elsewhere. We have to find a way to sell open, rules-based trade and we have to do a better job of it. Otherwise, we will face these kinds of stresses and strains. It's not just about President Trump. Bernie Sanders had the same message, too. There are also a lot of governors and senators who have the same message. That is why we are trying to go to places where we can demonstrate that Canada-U.S. trade has been beneficial for their citizens and not just for ours. We have been a bit complacent in terms of getting that message out.
Senator Cordy: I grew up in Cape Breton, so steel and coal mines were — I totally understand what you are saying.
Mr. MacNaughton: I understand that there are more people employed in Inverness now around the Cabot Cliffs golf course than there were in the coal mines.
Senator Cordy: And everyone should go to the golf courses in Cape Breton. They are among the best in the world.
The Chair: I have to intervene, because then we will talk about other golf courses across Canada that require some employment attention.
Senator Bovey: Thank you for coming here, ambassador. As I said in the chamber earlier today, I want to thank you for hosting the Winnipeg Art Gallery's exhibition of the work of Teevee in the Canadian embassy in Washington. This is the first solo exhibition of a Canadian Inuit artist to be held in the U.S., so we very much appreciate that.
That brings me to my question. I am going backward and forward simultaneously with the NAFTA discussions in 1994, preceding one of the big concerns; namely, that of Canadian publications and the issues of artists. Looking to the upcoming discussions, are you anticipating those kinds of issues arising again? Can we expect cross-border art exchanges to become easier — we hope so — or will we be getting into greater complexities? What can we do to help to ensure that the information and support is there?
Mr. MacNaughton: I was in Miami three months ago, and there were lots of Canadian artists there. Increasingly, artistic and cultural exchanges are a wonderful part of illustrating the importance of the Canada-U.S. relationship, and they also have a great economic benefit to our country.
I hope that we can make it easier for that to happen. We try to do everything we can, not just at the embassies but at the consulates across the country, to promote that.
Regarding the Winnipeg art exhibit, Senator Janis Johnson raised it with me last year, and I said, "For sure we will do it. Just let me know when. We will be totally supportive of that.'' We would like to do more of that.
On the NAFTA negotiations, the question is whether the United States wants to get these negotiations dealt with reasonably expeditiously, in which case we can probably all agree fairly quickly on some things that Canada, Mexico and the United States would like to do to see it modernized such that they will create win-win-win situations. The more that you put on the table, the longer and more complicated the negotiations are.
It's not clear yet — and it won't be until the end of the 90-day period in the United States — as to how complex these negotiations will be or they want them to be. We will be ready, in any case, because we have smart negotiators, and they are prepared, but we will see how much they want to put on the table and how long those negotiations might take.
Senator Oh: Welcome, ambassador. Thank you for giving us a big hand and support when our Standing Senate Committee on Agriculture and Forestry was in Washington last month.
Mr. MacNaughton: I am glad. I am sorry I missed you. We will catch you next time.
Senator Oh: We were looking for lunch with you.
Mr. MacNaughton: We will have Canadian food on the menu, I can assure you.
Senator Oh: On behalf of our agriculture industry, greenhouse vegetable production is a major sector of the Canadian industry. It accounted for $1.3 billion in farmgate value in 2015. Canadian greenhouse vegetable exports account for 64 per cent of all farmgate sales, totalling a $137 million in 2015, of which 99 per cent are sent to the U.S. each year.
Ontario trade barriers, such as production costs, labour costs and carbon policy, have a huge impact on the horticulture sector's ability to compete globally both in imports and exports. For example, greenhouse vegetable growers in other countries, including our main competitors, have free access to the Canadian market without the added carbon costs on emissions for production and transport. With Canada's current carbon policy in place, the industry faces a substantial impediment to competition, and many greenhouses are moving their operations to the U.S. or are at risk of going out of business.
Have Canada's negotiators looked into how we could harmonize some of these nontariff barriers, especially the carbon policy, to support our Canadian growers?
Kirsten Hillman, Assistant Deputy Minister, Trade Agreements and Negotiations, Global Affairs Canada: In the area of agricultural trade, generally — and I think your question wasn't specifically vis-à-vis the United States but vis-à-vis certain domestic policies generally with respect to agriculture trade — we have quite a robust set of relationships developed with our major trading partners through bilateral agriculture committees; we have a trilateral NAFTA agriculture committee and bilateral committees that look at sanitary and phytosanitary measures that can also be nontariff barriers to trade sometimes, if they are improperly applied or applied in order to restrict trade.
We have these committees, as I am sure you know, with all our major trading partners. That is where we bring those issues to the table. We do an assessment of where harmonization is possible and where it's in Canada's overall best interests.
This is on a case-by-case basis and, frankly, sometimes on a product-by-product basis, because, again, regulatory barriers in the area of food safety are specific to the product that you are looking at.
This is a long answer to get to a short answer for you, which is that it is very central to the work we do in our trade practice in conjunction with our agriculture colleagues. We know that can often be at the heart of what makes our industries competitive. We do place a strong emphasis on that.
Mr. MacNaughton: I've developed quite a good working relationship with the new Secretary of Agriculture in the United States, Secretary Perdue. He was in Toronto last week, and he has been a big supporter of NAFTA. He obviously wants some changes, and we are all open to that. He is a very practical, sensible guy who understands the value to the U.S. agricultural sector of open, rules-based trade. He will be a tough negotiator, but he is also a practical person who was Governor of Georgia for a while. He understands government, too.
He will be an adversary and an ally at the same time. He is a very practical person. When you are down in Washington next, I will try to organize for you to have a discussion with him, too.
[Translation]
Senator Saint-Germain: In your opening statement, you painted a picture of the challenges and priorities of the Canada-U.S. relationship at this time. What struck me the most are the challenges related to immigration and others related to security and peace. I have two questions about those challenges.
First, given the presidential executive orders on refugees, which are being challenged, do you have ways and means, with various U.S. authorities, to ensure that, on the one hand, there is more prevention of illegal immigration and that, on the other hand, refugees arriving from the United States are welcomed in compliance with international agreements and human rights?
[English]
Mr. MacNaughton: Sorry. In terms of clarification, are you asking the question in terms of our refugee policy?
Senator Saint-Germain: No, in terms of our cooperation with the American government or state governments in order to prevent the incoming of more refugees that would not come here and have their rights respected while they are on American soil, first.
Second, are there negotiations or discussions between the embassy or the Canadian officials and the American officials in order to prevent illegal entry into Canada through the United States and to avoid human beings from being exploited by traffickers?
Mr. MacNaughton: Very much so. This is, obviously, the number of people who have come into our country not through the normal border, but we saw it at Emerson, Manitoba, and other places. We have been having discussions with the U.S. It's part of human smuggling that's been going on. That discussion has been ongoing between our public safety officials in U.S. customs and border patrol and the other authorities.
There's been more this year than any other year. I think 2008 was the last there were as many. I don't know that we've got a complete handle on it, but I know there are ongoing discussions. Minister Goodale has been discussing this with Secretary Kelly a lot, and hopefully we will be able to get a better handle on it.
Forty per cent of the people have valid U.S. visas. It's a challenge in terms of what's been happening lately. We're trying to sort out the difference between those who are part of some kind of an organized effort and those who are doing this on their own.
It's certainly something that we're very much aware of and very much on top of at the present moment.
Senator Saint-Germain: My second question is regarding terrorism, security and safety. I'm a member of the National Security and Defence Committee, and we are studying some issues in the Arctic. Are you aware of the changes in the cooperation between Canada and the United States since the election of President Trump? Do you believe there are changes and that the cooperation is as fluid as it was before? Do you have comments you can make publicly on this issue?
Mr. MacNaughton: Specifically in terms of the Arctic?
Senator Saint-Germain: Or in terms of security, and I would say common interests in working together.
Mr. MacNaughton: I don't think our cooperation with the United States on defence and security has ever been as strong as it is right now. Three or four weeks ago, I spent a whole day over at Homeland Security listening to all of the different areas in which Canada and the United States are cooperating together. The relationship between the FBI and the RCMP is phenomenal. One of the reasons why we have been able to do as well as we have in terms of the security of our populations is that at the working level the cooperation is phenomenal.
The relationship between Canada and the United States and the administration and the government is very close. While there are areas of disagreement, and I think I mentioned in my opening statement that on climate change we obviously have a difference of opinion.
I like to say that our relationship with the United States is like a family, best friend or a marriage. If you spend all your time focusing on all the things you don't agree with, your marriage isn't going to last very long. If you spend all your time focusing in on the differences, the relationship is going to sour.
That's why we've been trying to focus on the areas where we agree. There are so many of those. I keep saying to people here that after we get through all the things that we agree on and try to make them stronger, there isn't a lot of time left to spend on the areas where we don't agree. While they're important and we have to resolve them, we should also focus on the areas we agree. Security and defence is unlike any two others in the world.
One of the best examples of that is the Shiprider program, where in the Great Lakes the smugglers used to get in fast boats, whether on the Canadian or American side, and they would go across. Once they got over the border, they would thumb their nose at the RCMP or the Coast Guard. Canadians and Americans got together and figured out the best thing to do is to put both enforcement officials on the same boat so they couldn't outrun either. The arresting jurisdiction depended on where they were.
Think that's evidence of the cooperation we have between our two countries.
Senator Marwah: Welcome, ambassador, and welcome to your officials. Nice to see you again.
To build on a point you made, we keep hearing about divergent views in the administration. Is there a commonality of views that we should be worried about or we should leverage? Or are there any divergent views that we should leverage, too?
Mr. MacNaughton: Again, I don't want to talk about negotiating strategy. Dividing and conquer is not bad when you're talking about someone else.
One thing I've noticed over the last several months is that initially there was a lot of talk out of the administration about the problems with trade and globalization. In the last several months I have heard more of what I call the "Fortress North America View,'' which is that North America can become the most competitive economic jurisdiction in the world.
There are a lot of people in the administration who are sounding a lot more like Robert Zelnick and General Petraeus who wrote the article about how strong Canada, the United States and Mexico could become. There's more concern that's been expressed about how we can work together in solving issues in the western hemisphere.
If we find areas where — and I think increasingly whether it be Secretary Mattis, Secretary Kelly, Tillerson, Wilbur Ross and others, they're coming to realize that cooperation with Canada is in their best strategic and economic interest. We just keep reinforcing that.
Given your experience in banking in terms of the western hemisphere, we haven't begun to leverage as much as we can in terms of making North America even more competitive than it is.
Again, are there ways to exploit differences within the administration? I'd rather try and find a way to make them more cohesive around the same agenda that we have.
The Chair: I'm going to ask a question. I recall when we did the FTA, and then Mexico said, "Hey, we want into the U.S.,'' and Canada had to make a determination of whether they were going to stay out or move in.
We decided being at the table was better, and, of course, we ended up with NAFTA. We did the same thing with TPP. We weren't asked in. We asked to go into TPP, and now it's struck.
My concern is that you're saying that these negotiations are going to take place. I agree that a lot of diplomacy has to be done quietly, but this committee produced a report that said that Canadians demand to be in, that they really want to know what is being negotiated at the table these days. As you pointed out, we've changed a lot from 1994.
At what point will we engage the Canadian public? I know the Minister of Global Affairs has put out a statement that it's going to be Canadian and that we're going to protect Canadian interests, but, if we're going to protect Canadian interests, we need to know what is on the negotiating table.
I think the negotiations are going to be very different. Right now, I think there's an ease with letting the government move because we're not quite sure of the U.S. At what point will we know what issues are on the table?
Mr. MacNaughton: First of all, on June 3, there was the notice gazetted that asked for input from Canadians in terms of their position on NAFTA. I think it's a 45-day period where any Canadian can express their views.
We have been engaging with the private sector, with industry groups, with the provinces. We will intensify that over the next little while to make sure that it's inclusive. I think that the consultations are going to continue throughout the negotiations.
The most important thing is that people feel free and open to express their views and to make sure that we understand because some of this isn't just about, "I want my interests defended.'' It is also to make us aware of some of these technological changes that we might not be aware of.
When you look at the automotive industry and the integrated supply chain and how there are parts that cross the border seven times before they end up in a vehicle, these are the kinds of things that didn't exist 15 years ago. So it's really important that people do make us aware of some of these changes, intellectual property, the movement of people and goods. Things are changing so quickly. We can't be expected to know everything that's going on, and it's really important that we understand those things.
In terms of where the ultimate negotiating position ends up being, in part, that is going to depend on where the U.S. administration ends up and what they think should be on the table, but, right now, we're really very much in the information-gathering mode from Canadians.
The Chair: What we found in our report was that, certainly, there were consultations with stakeholders, et cetera, but the public was not engaged. Then, they were coming to the Senate — we're often at the end — saying, "We didn't know these would be the consequences,'' or, "We don't know whether this is going to be in regulations. We're kind of okay with the idea.'' The devil is always in the detail.
I think what we were saying is that we hope the government — and you are very pivotal in that position — is to engage the broader public on the issues if we want buy-in.
Mr. MacNaughton: I totally agree with that. That's been part of the skepticism around the world about some of these trade negotiations, that they seem to take place behind closed doors and then are sprung on people. If you don't engage the public in them, you won't get the kind of buy-in.
I've been trying as much as I can. I've been right across the country — well, I haven't been to Newfoundland yet. I apologize. I haven't been to Newfoundland. I will be going — to actually talk to the provincial governments and get their input. Whenever I'm there, I always also try to meet with not just stakeholder groups but try to reach out and get as much information as I can.
The economy is changing so much that it's really informative to actually listen because, if you're talking all the time and you don't listen, you don't learn. I've learned a lot.
The Chair: My other question is that you did mention, once, Mexico. When we talk about the North American continent, NAFTA was very much with Mexico. We've been preoccupied with the bilateral; it really was a trilateral. A number of us representing the committee went to Mexico, and they were very concerned about their position, not only in NAFTA but with Canada.
Are you engaged? Is that issue coming up in your conversation in Washington, or is it strictly bilateral at this point?
Mr. MacNaughton: I am in touch with the Mexican ambassador frequently. I've met with the Mexican foreign minister, the minister of the economy for Mexico. We are keeping in close touch with them, trying to understand, trying to figure out where there are areas, in the first instance, where we can agree.
It's pretty open dialogue. I know that Minister Freeland has been in Mexico a couple of times, has met with her counterpart who came up here. He was in Toronto a few weeks ago. It is very much a trilateral agreement. That's what NAFTA is, and we hope that's the way it continues. I think there are a lot of benefits to that trilateral agreement and improving it, rather than thinking of things only in bilateral terms.
The Chair: I'll try to make a quick question so that we get a quick answer because I still have a bit of a list.
In my early days with NATO, Canada was not only a contributor and part of the defence of Europe and our own stability but often seen in Europe as the interlocutor to the Americans. We had a special relationship.
We often played that middle of the road — how do we negotiate; how do we get consensus within NATO role. With an ever-changing Europe and now a United States, I didn't see that in the minister's statements, our pivotal role in being part of North America but also part of the European strategy, and we had a unique place. Are you giving any thought to that? Is there any discussion with the United States? Our value-added is not just our military capacity but our political diplomacy and strategic position that is value-added to NATO and to our security and the American security.
Mr. MacNaughton: I agree. What's happened most in terms of my interaction with other countries is that a lot of them have phoned and asked for me to help them think about how to deal with the new administration. It's an interesting phenomenon.
One of the things that's happened is that the CETA agreement has made us closer economically to Europe and, I think, has strengthened the European-Canadian bond. I think we can play a constructive role both in terms of what's happening in Europe and also in the relationship between Europe and the United States.
Senator Ngo: Thank you for being here, ambassador. My question is a bit different. As you are aware, China has been purchasing several Canadian companies that deal with sensitive documents and establishing state-owned enterprises in key trade sectors. There are so many. Just to name a few, for example, the acquisition of O-Net Communications, Wealth One Bank of Canada and, recently, a Vancouver tech firm, Norsat International. Is the U.S. government urging the Canadian government to conduct a full-scale security review of the Chinese acquisition before approving of any of these purchases?
Mr. MacNaughton: My understanding of the most recent one that you talked about is that we have consulted with the Americans, and they did not. Is that correct? Obviously, the Americans are concerned about, and have raised the issue of, the role of state-owned enterprises, generally speaking. Any time that there are security issues around an acquisition or any other thing, we obviously consult with our closest ally in that regard.
As I say, in this recent example, I think the Prime Minister answered that question in the Commons yesterday, and my understanding is that they were consulted and they did not ask us to conduct a full review.
Senator Ngo: The U.S.-China Economic Security Review Commission, which reports to Congress, says that the U.S. military and other domestic clients of Norsat should immediately review their purchases.
The question is: Will you follow up on these concerns?
Mr. MacNaughton: I think we are a sovereign nation and make our own decisions. We obviously consult with them. I have not been involved in the specific details of either that or the other ones you mentioned. I'm not really in a good position to give you a straight answer, other than the fact that, obviously, on anything that has any security implications, we consult with our allies. At the end of the day, it's a decision for the Government of Canada to make.
Senator Ngo: To Mr. Gwozdecky. When Hytera made a bid issue for Sepura, the mobile digital radio equipment maker in Britain, the British government conducted national security and imposed strict stipulations. With the purchase of China regarding Norsat, did they urge the Canadian government to do the same?
Mark Gwozdecky, Assistant Deputy Minister (Political Director), International Security and Political Affairs, Global Affairs Canada: I would repeat what the ambassador said, which is that each of our governments has its own regulatory processes in place. We consult each other, but they are our sovereign processes. There are also processes that have to respect certain privacy provisions; companies and governments are entitled to protect certain information. So it's not something that we would normally discuss in a public forum like this.
Consultations take place, and we certainly try to ensure that our practices are not inconsistent with our most important allies.
The Chair: We've run a bit over but I have two senators who keep looking at me and want to ask supplementary questions and I have to live with them, committee-by-committee.
I'm going to ask them to make them extremely short and perhaps we'll just have time to answer those before we chose.
Senator Housakos: I will make an extremely short supplementary question to my colleague's question, specific to Norsat. Did I hear you say specifically that the United States has not expressed any concerns with regard to Norsat having been bought by a Chinese firm?
Mr. Gwozdecky: This would be a question that our colleagues at Innovation, Science and Economic Development Canada would be best able to answer. I'm not familiar with the details of that.
Senator Housakos: As a parliamentary committee, I'm asking our Ambassador to the United States: Has the United States expressed any concern regarding this acquisition by China?
Mr. MacNaughton: They have not, to me, but they wouldn't necessarily have raised that issue with me. All I know is how the Prime Minister answered the question in the House of Commons yesterday. I have no more knowledge than that.
Senator Oh: Ambassador, my question has nothing to do with sophisticated, high-tech equipment. We always say, "Don't put all your eggs in one basket.'' Since 1984, we now have worked out that our trading partner in the south is thinking they want to have a better deal, so should Canada have a better policy to trade globally or start looking for a new market and expanding our sales elsewhere?
Mr. MacNaughton: Absolutely, we should be looking to expand our markets elsewhere. I think one of the things that has been the response to the imposition of the tariffs on softwood lumber was that we are trying to look at ways in which we can help the lumber industry in Canada diversify its markets.
It's really important that when you have a good trading partner that you treat the partner well and you pay attention to that partner, but you also want to make sure that you have a diversified market.
For many businesses, the United States market has been open, it has been relatively easy and they have not done enough to expand their markets. We need to both encourage Canadians to look elsewhere, but also to try to do what we can to facilitate that.
I know the provinces have a role in that, too. One of the things I will say to you, senator, is that in my travels across the country, every time I go I try to meet small groups of people. One of the things I've noticed is there's a real difference in young entrepreneurs these days, compared to when I started my own business, and that is that they're looking to the globe as their market. They are really way more entrepreneurial in terms of being able to sell around the world than a lot of businesses when I started my career.
I find that really encouraging, but I completely endorse what you're saying. We need to do whatever we can to expand our markets to other things. When you put all your eggs in one basket, you are vulnerable.
The Chair: Thank you, ambassador, and your team, for coming before us. We're in the exploratory stage of figuring out where to go from here. You obviously are in the same mood. We're not quite sure where Canada is going to end up; it's a very different world.
We will be monitoring the new foreign policy. We'll be monitoring what trade initiatives are coming forward, and no doubt you will see many of us in Washington. We believe that we all have a role to play to help Canadians and Canadian business, and I think the dialogue today was very helpful.
We wish you well in your position. The better you do in your position, the better off we are. We know how important you are to our welfare here in Canada.
We wish you the best in Washington. I think that anything we can do to assure Canadians that we are, in fact, taking care of their best interests in this very turbulent time would be appreciated. Thank you for coming forward with your team, and we look forward to continued exchanges.
Mr. MacNaughton: Thank you very much. I will reiterate what I said earlier: One of the reasons that I believe we are going to do very well in terms of our relationship with the United States in any of these trade negotiations, is that first of all, we do have a really good team. I've got a great team in Washington at the embassy, we've got great people across the United States and there are really smart people here in Ottawa that support me.
More important than anything else has been the support of Canadians from coast to coast in terms of reaching out and offering help. That's been the provinces, it's been business and people in community organizations. The political parties are going to have their differences of opinion; I understand politics and I respect that. The reality is that when people from all parties and all walks of life come to the United States, we've been "Team Canada,'' and it's really made a big difference.
Thank you all very much. You can be assured that when you come to the United States, you'll have the full support of the embassy, all its people and me personally. Thanks for inviting me; I'm happy to come back any time.
The Chair: Senators, we are adjourned until tomorrow.
(The committee adjourned.)