Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue No. 43 - Evidence - June 14, 2018
OTTAWA, Thursday, June 14, 2018
The Standing Senate Committee on Banking, Trade and Commerce met this day at 10:29 a.m. to study new and emerging issues for Canadian importers and exporters in North American and global markets; and, in camera, for the consideration of a draft agenda (future business).
Senator Douglas Black (Chair) in the chair.
The Chair: Good morning and welcome, colleagues and members of the general public who are following today’s proceedings of the Standing Senate Committee on Banking, Trade and Commerce either here in the room or listening via the web.
My name is Doug Black, I’m a senator from Alberta and I’m chair of the committee.
Would the other senators please introduce themselves to the witness?
Senator Marwah: Sabi Marwah from Ontario.
Senator Ringuette: Pierrette Ringuette, New Brunswick.
Senator Neufeld: Richard Neufeld from British Columbia.
Senator Dagenais: Jean-Guy Dagenais from Quebec.
Senator Dalphond: Pierre Dalphond from Quebec.
Senator Day: Joseph Day from New Brunswick.
Senator Stewart Olsen: Carolyn Stewart Olsen, New Brunswick.
The Chair: Thank you very much.
Today our committee will continue our hearings on new and emerging issues faced by Canadian importers and exporters in relation to their international competitiveness. Some of these issues include the uncertain future of Canada-U.S. trade and recent changes to the U.S. federal corporate tax system. The committee is interested in learning about the potential impacts of these developments on Canadian importers’ and exporters’ competitiveness, as well as the manner in which Canadian importers and exporters and the federal government might respond to these developments.
In the first part of the meeting, I’m pleased to welcome, via video conference from Oklahoma, Wayne Garnons-Williams, Chair of the International Inter-Tribal Trade and Investment Organization.
Mr. Garnons-Williams, thank you very much for being available today. Please go ahead with your opening remarks, which I would ask you to keep to five minutes, and then we will have questions and answers. Welcome and thank you very much.
Wayne Garnons-Williams, Chair, International Inter-Tribal Trade and Investment Organization: Thank you very much. Good morning, senators.
If there is one message I could give to this committee today, it is the core message that real Indigenous reconciliation includes a recognition of Indigenous economic rights, including the Indigenous right to conduct international intertribal trade and commerce. I ask this committee to recommend enabling legislation for international Indigenous trade and the establishment of Indigenous trade zones.
What is IITIO — my organization, the International Inter-Tribal Trade and Investment Organization? IITIO has been in existence for four years. It’s a non-profit NGO, with Canadian head office in Ottawa. Every six months, we organize an Indigenous trade mission and conference that alternates between the United States and Canada. Given the brevity of time, I refer the committee members to our IITIO website, which provides terms of reference, background and exception.
Historically, there has been ample evidence of pre-European Indigenous trade. There is also ample evidence that Canada and the United States were countries founded on trade with and between the original North American Indigenous peoples.
Meaningful, full and informed consultation here is key. As you are well aware, Bill C-262, the proposed United Nations Declaration on the Rights of Indigenous Peoples Act, passed the House of Commons on May 30 of this year with a vote of 206 to 79. As of June 1, 2018, of course, it’s in second reading in your Senate.
I’d also like to recommend that you look at the United Nations Declaration on the Rights of Indigenous Peoples, specifically Article 19, dealing with free, prior and informed consent; Article 29(1), the right to the conservation and protection of the environment; and Article 20(1), the right to maintain and develop economic institutions and economic activities.
As well, coupled with that, don’t forget the July 2017 10 Federal/Indigenous Relationship Principles, with specific emphasis on principle 6, free, prior and informed concept; Article 8, a renewed fiscal relationship, economic partnership and resource development.
In previous NAFTA, there has been an article to preserve and protect Indigenous peoples. Article 800. Indigenous peoples were not present at the NAFTA negotiations but Canada inserted specific language — “nonconforming measures” —and that is a carve out to protect Indigenous peoples’ rights.
In the current NAFTA negotiation, the Indigenous trade chapter, part of Canada’s progressive trade agenda, which IITIO had a lead on in developing with Global Affairs and over 50 rights holders, stakeholders and treaty holders, has three parts generally: one, to recognize the important role of Indigenous Peoples in trade; two, to facilitate cooperative activities between the parties; and three, to establish a committee to oversee the implementation.
What are the possible trade issues with respect to Indigenous trade? Well, the Minister of Trade was specific to say while there is an Indigenous trade chapter, there is also the desire of the Government of Canada to not pigeonhole Indigenous people just in the Indigenous trade chapter. There has been ample opportunity to contribute to various issues in NAFTA with respect to Indigenous lands; that is, for example, market access, agriculture, rules of origin, dispute settlements, stable developments, international investment, procurement, financing, labour, HR, et cetera.
NAFTA negotiations have recently been put on a holding pattern, but the Indigenous trade chapter has promise with other like-minded nation states that have Indigenous peoples. I give two examples: New Zealand and Peru. In the Canada-Mercosur trade negotiations, Peru has expressed interest and curiosity in Canada’s Indigenous trade chapter, and in Pacific Alliance negotiations, Canada tabled the Indigenous trade chapter developed in NAFTA with New Zealand and, at the last round of discussions, New Zealand tabled their own version of an Indigenous trade chapter — a very promising development.
How can this Senate help empower economic prosperity for Indigenous peoples and help lead by allowing Indigenous peoples to lead? Well, that’s simple: recommend enabling legislation for international intertribal trade and establish Indigenous trade zones.
I will conclude with the words of Murray Sinclair of the Truth and Reconciliation Commission Final Report 2017, where in his final words he states:
Reconciliation calls for federal, provincial, and territorial government action.
Reconciliation calls for national action.
The way we govern ourselves must change.
Law must change.
Policies and programs must change.
The way we educate our children and ourselves must change.
The way we do business must change.
Thinking must change.
The way we talk to, and about, each other must change.
All Canadians must make a firm and lasting commitment to reconciliation in orderto ensure that Canada is a country where our children and grandchildren can thrive.
Reconciliation includes the recognition of Indigenous economic rights, including the Indigenous right to conduct international intertribal trade and commerce. I ask this committee to recommend enabling legislation for international Indigenous trade and the establishment of Indigenous trading zones.
Thank you. Those are my opening statements.
Senator Stewart Olsen: Thank you for this. I must confess I didn’t know much about it, so I have a few questions as to how exactly it functions. I don’t hold a lot of hope for this country implementing something that quickly, as we’re not doing so well in our trade treaties right now, and our interprovincial trade is also abysmal, but it sounds very interesting.
Do you have something like that in the United States? Where do you have something like this that functions that we could look at?
Mr. Garnons-Williams: As I said in my opening statement, there is a lot of hope concerning Canada’s development in conjunction with IITIO and over 50 rights holders, stakeholders and treaty holders in developing the Indigenous trade chapter. The fact is that Canada was so proud and pleased with the Indigenous trade chapter that they shopped it around the world to find other nation states that have Indigenous peoples that are ready for trade. The two I mentioned that are the most promising are New Zealand and Peru.
It is very promising to have, in the Pacific Alliance negotiations, New Zealand proposing their own version of an Indigenous trade chapter, which means there could be negotiated between the two nation states of Canada and New Zealand an Indigenous trade chapter allowing for Indigenous nations of those two nation states to trade. I think that’s a real promising opportunity.
Senator Stewart Olsen: But you didn’t answer. Is there something like this now that we can look at? Is there this kind of intertribal trading relationship in the United States or somewhere that we could look at as a model, or are you looking at Canada to establish the model?
Mr. Garnons-Williams: Comparing the law between the two nations is interesting on this. This is pretty basic, but I’ll keep it basic.
Canada and the United States have very similar relationships and very similar histories, yet they diverge at certain points concerning the relationship between Indigenous peoples and the federal government. The big difference, of course, is the fact that, in the United States, early on, in 1832, the United States Supreme Court recognized that Indigenous peoples in the United States are sovereign entities within the United States and therefore, as a sovereign entity, they have various opportunities in which to exercise that. In the United States, you have a lot of domestic, intertribal trade that is happening among the nations. The case is Worcester v. (1832) Georgia, the Marshall trilogy.
When you chart and historically compare the evolution of the two jurisprudential areas, Canada is on average 30 years behind the United States in the development of its enlightenment concerning the relationship between Indigenous peoples. In the 1970s, the Nixon regime focused on self-government for Indigenous peoples, and today we have very prosperous American tribes doing trade internationally, intertribally, domestically and looking for tribal markets overseas as well as in Canada. We have that evolution happening, and we can learn a lot from the experience of the United States in how they have, since the 1970s, supported Indigenous trade and self-government.
I note that some of the material I provided the Harvard project on American Indian economic development, the writings of Dr. Stephen Cornell, specifically the essay Sovereignty and Nation-Building: The Development Challenge in Indian Country Today. It’s important to understand that in the relationship between the federal government and Indigenous peoples, various things have been tried throughout the history of the United States and a lot of things have failed.
The Chair: I think you’ve answered the question to the satisfaction of the senator.
Senator Stewart Olsen: Yes, thank you very much. That’s a big help.
Senator Marwah: Thank you again. I congratulate you on the engagement of the Indigenous people on trade and trade-related issues. I think it has great promise.
In your comments, you mentioned the establishment of free Indigenous trade zones. Could you elaborate on what you mean by that? Are you talking about trade zones within Indigenous lands or trade zones among the Indigenous people across Canada? What exactly do you mean by that?
Mr. Garnons-Williams: Looking at the United States as an example, in the United States, the Citizen Potawatomi Nation of Oklahoma is the second nation to establish a tribal free trade zone. That allows for a triple opportunity for, say, Canadian Indigenous companies that want to do business. I use the example of an Indigenous company that makes furniture. The Trump administration imposed tariffs on chairs and furniture and whatnot. That company could re-establish itself within the Citizen Potawatomi Nation Corporation Act, take advantage of opportunities for low-interest loans within the nation, establish itself also on the free trade zone and therefore not be subject to the high duties of importing the product until the product is manufactured and exported out of the free trade zone. There are economic opportunities for using the free trade zone as an economic advantage and using the tribal lands as a means of having the sovereignty of the Citizen Potawatomi Nation to provide low-interest loans and favourable economic conditions. Finally, the banking system of Citizen Potawatomi Nation allows it to take advantage of grants and low-interest loans.
Senator Marwah: You also mentioned the development of an Indigenous chapter within NAFTA and the possibility of extending that to other countries that have Indigenous people. Are you referring to separate agreements outside of existing trade agreements that would exist only between Indigenous people to Indigenous people? Are you talking about trade agreements within the broader agreement between two countries or two regions?
Mr. Garnons-Williams: The concept here is to recognize the inherent Indigenous economic right of intertribal trade. Part of that is recognizing the fact that there is a need to re-establish that link. Well before the establishment of Canada and the United States, trade existed throughout North America, and we see this in the writings during the initial War of Independence. George Washington sent his chief justice of the United States to negotiate the Treaty of Peace and Amity. Chief Justice John Jay went to Great Britain and negotiated a treaty, and part of that treaty, clause 3, basically says that they are going to establish a border between Canada and the United States. Justice Jay said, What is happening across this newly established border? What are we impacting? Well, we are impacting a lot of trade happening throughout North America.
So within article 3, there is a clause that recognizes and respects the Indigenous trade happening at the time. I’ll cite the section, Article 3 of the Jay Treaty:
. . . Indians dwelling on either side of the said Boundary Line freely to pass and repass by Land, or Inland Navigation, into the respective Territories and Countries of the Two Parties on the Continent of America . . . and to navigate all the Lakes, Rivers, and waters thereof, and freely to carry on trade and commerce with each other.
That aspect was recognized in the Treaty of Peace and Amity between Great Britain and the United States. It’s a matter of re-establishing those links, because when the border was built, tribal nations were cut in two, and there were and still are trade relationships between nations all across North America. It is that aspect of reconnecting and reinvigorating that economic right, which an easy win for the Government of Canada because it is cost effective.
Senator Dagenais: Thank you, Mr. Garnons-Williams. I will try to summarize my question. You often refer to trade with regard to NAFTA. There is talk of it becoming a bilateral agreement, between Canada and the United States or Canada and Mexico. There will be a lot of negotiations. What objections could be raised to that type of agreement? We know that negotiations are still under way and do not appear to be nearing conclusion. I would like to hear your thoughts.
Mr. Garnons-Williams: Thank you. One of the objections would be a logistics objection with Mexico when we are looking at NAFTA and the Indigenous people’s chapter. The reason is because the Indigenous people of Mexico are not as organized as Canada or the United States. Canada has the Assembly of First Nations and various nations that are articulate and can express their interests through consultation and negotiation. It is the same in the United States with the National Congress of American Indians, but in Mexico there is no national organization. For the government of Mexico to consult with Indigenous peoples, it is a bit of a challenge. Also the Government of Mexico, in negotiations, has claimed that Indigenous people in Mexico make up 30 per cent the population, which again makes consultation a little challenging. There is no definition of Indigenous peoples currently in existence right now that’s universal, but I personally think that 30 per cent, if that’s the case, then it’s a huge economic advantage for the country of Mexico to make that claim and support an Indigenous peoples’ chapter.
Senator Ringuette: Has the United States established inter-tribe trade zones? Is that what you are saying? Yes or no?
Mr. Garnons-Williams: That is correct. If you look at the material I submitted, there is material concerning the free trade zone of the Citizen Potawatomi Nation.
Senator Ringuette: In Canada, I’m not aware of any legislation that would disallow internal trade between the different native communities. You say we need to enact legislation that would allow for trade. I don’t know of any legislation that does not allow for trade, so it is very puzzling to me that you would make a statement like that.
Mr. Garnons-Williams: I’m happy to help out there. The problem is a comparative law analysis. In the United States, as I said clearly, in 1832, the United States Supreme Court recognized that tribes have sovereignty. Only recently in the Williams case has the Supreme Court of Canada recognized that Indigenous peoples have the right to self-government and the right of their own lands. We are going to see more and more of these Williams-like decisions through the courts or accepted as a means of self-government.
This is the rub: To get trade, for a Canadian First Nation to trade with another American tribe, there is a huge difference between the American tribe’s ability, which is clearly determined as sovereign by their domestic courts, and Canada’s, which has not yet accepted that fully. To provide legislation that says First Nations in Canada have the right of Indigenous trade with other tribes, that gives them the opportunity to trade freely with other tribes in United States or around the world.
Senator Ringuette: I reiterate that I have no knowledge of Canadian legislation that disallows or discourages inter-tribe trading nationally or internationally. Thank you very much for your answer.
Mr. Garnons-Williams: I would refer you as well to a Supreme Court of Canada case that will be relied on, unfortunately, the case of Mitchell, and I’ll be happy to provide that as well.
Senator Day: I would like to explore your concept of the economic free trade zone. Would that be restricted to Indigenous peoples’ lands, reserves, or would it be Indigenous peoples in a particular region on or off reserves?
Mr. Garnons-Williams: The low-hanging fruit is the easiest way to go, and that is to look at federal reserves and the Indian Act and tweak the Indian Act so that federal reserves, which are solely federal jurisdiction, can be, if the chief and council of the tribe so wanted, intertribal trade zones. There are some that are naturally suited for that geographically, for example, blessed by being closely located to the border and to major cities. Others, because they are geographically isolated, could use more creative means of intertribal commerce.
Senator Day: On other occasions, we have had Indigenous businesspeople from Western Canada, but they are participating in the economy generally as opposed to looking for special economic free trade zones and other special free trade arrangements.
We’ve got two sets of negotiations going on, one a little hotter than the other. NAFTA may end up being a Canada-U.S. discussion again, and then there is the interprovincial trade mentioned by my colleague. It’s easier to trade internationally than it is to trade nationally in Canada now.
Who is putting forward your point of view and the point of view of the Indigenous peoples and your aspirations? You are not at the table, but are there discussions with the negotiators for the various countries?
Mr. Garnons-Williams: Yes. When Global Affairs decided to go ahead with the progressive trade agenda, an Indigenous trade chapter was one of those things they wanted to go ahead on. Through a collaborative, consultative process, over 50 rights holders, stakeholders and treaty holders were involved over a seven-month period in creating the Indigenous trade chapter. The voices of those rights holders, stakeholders and treaty holders collaborated into the development of Indigenous trade chapter.
Senator Day: Thank you.
The Chair: Sir, I have one question for you that I’m hoping can bring some focus to my thinking in respect of what you have offered today. What this committee is mandated with currently is basically to ensure that Canada remains competitive in North America. We want to ensure that Canada remains competitive in North America. How can you and your organization assist if that would be our goal?
Mr. Garnons-Williams: To assist Canada in remaining competitive, my wheelhouse or bailiwick is that of Indigenous economic development, so looking strictly at Indigenous economic development, how do we keep Canadian Indigenous people competitive? How do we help them become world traders? How do we help them become successful?
Again, I refer you to my submissions concerning Dr. Stephen Cornell, and he studied, through the Harvard project on economic development, all the opportunities, ideas and policy positions provided for Indigenous economic development. He concludes that the most powerful argument for economic development is tribal sovereignty to help Indigenous peoples become sovereign nations within the fabric of Canada.
Nothing else has provided a premise to set the political conditions for economic development. Nothing else has produced success stories and broken cycles of dependence on the federal system in the way that sovereignty, backed by capable tribal institutions, has done. Providing the sovereign tools of First Nations —
The Chair: I understand. Thank you, sir.
If senators have no other questions, I’d like to thank you very much for presenting to us today and for the obvious work that you are doing on behalf of this very important initiative that you are undertaking.
Senators, as you know, in terms of the competitive issue we are looking at, it was our view that we needed to have an Indigenous panel to understand these issues. Senators need to understand that we had extended an invitation to the Canadian Council for Aboriginal Business as well as the National Aboriginal Economic Development Board, in addition to the witness we have heard today. Unfortunately, both of those organizations were unable to be with us. I just wanted senators to have that context.
Honourable senators, Mr. Mercury, Partner and Vice Chair from Bennett Jones, who was going to join us by video conference from Calgary, unfortunately has had a family issue this morning so he will not be with us, but we will arrange to hear from him early in the fall.
We will now hear from Sara P. Sandford, principal of the law firm Garvey Schubert Barer. She is in Seattle.
Ms. Sandford, please begin with your opening remarks, and then senators will have questions for you. Thank you and welcome.
Sara P. Sandford, Principal, Garvey Schubert Barer, P.C.: Good morning, senators. It is my honour and privilege to appear before you today.
I understand our topic is new and emerging issues for Canadian importers and exporters in North America and global markets. I have been invited to speak as a U.S. lawyer who frequently works with U.S. clients entering the Canadian market. I offer my comments from that perspective this morning.
Although the discussion of potential changes to NAFTA was probably on your minds as you embarked on this review in January of 2018, I expect that the developments of this past week are now forefront in your minds, as they are in the minds of many of us in the United States who deal with cross-border issues both from a legal and business perspective.
As a U.S. citizen and attorney, I have long been of the view that free trade should be our collective global aim. That is, in part, due to the reality that technological changes are driving globalization at a faster and faster pace.
Compared to past decades, citizens in developing nations can much more easily see what they are missing that citizens of developed nations enjoy. We’ve watched the rise and expansion of violent movements in many countries, in part from this disparity. It is coupled often with deep resentment for the United States — a country that, at least as a televised image, epitomizes wealth and comfort, often seen as having come at the expense of others.
In contrast, Canada’s generosity and openness to those less fortunate, even as a strong ally of the United States, has left Canada in a position of far greater regard, in my view, amongst citizens of the world. This is true even if in reality the United States standards of living may be much lower than in some other developed nations.
Although this observation may be a gross oversimplification of a much more complex reality, and although my aim is not to be political in speaking with you today, I believe there is an economic imperative, as well as a social imperative, to increase access to world markets for all. We must have greater equality to diminish war, strife and violence globally. I state this view primarily so that you will know the perspective from which I speak today.
I also suspect that I may not have much new and emerging to mention to you that you have not already considered, but I nevertheless, with the hope of being of some small benefit, provide some brief thoughts about themes that clients have raised with me as we discuss cross-border trade issues.
The first theme I would like to mention is harmonization. Almost all clients get frustrated with cross-border transactions because of the added complexity of complying with multiple layers of legal requirements. As trade volume increases, this becomes even more challenging. Moreover, in countries like Canada and the United States, with multiple states, provinces and territories, it is particularly challenging for new investors to understand the array of legal requirements to which they are subject.
The more Canada can harmonize requirements both across its provinces and territories and also between Canada’s laws and those of other countries, the more efficiently and effectively companies can operate. One such example where harmonization could be helpful is in inspection points for agriculture. As I understand it, Canadian agricultural officers, the CFIA, conduct inspection of plants at final destination. In contrast, the U.S. inspectors, the U.S. Department of Agriculture, conduct their inspections at border points of entry. This can lead to issues with the way plants are packed and therefore potentially impossible to inspect at the appropriate location, sometimes resulting in plants being rejected at the border of the United States.
Another example is import of bamboo canes from China. Canada allows the fumigation of bamboo to occur in China and to be accompanied by a certificate for use into Canada. In the U.S., they want fumigation to be done once the shipment reaches a U.S. port. As a result, the U.S. will not allow plants from Canada to enter the country if there are any bamboo canes present without added fumigation.
The second issue, concern or topic I might raise is technological risk. The vulnerability of whole segments of our countries’ economies due to technological risk and the threat of cybercrime have both triggered protectionist measures but also made the average citizen sensitive to protection of their personally identifiable information. The growing interest and struggle to comply with requirements from Europe’s General Data Protection Regulation, along with Canada’s Privacy Act and Personal Information Protection and Electronic Documents Act, are two examples of regulations that have been serious concerns for many businesses over recent years. Yesterday in the news, for example, I heard that some corporations have spent over US$10 million merely to comply with GDPR. This is not an insignificant challenge that companies are facing now.
The third theme is predictability. The times we see companies most hurt in cross-border business matters is when they are hit by a surprise change in circumstances, which is often triggered by changes in the law. As technology has pushed the pace of change, this has affected the time horizon for companies’ planning efforts. Everything has to be short term to assure success.
As Canada’s Senate, I encourage you to consider the importance of predictability and information sharing. The more you are able to offer in both respects, the more investment in Canada will be successful and prevalent.
The uncertainties surrounding the U.S.-Canada relations right now, and in particular how the elimination of NAFTA and a tariff war might affect cross-border trade and business activity, is already causing a chilling effect of new activity. Clients are taking a “decide to wait and see attitude” in such turmoil, and economic activity slows as a result.
Fourth, I would like to mention the theme of fairness. When I learned I would have the opportunity to speak with you today, I consulted with some of my clients about what they would like me to be sure to mention. Two asked me to encourage you to seriously question all tariffs, requesting that in each instance you question whether the reality that duties reduce business is really offset by the domestic industries being protected by them. This point was raised by clients in the dairy, lumber, clothing and footwear industries, to name a few. The original rationale for some duties may no longer justify the duties still being imposed or threatened, and ofttimes the harmed are not the group originally intended to bear the cost. It is passed through to others.
Another aspect of fairness that was raised with me was by a long-time resident of the United States from a third country who is present in the U.S. on a non-immigrant visa. His country of origin is a country with strong, stable ties to Canada as well. He asked me why the Nexus system isn’t available to him too. I realize, of course, that it has to do with the parties to Canada’s treaties, but the point is that I urge you to continue to find ways to offer similarly advantageous options to the citizens of other countries who are friends to Canada.
Likewise, some of the efforts in NAFTA and the U.S.-Canada tax treaty result in unfair tax advantages to certain types of entities. In particular, our limited liability companies in the U.S. cannot take advantage of tax treaty benefits when investing in Canadian unlimited liability corporations, which at times has discouraged investment in Canada of my clients. Please consider making a change that would give these two commonly used forms of entities the same opportunity to benefit from the tax treaty.
I want to thank you for the opportunity to speak with you today. I believe in the U.S.-Canada relationship and believe it will withstand the current challenges. My home, as mentioned a moment ago, is roughly two hours from Canada’s border, and I live north of roughly two thirds of Canadians. I am more culturally, socially, economically and politically akin to many of my Canadian friends than I am with many of my American friends in far-flung parts of the United States. Our interests and fates are aligned in so many ways. If I can play even a small part in strengthening our ties today, it is truly my honour. Thank you.
The Chair: Thank you very much, Ms. Sandford. That was helpful to us.
Senator Dagenais: Thank you very much to our guest. You talked a lot about NAFTA. I will repeat my question. How would you see a bilateral NAFTA then, that is, between Canada and the United States, without Mexico?
Ms. Sandford: I certainly think it’s possible that a bilateral agreement, if it improved and strengthened free trade, is not a bad option. It seems to me that CAFTA was effective for a period of time, and the inclusion of Mexico just creates even broader markets. I would hope that the NAFTA structure could stay in place, although I think any agreements that will allow for the free flow of trade are a positive development.
Senator Wetston: Thank you for your testimony, information, evidence — whatever we call it today. I appreciate you sharing it with us.
I want to pursue the issue of tariffs, competition and free trade. You obviously have strong views about free trade and potentially reducing tariff barriers, which I think is positive for competition and potentially for the development of markets. Can you elaborate a bit more? For example, you indicated that clients have talked to you about dairy, footwear and clothing. With the dairy industry, we have marketing boards; with footwear and clothing, we don’t. Can you compare that from your own perspective in assessing the advice you give to your clients doing business in Canada?
Ms. Sandford: I don’t know if I can add much depth to my comment about dairy in particular. The comments I receive from clients really relate to discussions when they are facing challenges. It is always problem solving more than the business side of the issue.
Fundamentally, recognizing there is legitimate interest for many countries to try to preserve certain industries, those same tools are used in ways that sometimes far exceed what is necessary for that purpose and really impede free flow of goods in a way that is detrimental, ultimately, to consumers and to the participants or to my clients.
Senator Wetston: I am always concerned about who bears the costs. You did mention that issue. Once again, I think you know of what I speak. Can you elaborate on your thought about that? I am not really talking about issues of externalities and other such things but more the direct bearing of cost to those who might not have anticipated that they would be bearing that cost. Can you elaborate, please?
Ms. Sandford: I can give you one simple example from the other day that wasn’t a client matter and, therefore, I feel free to speak about it.
A gentleman who makes metal-coated products in the United States was being interviewed and was talking about the challenge with the tariffs that the U.S. has imposed on steel and aluminum for his business and how he is worried about having to have layoffs at his company. He understands that he is now supposed to source metals through domestic providers. That is what tariffs are intended to encourage him to do, but the reality is that U.S. manufacturers don’t make some of the specialized materials he needs and he will continue to have to buy them and pay the tariffs to use those materials, which means ultimately his production will get more expensive or he will be producing less of it. It’s not as if that is either helping the steel and aluminum producers here in the United States nor helping the consumer ultimately to get more competitively priced products.
The Chair: I have a question for you, Ms. Sandford, if I may. You spoke about, in your practice, seeing a current chill over investment decisions, the U.S. into Canada. Did I understand you to say that correctly?
Ms. Sandford: I said it appears to be having that effect. I wouldn’t want to speak about specific clients on current affairs because I have an attorney/client privilege obligation, but what I have observed over the years is that when things become uncertain, as they are right now, the thing I hear from clients regularly is that because they don’t know what will happen, they will wait and see what happens rather than taking the risk. I certainly anticipate and could generalize in saying that I expect there are similar “wait and see” attitudes going on now. As I said, I would feel restricted in speaking concretely about clients’ affairs at the moment.
The Chair: No. That is very helpful.
Thank you very much, Ms. Sandford. All the senators undoubtedly join me in thanking you very much for the work that you do because you are helping Canada. Your presentation this morning was also helpful to us. Thank you very much. We appreciate it.
Ms. Sandford: Thank you.
(The committee continued in camera.)