Canada--United States--Mexico Agreement Implementation Bill
Second Reading--Debate
March 13, 2020
Moved second reading of Bill C-4, An Act to implement the Agreement between Canada, the United States of America and the United Mexican States.
He said: Honourable senators, it is my great pleasure to rise today to speak as the sponsor of Bill C-4, An Act to implement the Agreement between Canada, the United States of America and the United Mexican States.
Like all of you, colleagues, I did not expect this to happen today, but we do, of course, find ourselves in a global public health crisis. In fact, I had a 45-minute speech ready to go, but this one will be 5 or 6 minutes.
The COVID-19 pandemic demands that we take extraordinary measures to keep ourselves and all members of the Senate family safe. This is why we have been recalled this morning to deal with urgent government business.
Otherwise known in Canada as CUSMA, l’ACEUM en français, the new NAFTA, USMCA in the United States and T‑MEC in Mexico, this tri-national agreement is essentially a modernized version of the original treaty of 1994. It is NAFTA for the 21st century.
Regardless of which side of the political fence you sit — or squarely on top of it, as I sometimes do — this agreement is a win for Canada and for our national economy, our industry, our agriculture and agri-food sector and our workers. All Canadians win. Once implemented, it will not only protect Canadian jobs but will help to prepare us for the jobs of the future. It will also ensure long-term stability, predictability and, most importantly, growth in the North American market.
We should not just be happy with the end result of more than a year of difficult negotiations — with at least one especially challenging opponent. We should also be happy with the team that brought us to this point. Canada’s negotiating team — and it was indeed a team — led by then Minister of Foreign Affairs, Chrystia Freeland, and our Chief Trade Negotiator, Steve Verheul, was comprised of some of Canada’s, and the world’s, best and brightest public servants. I am honoured to have worked with many of them in my previous career. All Canadians should feel very proud of the people who represent us and advocate for our interests internationally.
As I said, this is a much-shortened version of my planned second reading speech. I just want to put that on the record. My original plan was to go back to 1854 and the original reciprocity agreement, taking us through to the 1911 reciprocity election and the like. I am sparing you that, and I can sense your disappointment.
I had also wished to offer some remarks about the bilateral relationship between Canada and Mexico, as that important bond is often overshadowed by the one we share with the United States.
Canada’s relationship with Mexico has blossomed from us seeing Mexico as a lovely winter tourism destination to a key trading partner since the original NAFTA was enacted in 1994. It was our first formal deal with Mexico, and since then, our relationship has flourished and will continue to do so.
This agreement — signed in Mexico City on December 10, 2019 — bolsters the original deal of 1994 by modernizing key chapters, some of which certainly warranted review. Renegotiating NAFTA was definitely not something Canada or Mexico wanted, although there was a general recognition that some changes should be made. After all, in the interval, we had entered the digital age, our global supply chains had multiplied significantly and our environment had become more threatened. We were pushed into negotiations about a trade deal that has served Canada and North America very well, by any measure, for more than 25 years. The choice with which we were presented seemed to be a better NAFTA or no NAFTA at all. The question was on whose terms.
We chose the latter and came away with an agreement that maintains all the most important elements of NAFTA for our country while improving on a number of them.
More than a year of challenging negotiations, and uncertainty for businesses and workers across the continent, finally led to a good deal, signed in November 2018. Then came more than a year of delay on ratification because Congressional Democrats wanted amendments on labour standards and environmental policies. The changes make the updated agreement signed last December that much stronger, but the extended delay led to further uncertainty and worry. Many were especially, and justly, concerned given political events in the United States.
All of these challenges — all ably handled by our team — made finally getting to this point that much more satisfying, though I imagine our negotiators would have felt plenty satisfied had this been wrapped up without these great challenges. Our negotiating team did a superb job in difficult circumstances. Its members certainly deserve our thanks and respect, not just for getting Canadians a strong deal, but for their dedicated service to our country.
The government’s NAFTA Council also deserves credit for its work. It included a diverse selection of prominent Canadians of all backgrounds and political stripes, including, among others, Rona Ambrose, the former interim leader of the Conservative Party; Perry Bellegarde, the National Chief of the Assembly of First Nations; James Moore, a former Conservative MP and minister; and Hassan Yussuff, President of the Canadian Labour Congress since 2014.
The hard work of our entire team led to a deal that has been strongly endorsed by important groups, including the Council of the Federation, comprised of Canada’s 13 provincial and territorial premiers, a crucial base of support; the Canadian Chamber of Commerce; and the Federation of Canadian Municipalities. All have urged quick ratification to not only end years of uncertainty for the Canadian business community, industry and workers, but also so that Canadians may finally benefit from a modern, progressive trade agreement.
As a final point, I wish to thank the members and dedicated staff of our very temporary — much more temporary than I had thought — Standing Committee on Foreign Affairs and International Trade, as well as the witnesses who appeared over our three meetings this past week.
Honourable senators, I submit that this is a good deal for Canada and for all Canadians — indeed for all North Americans — that will ensure stable, reliable and predictable trading partnerships with our continental neighbours for years to come.
The new NAFTA is an agreement for which you can proudly vote in favour, and I urge you all to do so, colleagues.
Honourable senators, I would like to bring forward three ideas and points that we should be aware of as we work through the new agreement with the United States and Mexico once it is ratified.
The first point is that Canada is the fourth-largest aluminum producer in the world, providing just over half of all aluminum consumed in the United States. Eight of the nine Canadian smelters are in Quebec. I am speaking as a Quebec representative.
CUSMA excludes a definition for aluminum rules of origin for automobiles. This means that producers in Mexico will still have access to cheaper and poorer-quality aluminum from Asian markets such as China. Of the steel used in the production of automobiles in North America, 70% must be melted and poured in North America, but those rules don’t apply to aluminum, meaning that Chinese aluminum can be recycled in Mexico and used in the production process. This removes any competitive advantage that Canadian aluminum producers would have over Asian aluminum.
This is a big blow for Quebec, but it’s something that has to be managed as we move forward. There are always good things and bad things in any negotiation. This negotiation, at the end of the day, is positive for our country, but there are elements that we should be conscious of and that we have to manage because it’s important that we keep our competitive advantage.
The second area is dairy. While Canada maintained control over the supply-managed dairy sector, it did offer concessions in the form of access to the Canadian dairy market at 3.6%. With the other deals that we’ve been involved with — CPTPP in Asia and CETA in Europe — how much market share are we giving up? Is it 3.6%? Is it 5%? Is it 7%? Is it 10%?
There are two classifications in the industry. Milk classes 6 and 7 have very high prices and benefits to the economy. Classes 6 and 7 are domestic pricing classes that govern milk ingredients, such as skim milk powder and milk proteins. These concessions expand the American dairy industry’s access to the Canadian market and allow it to reduce the domestic surpluses that it has built up over the years.
Steve Verheul, Canada’s chief negotiator, said they do have surpluses in the dairy sector. They consistently have a surplus problem. They have gone so far as to store skim milk powder — get this — in caves in Pennsylvania because they don’t know what to do with it. This was one of the more difficult aspects of the negotiations on those issues.
American dairy producers use a hormone called recombinant bovine somatotropin, which is injected into cows to boost milk production. It is banned for use in Canada, so any product coming into our country would have hormones in it that we do not allow. Again, this is something to monitor and ensure that we manage as we go forward. This is not a criticism. When you are dealing with a big player — and these guys have the biggest economy in the world — we have to be agile and move as best we can to secure a deal. However, we have to manage things going forward. So that is dairy.
Third is the economic impact assessment of the deal. The government modelled its assessment of the new trade agreement against the prospect of no free trade agreement. They made their assessment and it seemed to be one-sided and favourable. The government claims that CUSMA preserves GDP gains of $6.8 billion, or 0.249%, as well as almost 38,000 jobs, or 0.160% of jobs would have been lost if the United States withdrew from NAFTA. Overall, after CUSMA is implemented, Global Affairs is projecting Canadian exports into the U.S. to be valued at $16.9 billion, and imports from the United States are projected to be valued at $20.4 billion. There is a discrepancy that we will have to manage.
The C.D. Howe Institute modelled CUSMA against the current NAFTA agreement, and they concluded that Canada’s GDP is projected to shrink by 0.4%, and the country is set to lose $10 billion in economic welfare.
Again, these are the challenges and potential headwinds that we will have to manage as a smaller partner. Our agility and ability to influence people, once the deal is done, will be very important in terms of how we manage the new deal. This is good for our country, but, let’s be honest, there are challenges within that to make it even better as we go forward. The agility of our negotiators and the people who will continue to talk with the United States after the implementation will be paramount to the long-term success.
These are just three points. There are a few more, but we don’t have a lot of time and we need to move forward.