House Standing Committee on International Trade
feat. Colin Robertson
February 20, 2020
My remarks draw from my previous experience as a foreign service officer serving on the teams that negotiated the Canada-US Free Trade Agreement and the NAFTA, my postings in New York, as Consul General in Los Angeles and as first Head of the Advocacy Secretariat at our Washington Embassy and, more recently, as a member of the Trade Advisory Committee to the Deputy Minister of International Trade.
I encourage members to pass the legislation implementing the Canada, US, Mexico agreement. . Trade agreements are like riding a bicycle: keep cycling and when you hit bumps make adjustments as necessary. But keep cycling.
CUSMA is the best possible agreement under the circumstances. Not perfect, but for Canada it both preserves access to our largest market and preserves the North American platform incorporating Mexico.
The Canada-Mexico story gets scant attention but it's the hidden treasure of the NAFTA story. Mexico is now our third largest trading partner and, as we witnessed, a valuable partner and ally in recent trade negotiations with the Trump administrations – not just the new NAFTA but in reversing US protectionism through country-of-origin labeling.
The new agreement is not perfect. It is freer trade not free trade. But consider where we started. President Trump damned it as the worst trade deal ever negotiated. Commerce Secretary Wilbur Ross said it was for Mexico and Canada to give and the USA to get.
The Trump Administration thought they had us over a barrel because we – Mexico and Canada – were much more dependent on the US than they are on us. We each account for close to 18 percent of US exports, while for us the US takes almost 75 percent of our exports (for Mexico it is about 80 percent).Trade generates two-thirds of our GDP making us the twelfth largest export economy in the world. For the USA trade represents just 27 percent of its GDP. Mr. Trump was well aware of these asymmetries.
Despite these disadvantages, we updated the NAFTA with new chapters on digital trade, intellectual property, labour and the environment while keeping dispute settlement and supply management while drowning investor-state provisions. The unjust steel and aluminium tariffs are gone. Our auto trade is managed trade, a bit like that of softwood lumber, but we should be able to manage this to support jobs and more investment.
Thanks to the Democrats in the House of Representatives, our gives on patent protection for biologic drugs, that would have raised health care costs for provinces, were rolled back. The Democrats also secured better enforcement on environmental and labour provisions.
In short, we have a high-quality North American trade agreement, something we sought to obtain through the Trans Pacific Partnership.
Instead we now have an up-to-date CUSMA with the advantage over the US in trans-Pacific and trans-Atlantic markets through CPTPP and CETA.
This leads me to my recommendations:
First, CUSMA is the result of an all-of-Canada effort involving the prime minister, ministers, premiers, parliamentarians and legislators, business and labour leaders all working their American counterparts with complementary messages and purpose.
This work must continue and become a permanent campaign. American protectionism is older than the Republic and it will continue no matter who is president.
Trade diversification yes, but we cannot change geography. And that geogrpphy that gives us access to the biggest and most innovative market in the world.
Working Capitol Hill daily from our Embassy and through my experience at our consulates I learned that just as all politics is local so is all trade. While we can’t vote or make donations to campaigns, we can illustrate the jobs that Canadian trade and investment create by district and by state. We need to keep this data current.
Importantly, you as parliamentarians need to keep reminding Americans of these facts and do this through regular meetings with US legislators local, state and federal. There are lots of opportunities like the regional conferences of state and national legislators, important forums like PNWER and NASCO as well as the sectoral industry and farm group meetings.
You need to be there to develop relationships and to make the case for Canada. Use your travel points to go to Washington and I encourage you to adjust the rules for travel throughout the states. As you will appreciate nothing beats a meeting on your home turf.
Second, with the trade agreement in place there is still unfinished business when it comes to regulation and infrastructure.
The thicket of national, provincial and local regulations and standards need to be harmonized or made complementary. CUSMA helps. But we are also working through separate initiatives, launched by the Harper government and Obama administration on regulatory cooperation and Beyond-the-Border. They continue under the Truea and Trump governments, although after the initial burst of enthusiasm they are now buried wtthin our bureaucracies.
Progress requires political oversight by this committee: hearings to identify the roadblocks, raise consciousness and keep governments’ noses to the grindstone. Your constituents will thank you.
People and trade pass through our border points as well as roads, rail, hydro and pipe lines, bridges and tunnels, airports and train stations. They need improvement. Too often they are chokepoints that hamper passage and productivity. Canada has an infrastructure program but is it moving fast enough?
This should be an area of close collaboration by all levels of government. Again, parliamentary oversight on progress is essential. The US administration and Congress plan a 2 trillion-dollar infrastructure program. We need to ensure it is complementary to our efforts and leave it to governors and premiers to work out a reciprocal procurement agreement as we did in 2010 in the wake of the Obama infrastructure stimulus program.
Harvard’s Belfer Center points out, North America is the next great emerging market possessing abundant energy, a skilled workforce, technology and a big market. But we need infrastructure.
Meanwhile, we enjoy first mover advantage over the USA with the EU and CPTPP nations but only if seize these opportunities. Our competitiveness depends on our ability to get goods quickly to market whether in North America or across our oceans.
Third, we need to know more about North America, especially the USA. Again, trade diversification is a laudable goal, but for Canada, when it comes to trade and security, it will always the USA and then the rest.
Anyone in business will tell you market intelligence is essential, whether you are buying or selling. How many of you, for example, can tell your constituents how many of their jobs depend on US investment and trade? We can do it for the US and the Business Council of Canada has created an interactive map that can pinpoint jobs by congressional district and state. Why don’t we have one for Canadian constituencies? And why not include TPP and CETA?
And given our propinquity and innate understanding of the USA, why aren’t turning this to advantage? Ask yourself: How many serious centers for the study of the USA are there in Canada? How many Canada research chairs focus on the USA and our trade? You will be disappointed in the answer.
I encourage you – as parliamentarians – to pass CUSMA. I encourage you to press for investments that serve our national interest.
In conclusion, we always need to keep in mind that Canada’s influence in the world is measured to a large extent by our understanding of the US. By using our knowledge and relationships with Americans, our ability to leverage influence in Washington and state capitols makes us a more desirable partner with the rest of the world that also has to do business with our complicated neighbour.