Standing Committee on International Trade
Thursday, May 18, 2017
[Recorded by Electronic Apparatus]
Thank you, Mr. Chair.
My remarks will cover the upcoming trade negotiations, the Canada-Mexico relationship, and the need for middle powers like Canada and Mexico to stand up in support of the rules-based, liberal international system.
With regard to the North American accord, we need a new North American accord. NAFTA worked to the benefit of all three parties—Canada, U.S.A., and Mexico—but it is time to bring the NAFTA negotiated before the digital age and the arrival of e-commerce into the 21st century.
The trans-Pacific partnership would have largely accomplished this, but the Trump administration has withdrawn from this Obama administration initiative, so we need to adjust to the current circumstances. A new agreement would include and set the standards in emerging areas like e-commerce and the growing digital trade. We can also make improvements to integrate into the agreement standards on labour and the environment.
We need to address labour mobility, including the mutual recognition of accreditation. Then we can make maximum use of the talent pool that North America enjoys, but that we need to harness, to make us the most competitive region in the world. This means provision for trade adjustment so that those who are displaced by trade decisions or by efficiency improvements in automation, robotics, and artificial intelligence are guaranteed the opportunity to improve their skills or have training in another area. In doing so, we have the opportunity to create, just as NAFTA did in its time, the new model for trade agreements: a realistic but progressive trade agreement that gives a helping hand to those who are displaced or who lose out.
A trilateral trade negotiation leading to a new North American economic accord would respect the sovereignties of the three nations. It would be a very different model from that of the European Union with its centralized and heavy bureaucratic oversight. Rather, we would continue with the current approach of ad hoc working groups to ensure and evergreen the agreement to allow for continuous improvement in areas like transportation.
In the coming weeks, we’ll hear a lot of noise and nonsense about Canada and Mexico out of Washington. We need to distinguish between what is real and what is theatre. To paraphrase the great Gretzky, we need to go “where the puck is going”, and keep our eyes on the net and on the goals that we want and can score.
With regard to Canada-Mexico, NAFTA transformed the Canada-Mexico relationship from one of cordial distance based on a shared neighbour into that of family. Today, there is an annual, increasing flow of two million Canadians to Mexico, especially during the winter months. Canadian investment, mining, manufacturing, and banking have increased manyfold, while trade has more than tripled—even faster than with our traditional partners in Europe and Japan. Today, Mexico is our third-largest trading partner, but it’s not reciprocal. Mexican investment in Canada never took. There is one notable exception: Grupo Bimbo’s acquisition of Canada Bread in 2014. It now operates 17 bakeries and employs over 4,000 across Canada.
The imposition of the visa in 2009 affected more than half of Mexican travel to Canada, effectively chilling tourism, study, and investment. The lifting of the visa this past December and its replacement with the electronic travel authorization has resulted in a significant increase in Mexican travel to Canada. We are already reaping rewards and more tourists, but we should be doing more in terms of tourism promotion. We expect more students, especially given President Trump’s comments about building a wall on the Mexican border. We should encourage recruitment visits here by middle and high schools, university and vocational schools, and provincial education ministers.
Beyond students, we could do a lot more in joint research projects in manufacturing and agri-food. In the longer term, ease of entry into Canada would also generate more investment, but we need to target Mexican investment that matches Canada. Most promising are the automotive and automotive parts sector and the energy and energy services sector.
Goldman Sachs estimates that by 2050, Mexico will overtake China in terms of per capita GDP. There is already a middle class of 40 million in Mexico. Mexico is our springboard into the potential of the Americas. We already have preferred observer status in the Pacific Alliance that includes Mexico, Peru, Colombia, and Chile. In the short-term, before the end of the year, Prime Minister Trudeau should lead a “Team Canada” mission with premiers, business leaders, and university presidents to Mexico to deepen Canada-Mexico relations and to underline our solidarity with Mexico in negotiating a new North American accord.
The picture of solidarity, Mr. Trudeau with President Peña Nieto in Mexico City, would be appreciated in Mexico. Its significance would also be recognized in the United States, and it would give encouragement to our many allies in the Congress, the states, the business community, and even within the Trump administration.
A vigorous partnership with Mexico is already working to our mutual benefit, but we still have to realize the full potential of the Canada-Mexico relationship.
In terms of worry about middle powers, we live in a world of disarray. The rules-based, liberal international system and supporting architecture that Canadians helped engineer in the period after the Second World War has kept the peace and created the conditions for extraordinary growth and prosperity. Today, it is under strain and in need of reform and rejuvenation, and the middle powers need to step up. China and Russia would like to see a return to spheres of influence and a concert of great powers. This would not serve Canadian or Mexican interests.
The United States, which guaranteed this system and built it on its military might, wants more burden-sharing by like-minded states. This we must do, because the hard truth is that the U.S. carries and sustains the system under which Canadians and Mexicans have thrived. We need to stand up with like-minded middle powers such as Mexico and reaffirm our support and commitment to the rules-based, liberal international system. A new, progressive approach to sustainable trade and labour mobility in partnership with Mexico and other democratic middle powers is the place to begin the necessary reform and rejuvenation.
Thank you, Mr. Chair.