Bill C-4 (Historical)

Canada–United States–Mexico Agreement Implementation Act

An Act to implement the Agreement between Canada, the United States of America and the United Mexican States

This enactment implements the Agreement between Canada, the United States of America and the United Mexican States, done at Buenos Aires on November 30, 2018, as amended by the Protocol of Amendment to that Agreement, done at Mexico City on December 10, 2019.
The general provisions of the enactment set out rules of interpretation and specify that no recourse is to be taken on the basis of sections 9 to 20 or any order made under those sections, or on the basis of the provisions of the Agreement, without the consent of the Attorney General of Canada.
Part 1 approves the Agreement, provides for the payment by Canada of its share of the expenditures associated with the operation of the institutional and administrative aspects of the Agreement and gives the Governor in Council the power to make orders in accordance with the Agreement.
Part 2 amends certain Acts to bring them into conformity with Canada’s obligations under the Agreement.
Part 3 contains the coming into force provisions.

Canada-United States-Mexico Agreement Implementation Act

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the President of the Queen’s Privy Council for Canada and to the Leader of the Government in the House of Commons]

Mr. Speaker, Canadians understand the importance of trade agreements. With this administration we have seen many trade agreements signed off. What makes this one more significant than the previous 30 trade agreements is that this one is with our greatest trading partner.

We are very much dependent on trade. There is no country more than the U.S. with which we need to get a deal finalized. It is really encouraging to see the type of support that we are getting. Yesterday when we had votes, we had the New Democrats and even the Green Party recognizing the value of this agreement.

Is there anything in the old agreement that the member across the way believes was lost by not being incorporated into the new agreement? Would he not agree that this is indeed a better agreement than the previous one?

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Mr. Speaker, the problem with this agreement is that there are still more unknowns, especially on the standards. The types of things that we are going to be importing into Canada now, because of the new agreement, still require some standards to be figured out.

In my previous life as a farm leader, I sat on the board of the Canadian Standards Association. There, on the ag-technical committee, we looked at different standards that were required for couplings for hydraulics, but also roll bars for tractors, and the metallurgy required for a manufacturer to import those into Canada.

Interestingly enough, if a manufacturer in a warm climate manufactures a tractor and tries to import it into Canada, there are certain standards that have to be met in Canada before they can import it, or it is considered a grey market tractor. If such a tractor is unknowingly brought into Canada, it becomes the Canadian owner's responsibility and a liability to that farm worker. It is totally unacceptable for the Canadian government to be standing to the side and letting that happen every day.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Mr. Speaker, it was not this government but, I guess, the United States Democrats who pulled out the chapter 11 clause in the previous NAFTA from this new agreement, which is something we have been very happy to see happen. The investor-state provisions threatened our sovereignty. It is something we saw the U.S. Democrats lead on. We hope that in future trade deals the Liberal government will also make sure that the investor-state provisions are no longer something it would support.

Does my colleague support the decision, which the Liberal government is now supporting because the United States is leading on it, and would he also like to see this provision and clause be removed from future trade deals to protect Canadian sovereignty and the environment?

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Mr. Speaker, I would like to see something, plain and simple. We have not seen enough details on many impacts. As the member can imagine, these agreements are very complex, and one decision impacts another. Therefore, without seeing the documents, I cannot honestly answer that question.

[John Barlow, Conservative, Foothills, AB]

Mr. Speaker, it is a pleasure to have the opinion of my colleague from Manitoba, with his experience in agriculture, on the impact that this agreement will have on agriculture.

Does my colleague know of another trade deal that a Canadian government has ever signed that puts a cap on an agricultural commodity and would stifle future growth for that commodity?

This has happened in the dairy sector through the new NAFTA, which puts a cap on Canadian dairy farmers and processors to be able to expand their market when it comes to certain types of protein and skim milk powder.

Can my colleague name any other trade agreement that a Canadian government has signed that has put a cap on future growth in a Canadian agricultural commodity?

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Mr. Speaker, not offhand, and I think that is the game-changer in all of this. It limits our ability to go out and develop our good quality food products to other nations. Wherever the U.S. is, we cannot go, and that is the biggest problem with this agreement.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Mr. Speaker, before I begin, I will be sharing my time with the member for Kitchener South—Hespeler.

I represent Surrey, and Surrey Centre in particular. It is a port city and major logistics centre for goods, particularly trade, and home to some of the most amazing produce, berries, dairy and poultry in the country. I am pleased to stand today to talk about the Government of Canada's unwavering support for supply management in our dairy, egg and poultry industries in the context of the new Canada-U.S.-Mexico agreement and our other international trade deals.

These industries are pivotal. I have met many hard-working Canadians in this sector, whether it be Donia Farms, which has been continuously family-run since 1955 and produces high-quality grass-fed milk, or Gurpreet Arneja and Vineet Taneja, who had humble beginnings and launched Nanak Foods in Surrey, a large specialty dairy processor that now exports Canadian dairy products to over 15 countries around the globe. These are real people who have worked hard. As a new member on the Standing Committee on International Trade, I hope to ensure that our government prioritizes their needs.

Let me begin by stating that the future of supply management in Canada is not in question. Our supply management system is fundamental to the overall success of Canada's agriculture and agri-food industry. Our dairy, poultry and egg farmers provide high-quality, delicious and nutritious food to Canadians at an affordable price.

Combined, the sectors drive a strong economy, with almost $34 billion in sales and tens of thousands of jobs. They are vital to the prosperity of our nation. That is why in our negotiations for the new NAFTA, the CUSMA, the government fought hard to maintain the three pillars of Canada's supply management system: production control, pricing mechanisms and import control.

The same commitment to Canada's supply-managed sector also guided Canada in negotiations for CETA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The new NAFTA, like Canada's other trade agreements, preserves and maintains Canada's supply management system. Canadian dairy farmers will continue to supply the vast majority of the Canadian market. As well, Canada has negotiated reciprocal access to the U.S. dairy market, including tonne-for-tonne access to most dairy products.

We are united in our goal to help the dairy sector innovate and drive the economy for future generations. Across Canada, we are helping dairy producers purchase state-of-the-art equipment to boost productivity and efficiency. Innovation is driving significant growth in chicken and egg production across Canada. Canadian egg producers like to talk about the tale of the three 50s: Over the past 50 years, they have increased their production by 50%, while reducing their environmental footprint by 50%. That is all thanks to innovation.

We continue to roll out investments to support innovation in our supply-managed sectors. Our government has clearly recognized the great value of the supply management system. Canada will continue to defend this system at home and abroad.

Our government has committed to fully and fairly supporting the supply-managed industry. This support will help chart a path forward so our supply-managed farmers can continue to innovate, grow and remain competitive and sustainable for future generations.

In the fall of 2018, the government announced the formation of supply management working groups. These groups were tasked with looking at providing support and helping the industries adjust to recent trade agreements, including the new NAFTA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the CPTPP. The overall goal is to ensure Canada maintains its robust dairy, poultry and egg industries now and in the future.

Together with industry, we have one common goal and that is a strong Canadian supply management system. For our farmers and food processors, the new NAFTA will protect and secure our $30-billion agri-food exports to the United States.

In addition to preserving key aspects of the original NAFTA, the new agreement helps open new market access opportunities in the U.S. market. This agreement provides Canadian exporters with new market access into the U.S. in the form of tariff rate quotas for refined sugar and products containing sugar, as well as certain dairy products, including cheese, cream, milk beverages and butter. It also eliminates U.S. tariffs for whey products and margarine, and provides a more liberal rule of origin for margarine.

As my hon. colleagues well understand, trade is vital to Canada and Canada is a trading nation. Our farmers depend on trade. They export about half the value of their production. That is why the government is seeking to expand market opportunities and promote the interests of Canadian farmers by negotiating new trade agreements and modernizing existing ones. This is why our government has big plans for agriculture trade.

Our exports hit a new record in 2018, but we are not stopping there. We set our sights on $75 billion in agriculture exports by 2025. A 2018 report of the agri-food economic strategy table has challenged us to think even bigger, proposing a target of $85 billion.

In addition to preserving Canada's supply management system, Canada's existing trade agreements play a key role in realizing these export goals.

CETA has provided Canadians with preferential access to the European market since September 2017. Canadian farmers and food processors are already taking advantage of access to the world's single largest market for food. From 2018-2019, Canadian agriculture exports to the European Union increased by 24%.

While it is still too early to measure the full impact of CPTPP since it came into force December 30, 2018, there are early signs of success for Canada's agriculture sector.

For example, Canada's exports of pork to Japan increased by 11% and exports of beef grew by 68% during the first 11 months of 2019, compared to the same period in 2018.

We are advancing Canadian agriculture in international markets, while preserving and protecting our supply managed systems.

I am proud of the federal government's incredible achievements in this regard. We will continue to support and defend our dairy, egg and poultry industries, while ensuring a strong and competitive future for Canada's agriculture and food sector.

With this new agreement, we will be helping Canada's farmers and food processors harvest the benefits of what the Canada-United States-Mexico Agreement has to offer. I urge all hon. members to support this bill.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Mr. Speaker, we have heard a lot of concern, and for good reason, around the chapter 11 provisions that were in the past NAFTA agreement. These are huge concerns, and it affects our sovereignty with respect to the protection of the environment and indigenous rights.

The New Democrats have been calling for it to be removed in any future trade deal. We were glad to see the U.S. Democrats actually pull that out in their side of the negotiations. We wish it had coming from Canada, but we do not even know what Canada put on the table.

In terms of moving forward, can we count on the member for Surrey Centre and his government to ensure that chapter 11 and those sorts of provisions that threaten our sovereignty and the environment will not be included in any future agreements that Canada does? I know Canadians have voiced concerns about that. We have been brought these concerns forward around investor-state provisions that protect corporations instead of people, communities, the environment and our sovereignty.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Mr. Speaker, in fact, if I recall from my days in law, when I studied some of this international trade, chapter 11 has been more helpful for Canadians in most of those cases. The provisions protecting and arbitrating our trade laws between the two nations must be strengthened and protected so companies and the government are protected.

I take my colleague's point very seriously. Canada has now entered into a new arbitration agreement. There are four WTO trade mechanisms with China and others, which is now the envy of many others. The U.S. is left behind. We have been doing better and I urge our ministers to do even better going forward.

[Luc Thériault, Bloc, Montcalm, QC]

Mr. Speaker, as I listened to my colleague's speech, I wondered how he could be so proud of this government's free trade agreements. We all know the government made concessions on supply management that resulted in compensation for the agricultural sector.

How can he be so proud of CUSMA when, just yesterday, a delegation representing Quebec aluminum workers condemned the agreement for damning their sector to die a slow death?

[Randeep Sarai, Liberal, Surrey Centre, BC]

Mr. Speaker, I am very proud. We faced a president in the U.S. who wanted to end supply management. In fact, it was his electoral goal to eliminate supply management to appease his interests in some dairy farming sectors and states. We upheld our end to protect our own supply management systems and gained access for Canadian farmers into the U.S., allowing a very small amount of gain from them.

The alternative option of having no trade agreement and scrapping NAFTA was much worse than what we have now, which is much more robust and healthy for our industry.

As for the aluminum sector, now 70% of the aluminum for the auto sector will come from our country as opposed to what was there before, which was zero protection. Therefore, 70% is a lot more than zero, and I am very proud of our trading team for negotiating that.

[Lloyd Longfield, Liberal, Guelph, ON]

Mr. Speaker, I thank the hon. member for mentioning supply managed sectors in his intervention.

In the last Parliament, I was on the agriculture committee. I come from Guelph and it is a topic that has been discussed there. He talked about the working group, which also included the Dairy Farmers of Canada and the Dairy Processors Association of Canada, that collaborated with the Government of Canada to develop mitigation strategies to protect the supply-managed sector within this agreement. We also have an expert negotiating team that is internationally recognized for its world-leading efforts in negotiating what is best for Canadians.

One thing I have heard is that it is very important for Canadians to know and recognize Canadian products, such as our dairy products, so consumers can make the choice to support our industry.

Could the hon. member comment on how important it is for our industry to have protection in place so we know Canadian products are Canadian products?

[Randeep Sarai, Liberal, Surrey Centre, BC]

Mr. Speaker, it is very vital to have Canadian dairy produce, our own poultry and our own eggs. Our standards are stricter and our farms are better and world class. The products are eaten locally. The GHG emissions used to get that food to our tables is much less.

In fact, in my personal life, I have been advised by my doctor to drink only Canadian milk, grass-fed milk in this case, which is produced very close to home and is much better and healthier. This agreement is the only way our homegrown industries are protected. These industries are handed down from one generation to another. This protection will make it even stronger and we will have a robust industry, which will provide consumers better products and help farmers who produce them.

[Marwan Tabbara, Liberal, Kitchener South—Hespeler, ON]

Mr. Speaker, I want to thank my constituents of Kitchener South—Hespeler for electing me to this place. I also want to thank everyone who volunteered on the campaign, everyone who worked in the constituency office and the strangers who offered me water when I was campaigning. I could not be here without them and all their hard work.

Canada is among the top automotive producing countries of the world. The motor vehicle manufacturing industry directly employs nearly 137,000 Canadians and indirectly employs nearly 420,000 people in sales and market services. The majority of the vehicles produced in Canada are exported, and over 90% of our automotive exports are sent to the United States.

Given the importance of our automotive trading relationship with the United States, a key government objective throughout the negotiations of the new NAFTA was to ensure the agreement continued to provide the industry with stability and opportunities for growth. This included maintaining duty-free access to the United States and Mexico, ensuring the rules of origins met the needs of the Canadian producers and securing an exemption from potential U.S. section 232 tariffs on automotive goods.

I want to take some time to talk a little about my riding. I am from Kitchener South—Hespeler. Toyota Motor Manufacturing is within my riding. Not too far down the 401 is another Toyota manufacturing plant, in Woodstock. Between the two plants, they employ 8,000 employees. Just a couple of years back, in 2018, there was a $110-million investment allotted to Toyota through the strategic innovation fund. This helped to support 8,000 jobs, to create 450 new jobs, and will create another 1,000 new co-ops.

Also, in April 2019, Toyota announced it would be building the new Lexus NX and NX hybrid in Cambridge as of 2022. This is the first line of Lexus SUVs that will be built outside of Japan. It is great to see that it will be in my hometown riding of Kitchener South—Hespeler.

The rules of origin are the criteria used to determine whether a good has undergone enough production in the North American region to receive preferential tariff treatment. These rules ensure that the benefits of the agreement go to the North American workers and producers. The final outcome on rules of origin meets Canada's objective and has broad support from all segments of the automotive industry.

However, it was far from clear during the early stages of the negotiations if we would be able to achieve an acceptable outcome. Initially, a series of proposals were put forward that Canada believed would have undermined North American integration in the sector and done lasting damage to automakers and parts producers in Canada and indeed the United States and Mexico. Canada was especially opposed to the proposals that would require every Canadian vehicle exported to the United States to include 50% U.S. content. Canada's position was unequivocal on this point. There were no circumstances under which the proposal would be accepted.

In response, Canada put forward a counter-proposal designed to encourage production and sourcing in North America. These ideas were instrumental in reaching an agreement on new rules of origin, which will incentivize the use of North American-produced materials and support the long-term competitiveness of the North American automotive industry.

In order to benefit from the preferential tariff treatment under the new agreement, automobiles must meet a number of requirements: 75% originating content for the finished automobile and core auto parts like engines, transmissions and bodies; 70% of the steel and aluminum purchased by automakers qualify as originating; and 40% labour value content.

The 70% aluminum and steel requirements did not exist under the original NAFTA. This requirement will apply to all vehicles traded among the Canada-United States-Mexico agreement when the new agreement enters into force. Certain elements of the requirements were expanded upon as a result of the December 10, 2019, amendments to the agreement. After seven years, the steel purchased will have to undergo more manufacturing in North America in order to fulfill the 70% requirement.

In addition, after 10 years the parties will evaluate whether the aluminum requirement needs to be further strengthened in a similar way.

The labour value content provision means that 40% of the value of the vehicle must be from a plant where the workers earn an average wage of $16 U.S. an hour or more. Wages in automobile assembly facilities and parts production plants located in Canada exceed this threshold, which will help improve Canadian automotive manufacturing competitiveness.

Throughout the negotiations, consultations were held with Canadian producers of both vehicles and parts, industry associations and the union that represents Canadian auto workers. All of the proposals put forward by Canada were based on extensive consultations, and the final outcome has the support of Canadian stakeholders.

Regrettably, overshadowing these negotiations were threats by the United States to impose tariffs of up to 25% on automobiles and auto parts imported to the United States. These threats were real, as section 232 of the United States Trade Expansion Act, 1962, provides the means to impose restrictions on those imports that are deemed to pose a threat to U.S. national security.

The notion that Canadian autos and auto parts could pose a threat to U.S. national security was inconceivable. Canada strongly rejected this notion at all levels. As well, our negotiating team and the media mentioned that it was absurd that Canada was a national security threat to the United States.

At the same time, it was clear that the prospects of a tariff as high as 25% on Canadian automobiles and auto parts would be a significant challenge for Canada-U.S. trade relations and the Canadian economy. As a result, Canada was steadfast in its position that an exemption from section 232 measures on automobiles and auto parts was necessary as part of the negotiations. This exemption was secured through a binding side letter to the new agreement that took effect November 30, 2018.

Should the United States impose section 232 tariffs, the side letter guarantees an exemption from such tariffs for 2.6 million Canadian automobiles annually. It also guarantees an exemption of $32.4 billion worth of Canadian auto parts exported to the United States annually. In addition, the side letter guarantees that Canadian light trucks, such as pickup trucks, are fully exempt from any section 232 tariffs and do not count against the annual exemption of 2.6 million automobiles.

These levels are significantly higher than Canada's exports of automobiles and auto parts to the United States, thereby providing significant room for growth in Canadian production and export of vehicles and parts, even in the event of U.S. section 232 tariffs on these goods.

As a part of the negotiations, Canada also secured a commitment from the United States to provide at least a 60-day exemption to Canada for any future measure under section 232, including for automobiles and auto parts. This side letter also took effect November 30, 2018.

In closing, I will reiterate the importance of Canada's automotive industry to Canada's economy. The sector is heavily integrated within a broader North American economy, and its ability to trade freely in North America is imperative to its success. This is why we worked tirelessly towards achieving outcomes in the new NAFTA in support of this sector. As a result, the future prospects of the Canadian automotive sector are very bright.

The industry is competitive and innovative, the quality of our workforce is second to none, and Canada has preferential market access to the United States, Mexico, Europe and key markets in Asia, together with 14 free trade agreements covering 51 countries that connect us to 1.5 billion consumers worldwide. Canada is the only G7 nation with trade agreements with all other G7 nations. The Canada-United States-Mexico Agreement is central to Canada's trade with the world, and the automotive sector is central to this agreement.

The new NAFTA maintains tariff-free trade, strengthens the rules of origin and removes the threat of new and prohibitive section 232 measures. It also provides Canadian industry with the stability and market access certainty it needs to grow and continue to provide high-quality, well-paying jobs for tens of thousands of Canadians.

I want to mention that I am very much in support of the bill and I hope other members in the chamber are supportive of it. On average, the Canadian auto sector manufactures one car every 30 seconds, supports over 500,000 jobs and contributes $18 billion annually to our economy.

[Andréanne Larouche, Bloc, Shefford, QC]

Mr. Speaker, I thank my colleague for his speech.

The problem is that people can make numbers say whatever they want. The 70% everyone is talking about does indeed apply to car parts, but the specifics cover rules of origin for steel. The agreement specifically covers the initial melting and mixing and continues through the coating stage and provides a seven-year compliance horizon. However, there are no specific rules of origin for aluminum used in Mexican-made parts. Clearly workers in the rest of Canada and Quebec's aluminum industry workers are not benefiting to the same degree.