Madam Chair, committee members, thank you for the invitation to take part in your consultations on Bill C-4, An Act to implement the Agreement between Canada, the United States of America and the United Mexican States.
The Business Council of Canada represents the chief executives and entrepreneurs of 150 leading Canadian companies, in all sectors and regions of the country. Our member companies employ 1.7 million Canadians, account for more than half the value of the Toronto Stock Exchange, contribute the largest share of federal corporate taxes, and are responsible for most of Canada’s exports, corporate philanthropy, and private-sector investments in research and development.
It almost goes without saying – trade with the United States is critical to our prosperity. The Canadian economy depends on international trade and the U.S. is by far our largest trade and investment partner. Trade of goods and services represents 64 per cent of Canada’s gross domestic product (GDP), with the U.S. the destination for over 75 per cent of our goods exports.
The Business Council strongly supports CUSMA and calls for the swift passage of Bill C-4 for the following reasons:
- Protect market access – When the negotiations were first launched, we had one overarching recommendation for government – do no harm. To avoid damaging employment, trade and investment, Canadian, American and Mexican businesses need to retain their preferential access to markets and commercial opportunities in each respective country. By this measure, CUSMA is an overwhelming success. The resulting agreement is based upon reciprocal access and treatment and no Canadian company will face new tariffs (or other market access barriers) in North America. Given recent reports that the White House is considering raising WTO bound rates, the importance of quickly ratifying this deal is even greater.
- I might add that the overarching US objective at the outset of negotiations was to “improve the U.S. trade balance and reduce the trade deficit with the NAFTA countries”. In other words, the US wanted to restrict imports, not liberalise trade as is usually the objective in a trade agreement.
- Remove uncertainty – The ratification of CUSMA eliminates significant trade uncertainty from the Canadian economy. According to the Bank of Canada, trade measures are estimated to reduce global gross domestic product by approximately 1.3 per cent by the end of 2021. Given that the US remains the key market for Canadian firms planning to invest abroad, reducing uncertainty in the relationship will be a boost for the Canadian economy in this challenging global trade environment.
- Modernize NAFTA – CUSMA will improve the trade relationship by modernizing long-outdated elements of the North American Free Trade Agreement. The agreement is largely based on the text of the TPP, Canada’s most modern trade agreement. For example, it contains a chapter on digital trade that prohibits customs duties and other discriminatory measures from being applied to digital products distributed electronically while ensuring that data can be transferred across borders.
- Enhance North American competitiveness – CUSMA includes important new provisions that will help Canada, the United States and Mexico develop a more productive and mutually beneficial trilateral relationship. For example, chapters on competitiveness and good regulatory practices establish committees in each area to promote economic growth and strengthen regulatory cooperation. We call on the government to take advantage of these new mechanisms by developing a robust committee work plan.
Before I conclude I would like to comment on timing. The US and Mexico have already moved to ratify the agreement in their respective legislatures. While we have every right to review and assess the agreement, I caution against excessive or unnecessary delays.
Business leaders across North America support the swift ratification of the agreement to keep North America tariff free, make the economy even more vibrant and competitive, drive investment and support the creation of high-value jobs.
Thank you for the opportunity to address your Committee. I look forward to answering questions.