May 10, 2017
Good afternoon Mr. Chair and members of the Committee.
Thank you for inviting me here to speak on behalf of Canada’s 90,000 manufacturers and exporters and our association’s 2,500 direct members to discuss Canada’s trade with our NAFTA partners. NAFTA is the most critical trade relationship that exists for Canadian industry and we are here today to show our support for the government’s efforts to maintain that relationship and to find ways to modernize and strengthen it.
Canadian Manufacturers & Exporters is Canada’s largest industry and trade association with offices in every province, and is the chair of the Canadian Manufacturing Coalition, which represents 55 sectoral manufacturing associations. More than 85% of our members are small and medium-sized enterprises representing every industrial sector, every export sector, and all regions of the country.
Manufacturing is the single largest business sector in Canada and across the NAFTA region. In Canada, manufacturing sales surpassed $600 billion in 2016 for the 3rd consecutive year directly accounting for 11% of Canada’s total economic output, while employing over 1.7 million Canadians directly in highly productive, value added, high paying jobs. With the base in the NAFTA region, manufacturers are also directly responsible for the majority of Canada’s exports. In 2015 and 2016 manufactured goods exports reached nearly $350 billion, an all time record high, accounting for almost 70% of all Canadian exports. Nearly 80 per cent of these exports go to our NAFTA partners.
Much of this trade is due to the deep integration of manufacturing operations across the NAFTA region and in particular between Canada and the US. This integration has created a unique relationship for our countries globally; we do not simply trade goods with each other, we build things together, we innovate together, we compete with the world together.
NAFTA in most ways is a model for which all trade agreements should be judged. It has helped increase the standard of living of participants. It has strengthened industry by combining the talents and expertise of each market, creating bigger markets at home and strengthening our combined competitiveness globally. No other trade agreement that Canada has can compare to the historical, current and future importance for our economy or our citizens.
At the same time, it does not mean that the agreement should not be improved. Over the nearly 25 years since it was negotiated and came into force, the world around us has changed remarkably. Things that we take for granted today were barely even on our collective radars at that time. The Internet and e-commerce; smart phones and connected devices, are just a few of the technologies that have changed the way we live and work. The world around us, and our global competitors, has also changed. China, for example, had a GDP of only about $440 million in 1993 today it is a 12 trillion dollar economy. And the world of manufacturing has also changed – no longer is it simply about taking raw materials and turning into a consumer product. Today the lines between manufacturing, technology and services have blurred and companies are focused on creating solutions for the lowest cost with the greatest customer value.
CME has worked constructively with the federal government for years on avenues to improve and strengthen the existing NAFTA framework to reflect these changing realities. Efforts like the Border Action Plans of the 2000’s and the Regulatory Cooperation Council and the Beyond the Border agreements of the 2010’s were aimed directly at improving the NAFTA manufacturing platform without opening it up because that was seen as politically impossible.
Now, opening the agreement is a political reality and we should look for ways to cement improvements that support the economic base of NAFTA. To help prioritize, CME is surveying our members to identify priorities for NAFTA modernization and improvement. While our surveying is still ongoing, I can give you an overview of the responses as they currently stand.
As a starting point, the overwhelming priority is for Canada to maintain market access across the NAFTA region. While companies want improvements, they are also very concerned about a renegotiation that leads to a worse economic outcome through more restrictions, barriers and protectionism on imports and exports of people, goods and services.
On specific measures for improvement, the priorities mainly stem from the deep level of integration and the volume and value of the trade. Improved customs processes to speed border transactions and eliminating uncertainty through reduced red-tape for both people and goods ranks as the top priority. Following that, companies are looking for maintaining effective dispute settlement processes, improved regulatory cooperation and alignment, coordinated action on dumping of goods from other markets.
Many of these priorities are already included in the existing Canada-Europe Comprehensive Economic and Trade Agreement (CETA) framework, were being negotiated as part of the TPP, and we believe could create a framework for a modernized NAFTA.
At the same time, the relationship between Canada, the US and Mexico are fundamentally different than those represented in those other trade agreements. We believe that if Canada can come to agreement on these priority areas with other, largely new trading partners, we should be looking to go beyond those commitments with our NAFTA partners. As mentioned earlier, we don’t simply trade goods with, but rather build goods together by leveraging the 25 year old NAFTA platform.
This negotiation should be the time to create a new phase of NAFTA and cement in place, and go beyond where possible, the direction started under the recent RCC and Beyond the Border agreements where Canada, the US and where possible Mexico are regulating and securing on the perimeter together and restrictions on the internal economy are eliminated.
Thank you again for inviting CME to participate in your study. I look forward to the questions and discussion.
Committee: Standing Committee on International Trade (CIIT)
Study: Priorities of Canadian Stakeholders Having an Interest in Bilateral and Trilateral Trade in North America, Between Canada, United States and Mexico
ABOUT CANADIAN MANUFACTURERS & EXPORTERS
Since 1871, Canadian Manufacturers & Exporters has been helping manufacturers grow at home and, compete around the world. Our focus is to ensure manufacturers are recognized as engines for growth in the economy, with Canada acknowledged as both a global leader and innovator in advanced manufacturing and a global leader in exporting. CME is a member-driven association that directly represents more than 2,500 leading companies who account for an estimated 82 per cent of manufacturing output and 90 per cent of Canada’s exports.
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