On July 9, 2020, Mark Agnew, Senior Director of International Policy at the Canadian Chamber of Commerce, appeared as a witness before the House of Commons Standing Committee on International Trade (CIIT). In his remarks, he discussed the Canadian Chamber’s recommendations for supply chain resiliency, the coming into force of CUSMA and addressing remaining trade concerns with the US, and the urgency of Canada completing a bilateral trade agreement with the UK.
Read Mr. Agnew’s opening statement below:
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Thank you, Chair, for the invitation to speak with the committee today. It is a pleasure to be here, even if participating virtually. While it is common for stakeholders to appear at committee and make reference to the critical or timely nature of a particular study, this one really is. COVID-19’s impact on international trade is important for Canadian companies, and so are our relationships with the US and UK.
I would like to touch on three issues this afternoon.
The first point is COVID-19’s impact on international trade. COVID-19 has brought into focus the need to strengthen supply chain resiliency. We all know that. What I think most commentary misses is that supply chain resiliency is not monolithic. Each sector of economy has different needs.
We are also a market-oriented economy. Governments generally do not own supply chains. They instead incentivize private sector behaviour and create the conditions within which businesses operate. Our approach to supply chains needs to ensure consumers and business get the inputs and products they need, in addition to supporting exporters. It goes both ways.
It’s also more than just the production of physical goods. Services across different modes of supply play a critical role. Take for example research and development, after-sales servicing to equipment, or transportation.
This week the Chamber released our position statement on supply chain resiliency, which I have shared with committee staff.
In short, we think governments need to take a holistic approach to how domestic and international policy is used to support supply chain resiliency. A few international tools that I would like to draw attention to include:
- First, security of supply agreements. Export controls on medical equipment proved to be a major issue during the pandemic. Let’s look at taking a positive list approach with our most trusted allies to circumscribe the use of export restrictions. We commend the government for its work through the Ottawa Group and hope this is an avenue to take that work to the next level.
- Second, industrial subsidies. This was a longstanding problem before the pandemic but will get worse as governments around the world throw cash at their domestic industry. This is going to tilt the field against Canadian companies and we need to reign in other countries’ excesses.
- Third, digital trade. More activities are heading online and we need to ensure our trade rules are relevant to the economy of 2020. For example data flows and e-commerce support through trade facilitation.
Shifting now to the US, we very much welcome the entry into force of CUSMA and thank our negotiators for all their efforts. However, our main message here is that it is too early to get out the proverbial Mission Accomplished banner when it comes to US trade issues. The spectre of so-called national security tariffs looms large once again on metals and electrical coils. We remain steadfastly opposed to national security tariffs and are working closely with our US business counterparts. Additionally, we are without a softwood lumber agreement. We hope that the resolution of CUSMA will create bandwidth to tackle some of these important issues.
The last issue I want to touch on is the UK. In the absence of further developments Canadian companies are generally now operating on the assumption that the UK will leave its transition status at the end of 2020 and that it will enact its Global Tariff regime in January 2021.
This means the clock is ticking. Given discussions have been happening for some time between the UK and Canada, our view is that we need to conclude the efforts to transpose CETA into a bilateral agreement at the earliest opportunity, and begin the necessary implementation processes.
I know this view puts the Chamber in a different spot than some, but our position is informed by several factors.
One, companies have already faced more than enough disruptions. Let’s ensure companies have certainty that they will not face tariffs under the UK Global Tariff regime announced earlier this year.
Two, based on media reports the European Commission indicates UK-EU trade discussion might not be finalized until October. That cuts very close to the end of the year given our own parliamentary timings if we decide to wait until having complete certainty about the outcome of UK-EU trade discussions, particularly given the COVID-19 context.
Three, landing a bilateral based on CETA positions us well for discussions about the next level in the trade relationship. This includes deepening what we’re doing on services, regulatory and digital. It also sends a great signal for Canada to maintain that we are only G7 country to have comprehensive FTAs with the rest of the G7. That is certainly a talking point the Chamber is proud to use when representing Canada in business forums abroad.
But I will stop here and look forward to your questions.