NAFTA Negotiations Business Council of Canada Submission 1
The Business Council of Canada represents over 150 of Canada s largest companies and industry leaders in all sectors of the economy. Our membership includes the Canadian subsidiaries of 29 major American companies, all with significant interests in protecting and enhancing the trade relationship between Canada and the U.S. In addition, many of our 110 Canadian-headquartered member companies are among the largest foreign investors and employers in the U.S. 2
Why NAFTA matters NAFTA has played a crucial role in the development of our balanced and mutually beneficial trade and investment relationship. Canada is the top export market for American goods and the top export destination for 35 states. Further, most manufactured goods imports from Canada contain a high level of American content. Altogether, our bilateral trade relationship supports over 9 million good-paying U.S. jobs. Considering the importance of this relationship, we see both a risk and opportunity in renegotiating NAFTA. There is no question that after a quarter century, much of the agreement is showing its age. Our Council welcomes the opportunity to bring NAFTA into the 21st century. However, renegotiations must not jeopardize the millions of jobs on both sides of the border that depend on the protection of the current framework of rights, benefits and privileges the existing agreement currently provides. It is also important that the renegotiation process moves quickly. Prolonged uncertainty about NAFTA s future undermines the ability of Canadian companies to make major jobcreating investments across the border. To ensure the renegotiation process moves quickly and in a constructive manner, the Business Council of Canada requests that NAFTA negotiators in both countries work around the following principles. Do no harm To avoid harming employment and current investment levels, Canadian and American businesses need to retain their existing access to markets and commercial opportunities in each respective country. The resulting agreement must be based upon reciprocal access and treatment. NAFTA s rules of origin could use an update. However, we urge negotiators to proceed carefully to avoid unintended consequences when making changes. Alterations that lead to country-specific rules would be devastating to industry in all three member states. But not all changes to rules have to be harmful. For example, a modernization of NAFTA s outdated tracing system would be welcomed. We anticipate that dispute settlement will be revisited, but alterations cannot result in disputes being settled in domestic courts. This was a deal breaker for Canada in the original NAFTA and it will be for Canadian companies in the new NAFTA framework. 3
21 st century opportunity In addition to avoiding harm to the existing framework, negotiators should aim to update the agreement for the current and future economy. We see an opportunity to add or modernize areas, such as: intellectual property, e-commerce, treatment of state-owned enterprises, competition, rules, sanitary and phytosanitary measures, telecommunications, customs procedures, labour, environment, government procurement and regulatory cooperation. Labour mobility and customs procedures provisions are clearly outdated in the existing NAFTA framework. For labour, the eligible positions negotiated in NAFTA do not match today s technology-driven economy. Another outdated element is continued paperbased nature of customs procedures. These and other areas should be modernized to benefit both countries businesses, reflect current needs, and anticipate future changes. Go further The Canada-U.S. Free Trade Agreement and NAFTA have helped our countries develop a mutually beneficial relationship that has enhanced energy security for the continent. Modernization presents the opportunity to strengthen this relationship even further. We should strive to improve North American energy independence and security, promote greater cooperation and innovation, and expand access to lower-carbon energy sources. Infrastructure and government procurement are two areas where an agreement could help us work more closely together. Our geographies naturally drive our industries together, but there are obstacles interfering with the ability for our firms to cooperate on infrastructure. To maximize our potential, we recommend the creation of a U.S.-Canada Infrastructure Pact. A pact could help to generate a common template for P3 projects, as well as commit to non-discrimination against U.S. content in Canadian projects and Canadian content in U.S. projects. Lastly, the new NAFTA should aim to improve regulatory cooperation, to reduce administrative costs to consumers and businesses alike. We recommend that our two governments establish a Regulatory Cooperation Council to work closely with industry to identify opportunities for harmonization. Conclusion So long as the principles in this submission are taken into consideration by the U.S. and Canadian negotiators, you can count on the support of our Council and its members. We would be pleased to work with your officials and discuss in greater detail each of the above recommendations. 4
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