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Open letter to the Right Honourable Prime Minister Justin Trudeau.

Published by Bryant McNamara on May 31, 2016

North American Leaders' Summit

Dear Prime Minister:

I am writing on behalf of Canada’s 60,000 manufacturers and their 1.7 million employees regarding the upcoming North American Leaders’ Summit to express our support for your leadership in rekindling this initiative and outline the priorities of our sector for this important meeting.

First, let me say how strongly we support getting this initiative back on track. For Canada, there is no more important international relationship than that with our North American partners, from either an economic, environmental, or security point of view. We applaud you for your efforts. You can always count on our support in strengthening this most critical relationship.

The integration of the North American economy has been driven largely by the integration of manufacturing supply chains. The vast majority of the trade among our three nations consists in the raw materials, components, equipment, and services required in the manufacturing of finished goods. We do not simply trade finished goods with each other. We build goods together. We sell those goods to each other. And, we compete together against the rest the world. The ability of Canada’s manufacturers to compete globally rests on our integrated abilities in North America to develop, produce, and deliver the innovative products and services that customers want to buy around the world.

Over the past few years several important steps have been taken to forward our North American relationship. We believe that these initiatives should continue with the resources they require to meet their objectives. Most notably among these are the Regulatory Cooperation Council (RCC) and the Beyond the Border (BTB) initiatives and their resulting action plans. Considerable progress has been made since they were launched in 2011. At the same time we believe much more can and should be done to improve the outcomes for all parties from these initiatives.

As a starting point, there are several activities being undertaken within the RCC and BTB initiatives where Canada should be looking to facilitate Mexico’s inclusion. Regulatory cooperation with respect to greenhouse gas emissions reduction targets, a continental, comprehensive plan for energy development and usage, and programs to facilitate trade, tourism, and business travel would be an excellent beginning. It is our hope that visa restrictions on Mexican travelers entering Canada will be lifted prior to or during the Leaders’ Summit.

We also believe that it is in Canada’s interest to push for additional efforts in support of deeper North American integration including:

Facilitating labour mobility. Modern manufacturing relies on the ability to move business professionals and skilled workers across the region efficiently and consistently. Unfortunately our NAFTA rules for the movement of these individuals are rooted in a 1980s understanding of manufacturing when integration was just beginning. Today, manufacturers often are restricted in moving their employees, as well as those of their suppliers, freely across national boundaries to support operations, including production and plant expansion, or to undertake research and development and training activities. It is often thought that the movement of these individuals are eliminating local jobs; the reality on the other hand is that they strengthen manufacturing competitiveness and thereby support local job creation.

While we understand that opening up the NAFTA labour mobility section is not politically realistic, we believe there are alternatives to facilitate the movement of business professionals. CME recommends the adoption of a “trusted employer” program that would be based on existing trusted trader programs for the movement of goods. Existing programs, such as the Free and Secure Trade (FAST) program for the movement of cargo eliminate much of the at the border screening and replace it with pre-screening and pre-approval for movement of the goods. This simplifies the processing at the border, improves consistency of treatment, and eliminates uncertainty.

Improving trade corridors. The ability to move goods between our countries is fundamental to our trade and competitiveness. Unfortunately most of our infrastructure is outdated and new developments are not well coordinated across the region. The new Gordie Howe Bridge in Windsor is a critical new link that we have long championed and we applaud your continued support for it. However more can and should be done. CME recommends the establishment of a bi-national planning committee that includes the private sector, that can help coordinate and plan long-term infrastructure investments to facilitate trade throughout the region.

Eliminating internal barriers to trade in goods. While integration and trade flows have improved dramatically since the signing of NAFTA, much more can be done to expedite the free flow of goods between our countries. The government procurement practices of our NAFTA partners is one of the most pressing concerns of Canadian manufacturers, especially those of the U.S. Buy American policies that now cover a wide range of manufactured goods, including public transit vehicles, inputs into infrastructure projects, and water and waste water equipment. These restrict the ability of Canadian manufacturers to access the U.S. market, and even harm U.S. companies that rely on integrated North American supply chains to produce and sell goods into their home market. In an election year we are very concerned that these restrictive policy measures will only proliferate. CME recommends that the government work towards securing an exemption for Canada under Buy American policies as a top priority. If an exemption cannot be secured, Canada should look to enact reciprocal procurement policies that will create a level playing field in our home market and treat foreign companies similarly to how Canadian companies are treated in international markets.

Cooperation on trade agreements. As mentioned earlier, we do not simply trade finished goods with each other; rather, we build goods together and compete globally together against other nations. As such, most goods that are manufactured in Canada, have a significant portion of their inputs from the U.S. and Mexico. A car is a good example, where often 80 per cent of the inputs come from our NAFTA partners. CME recommends that Canada spearhead efforts to coordinate negotiations on free trade agreements where all parties are participating to ensure manufacturers operating within the NAFTA region can take advantage of the new market opportunities. A more formal coordination on trade agreements would ensure market alignment between the NAFTA partners and a stronger negotiating position for all countries.

Thank you for your consideration of these recommendations. We look forward to supporting your efforts during the Leaders’ Summit and the outcomes that are achieved. 

Yours sincerely, 

Jayson Myers 
President & CEO
Canadian Manufacturers & Exporters 

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