Next on cspan2, discussion about nafta ongoing trade talks. This portion of the conference included a former canadian ambassador to the us and current and former government officials from mexico and canada. Followed by a discussion about how nafta negotiations could impact ongoing trade talks. Good afternoon. Welcome. My name is joe then, the Office Managing Partner in washington and we are pleased to welcome you to the Washington Office of dentons for the nafta twopoint oh summit. It seems appropriate to say not only welcome, but also. [speaking in native tongue] we are pleased to have you here and to present the program today, which is streaming live even as we speak and will be available afterwards on the dentonss website. Change can be unsettling, but it also present opportunities. There is so much interest that has been generated about this program. We have over 100 people who will be here in person and many more are watching over the web. Dentons is pleased to present this program and with its presence in the us, canada and mexico we have extensive capabilities and experience at the critical intersection of business, Public Policy and crossborder relations. Many of our practitioners are here today to share their experience and their perspectives and we are happy to be joined by key members of the industry and governments who can also add their valuable perspective and with that im going to turn things over to Scotty Greenwood who is the code lead of our federal practice. Scotty . Thank you and welcome everyone we are delighted to have you here this is what its all about for us in Public Policy, bringing together policy leaders, thought leaders, our clients, our prospects, everyone that is looking to understand what could happen with this really important north American Economy. So, you have the agenda in front of you and we would like for you to interact as much as possible one of my favorite parts of being at this firm is the terrific people you get to work with and im going to introduce gary who many people know as canadas former ambassador to the us and also premiere of the province of manitoba work hes a rock star and hard act to follow. I understand impact the general is on the way homes so i will introduce my good friend from mexico and up analyst and mr. Gonzalez to is a Founding Member and an expert of Corporate Law and cross border financing and a Legal Advisor on energy not only can he answer those politically correct questions but also your question is. We have just been joined by general leslie who has been elected as a member of parliament in 2015 the parliamentary secretary to the canadian minister of global affairs. And has worked in that capacity in various theaters around the world and of course, working with the military it can the the serving in afghanistan but also places and i know from my experience that many of the people in the administration for other general jones or general kelly in the military leadership are bonded by skills and bravery with commandandcontrol in the work on behalf of the shared Democratic Values in north america. And the Prime Minister is meeting with the president we want you to reveal the agenda of all the items in the oval office simultaneously while the live long here today. Started with our friends in mexico a lot of media speculation during the president ial election during the summer of 2018 how do you see that operating as the environmental condition for these negotiations . I want to know your read to the community and outside mexico. Thinks for being here this is a timing issue with those negotiations by the Mexican Government when it was elected to office so we will renegotiate nafta. We dont want to spill that overthrew 2018. Mexico runs that six year presidency. It is a changed environment. In to be completed at the end of the fiscal year. So right now the parties are resigned and that creates something indeed as a dialogue. With the tpp it was an agreement from the former president to get to the table of the United States with canada and japan going of between eight and 11 countries if there is the amendment to nafta does it have to be ratified it your parliament or assembly . Or is that the administrative decision . In terms of hierarchy so it needs to be agreed by the executive branch to be ratified by the senate. And to make statements. So yes. One from the of mexican point of view. I hope all your readings are going well here in washington. I am learning a great deal full disclosure i am here because they do whatever he says. [laughter] obviously the Prime Minister is here with the advisers on the nafta phial it has been a great morning and those points were initiated. Than the chair of the committee at one point with day border tax that other countries have argued is not in the Trading Interest of the United States. It does not appear to be any tax reform package. It has not been discussed but facts were put on the table can the debt is the largest trading partner so china the k combined. It has reached a state of efficiency and civilization on poolsides. To cross the canadian u. S. Borders by force six or seven times. But the cross border tax and that larger Economic Impact is analyzed in soda to discuss and the tpp negotiations now when i was in detroit we go on a the border meeting. What is the position of the government of mexico on the of principles . We dont have the same wording but the president is opposed to a tpp . To those principles or other principals on improving the enforceability and the efficacy of labor and environmental standards. This is also a sensitive issue for the mexican in government 2. 0 with that country why a disclosure. And that process is on the way. So 02 comply with guidance. With that i standards of label. So a general you are still here. Over the years that again the of military relationship between canada and United States that you developed in your leadership position for those that have those various leadership positions with those loyal president ial pipeline approvals to sign off and say yes to go ahead because of the Energy Security that was represented for the United States. But hasnt been any discussion in all of the ability into north american neighborhoods to have Energy Security between our three countries to include renewable store Energy Security . That we would not necessarily rely but we could rely on though whole neighborhood to have a multi pronged approach to Energy Security. Canada is the u. S. Largest trading partner. Currently to trade surplus with canada and in the energy field it is 37 million. With a safe and secure supply that travel just of the of it and that is with United States has to have. But of the east coast but because we said the county you you processing and refining of crude that brings adaptive value by elway with the valueadded food chain then selling back to last for consider yourself. That relationship with the pentagon in my opinion is the strongest bilateral relationship in the world. Those are bonds that are forged in a blood but that the armed foes want but as a result of direct experience is something juicy and which you had your for gracious to do the same. I am not sure how many enjoy that but they are enthusiastic before they start to trading. There isnt any discussions of any levels and i was as the Prime Minister spoke about the barriers to trade across the border and to think give that outer perimeter was never processed the regulatory systems is in place to speed up the flow that was talked about at some later by those two gentlemen. And in turn we indicated 73 increase to defense spending. Which is pretty sizable. Along with an answer to the short question. Batted it is extremely important. And the Energy Chapter and that you wisely protect to offer energy as i recall not that any of us object but the amendment to the constitution that believe that it makes sense to put that into the amended nafta because it is not as explicitly in the nafta agreement of the constitutional changes that are there to allow for private investment up to a certain percentage is this something the Mexican Government are talking about . As a potential amendment to the nafta agreement . But thats reason that the entirety Energy Sector was a monopoly of the state. So to include that for a the constitutional impediment but under that Current Administration to with a constitutional amendment with that Energy Sector it was the position of the Mexican Government in a separate chapter and that is not totally shared by the United States. But i know the populist argument of getting oil from canada and mexico and energy zero or gas from the United States or hydropower to be more reliant in our own arianna and less required to rely on a the dictators is a populist idea so is more enthusiasm. It is a grid so it is a north American Energy grid. And it is my job halifax u. S. Relations so city at these councils i am not sure how this originated so that is doing all the lights in this room right now it is absolutely seamless but that they lose me and. It is seamless as to where the energy is coming from. To incorporate to the different seeds to resulted the efficient use or distribution of power. Those are using a populist argument to be those vintage is starting with the energy. One of the main purposes and to lock up the changes to undoing the Energy Reform in with the Mexican Society to have that Energy Chapter 4250, in hypotheticals you dont have to get too accurate. Thats enough work to keep you going for a couple years. This is perhaps, have i said hypothetically enough . So, what is happening . It is, in part, building on an atmosphere which boeing sees and is taking competitive advantage of, to essentially use this existing mechanism to go after a canadian competitor who is got a product which a few years from now. [inaudible] we in canada are quite keen on having chapter 19. Oh yeah, we are really keen on that. Theres always going to be differences and squabbles, different interpretations of the role, commercial advantage being sought, and eventually, that ugly topic of politics cant get its way into projects which involve multiple billions of dollars. A hypothetical case, theyll say they received billions and government subsidies for the procurement. Somewhere in between those two examples is the truth, but because its governments involved, the only way. [inaudible] in a u. S. Proposal you wanted to go to a u. S. Court. Ill stop there. That was a great hypothetical that you used. I can imagine that whatever happened. The tpp and other trade agreements have tried to increase the capacity to manage the modern economy, including intellectual property and copyright and other digital provisions. Our militaries are working very carefully on Cyber Security policies and protections and canadianamerican and mexican companies, i know one of the areas that keep them up at night is the cyber attack on their facility or on their infrastructure, connected to many other infrastructures. Is there any wording, is there any view that we should modernize agreement . Yes . How, along with Cyber Security and property, intellectual property be part of that in terms of mexico and canada. I think mexico and canada together in this, having Higher Standards of protection of intellectual property, especially in our masuda goes and biochemical products. General leslie, you would know that general alexander is very important to canada on some of the work with the five eyes, i actually do believe we are working on some areas outside the Public Sector that the military Cyber Security command and control was more advanced than it is in the private sector. How do you see this, do you see an opportunity or an avenue for institutions that are connected between our three countries to get increase, not only intellectual property but wording that could be part of an International Modern treaty . These would be intellectual and property rights. There is room for improvement. Large r d firms and production facilities have made very convincing request for modifications and a lot of them are quite technical. Many of them have to do with timings and when the rights a labs. Thats something the negotiators can and should go through. Literally billions are on the line and people have to recoup those cost, and yes, we get it. Cyber. Its a complex problem that a whole bunch of people are working on right now. Cyber, all of us have identified Cyber Threats, either from internal disaffected elements or other state actors as probably one of the greatest threats we do face in terms of lost intellectual property, lost value or their ability to disrupt. The relationship between canada and the u. S. Is unparalleled in terms of linkages and exchange of information. I actually used to be a young one responsible for the canadian equivalent on a much more modest scale of what used to be called nsa. I had the privilege of, general alexander would be up there is a four star. I would know a little bit more than most on the subject. A variety of agreements have recently been modified, put into place dealing with the very classified domains that started and also on the passage of information, the use of detection and response to Cyber Threats and commercial space. Keeping in mind, in canada, the department of National Defense and art medication security establishment dont have to technically defend corporate structures, and the same is true, im told still in the United States. There are a variety of tools which are developed for, to protect the military system which later cascade down into some of the big Network Operations centers that you folks have established. Most of those run by corporate entities, but a lot more work still has to be done to integrate them. We could actually talk about this for hours. I better stop now. It just points to the integrated nature of all that we do as three nations, not just to periodically and focused on the canada, u. S. , but it is three nations. It is hard to imagine, they are so closely integrated, its so hard to imagine situations where they are not so closely integrated. The often, the trade negotiations, theres a lot of visibility and horsepower with various stat stakeholders in the direct negotiations. All of us would have examples where we would perceive the stakeholder to have more horsepower in the the americans have their own examples that canadian consumers are unrepresented in they are in mexico as well so la balance to their views in the final product will . I wasnt working at the Mexican Embassy it was very different with those dynamics as the approach from the United States and canada and mexico accepted the challenge but now it has increased competition. If that was imbedded into the society. There are so many groups that are precisely for that. Still to be involved in the discussion. And one thing i wanted to touch on so that is difficult to negotiate. But still the its bill over to other areas. It is difficult to think of that bilateral relations with the u. S. Or canada and would not have consequent otherwise. End everybody in the agreement to complete the destroy a and take advantage and with mexico and those different sectors to take advantage to express concerns. But a the bottom line is right now the parties are close and though offense to the mexican colleague but it is in day blood sport but it has been going on about 100 years. Literally it is the first trade dispute from way back when. And i would never presume but it is between three organizations where the Corporate Association to write that veto over potential solutions and to have all the support and i am pretty sure for what it looks like it is clearly not us. So just to build on that to get 1. Across nafta has renegotiated tough times and negotiations are halfway through with the j. Neary deadline. Sova to clearly identify the impact to leave the United States to go elsewhere. Id with those mexican in negotiations to increase labor standards and to go up that the economic ladder at the rich corporate level to do a the workers which in turn means no zero disposable income and to address the substantial issue the President Trump and his team have seen is of grave concern they are left behind. And i would argue and those that do the work which is why we are suggesting respectfully progressive ideas. And that has been put on the table. With the increase of labor standards so let me talk about the environment for a second if youre absolutely not concerned of what youll play into the atmosphere their production costs will be a lot lower. And everyone on the continent if you are willing to give that up to offer skill and porter environmental conditions i am way across the oceans then it is cheap to produce so we have to be conscious to achieve that level ergo sum of those progressive ideas. There is a question coming from the left. Is there a realistic plan me . Pan b. I apologize. Fisker eight realistic plan b . Yes. But i should point out through those Industries Society could adjust. I think it is something that has been talked about and with those rules of the wto that nafta and those ties it is difficult to say so guess both the private sector and the Public Sector are considered plan b our economies are interweaved it is difficult to intercept to have some deep roots in many areas that we will continue to be trading. Plan b for nafta is nafta. Refocused on the first plan which is nafta and the changes. Tactically underneath nafta ovals 24 years ago and the day buteo. And to get into the hypothetical in so let me refresh your memory. That they buy more from us than we buy from them. So if we buy this stuff that comes out of the ground is the result of water of hydroelectric power and the list goes on but it is that the American Economy makes better in terms of value added to go overseas. Sometimes in the supply chain looking at the immediacy trying to disrupt the supply chain of people you have to figure out where the impact is most likely to be felt at the point to the for this downstream of the point of origin . The answer is further down the stream of. But so who feels the impact the most of there is a disruption from what you import to make better . Yes. Huge. Of what to ask what question read on agriculture and to know the of former governor of georgia with the potential decisions a few months ago talking about canadian agriculture we have a lot of talk of agriculture and tpp but the copyright were the priorities not the discussion going on. So where do you see the discussion led going on agriculture that mexico is the Third Largest customer for a very ted Agricultural Products . Canada and china trade by far the largest customer of u. S. Goods. To make that very clear for. And we have to look at that competitive a vantage. There are two broad areas of concern there is a bunch of grey work. Most of that is the administrative stuff that has to be done anyway. This is the 12th time it has been revisited based on a document that is almost 24 years old. To of the big areas of concern are dairy and poultry currently has a five one trade advantage in terms of how much they sell in canada compared to how much they sell in the United States. Is it an issue . To say we make hard decisions years ago to limit supply but we dont get subsidies that the state or federal level to dairy producers. The concern is is once you give up a very small number of people that produce milk in a limited supply be inevitable Large Production facilities will literally drown us and lose the indigenous milk capability with medical issues. 246 million surplus. As compared to canada so they have more output in the entirety of my nation. Is this a big issue . Yes but not a huge nafta stock being issued as discussions are ongoing. Questions from the audience . Here rigo. They are leaving the room. [laughter] so earlier this week the u. S. Chamber of commerce described the u. S. Proposal as a poison pill proposal that would be a non starter for in the changes for the dollar for dollar procurement for tighten auto but even the canadian government hears these proposals at the negotiating table and to call into question at the end of the year . We dont like negotiating in public so thank you for those questions but im learning my craft as a politician and still two years into this after being a soldier. But those final decisions cannot be made until the end of the nafta negotiations. One of the most complicated mosaics and but anyways but you will leave only close the deal but if you make the mistake to say in chapter one or chapter to a Chapter Three and say yes and the beginning so right now were all negotiating. There is a bunch of messages and that is the way of negotiations work. So any hard lines can be declared live so rams seven is complete then you go back to the respective governments. And to have the absolute majority. And the kids more interesting for the mexican and american friends. But to be approved by the executive branch angelou those communities and committed to do this but not to disrupt the change. One more question and then i get the book broke. Talking about different subjects but this is a hot topic im sure people will be interested. The elephant in the room. I think the mexican in government position will heighten the nafta content of the automobile with fat content witches what the United States is asking. I dont know if the situation and what it is spent they have created a strong automotive to these producers and clearly in the case of mexico it has worked fine for us for the United States and to make the industry. So with that entire industry so and open and flexible to change so with those rules of origin. And as very often 89 of the time in terms of made in america at contents and in southern ontario to come from canadian engines is refined to take a metal that they founded the United States with the rearguard that goes south and then to bring them back across the border into canada and then to be labor intensive with going back and forth with the stereo system so what is the content of the car . Because the Car Companies are owned by who . You. The american in the room. Absolutely. But the majority of shareholders are american. This is the issue were watching very closely. They do very much. We appreciate the answers from the panelists and all the questions and obviously there is a lot of interest as the day goes on