>> good morning. good afternoon. welcome. over to you, joanne. >> i'm joanne. i'm the office managing partner in washington. we're pleased to welcome you to the washington office for the nafta 2.0 summit. given our topic today and who we have with us, it seems appropriate to say not only welcome but [ speaking french ] . we are pleased to be able to have you here and to present this great program today which is streaming live even as we speak and will be available after on the website. change can be unsettling, but it also presents a lot of opportunity which i'm sure will

be part of the discussions today. and there's so much interest that's already been generated about this program. we have over 100 people with us today in person and many more watching it over the web. denton's is pleased to be presenting this program, and with its presence in the u.s., canada, and mexico, we have a extensive experience at the critical intervention. many practitioners here to share their experience and perspectives and we're happy to be joined by key members of industry and governments who can also add their valuable perspective. and with that, i'm going to turn things over to scotty greenwood, the co-lead of our federal practice. >> thank you. welcome, everybody. we are really delighted to have you here. this is what it's all about for us in public policy. bringing together policy leaders, thought leaders. our clients. our prospects.

everybody that is looking to understand what could happen with this really important north american economy. and so you've got the agenda in front of you. and we'd like for you to interact as much as possible. one of my favorite parts of being at this firm is the terrific people that we get to work with, and i'm going to introduce gary, who many people know as canada's former ambassador to the united states. he was also premier of the province of manitoba. he's a rock star, a hard act to follow. you can just ask the ambassador who has had to follow him, or others who work with him in the embassy. minic smith represents the province of ontario, our friends from mexico, everybody knows gary, and so with that, gary, we'll ask you to introduce the group. i believe general leslie is in the building. you can start and we'll get him going.

>> thank you. thank you very much, scotty. please, i hope you get better soon, scotty. and you can have on our recommendation either some tequila from mexico or bourbon from the united states or good old crown royal from manitoba, canada, and we would strongly recommend that for medicinal purposes here at this discussion on trade. it is an honor to be here with all of you, and i'm going to -- i'm not going to rag the puck. i understand generalle leslie i in the room or on the way. i think he's coming. i'm going to introduce my good friend from mexico, and the -- our panelist today. the gregg gregoria gonzalez who is a founding member of monterey law practice for dentons.

he's an expert in corporate law. he's an expert on cross border financing. he's a legal adviser -- general, good to see you -- he's a legal adviser on energy, and not only will he be able to answer the tame politically correct questions i will ask, but we'll also later be able to answer your questions. we have just been joined and thank you very much, general leslie, andrew leslie who has been elected as the member of parliament in 2015. he is the parliamentary secretary to the canadian minister of global affairs. he is a former general in canada, a military leader in canada. he has worked in that capacity as a -- in various theaters around the world, and, of course, working with military in canada. he has served in places like

afghanistan, very dangerous places, but also places i know from my experience as being a former ambassador that many of the people in the administration whether it was the obama administration with general jones or the administration now with general kelly, people of in the military leadership in our two countries havenenen served together. they are bonded by their skill, their bravery, the command and control which they bring to their jobs, and also the work on behalf of our shared democratic values here in north america. so we're very pleased. i don't know -- the prime minister i know is meeting with the president. so we want you to reveal completely all the agenda items he'll be raising in the oval office simultaneous to the meeting going on here today. i want to start with our friends in mexico.

just a lot of media speculation. a lot of punditry about the presidential election in mexico in the summer of 2018, how do you see that operating as an environmental condition? will it affect timing or substance in what's your read of it? i want to know your read for monterey, not our read from some other community outside of mexico. >> yes. well, thank you for being here. and yes, this is a very sensitive timing issue. it has been expressed since the beginning of the negotiation by the mexican government. when this administration was elected, one of the first statements of the mexican administration said if we're going to renegotiation nafta, we want to do it quickly and 2017. we don't want it to spill over to 2018, because we're getting a

presidential election. mexico runs a six-year period presidency. that is not -- reelection is not allowed, so it's a completely changed of political environment. so we're mid october in the negotiations, and the status we already know. it's difficult that the negotiations will complete, be completed by the end of this fiscal year. right now the mexican parties are starting to select the candidate. it's like an internal process. but it's getting a lot of noise. and, of course, nafta being a key element of the mexican economy, it creates some distortions in the public dialogue. >> just a legal question

following that. if there is a -- i remember in tpp, there was an agreement from the former president, and then the existing president to get to the table with the united states along with canada and japan to go from eight to 11 countries. does this -- if there is an amendment to nafta, or amendments to nafta, does it have to be ratified in our parliament, or in your assembly? does it require approval from the states, or is it a presidential administrative decision? >> yes. since nafta is a treaty and according to mexican constitution, it ranks just below the mexican constitution in terms of hierarchy of loss, so it needs to be agreed by the executive branch, of course, and then has to be ratified by the senate who has the exclusive authority to ratify treaties.

and we've seen now in the negotiations that some of the senators are not just playing a backseat role. they're actively making statements about the course of the negotiations. it further complicates it from the mexican point of view. >> thank you. it doesn't need a two-thirds vote like pan exdid with the constitutional amendment? >> no. >> straight up and down. general leslie, welcome. hope all your meetings are going well in washington. would you care to tell us how well they're going? >> i think personally i'm learning a great deal. full disclosure. the main reason i'm here is i do whatever scotty says. >> we all do. we're here obviously with key advisers on the nafta file. it's been a great morning. we had really good interactions with the ways and means

committee of the house, and a lot of salient points and discussions were initiated. i see an awful lot of common ground. >> secretary, the chair of the committee kevin brady, who we know, at one point was proposing a border tax which, of course, canada and mexico and other countries have argued would not be in the trading interests of the united states. did that topic come up, or has so far now it doesn't appear to be in any of the so-called tax reform packages in the congress and at the white house? >> didn't come up this morning. it's been discussed in corridors for some time now. a couple of facts on the table. make sure we're speaking from a common framework. so canada is the u.s.''s largest trading partner. we buy more stuff from you than

china, the uk and japan combined. so the idea of a cross border tax when you have cars, for example, after 23 years of na a nafta, the system has reached a state of efficiency and productivity and specialization on both sides. all three sides of the border if the border can have three sides. i think you know what i'm talking about. a car can cross the canadian/u.s. border, five, six, seven times. so cross border taxes wouldn't make them cost effective. you have to think these things through in terms of their implication. the second and third are the consequences. and that cross border tax has been out there as an idea for many years. and it usually, the larger economic impact is further analyzed and tends to just stay where it is now. >> that's good news. that's very good news.

gergorio, the whole issue of labor, the environment has been discussed in the tpp negotiations before, during, and after, and now is an issue that i was in detroit a week ago on a border meeting, and that came up from folks from the united states. what is the position of the government of mexico on the principles. we won't have the same wording as tpp because the president is opposed to tpp. but the principles contained within the tpp agreement, or other principles on improving the enforceability and the efficacy of labor and environmental standards within the three countries. >> well, this is also a very sensitive issue for the mexican government. it is very important to point out that at this time there is a

country wide discussion about a constitutional amendment to change and to modernize labor laws nature process is on the way. it also has domestic remember repercussions. what's important to point out is mexico is part of the system and complies with the rules and guidelines and has been in compliance with all those principles, and also in tpp, they agree to this high standards of labor. >> good. the general leslie, the -- you would be a general still here. >> it's okay. it's a prenominal. >> it is. it was our experience over the years that, again, the military relationship between canada and the united states, between the pentagon and our military and canada was very strong, and you

developed in your leadership position strong bonds between the individuals that had those various leadership positions. i also know that when we were asking for either hydro presidential permits or oil presidential pipeline approvals, that the pentagon was the first of the nine agencies to sign off and say yes to go ahead because of the energy security that potentially represented for united states. in these trade discussions, in nafta, we hear a little bit about some of the grievances between our countries. has there been any discussion at all about the ability in the north american neighborhood to have energy security between our three countries that would include renewables, energy security, oil and gas. in other words, we wouldn't rely necessarily in the future on petro dictators. we could rely on our own neighborhood to have a

multi-pronged approach to energy security. >> currently the united states enjoys a trade surplus with canada. in the energy field, it's $37 billion a year. so what we represent to the united states is a safe, secure supply which as essentially unrestricted, unlimited flow. and well established networks that are already fairly sunken into the ground or traveled just above it, and that's energy which the united states has to have. on the west coast, the energy flow is mainly west coast, and of course, central canada. it's mainly from the north to the south. on the east coast stuff comes from the united states up to canada. in the main, though, what we do is we send relative states of

crude down to you folk. you process it. you refine it where the greatest markup exists and you either sell it back to us internationally or consume it yourselves. the relationship with the pentagon and national defense head quarters is in my opinion, the strongest military relationship in the world. and it's -- it's bonds that have been forged in blood. of course, going back well over a century. the amount of exchange and cultural affinity that armed forces folk and canada and the u.s. have as a result of direct experience is quite something to see where we have literally thousands of canadian men and women in uniform in the states training and up north doing the same, especially in the winter. i'm not sure how many of them

actually enjoy it. but they're very enthusiastic before they start the training. i would say that relationship is very firm and secure. i don't think there's any discussions on any level about any significant tweaking to it. i know that i was in the room for the last visit when the president and vooims spoke about reducing the barriers of trade across the border, and the whole vision, if you would, of thickening the outer perimeter so you can thin whatever process regulatory systems in place at the border to speed up the flow was talked about at some length by those two gentlemen. in turn in our last budget we indicated a 73% increase to defense spending. which is pretty sizable. it's pretty sizable.

so that's to buy new capabilities and stuff we need. >> a long winded answer to a short question. my apologies. >> that's a very important part of our neighbor, is north america. i think it's extremely important. the general mentioned about the issue of the energy chapter. the energy area in the nafta agreement was not -- you wisely protected tequila but didn't offer energy, as i recall, not that any of us as consumers of the fine product object, but the amendment to the constitution in mexico, there are many that believe that it would make sense to put that in the new nafta, an amended nafta. there's energy in the u.s./canada trade agreement but not as explicitly in the nafta treatment. the constitutional changes there to allow for private investment

up to a certain percentage in energy in mexico. is that something the u.s. and mexican government and canadian government is talking about as a potential amendment to the nafta agreement? >> yes. we have to keep in mind that when nafta, the reason nafta was goesh negotiated, the entire energy sector was a monopoly of the state. at the time there was a push from the united states to include that into the regional nafta for this constitutional impediment. it was not included. however, just recently under the current administration, it was a sweeping energy reform that included constitutional amendment. mexico now is totally open in the emergency sector for foreign nrsment. it was not.

the position of the mexican government is to accept an energy sector. i think it's not been totally shared by the united states and canada. >> i think that my view of that is it would be popular. we're dealing with a populous argument. i view the populist argument of having your oil from canada and mexico and gas from the united states and hydropower, et cetera, is to be more reliant in our own area and less required to rely on so-called petro-tick day or thes is a populist idea we should be entertaining with more enthusiasm. >> it's an energy grid, and eventually you can see a vision wherein it will be north american energy grid. right now i was in an energy

grid drira couple weeks ago. you have smart men and women sitting at consuls. i'm not sure, but this power may have originated somewhere in northern kquébec in a water fal that's doing the lights in this room. it's seamless, and they're figuring out based on draw and brownout periods and all sorts of other things. you try to pretend to know what they're saying. they're good at what they do. it's seamless as to where the energy is coming from and how it's managed and manipulating, incorporating different feeds to result in an efficient use and distribution of power, all down the eastern seaboard. it's quite something. >> now, we're dealing with -- the people that are against nafta are using populist arguments against it.

do you think we should be as populist on the advantages of nafta starting with energy? >> i should point out that on energy, the position of mexico has changed dramatically from 23 years ago. and one of the purposes, the main purposes of the current administration to push a full energy chapter of nafta is to lock up those changes and prevent upcoming administrations for undoing the energy reform which was very debated in mexico. it meant for certain sectors of the mexican society. that's why they believe by having an energy chapter in nafta will lock up that energy reforms. >> on behalf of my nation, i've been to a variety of places

around the world. everyone has different life lessons they learn from wars or peace keeping. one of the things i better appreciate now that i'm slightly older and more experienced is it's not a good way to improve something by blowing it up or destroying it. it's pretty simple. especially something that's complicated, has taken years to reach maturation and has resulted in benefits, of course. but when you have those benefits which are the product of very closely integrated supply systems which provide value added, just think through the consequences of the desire to make a bold statement and what that means, and what's your plan b? what's plan b, by the way? so what we're focussed on as a nation is seeing the good in

nafta, seeing what has to be -- what should be changed. what should be modernized. what can make to, quote, vice president pence, what are the win, win, win scenarios which he said with our prime minister standing beside him when they were both in rhode island two and a half months ago. what are the win, win, win circumstances? when you go into negotiations, you should know where you want to go, and i'm hosting this magnificent city to which i've been often -- you folk asked when i'm looking at the americans in the room, you asked to renegotiate nafta. so what's the win, win, win? if not, what's your plan b? >> yes. the -- on behalf of the united states -- [ laughter ] >> stay tuned is my only answer. >> we're missing a u.s. --

>> we'll have u.s. representatives. we'll have speaker gingrich here today, and secretary of commerce wilbur ross here today. the question has been banked by james moore in the discussion with the secretary of commerce. i'm sure he will propose it. the issue of dispute resolution mechanism. i should be very careful here. now i'm working part-time for a law firm. and denton's, the finest law firm in the world. and i would say my read of getting rid of some of the dispute resolution mechanisms would be that we would end up resolving disputes in the courts, in the world trade organization and other areas of legal jurisdiction. and it seems to me that for a

person or an administration promising to drain the swamp, it would actually not -- it would have the opposite impact, the unintended consequence may be different than the proposal. so far we made these arguments to the united states, and our good friends, the united states, and what is the -- what is the reaction at the table or in the public discussion on having a predictable, affordable, decisive resolution dispute mechani mechanism? mexico? >> yes, i think it's important to have these two separate dispute resolution mechanisms. state to state mechanisms. nafta already contemplates that, and then the state investor. dispute resolution also should be basically stay cities.

i think there is some inconveniences to have domestic national tribunals to resolve that kind of disputes. i think it's important to have an international body to resolve the disputes. >> general? >> so let's talk about a completely hypothetical case involving bowling and boembar. bombar jay produces a neat aircraft with new technology. it has all the advantages of new technology, faster, lighter, more cost effective, and another company, a u.s. company, boeing, for example, says we don't like that. we're going to put counterveiling duties by approaching the u.s. department of commerce saying whatever they said, and 220% duties are

assigned with another 80% for counter dumping. so 300% duties. wait a second. boeing didn't submit a bid for the aircraft type. because they don't have an aircraft which meets the qualification of the customer. who is american airline. so they didn't submit a bid. and one of the understandings is you have to show material damage. how do you show material damage when you didn't submit a bid? you didn't take part in the competition, and you don't have an aircraft which can compete. and the answer is, well, you can't. so why did they really do it? this completely hypothetical situation? because boeing is looking down range and seeing what they produce which is three different types of aircraft. one is 100-seater plus. one is about 150. i'm going to get the numbers wrong, because i'm a army guy,

this is things that fly. the third is a dream liner area of competitive process, and boeing is back order, which is about 4,250, not that in hypotheticals you have to get too accurate. that's enough work you can go on for a couple of years. so this is, perhaps, have i said hypothetically enough? >> i think you've mentioned it, yes. >> okay. thanks. minutes.

[applause] >> i will make a brief introduction. you know who kevin brady is. you know him as the house ways and means committee chairman. when i arrived in washington, i thought powerful was part of the title. in the black hills of south dakota, cap remember -- kevin remembers playing track at central high school. playing for legendary dave bluth who died early this year. got 34 state championships, two of which when you were there.