bills include a repeal of the mandate. both versions cut the top individual tax rate. the senate version only lowers it to 38.5%. >> the senate finance committee will begin its review of its tax reform plan this afternoon. live coverage on c-span3 at 3:00 eastern time. you can also watch online at c-span.org or by using the free c-span radio app. and kentucky senator rand paul is returning to capitol hill after being assaulted a week earlier by a neighbor who broke six of his ribs. senator paul tweeting this morning that he and his wife want to thank everyone once again for your thoughts and prayers for his recovery. he says, while i'm still in a good deal of pain, i'll be returning to work in the senate today, ready to fight for liberty and help move forward with tax cuts in the coming days and weeks. >> an international law firm hosted a conference on nafta negotiations and the

implications for ongoing trade talks. this portion featured a panel moderated by a former canadian ambassador to the u.s. with current and former government officials from mexico and canada. this is about an hour. >> good morning. good afternoon. bon jour. welcome. over to you, joann. >> okay. and my name is joann zimolzak. we're pleased to welcome you to the washington office for the nafta 2.0 summit. given our topic today and who we have here with us, it seems appropriate not only to say welcome, but beinvenidos.

we're pleased to have you here and present this great program today. which is streaming live, even as we speak, and will be available afterwards on the dentons 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 who are going to be here today with us in person and many more who are watching it over the web. dentons is pleased to be presenting this program, and with its presence in the u.s., canada, and mexico, we have extensive capabilities and experience at the critical intersection of business, public policy, and cross-border relations. many of our practitioners are here today to share their experience and their perspectives and we're so happy to also be joined by key members of industry and government who can also add their valuable perspective. and with that, i'm going to turn things over to scotty greenwood, who is the co-lead of our federal practice. scotty.

>> thank you. welcome, everyone. we're 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 doer, 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 ambassador mcnaughton who had to follow him. you can ask the people who work with him in the embassy. i almost had you married to juton, who represents the province of ontario.

our friends from mexico, everybody knows gary doer, so with that, gary will ask you to introduce to group. i believe general leslie is in the building. you can go ahead and start and we'll get him going. >> thank you very mump, 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 trilateral 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 general leslie is in the room or on the way. i think he's coming. so i'm going to introduce my good friend from mexico and our

panelists today, grugore yeah canalis, 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 therefore not only will he be able to answer the tame politically correct questions i will ask him, but he will also be later on 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 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 of 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 in the military leadership in our two countries have served together. they are bonded by their skills, 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. we want to reveal completely all of the agenda items he will 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 for these negotiations? will it affect timing? will it affect substance? what's your read of it? i want to know your read monterey, not our read from some other community outside of mexico. >> thank you for being here. and yes, this is a very sensitive timing issue that has been expressed as. when this administration was

elected, one of the first statements of the mexican administration said if we're going to negotiation nafta, we wanted to do it quickly and we want to do it in 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 -- re-election is not allowed. so it's a complete change of political environment. so we're mid-october, and negotiations are in the state that we already know. so it's difficult that the negotiations will complete, be completed by the end of this fiscal year, so right now, the mexican parties are starting to select the candidates. 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 8 to 11 countries. if there is an amendment to nafta or amendments to nafta, does it have to be ratified in your parliament, in your assembly? does it require approval from the states or is it a presidential administrative decision? >> yes, since nafta is a treaty, the mexican constitution, it ranks just below the mexican constitution in terms of hierarchy of laws.

so it needs to be agreed by the executive branch, of course, and then has to be ratified by the senate who has exclusive authority to ratify treaties. and we have seen now the negotiations that some of the senators are not just playing a back seat role. they actively are making statements about the cause of the negotiations. so yes, it further complicates the approval from the mexican point of view. >> thank you, it doesn't need a two-thirds vote, though, with the constitutional amendment. >> no. >> straight up and down. general leslie, welcome. >> thank you. >> hope all your meetings are going well here in washington. would you care to tell us how they're going? >> i think personally i'm learning a great deal. full disclosure, the main reason i'm here is i just do whatever scotty says. >> we all do. we're all nodding. okay. fine.

yes. the pm is here, obviously, with key advisers on the nafta file. it's been a great morning. and we had really good interactions with the ways and means committee. the house, and a lot of salient points and discussions were initiated. and i see that an awful lot of common ground. >> good. now, secretary -- or 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 interest 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 to put 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, uk, and japan combined. so the idea of a cross-border tax when you have cars, for example, after 23 years of nafta, the system has reached a state of efficiency and productivity and specialization on both sides, three sides of the border if the border can have three sides. i think you know what i'm talking about. where in a car can cross the canadian/u.s. border five, six, seven times. so cross-border taxes wouldn't make it really cost effective. you have to think these things through in terms of their implications. the second and third are the consequences. and of course, that cross-border tax has been out there as an idea for many, 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. very good news. gregorio, the whole issue of labor and 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? >> yeah, 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. so that process is under way, which is also going to have domestic repercussions. what is also important to point out is that mexico is part of the oet and complies with all these rules and guidelines. and has been compliant with all of those principles. and also in tpp, they agreed to this high standard of labor. >> good. general leslie, 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 in 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 approvals, 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? >> once again, former soldiers, like members have mentioned, canada is u.s.'s largest trading partner. currently, the united states enjoys a trade surplus with canada. and in the energy field, it's $37 billion per year. so what we represent to the united states is a safe, secure supply, which as essentially unrestricted, unlimited flow. in well established networks that are already firmly sunk into the ground or travel just above it. and that's energy which quite frankly the united states has to have. funnily enough, on the west coast, the energy flow is mainly

west coast and of course central canada, mainly from the north to the south, but on the east coast, stuff comes from the united states up to canada. in the main, though, what we do is send relative states of crude down to you folk. you refine it where the greatest markup exists in the food chain, and you sell it back to us or internationally or consume it yourselves. the relationship with the pentagon and national defense headquarters is in my opinion the strongest bilateral military relationship in the world. and it's bonds that have been forged in blood, of course, going back well over a century. and the amount of exchange and cultural affinity that armed forces folk in canada and the u.s. have as result of direct

experience is quite something to see. where we have at any one time literally thousands of canadian men and women in uniform in the states training, and you folks and your formations up north to do the same. especially in the winter. not sure how many of them actually enjoy it. but they're very enthusiastic before they start the training. so i would say that 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 prime minister spoke about reducing the barriers to trade across the border. and the whole vision, if you would, of thickening the outer perimeter so that you can thin whatever administrative or process regulatory system is in place at the border to speed up that 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. that's pretty sizable. so that's to buy new capabilities and stuff that we need. >> a long-winded answer to a short question. my apologies. >> no, no, very important part of our neighborhood, north america, it's extremely important. the general mentioned about the issue, 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 that fine product objecti. but the amendment to the constitution in mexico, there are many that believe it makes sense to now put that in the new

nafta, an amended nafta, because there's energy in the canada/u.s. trade agreement, but not explicitly in the nafta trade agreement, is the constitutional changes that are there to allow for private investment up to a certain percentage in energy in mexico. is that something that the mexican government and the u.s. government are talking about? the canadian government is talking about as a potential amendment to the nafta agreement? >> yes. we have to keep in mind that when nafta, the original nafta was negotiated, the entire energy sector, not only oil and gas, but electricity and inentire energy sector was a monopoly of the state. >> yes. >> at the time, there was a push from the united states to include that into the original nafta. for this constitutional impediment, it was not included. however, just recently, under the current administration, it was a sweeping energy reform

that included a constitutional amendment. mexico now is totally open in the energy sector for foreign investment, which it was not. and the position of the mexican government has been to include in a separate chapter, in a full chapter, energy sector, which i think has not been totally shared by the united states and canada. >> i think that my view of that is it would be very popular. we're dealing with a populist argument for or against nafta. and i view that the populist argument of having your oil from canada and mexico and energy and gas from the united states and hydro power, et cetera, to be more reliant in our own area and less required to rely on so-called petro dictators i think is a populist idea that maybe we should be proposing with more enthusiasm, he says, diplomatically. >> yeah. so it's an energy grid.

and eventually, you can see a vision wherein it will be a north american energy grid. right now, i was in an energy grid distribution center a couple weeks ago. it's my job to figure out how that impacts canada/u.s. relations. io have smart young men and women sitting at these consoles. i'm not sure, but this power may have originated somewhere in northern quebec in a waterfall. that's doing all of the lights in the room right now. but it is absolutely seamless, and they are figuring out based on draw and brown-out periods and all sorts of other things which they lost me. usually you go in and smile and nod and pretend to actually understand what they're saying. they're very good at what they do. it is seamless as to where the energy is coming from and how it's managed and quite frankly manipulated, incorporating all of these different feeds to result in an efficient use and

distribution of power. all down the eastern seaboard. so it's quite something. >> now, we're dealing with -- people who 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 full energy chapter nafta is precisely to lock up those changes and prevent upcoming administrations from undoing the energy reform which was, you know, very debated in mexico. a lot of sectors of mexican society, so that's why the

mexican government believes by having an energy chapter in nafta, we lock up that energy reforms. >> you know, on behalf of my nation, i have been to a variety of places around the world. and there's -- you know, everyone has different life lessons they learn from wars or peacekeeping. one of the things which 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 a pretty simple lesson. especially something that's complicated as taking years to reach a certain degree of 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, you know, the

desire to make a bold statement and what that means. and what's your plan "b"? what's plan "b" by the way? what we're focused 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 very eloquently said with our prime minister standing beside him when they were in rhode island about two and a half months ago. what for 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 have been very often, but you folks ask when i'm looking at the americans in the room, you asked to renegotiate nafta. what's the win/win/win? point one, and if not, what's

your plan "b"? >> yes. on behalf of the united states, stay tuned is my only answer. >> we're missing a u.s. -- >> we'll have a u.s. representative. we'll have speaker gingrich here today and secretary of commerce wilbur ross here today. so that question has been banked by james moore in the discussion with the secretary of commerce. and i'm sure he will propose it. the issue of dispute resolution mechanisms. i should be very careful here because now i'm working part-time for a law firm. and dentons, of course, the finest law firm in the world. and i would say my read of getting rid of some of the dispute resolution mechanisms in section 11 and 19 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 have the opposite impact, the unintended consequence may be different than the proposal. so far, we have made these arguments to the united states? and our good friends, the united states. and what is the reaction been at the table or in the public discussion on having a predictable, affordable, decisive resolution dispute mechanism? mexico. >> yes, i think it's important to have these two separate dispute resolution mechanisms. one is state to state mechanism,

which nafta already contemplates. and then the state investor. the state resolution, also should be basically stay as it is. you know, i think there is some inconveniences to have domestic national tribunals to resolve that kind of dispute. i think it's important to have an international arbitration or international body to resolve these disputes. >> general? >> let's talk about a completely hypothetical case involving boeing and bumbarjam. so, they produce a neat aircraft with brand-new technology. which has all the advantages of new technology, faster, lighter, more cost effective.

and another company, a u.s. company, boeing, for example, has ooh, we don't like that. we're going to put counter veiling duties by approaching the u.s. department of commerce saying whatever they said. and 220% duties are assigned with another 80% for counterdumping. 300% duties. well, 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 an american airline. so they didn't submit a bid. one of the understandings is you've got 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? in 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 an army guy and this is things that fly. the third type of airplane is something that's a bit bigger, ooh, and it's now getting into the dreamliner area of competitive process, and boeing's backorder which is about 4,250, not that -- in a hypotheticals you have to get too accurate, that's enough work to keep them going for a couple years. so this is perhaps, have i said hypothetically enough? can i stop saying that? >> i think you have mentioned that, yes. >> so what is happening here? so it is in part building on an atmosphere which may exist. that's fine. which boeing sees and is taking competitive advantage of. to essentially use this existing mechanism to go after a canadian

competitor who has got a product which they're frightens two to three years from now will start to nibble into their overall profit margins. you want to know why we in want canada are quite keen in having chapter 19 as interstate dispute resolution mechanism? we are really keen on that. there are always differences in opinions, different interpretations of the rules and eventually that ugly topic of politics can creep its way into programs and projects which involve multiple billions of dollars. hypothetical case boeing says boembar jay receives government subsidies. we are probably going to say boeing received billions for their military procurement development which they have. so somewhere in between the two

examples is the truth, but because it is governments involved the only way actually to ensure that you don't get a politically biassed solution is to have a certain degree of independence. that's the final authority after it goes through the american equivalent i think the international trade regulatory group and the second step after that. then if it can't get results where does it go? in the u.s. proposal you want it to go to the u.s. court. so i'll stop there. huh. >> that was a great hypothetical example that you used. can't imagine that would ever happen. but the tpp and other trade agreements have tried to increase the capacity to manage the modern economy including intellectual property and copy right and other digital

provisions. our militaries are working very carefully on cyber security policies and protections. canadian and american and mexican companies i know one area that keeps them awake at night is a cyber attack on their facility or their infrastructure connected to many other infrastructures. is there any wording, is there any view that we should modernize the agreement? yes. how and with cyber security along with copyright and intellectual property be part of that in terms of mexico and canada? >> i think mexico and canada together having higher standards of protection of international property especially in pharmaceuticals and bio chemical

products. >> you would know that general alexander was very important to canada on some of the work. i would think, i actually do believe working a little bit on some areas outside of the public sector that the military kind of cyber security command and control was more advanced than it is obviously in the private sector. how do you see this -- do you see an opportunity and avenue for institutions that are connected between our three countries to get increased not only intellectual property and copy right and cyber security and wording that could be part of international modern treaty? >> vis-a-vis intellectual and actual property rights there is lots of room for improvement, a variety of large american research and development firms, pharmaceutical facilities and

stuff have made very convincing articulate requests for modifications, amendments. a lot of them are quite technical. some have to do with timings and when the right sort of lapse. and that's something that the negotiators can and should chew through. quite frankly, the last time nafta -- point of origin 23 years ago this wasn't such a hot issue. literally billions are on the line in terms of costs. we get it. cyber -- i have given a very short answer to a very complex problem that is a bunch of really smart people working on literally right now. cyb cyber, all of us have identified cyber threats either from internal diseffected 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 used to be responsible for the canadian equivalent on a much more modest scale of what used to be called nsa and is now cyber command. i had the privilege of -- general alexander would be up there as a four star. i 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 vis-a-vis detection

and response to cyber threats in the commercial space. keeping in mind in canada the department of national defense and communications security establishment don't have a remit to actually technically defend corporate structures. the same is true, i'm told, still in the united states. there are a variety of tools which are developed to protect the military system which later cascade down into some of the big network operations centers that you have established. most of those are run by corporate entities. a lot more work has to be done to integrate them. we can talk about this for hours. i better stop now. but it just points to the integrated nature of all that we do as three nations, not just two. obviously, i'm focussed on the canada and u.s. but it is three

nations. and it is hard to imagine, they are so closely integrated it is hard to imagine skair scenarios they are not so closely integrat integrated. >> the often in trade negotiations there is a lot of visibility and horsepower with various stakeholders in the direct negotiations or indirect negotiations. all of us would have examples where we would perceive the stakeholder to have more horsepower in the decisions than the consumers. in the case of canada we would probably articulate although it is not in the nafta negotiations that there should be a balance between home builders, renovators and the producers in the united states. the americans have their own examples where they would

believe that canadian consumers are not being represented because of stakeholders are so strong in our country. i'm sure there are in mexico, as well, some of those cases. how do consumers which are obviously constituents, how do they get at the front end of negotiations, some balance to their views in the final product? >> i think it is very interesting to see how -- i was working at the mexican embassy here in washington when the nafta negotiations were being negotiated. and it was very different the dynamics. the dynamics was a push from the united states and canada for mexico to open up its economy. and mexico i think accepted the challen challenge. it was a very controversial treaty domestically.

now i think mexico has embraced competition and that's something that is embedded in the society. there are some many groups now that didn't exist that are precisely for that asking for consumer rights and society getting involved in the discussion. so one thing i wanted to touch before what general touched before is that i think it's very difficult to insulate the whole nafta negotiation as a trade. we are talking military. we are talking energy. we are talking many other things that involve countries. the current state of negotiations and the rhetoric has spilled over to other areas. because i think it's very

difficult to think of the bilateral relationship with u.s. or canada and just with a trade issue that would not have consequences otherwise. it has issues on immigration. we are within having a good treaty for years that has work. i think everybody was in the agreement that needed to be reviewed and revised and updated but to that and to completely destroy and try to take advantage of a certain position it is kind of difficult. and we are seeing that at least for mexico from different sectors of society from the opposition parties that are taking advantage of this opening up to express concerns. >> general? >> that's been an interesting

one. bottom line is right now i think paer parties are close. this is really no offense to my mexican colleague. this is a canada/u.s., not a blood sport but an activity going on for about 100 years. literally it is the first trade dispute we had with our great american friends from way back when. and i would never presume to offer a solution. it's not between two organizations. it's between three, one of which is the u.s. lumberman's association. wherein corporate association has essentially right of veto over potential solutions the

u.s. government may offer to it. so i think -- i know secretary ross is working very hard in it. he has all our support. i'm pretty sure that there is light at the end of the tunnel. when and what it looks like, it's really not us. so may i just build on that, though, just to get one point across about -- nafta has been as you know renegotiated 12 times or in the process. the negotiations are half way through. we all want to work towards the january deadline. one of the big issues that the recently president trump's team when they came in clearly identified was the impact of jobs leaving the united states to go elsewhere. and one of the reasons that we articulated and with great

technical input from the mexican negotiations the idea of increasing labor standards and labor wages such that eventually they can move up the economic ladder not only at the rich corporate level, not only at the business owners but workers which in turn means more disposable income to buy u.s. cars is a way to address one of the substantive issues that president trump and his team have correctly identified as being of grave concern because people are being left behind. they are not sharing in the large. i would argue and would many others that it has been a great thing. we have to rethink how we look after the folk who do the work which is why we are suggesting

respectfully progressive ideas about including labor standards. it's part of the discussion. it's not a secret. some increase to labor standards and labor pay. so the environment. let me talk about the environment for a sec. if you are absolutely not concerned about what sort of junk you are going to pump into the atmosphere then your production costs are probably a lot lower than if you are marginally concerned. everyone in our continent is at least marginally or highly concerned. if you are willing to give all of that up and just produce steel, abhorrent environmental conditions and the steel ends up here, by far away i mean way across oceans, it is pretty cheap to produce. so we have to be conscious by actually talking about this stuff. some of the progressive ideas we are putting forward.

>> thank you. there is a question coming from the web cast. is there a realistic plan b? i don't know -- please describe it all for us. please. realistic plan b is the question. we haven't even finished plan a in terms of negotiation. i apologize. >> is there a realistic plan b if negotiations obviously don't succeed at the current status? >> yes. we are starting to see the public and private sector in mexico looking what would happen if the negotiations fail. it's not -- i mean, it's not good news when warning the public, warning the society. i think mexico is prepared. mexico i think has the

flexibility to adjust. i should point out that when the first nafta was enacted mexican industry went through a lot of pain. the toy industry, the shoe industry, industries disappeared entirely. and society was able to adjust and to compete with nafta. i think it's something that should be considered that has been talked about. and i think the fall back would be to trade on the rules which in the case of mexico i think nafta or nafta partners so it's difficult to say to the other party that it is in their best interest to continue to keep nafta, but to short the answer i

think yes both private sector and the public sector are considering plan b and would continue to try trading. our economies are so interlinked that it is probably very difficult to dissect and try to separate and it has some very deep roots in many areas that will continue to be neighbors and will continue to be trading. >> yeah. plan b for nafta is nafta. we're not worried about plan b. we are focussed on plan a which is nafta and doing the changes to create the conditions for a win-win-win. technically legal minds amongst you would point out that underneath nafta 23, almost 24 years ago you have the canada u.s. free trade agreement. you have the wto. just once again getting into the

hypothetical in the main though this has changed fairly dramatically. let me just refresh memories. our american friends buy more stuff from us than we buy from them. in the main our american friends buy stuff that comes out of the ground or is grown or is the result of water which generates hydro electric power and the list goes on. in the main it's stuff which the american economy then makes better in terms of the value added and sells it either back to us which is why we are biggest client or sell it overseas. so sometimes in a supply chain you have to figure out where the -- i'm talking like a soldier now. when you are trying to disrupt a

supply chain of people, you have to figure out where the impact is most loik likely to be felt. is it felt at the point furthest down stream from point of origin or is it right outside the gates of the supply depot? and the answer is not further down stream because there is already stuff in the system. it's right away. so who is going to feel the impact most should there be a disruption in your main source of stuff which you import from us and make better? and the answer is oh, yeah. hugely. so that's why plan a is nafta and plan b is nafta. >> thank you. i want to ask one question on agriculture because we haven't talked about it yet. it is very important. sonny purdue is a former governor of georgia. he apparently intervened in some of the potential decisions of the white house a few months ago

and is talking about some parts of canadian agriculture this week. where we had a lot of talk about agriculture and tpp but at the end of the day intellectual property were priorities not the discussion going on between our countries. where do you see the discussions going on agriculture given the fact i think mexico is the third largest customer for american agricultural products? i believe canada and china are usually trading between one and two. together by far we are the largest customer for u.s. goods? >> well, i think the position of mexico is very clear in that in this issue mexico is committed to free trade year round trade. we are not opposed to ability of trade on certain crops.

i think we have to look at competitive advantage of each country on agricultural issues. >> general? >> there are two broad areas of concern among our american friends. there is some -- look, a whole bunch of great work has been done on negotiations so far. most of it is technical in nature. stuff that had to be done anyways. this is the 12th time it has been revisited based on document that is now almost 24 years old. we all know that. the big areas of concern seem to be dairy and poultry. dairy currently the united states has a five to one trade advantage in terms of how much dairy they sell in canada as compared to how much canada sells to the united states. three u.s. states produce more

milk than the entirety of my wonderful nation. okay. is it an issue? we say that we made hard decisions years ago to limit supply but we don't give subsidies that either state or federal level to our dairy producers where in the states very often that does occur. and the concern is that once you give up a very small number of people who produce milk in canada which is the limited supply then the inevitable large production facilities in the united states will literally drown us and very quickly we will lose our indigenous milk capability and we have medical issues with what's in the milk and that goes on forever. is there room to discuss? of course.

poultry. there is a $246 million poultry surplus between canada selling poultry and associated stuff to canada as compared to selling it to the u.s. once again four states have more poultry output than the entirety of our nation. is this a big issue for those effected? yes. but it's not a huge nafta stopping issue. discussions are ongoing. >> time for some other questions from the audience. i'm sorry i asked a lot of questions. questions from the audience? please. here we go. is somebody going to ask a question or just leaving the room? >> yes.

>> we'll trade it off. >> hi. inside u.s. trade. my question is for mr. lesry. earlier this week the head of the u.s. chamber of commerce described u.s. proposals as poison pill proposals were his words would be nonstarters for business support for the deal at least in the u.s. those were changes to dispute settlement. and tightening the auto rule of origin. i'm wondering if the canadian government used those proposals as poison pills at the negotiating table and if so does that call into question the ability to conclude an agreement by the end of the year? >> we don't like negotiating in public. so thank you for the questions.

i'm learning my craft as a politician. i would say those are pills which don't taste very nice. really quite unpleasant. really unpleasant. but the final decisions will not, cannot be made until you get to the end of the nafta negotiations. because i know you know this. it is much akin to one of the world's most complicated mosaics which you have to assemble from pieces. it is only in the last round of any complex negotiations whether it is trade or trying to get people to move -- anyways, you only really close the deal, things only get knit together once you can see the totality of the picture. if you make the mistake of saying yes to chapter one or two or three right at the beginning

then you don't have much negotiating room later on. so right now we are all negotiating right now. this is negotiations. i'm not a professional negotiator by any stretch of the imagination. there is a bunch of messages that your folk and my folk and their folk are exchanging. that's the way all negotiations work. so any hard lines that can be declared of an intent but not until round seven is complete. and then it goes back to our respective governments and executives and they go through a decision cycle. canada's case it is relatively straightforward because my prime minister has an absolute majority. yes, we are going to consult and give into the committee structure. we have a majority. and it gets a lot more interesting for our mexican and

american friends. >> you want to add to that? >> yes. that's something that we commented before that it has to be approved by the executive branch and sell over to private sector, sell over to the legislative and then to the communities because it effects many, many aspects of society. we kind of committed to trade, committed to form this block, but not to disrupt the block or to change the rules of the agreement. >> one more question and i'm getting the hook. yes. >> so we talked a lot about many different subjects. i think there is a lot of people very interested in the subject of automobiles which is a hot topic. if you can comment on automobiles and i'm sure a lot of people would be very interested in it. >> yes.

automobiles. >> the elephant in the room. i think for mexico the mexican government position and i'm not speaking for the government but don't mind to heighten the nafta content of the automobile. we are against a country specific content which is what the united states apparently is asking on the negotiating table. so i don't know if this kind of gives you an overall of what the situation is. but, you know, we, i think between united states, canada and mexico have created a very strong automotive block of consumers and producers and clearly in the case of next mex the biggest part of trade is in

the automotive sector. it has worked fine for us. i think for the united states -- the fact that all of these plants are in mexico make the auto industry of the u.s. competitive. remember what happened a few years ago when the entire industry had to be rescued by the obama administration? so i think again we should be thinking about building and the mexican government is open and flexible to change these rules of origin, but we are opposed to country-specific rules of origin. >> so canada always meets 62.5 minimum percent for rules of origin in north america. very often, as a matter of fact 88% of the time we far exceed even theoretical drafts submitted in terms of made in

america content. the reason for that is it's fascinating to watch and especially in the southern ontar ontario, these enormous trains that come from the u.s. with canadian engined taking metal that came out of the ground probably in canada turning it in canada into stamped bars, rebar that goes south where they bend it and pour it into molds. and the train then brings the car back across the border into canada where they put in the wheel assembly and then back down south where they put in all the cabling and that kind of stuff which is labor intensive. and then goes back across the border for the furnishings and sterio system which more often than not comes from california. so what is the u.s. content of

that car? it's huge. we're still trying to figure out what it is because eventually the big car companies in canada are owned by who? who is the american in the room? absolutely, you sir. the majority of shareholders are american. so this is an issue which we are watching very closely but it is in the main, a discussion point between our other friends. >> thank you very much. appreciate all the answers from our panelists and appreciate all the questions and obviously there is a lot of interest as the day goes on. thank you. have a good rest of the day.

thank you. congressional analysts say the republican senate tax bill would increase taxes in 2019 for nearly 14 million households earning less than $200,000 a year. the nonpartisan joint committee on taxation provided the analysis today. the senate finance committee begins the review of the tax reform plan this afternoon. our live coverage starts here at 3:00 p.m. eastern online at website websic span.org. president trump made suggestions on how to change tax reform legislation ending unfair and highly unpopular individual mandate in baiobamacare and red taxes further and cut with the rest going to middle income cuts. neither the house nor senate tax bills include a repeal of individual health insurance mandate. both cuthe