Bill C-306 (Historical)

Canadian Products Promotion Act

An Act respecting the use of government contracts to promote economic development

The purpose of this enactment is to promote economic development in Canada by ensuring that, in the procurement of its goods and services, the Government of Canada gives preference to Canadian products while complying with its international obligations.
The enactment requires, however, that the price of a Canadian product not exceed by more than 7.5% the price of a non-Canadian similar product.

Canadian Products Promotion Act

[Monique Guay, Bloc, Rivière-du-Nord, QC]

moved that Bill C-306, an act respecting the use of government contracts to promote economic development, be read the second time and referred to a committee.

Mr. Speaker, we have been working for a very long time on this bill which, I believe, has become even more important today in view of the current economic situation.

Just a month ago, a $34 billion deficit was projected, and we learned last week that it would reach $50 billion. The federal deficit will be $16 billion higher than projected. It is very difficult for workers, it is difficult for the public in general and it means that economic recovery will not happen tomorrow but much further down the road. Therefore, measures must be taken to encourage Canadians and Quebeckers and help them through this economic downturn.

Bill C-306, an act respecting the use of government contracts to promote economic development, would encourage buying in Canada. Of course many people would say that we are following the Americans and that this bill is similar to the Buy American Act. Yes, this legislation could be said to be a protectionist measure, but I want to make it clear that is has absolutely nothing to do with the American legislation, and I will explain why.

It is also for that reason that I would like all my colleagues to read the bill and to give us an opportunity to debate it in committee. It is indeed a rather complex piece of legislation and we must be able to discuss it in committee. This important bill will allow Canada to buy, annually, up to $600 million worth of products made in Canada, which could create up to 21,000 jobs.

Do we not need jobs at this time while we are facing an exceptionally high unemployment rate because of the economic crisis and because of the government deficit? Would it not be desirable to create 21,000 additional jobs to give people a chance to work?

We support free trade, international economic agreements and the WTO, and this bill does not interfere in any way with NAFTA, the WTO or international economic agreements. It deals with small amounts and targets purchases made by the government. We are talking about a portion, 9.3%, of the government's total expenditures for goods and services.

I see no reason to be against apple pie. Basically, this bill will be grist to our mill for the next few years and could help small and medium-size businesses grow and continue to operate during difficult economic times. It would be desirable to pass this bill, which is, after all, very specific.

Chapter 10 of NAFTA, which deals with government procurement, provides that, as a general rule, the government shall accord the same treatment to American and Mexican goods and services as to Canadian ones when making purchases. Conversely, the United States and Mexico commit to accord Canadian suppliers equally open-minded treatment. In the lingo of international agreements, that is called the national treatment rule.

Clause 7 of the bill is designed to reflect that obligation under NAFTA. NAFTA does, however, contain provisions allowing the government to buy Canadian in certain circumstances. These exceptions are far from insignificant and probably cover the majority of government purchases.

The legislation I am proposing this morning includes all of these exceptions and, in each case, requires the government to give preference to and buy Canadian products.

The main exceptions to the national treatment rule include any procurement where the value is under $50,000 U.S., $25,000 U.S. with respect to the United States in accordance to a provision of NAFTA that was renewed, calculated in constant January 1, 1994 dollars.

In current Canadian dollars, that means all contracts valued at less than $80,000. For crown corporations, the threshold is five times higher: $400,000. Also included are all purchases for construction contracts valued at less than $5 million U.S., in constant January 1, 1994 dollars. In current Canadian dollars, that means all construction contracts under $8 million.

For crown corporations, the limit is 60% higher, at $12.8 million. That includes all construction contracts from the Department of Transport, Infrastructure and Communities, meaning roads, airports, railways, docks, etc. It also includes all purchases made for national security purposes by the Department of National Defence, the RCMP or the Canadian Coast Guard. As well, it includes the construction, maintenance or repair of ships, subways and commuter trains; communication and monitoring equipment; most agricultural products, except those used directly by the government, for example, purchases made by the cafeteria of Parliament; cultural products; and a vast number of services.

The bill refers to more than 60 categories of services. I will name them, because it is important for parliamentarians to understand why this bill was tabled. The bill includes all financial services, all public services, all categories of health and social services, all services related to research and development. Heaven knows that the government has made cuts to research and development. It needs to get back to basics and reinvest in research and development. The bill also includes most telecommunications services; most transportation services, for passengers and cargo; most services related to government activities in the areas of agriculture and fisheries, such as tests, inspections, veterinary services, resource management, management of government facilities, postal services, transcription and translation services.

I think that given the situation we are experiencing right now, our bill is absolutely not comparable to the Buy American Act. We are simply asking the government to favour Canadian purchases for anything that does not fall under international agreements, and anything that costs less than $25,000 and does not require a call for tenders.

This bill also calls for purchases to be distributed equally among the provinces on a pro-rated basis so that all provinces receive fair treatment and not all purchases are made in Ontario and Alberta. We have to make sure that all of the provinces are treated equally.

I think that this bill is very clear and that we can talk about it in committee. If it needs to be changed or amended in any way, that can happen; we are open to that. But I don't think that we should turn our backs on the possibility of creating 21,000 jobs. We are not talking about huge amounts of money here. We are talking about $600 million per year, which is just a fraction of the government's annual budget. That would be enough to help some companies survive these economic times of plant closures and massive layoffs.

There have been lots of layoffs in my region. Bombardier laid off 1,000 workers and issued temporary recalls. Bell Helicopter laid off over 600 workers and also issued temporary recalls. That makes things very difficult for people who are laid off for a period of time then return to work with no job security. We have to support a buy-at-home policy.

We have the technology we need right here. Why buy things from other countries when we can buy them here?

This bill caps the price difference at 7.5%.

If the government wants to buy a Canadian product, it can spend up to 7.5% more. If I issue a $25,000 tender abroad, I can spend up to 7.5% more on Canadian products to support our own businesses. That is not a lot of money. It is relatively little. Spending $25,000 is not the end of the world; that is about how much would be spent on stationery, for example. That is money the government would spend anyway. They should be spending that money here. The government should be buying goods like that at home.

The House of Commons uses a lot of goods and services. Running Parliament is expensive. Why not support companies that can supply products the government needs? For example, Cascades, a company in my riding, supplies specialized stationery to the government. Of course there are tenders, but this is a good thing because the government is supporting a company that is producing goods here. Why buy things from Australia or any other country when our country is going through hard economic times?

This is also a message we want to send to the Americans. We love the Americans. We do not want to send them a negative message. We want to tell them that we too want to buy our own products. We want to give preference to some of our own products while honouring the agreements we have with them so as not to create conflict. The bill is written in such a way that we are complying with international agreements and respecting the American government, but we are sending the Americans a very clear message that, in an economic situation such as the current one, we too will give preference to our own products, in a far more respectable way than the Americans with their Buy American Act. We will be able to create employment and help our workers keep their jobs and small and medium-sized businesses stay open.

I sincerely hope that all the members of this House will read the bill. It may seem hard to understand, but I have given a good description of what it contains. I sincerely hope that the bill will be referred to committee so that we can hear witnesses. To date, I have spoken with a number of companies and unions that support the bill. They see it as a first step in at least stimulating the economy, which badly needs a boost.

The government could also take this approach in the future. We know that Canada and Quebec can be very prosperous. We could develop new businesses. We can invest in research and development. I sincerely hope that this bill will be examined in depth and that we will hear witnesses such as unions and interest groups as well as companies that support this bill, consider it a step in the right direction and feel that it complies with international agreements. This is very important to them. Many firms in Canada and Quebec export their products and need international agreements such as NAFTA and the WTO. Certainly, we want to keep on honouring those agreements while giving ourselves the opportunity to promote local purchasing.

[Andrew Saxton, Conservative, Parliamentary Secretary to the President of the Treasury Board]

Mr. Speaker, the hon. member says that this bill will only affect $600 million worth of trade, a small amount, she says, but what about the message that it sends to the rest of the world? What about our reputational risk as a protectionist nation if we were to allow this bill to go through? Is it worth it for such a small amount?

There is no provision to exempt new and emerging trade agreements. In order to emerge from this recession, we need to continue trading with as few barriers as possible. The Great Depression taught us that the downward spiral of protectionism will only make the situation worse.

Surely, the member opposite cares about Canada's reputation and credibility. I would ask her this. If she is interested in our reputation, why is she putting forward a bill that is undermining current and emerging trade agreements?

[Monique Guay, Bloc, Rivière-du-Nord, QC]

Mr. Speaker, that does not make sense.

The Conservatives are introducing bills to enter into bilateral international agreements with developing countries that have certain problems. Those agreements contain no measures to protect workers and the environment. We do not need to take any lessons from them.

Second, it is true that $600 million is not a large sum, but it is a step in the right direction, and not a step back. What message would we be sending to the rest of the world? It would show that we are taking care of our own affairs, our citizens, our workers and our industries, while still respecting all international agreements. We therefore do not need to take any lessons from the Conservatives in that regard. They need to go back to the drawing board when it comes to the agreements they are trying to conclude with troubled nations.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Mr. Speaker, in discussing Bill C-306, An Act respecting the use of government contracts to promote economic development, we have to remember that we are in the middle of a worldwide recession. As Canadians, we are in fact in the process of arguing strenuously against any American efforts at protectionism. They are very, very real, as many manufacturers in this country have already discovered. Protectionism, particularly at a time of such economic crisis, is simply not the direction we want to be going in.

With regard to specifics in the act, there is no empirical evidence or sound economic reasoning behind what the bill is trying to achieve. The 7.5% price differential this act wants to apply was pulled out of a hat. There is no logical way of measuring the Canadianness, and an attempt at measuring this for the 50% to 75% requirement simply does not measure up. The agreement certainly does not provide any indications.

The act tries to suggest that NAFTA will still be complied with. We have serious doubts that this is even possible, and it certainly goes against the spirit of it. Therefore, for many reasons, we do not support Bill C-306.

[Monique Guay, Bloc, Rivière-du-Nord, QC]

Mr. Speaker, both sides of the House are very similar.

We must stop being afraid. It is time to show some backbone, as they say, and do something. It is not true that we are sending a negative message. We are sending a positive message that shows that we are standing up for our citizens and that we also want to invest in our own country. We do invest elsewhere; we export our products. We are one of the world's biggest exporters. That does not stop us from establishing measures for our country in order to protect certain companies and create jobs. It is a question of $600 million. That is a small sum. It was limited for that very reason. Norms were established to ensure that it respects international agreements. What else does the member want? There is no doubt it will be respected; that is in the bill.

[Guy André, Bloc, Berthier—Maskinongé, QC]

Mr. Speaker, I would like to congratulate my colleague on Bill C-306, which was inspired in large by the Buy American Act that currently exists in the United States. However, this bill will have a lesser impact than the Buy American Act since it gives preference to Canadian products in government procurements only. How does she explain that both the Conservatives and the Liberals seem to want to oppose this bill? We know about the free trade agreements with the Americans with regard to softwood lumber. We heard about how the Buy American Act is affecting the steel industry. This bill is a small step towards protecting our jobs, but other parties seem determined to oppose it. I would like to hear my colleague's comments on that.

[Monique Guay, Bloc, Rivière-du-Nord, QC]

Mr. Speaker, I was on the executive of the Canada-United States Association for 10 years. It was during the softwood lumber crisis. The Americans did not do us any favours nor did they intend to. We need to take matters into our own hands. It is true this bill is small step and presents no danger. It is high time we passed such legislation.

[Andrew Saxton, Conservative, Parliamentary Secretary to the President of the Treasury Board]

Mr. Speaker, I rise today on behalf of the government to argue against Bill C-306, which the hon. member from the Bloc introduced last February.

The year is 2009, not 1929. We live in a time when Canada no longer needs to prop up its industries with protectionist laws. We live in a time of liberalized trade and increasingly open world markets.

The fact is that Canada is a trading nation, and it always has been. Trade is a huge part of who we are. It is a part of our past, it is a part of our future competitiveness and it is a key part of our fight against the current recession.

In a recent report by the World Economic Forum, Canada ranked fifth among 118 countries in enabling trade. That report measures the degree to which a country facilitates international trade and investment, and it bears witness to its successful economic development.

Indeed one in five jobs in Canada is dependent on international trade, and we export half of all our manufactured goods. Clearly our success as a nation is built on increasing trade with other countries, not putting up barriers to trade.

However, this bill would do exactly that. It would put up trade barriers by making it the law that federal departments and agencies buy only Canadian produced goods, and not only that, but buy them at prices up to 7.5% higher than the competing products of other countries. This is deeply flawed economics and a very short-sighted response to the recession.

However, we do not have to take my word for it. Both the Prime Minister and the Minister of Finance have said publicly that protectionism is not the way to fight a recession. Their position, and that of the government, has been stated clearly: protectionism would mean recession, or worse, for a very long time.

Just a few months ago, in Washington, the Prime Minister spoke out strongly against protectionism in the United States, saying, “If there is one thing that could turn a recession into a depression, it is protectionist measures across the world”.

The reality is that the economic slowdown is not just a Canadian problem; it is an international one. All countries need to focus on stimulating the global economy because we are in a global economy, not just our national economy.

One of the ways we are doing this is by keeping protectionism at bay. This is the point that Bill C-306 completely fails to grasp.

Can we imagine what would happen if Bill C-306 did become law? First of all, Canada would be made an international laughing stock. After all, at the November summit of the G20 countries, we, and all other countries, agreed to avoid a return to protectionism.

That the hon. member opposite would table such a bill shows how out of touch she and her party are. At a time when the world needs less protectionism, the hon. member has produced a bill that would force government departments and agencies, crown corporations and even foundations to buy Canadian products at inflated prices and to invite retaliation.

That is woolly economics. From the point of view of our trading partners, it would be a subsidy. Our trading partners would have a field day the next time we find ourselves in front of an international trade tribunal, which will be soon if the bill passes.

What kind of retrograde thinking is this when the countries of the world are acting together to fight the worst economic crisis in a generation? If we want to protect jobs today and position the economy for growth in the future, we do not do it by hiding behind artificial barriers to trade. That is totally wrong-headed.

For one, we are not helping our industries to become more competitive; we are coddling them. For another, adding a price preference for Canadian products essentially adds 7.5% to the operating costs of government, at all levels. I cannot believe that a member of the House thinks that is going to make our economy more competitive.

At a time when Canadians are sacrificing and when governments have put their costs under the microscope, to suggest that we pay a premium for bad economics is the height of absurdity. Our government is not looking backward like this. We are looking forward and outward.

We are against protectionist policies and we are determined to respect and uphold our trade commitments with our partners. That is why our Prime Minister was in Europe earlier this month, opening doors on trade talks with the European Union potentially worth $12 billion in new Canadian exports.

The government has a perfectly good plan to fight the recession. It is the economic action plan. This multi-year plan outlines the steps we will be taking to stimulate the economy, to protect Canadians during a global recession and to invest in our long-term economic growth. As a result of these actions, Canada will emerge from this recession with better infrastructure, a more skilled labour force, lower taxes and a more competitive economy.

To finance this plan, the government is making a deliberate choice to run a temporary deficit to help stimulate our economy. There will be no long-term running of permanent deficits because the approach we are taking emphasizes capital expenditures rather than increasing the operating costs of government. This allows us to meet short-term needs while serving long-term goals. It helps sustain and create jobs during the global recession, and it allows us to build the infrastructure our country needs for long-term growth.

As the economy recovers, we fully expect to emerge from deficit and return to surplus within five years. We will use future surpluses to pay off the debt incurred during this recession. This plan will get money into the hands of individuals, families and communities in all provinces and regions of this country.

The measures we are taking are necessary, affordable and short term. I want to emphasize that point. It is temporary. It will not permanently increase the cost of government. We will continue to avoid a long-term structural deficit that we cannot afford. The amount that we borrow this year will remain affordable and reasonable by international standards.

Let me also assure the hon. members that the economic action plan contains many measures to support industries in difficulty, including the forestry, manufacturing, tourism, agriculture, fisheries and automotive industries. At the same time we need to focus on keeping our markets open and continuing free trade with our American partners. When 80% of our manufactured goods are dependent upon the U.S. market, we cannot afford to start putting up barriers to trade. Nobody can, so let us not start with this bill. We need to keep the Canadian market open and we expect our trading partners to do the same.

Do the hon. members of this House honestly think that the best way to fight the recession is by increasing the cost of government and putting up new trade barriers at this time? Do they think that is the best way to protect jobs and prepare Canadians for the future?

I doubt the majority in this House would agree that this is the best way forward. I would ask members to vote to defeat this bill, which would undo everything that Canada and the world is fighting for: more jobs and strong, competitive economies for the future.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Mr. Speaker, we do not support Bill C-306. Frankly, the bill seems aimed less at being passed than as a medium for certain partisan discussions. Its purpose seems to be to implement buy Canada legislation in response to the buy America provisions in the recently enacted U.S. budget. It is for those very reasons that we object to it. We are in the middle of a worldwide recession. Protectionism is widely regarded as the worst possible thing that countries could engage in in a worldwide recession. We are in the throes of objecting strenuously to the American buy America provisions.

As an aside, we on this side of the House are very upset with the fact that the current Conservative government has not done nearly enough in anticipating these buy America provisions and working in Washington before they were enacted to ensure that they were not, and we are seeing many manufacturers in Canada already suffering as a result. We have a concern that the current Conservative government has not done nearly enough to deal with these protectionist measures, but our position is very strongly that they do not belong, especially in a time of worldwide recession. In that sense, for a Canadian bill to suggest a similar approach is completely opposite to what makes sense from an economic perspective.

We have some significant concerns with the way the bill has been drafted. There is no empirical evidence or sound economic reasoning behind what the bill is supposedly trying to achieve. The 7.5% price differential this bill wants to apply seems to have been completely pulled out of a hat. There is no logical way of measuring the Canadianness and an attempt at measuring this for the 50% and 75% requirements in the bill is comical, at best. The agreement certainly does not provide any indication of anything otherwise.

The bill attempts to say that the provisions of NAFTA would still apply but, in our view, certainly this bill contravenes NAFTA and it certainly contravenes the spirit of our free trade agreements with the United States, Mexico and others.

The bill is poorly and vaguely drafted to allow for interpretation that may be inappropriate, in our opinion.

Ultimately, if protectionist measures are imposed, our significant concern is that this will harm Canada's economy, not improve it. We are on record as saying that free trade is important for economic competitiveness, economic sustainability and ultimately, economic prosperity. We object strenuously to the American attempts at protectionism, and we have said so publicly. For Canada to be seen to be attempting to do so completely flies in the face with our public position. Not only would it be damaging to our economy, but it would be extremely damaging also to our international reputation.

Mr. Speaker, I neglected at the beginning to ask to split my time with my colleague from York South—Weston. If it is all right with the Speaker, having neglected to do so, may I make my request at this point and ask my colleague to step in?

[The Deputy Speaker, Conservative, Andrew Scheer]

As the member may know, because we are in private members' business, she would need the unanimous consent of the House to share her time with her colleague, the member for York South—Weston.

Is it the pleasure of the House to allow the member for Willowdale to share her time with the member for York South—Weston?

[Some hon. members]

Agreed.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Mr. Speaker, I would like to thank all of my hon. colleagues in the House.

[The Deputy Speaker, Conservative, Andrew Scheer]

I recognize the hon. member for York South—Weston.

[Alan Tonks, Liberal, York South—Weston, ON]

Mr. Speaker, let the record show that was not totally unanimous as there was a latent undercurrent, but I thank members of the House for allowing me to say a few words on this subject.

The Bloc is well motivated with respect to the desire to remind Canadians that within the global economic picture there still is an element, albeit in a permissive way, for there to be a concept of buying local, for example, buying agricultural products that are produced by our farmers which are the best agricultural products in the world. We are reminded of our forestry industry. We have the best fibre in the world and yet we have an industry that is in serious decline. It is affecting towns and communities rights across the country.

I appreciate and I am sure the House appreciates the spirit and motivation of the Bloc in bringing forward this bill. Within the context of globalization, the movement of capital, the serious competitiveness of the movement of capital and God knows that we need to have capital invested in the commercialization of technology, we are trying to transform our economy. At the time when we need to identify these global trends and not only stay within the spirit of the WTO and globalization, but also the law itself, this is not the time for us to disaggregate our capacity with respect to competitiveness.

I would suggest that while the Bloc may not intend that, we could see a disaggregation with respect to our national strategy to compete in a global sense. At the very time when we think we are doing the right thing for our regions and provinces, we would be doing the very opposite. While I understand the motivation, I think that the Bloc should reconsider this issue.

Very recently, for different reasons, we have been looking at drawing closer relationships, for example, with the CARICOM countries of the West Indies. We have been looking at more of a hemispheric approach with respect to our ties with Colombia and Peru. There is a serious debate in terms of why we should embark upon that particular strategy, but the reason I mentioned that is that those particular initiatives are in keeping with globalization and, where there is a balance of payments and a capital deficiency with respect to investment, to open doors that would redress that and to bring Canadian products into a competitive mode and to balance that out against our interests.

While the bill may not intend to undermine or be contrary to what our global strategy should be, in fact that is what it does. From my perspective it invites a retaliation. If it is not deemed to be in the interests of our national policies, if it is deemed to be protectionist, then the perception of that will drive those whom we are attempting to reach out to, to be in trade relationships and the extension of that to drawing capital and investment here, we would be going the very opposite way.

For those reasons, as I said, I believe the Bloc is well intentioned on this, but in actual fact the bill would have exactly the opposite reaction to what the Bloc is hoping to accomplish.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I want to begin by thanking my colleague from Rivière-du-Nord for bringing this important issue before the House to Commons today. I want to thank her for saying what we are all thinking.

We have all been thinking in recent months and years that Canada's procurement policies go beyond stupidity. Sometimes they border on economic treason. I would like to use one case study to illustrate my point.

I should point out as well that the NDP feels so strongly about Canada's faulty procurement policies that our member for London—Fanshawe has introduced a similar bill to be debated in the House, Bill C-392. We have seen many parallels. These two bills complement each other, because the issue is as poignant for those in London—Fanshawe and the rest of Canada as it is for my colleagues in the province of Quebec. I am pleased to see that my colleague from Rivière-du-Nord is generous in her spirit by saying that her Canada includes Quebec, or her Quebec includes Canada. Let me put it that way.

The one illustration I would like to point out is something that happened recently in my home province of Manitoba. We believe that good government means putting the interests of Canadians first. I use that quote from the president of the Manitoba Federation of Labour.

The Government of Canada needed new troop buses for the Canadian military, so it put out a tender. I should point out that Manitoba builds the best buses in the world. The second best buses in the world are built in the province of Quebec. There are two bus companies in Canada and both build excellent buses, first class buses. In fact the Canadian military uses nothing but buses built in Quebec and Winnipeg for the rest of their troop carriers.

The government put out a tender for 32 new buses. Only two Canadian companies bid on it, from Quebec and Manitoba. A third company, a German company, Daimler-Chrysler, was the low bidder. Get this. It was a $32 million contract. Mercedes-Benz won it by $60,000 on a $32 million contract. This is 1,000 Canadian jobs. We got screwed. For less than the price of a set of tires, the Government of Canada chose to give that contract to Germany, so our tax dollars are creating jobs in Germany and unemployed Canadians in Quebec and Manitoba could have and should have been building those buses.

Let me expand on this folly. Let me expand on how stupid that is. I do not use that term lightly, but that decision was fundamentally stupid, because now we have said to the rest of the world that if they want a good troop carrier, they should buy German. That is what our army did. Now all of our NATO allies in Afghanistan in the field are being ferried around in 32 buses made by Mercedes-Benz.

We also had to build in a whole new parts regime. We had to train our mechanics so they could fix the Mercedes-Benz buses as well as the good Canadian buses that they used to drive.