Bill C-392 (Historical)

The Speaker Peter Milliken

The House will now proceed to the taking of the deferred recorded division on the motion at second reading stage of Bill C-392, under private members' business.

The question is on the motion.

Siobhan Coady St. John's South—Mount Pearl, NL

Mr. Speaker, I rise today to speak to Bill C-392, An Act respecting the use of government procurements and transfers to promote economic development.

Let me begin by recognizing the good and honourable intentions of the member for London—Fanshawe in drafting this legislation.

The purpose of the legislation, as stated in its summary, is to promote employment and economic development in Canada. This is a goal we can all support. Strengthening Canada's economy in order to provide Canadians with meaningful, good-paying jobs is a top priority of members on all sides of the House. However, to achieve this goal we need responsible public policy that acknowledges and addresses the reality faced by Canadians. The reality is that Canada has a small population that relies on international trade for our collective prosperity.

We produce far more than we can consume, and this is the source of much of our wealth. Put another way, Canada is our classic small, open economy. When we consider the value of our exports and imports together, this represents more than two-thirds of Canada's GDP.

Approximately three-quarters of Canada's trade is with the United States. That is about $1.6 billion in two-way trade between Canada and the United States on a daily basis. That is the largest bilateral trading relationship in the world. No existing Canadian trade issue or policy area is as important or complex as Canada's relationship with the United States. The level of integration between our economies requires that we constantly build and strengthen that relationship, especially during times of economic uncertainty.

It is true, with so much of the Canadian economy depending on trade with a single partner, it does leave us vulnerable to protectionist provisions like buy American.

It is also true that buy American is killing Canadian jobs. Workers across Canada have watched their shifts disappear as Canadian manufacturers lose contracts in the United States. For example, Cherubini Metal Works in Atlantic Canada has had to lay off workers, blaming between 30% and 40% of its slowdown on buy American. Canada needs an exemption from buy American provisions. It is in the best interests of both Canada and the United States.

Unfortunately, the Conservative government has been late to act on the file. The Conservatives lost precious months after the U.S. stimulus package was passed when they tried to convince Canadians there was not a problem instead of working to solve that problem.

The Conservatives were wrong to declare victory over buy American when the United States amended the stimulus package in the U.S. recovery act to ensure it respected U.S. trade obligations. Their premature declaration of victory showed they did not understand our trade agreements. U.S. stimulus money is being spent by its state and local governments, and this spending is not covered by our trade agreements.

When buy American proposals first took shape, the Canadian government should have immediately sat down with the provinces to work out a proposal for an exemption that extended coverage of Canada's trade agreements with the United States to provincial, state and local governments. Instead of doing this immediately, the Conservatives waited. In the meantime, a number of Canadian manufacturers gave up on our federal government and began moving both their operations, and the Canadian jobs that go with them, to the United States.

A recent CIBC report blames U.S. protectionist provisions like buy American for slowing down Canada's recovery in 2010, so there is no question that buy American is hurting our economy. We owe it to Canadians to work on responsible solutions to the problem.

Bill C-392 certainly appears to be a reaction to the buy American provisions in the United States. Yet reacting in kind is not the answer. Here is what Gary Shapiro, president of the Consumer Electronics Association, said about buy American.

The “Buy American” provisions...will signal to our trading partners around the world that the United States is returning to the bad old days of protectionism and economic nationalism.

Why would we want to do the same in Canada?

Bill C-392 not only will not work, it would actually worsen the problem. While we work to address a growing number of trade irritants with the United States, like buy American, country of origin labelling, and the western hemisphere travel initiative, we must not lose sight of the fact that the Canadian and U.S. economies are still highly integrated. We do not simply trade with each other, we build things together.

One-third of Canada-U.S. trade is between divisions of the same company. Two-thirds of Canada-U.S. trade takes place within established supply chains. Over 3 million Canadian jobs rely on trade with the United States. Implementing protectionist provisions here at home would put these Canadian jobs at risk.

The unintended consequence of this legislation would be to hurt Canadian companies that have U.S. companies as part of their supply chain. These consequences have been identified by prominent leaders, such as Leo Gerard, president of the United Steelworkers of America. In a written submission to the Congressional Steel Caucus, he said:

Because we are an International union, and because Canadian and US manufacturing is so integrated, we encourage you and other members of the Steel Caucus to approach your counterparts in Canada to discuss a coordinated approach for the North American industry to strengthen its ability to create and preserve these good jobs in both countries.

American manufacturers often use Canadian suppliers. When American manufacturers are shut out of the procurement opportunities, their Canadian suppliers lose out too. This hurts Canadian workers.

Each additional barrier to trade along the 49th parallel increases the cost of doing business in North America, both in Canada and in the United States.

Instead of reacting to the rising U.S. protectionism with our own Canadian brand of protectionism here at home, instead of erecting trade barriers and contributing to the global trade war of the likes of Smoot-Hawley during the Great Depression, we should focus our efforts on removing trade irritants and bringing down unnecessary trade barriers, particularly between Canada and the United States.

In the face of increased competition from emerging markets like China and India, the best way to grow the Canadian economy is to work closely with our largest trading partner, the United States, to improve our competitiveness and make our shared market the best, most efficient place to grow our business.

To summarize, while I recognize that Bill C-392 is motivated by the best of intentions, it does not reflect or address the realities of the Canadian economy. A recent statement made by Ontario Premier Dalton McGuinty highlights this fact. He said:

Closing the border to companies south of the border is not the way to combat American protectionist policies.

McGuinty told the delegates at the Association of Municipalities of Ontario that the best way to ensure both countries enjoy a strong and sustained recovery is if they work together. He called on municipal leaders and politicians to reach out to their counterparts across the border.

Bill C-392 will not do this. Instead, it would in fact achieve the opposite of what the member for London—Fanshawe intends to achieve by needlessly risking Canadian jobs. It is not in Canada's interest to contribute to global protectionism.

Instead, our federal government must focus on gaining and securing access for Canadian exports to foreign markets, so that Canadians can sell their goods and services to businesses and consumers around the world. That is the most effective, most responsible way to protect and create Canadian jobs.

Ed Holder London West, ON

Mr. Speaker, I welcome the opportunity to respond to the hon. member's Bill C-392 now before us.

Let me be clear. The bill is yet another protectionist measure emanating from the benches opposite. It would require that every department and agency of the Government of Canada give preference to Canadian products when purchasing goods and services and when transferring funds to the provinces, municipalities and private parties. It would apply not only to every department and agency of the Government of Canada, but to any crown corporation and any foundation with 75% of its income or funding from the government.

The best way to promote jobs and growth in our country is not by protecting Canadians from foreign competition. Canadian workers and Canadian businesses can compete with anyone in the world. The best defence is always a good offence. Ask my London Knights. The best way to create jobs and growth is to guarantee that our products and services have access to markets worldwide. How do we do that? By ensuring world markets, including our open, stay open to competition.

The bill runs completely counter to world trends and the work of the last 20 years to guarantee Canada's access to international markets.

Beginning with the landmark Canada-U.S. Free Trade Agreement, signed in 1988, the Government of Canada has entered into many free trade arrangements to ensure this access. These included agreements with Mexico, as part of the North American Free Trade Agreement, with Chile, Israel, Peru and Costa Rica and with Iceland, Liechtenstein, Norway and Switzerland, as part of the agreement of the European Free Trade Association.

As we look forward, we know that as a small market economy, Canada's future growth depends on our ability to reach markets beyond our own borders. That is why at the Canada-European Union Summit in Prague earlier this year, the Prime Minister announced the historical launch of negotiation toward an economic partnership between Canada and the 27 member states of the European Union.

Canada is and always will be a trading nation. Many of the first nations people who populated this land in early times were traders. When the first Europeans arrived on these shores, they traded manufactured goods for furs. Voyageurs paddled their canoes deep into the interior to trade with aboriginal peoples, while other first nations traded at outposts set up by the Hudson's Bay Company. The fur trade shaped the social, economic and political history of our country.

Make no mistake, today, trade continues to dramatically our lives. One in five jobs in Canada is linked to international trade. Why would any member opposite want to kill good Canadian jobs? Seventy per cent of our gross domestic product is dependent on it.

We are the second most open economy to trade in the G8. Consider, for example, the significance of our trade with the United States. Canada and the United States are each other's most important partner in economic growth. It is a partnership that has developed and grown over the last 20 years and, frankly, over its history.

Since the Canada-U.S. Free Trade Agreement was signed in 1988, and then NAFTA in 1992, our bilateral trade has been one of the major components of economic growth. During those two decades, Canada-U.S. trade has tripled. Investment flows have also increased substantially. Two-way trade crosses the Canada-U.S. border at the rate of $1.6 billion a day. That is well over $1 million per minute.

Close to my city of London, trade over the Ambassador Bridge, connecting Windsor and Detroit, is greater than twice the value of all U.S. exports to Japan.

There are now over 40,000 exporting enterprises in Canada in areas ranging from information and cultural industries to finance and insurance and from construction to manufacturing.

An estimated three million jobs in Canada depend on our trade with the United States.

Given this scale of success, it is clear that protectionism is not Canada's friend; it is our mutual enemy. In fact, it is a threat to our economic recovery, a recovery that is nascent but remains fragile. Indeed, restrictions on trade could stifle the recovery that has just begun. That is because these restrictions reduce real growth prospects in both the developed and developing world, alike.

Protectionist policies might superficially look like an effective way of supporting economic growth, but our companies cannot compete if they are coddled. In fact, such actions prepare Canadian businesses not to complete on the world stage at all, but to fall behind.

In addition, we are committed to respecting and upholding our trade commitments with our partners, and we expect our partners to do the same.

Our government is committed to building to Canada's capacity to successfully participate in the ever-changing global economy. Through our Advantage Canada initiative, we have taken important steps to create the right conditions for Canadian businesses to compete here and abroad.

Our plan lays out five key advantages that make up the groundwork for even greater prosperity for Canadian businesses and individuals, both today and in the future. Key among these are our tax advantages. A competitive business tax system that is responsive to changes in the economic environment is important to encourage investment, growth and job creation in all regions of Canada.

To come out of this global recession, we need to continue trade as free of barriers as possible. We just have to look at our history. If the great depression taught us anything at all, it is that the downward spiral of protectionism only leads to a more dire situation. That is why our economic action plan protects Canadians during the global downturn, not by restricting trade but by promoting it.

Our Budget Implementation Act revoked additional tariffs to increase international trade. This plan works to create new good jobs for the future and to equip our country for success in the years ahead.

We are acting through the most appropriate means to protect our economy and Canadians affected by the downturn. That includes the tax system, the employment insurance program and direct spending by federal and provincial governments. It includes lending by crown corporations and partnerships with the private sector.

The plan, which is among the largest fiscal stimulus packages in the world, is working. For the first time in a generation, Canada's unemployment rate is a full percentage point less than the United States rate.

Furthermore, the International Monetary Fund forecasts that Canada will be among the least affected by the global downturn this year and our recovery will be one of the strongest among G7 countries in 2010.

What our plan leaves behind is protectionism in the dustbin of history where it belongs. Canadians know we cannot build a fortress and lock ourselves inside. We must continue to engage with the world and work together to solve common challenges.

I believe the evidence before us can only lead to one conclusion. For the sake of Canada, for the sake of our families and the sake of our kids, I call on my colleagues in the House to oppose the bill.

Bruce Hyer Thunder Bay—Superior North, ON

Mr. Speaker, before I begin commenting on this bill, I would just like to take a minute to express my sincere condolences on my own behalf and that of the New Democratic caucus to the family and friends of the former member of Parliament for Port Arthur, Doug Fisher, who passed away earlier today. He was just one day short of his 90th birthday.

Doug Fisher led an incredibly accomplished life that included many careers. He was in the armed forces. He was a miner, a teacher, a fire ranger, a construction worker, and he was considered the dean of the parliamentary press gallery when he joined the press after his parliamentary career.

He was a very active and sometimes very outspoken member of Parliament who was always dedicated to his constituents. He was greatly appreciated for his integrity and his commitment, and he will be deeply missed. Our thoughts are with his five sons: Matthew, Mark, Luke, John and Tobias, and with their families.

His legacy in the CCF, in the NDP and in Parliament will not be forgotten.

It is my pleasure to support my colleague in urging the passage of Bill C-392 introduced by our hard-working member for London—Fanshawe. She has been long committed to helping Canadian workers. This bill continues that dedication.

Others who might not share that dedication might say, and have said here today, that this bill is protectionist at a time when they want more trade openness. I was disappointed in the previous speakers from the Conservatives and especially from the Liberals today. Did they read the bill? I thought they were discussing a different bill here today. If they read it, they do not seem to have understood it, especially the Liberals who said they were going to vote against NAFTA and repeal it, and vote against the GST, and who are now coming onto this bandwagon.

They gloss over the fact that all of our major trading partners have had the same or more stringent measures in place, most of them for decades. This is not protectionist. It is smart and it is fair.

Governments here have left Canadian companies and workers at the mercy of foreign competitors on government contracts and infrastructure projects, while the same Canadian companies are blocked from bidding on foreign government contracts abroad. That was not fair and that was not smart.

This bill levels the playing field for Canadian products and services. It does nothing more and nothing less. A made in Canada procurement policy has been a long time coming. Canada is the last in the G7 to play catch-up and implement even minimal domestic procurement requirements. Canada is the last within NAFTA to do it as well.

Successive Conservative and Liberal governments in Canada have lost a lot at the negotiating table. There has been a chronic failure of our governments to show courage and strategy in trade negotiations and disputes. Why have all of our trading partners done otherwise? There are many reasons. Here are a few.

First, they have seen the wisdom of supporting their local industries. Mandating a minimum level of domestic content in public procurements is the smart way to use public tax dollars to stimulate our domestic economies. In other words, it will be our government buying our goods and services. That has nothing to do with free trade in the private sector. It is about our government buying our goods and services with our tax dollars.

Spinoff benefits such as local jobs, an increased tax base, increased industrial capacity and the sparking of innovation are sent abroad when projects are outsourced to foreign competitors.

One glaring omission in the stimulus package in this year's budget, whether that stimulus is actually flowing or not, is that there is no preference for products or services that are made in Canada, even when that planned spending involves billions of dollars. Canadian taxpayer dollars should not be going to stimulate the economies of China or the United States.

Second, in other countries, they know they have a fiduciary duty to their taxpayers to get value for those taxpayer dollars. The fact that the government failed to include any domestic procurement requirements regarding the billions in spending it announced is a major disservice to Canadian taxpayers.

When passed, the made in Canada bill will mandate domestic source requirements for federal rail, transit and shipping contracts, such that infrastructure projects supported by our federal government will use, at a minimum, 50% Canadian products and services.

That is getting more stimulus bang for our taxpayer bucks. Some of that stimulus will come back to the government in new revenues.

Third, it is important leverage in trade negotiations. Exercising this legislative muscle is crucial if Canada wants to be taken seriously when we assert our interests to export markets. For Canada to have any leverage in trade negotiations, we must implement our own domestic buying by our own governments. Only then would we be in a position to pursue a managed trade agenda that would optimize and fairly allocate the beneficial impacts of public procurement.

The current government practice of again and again allowing the free market to make key decisions makes no more sense for the industrial sector than it did for banking or financial services.

Critics have sometimes said that we cannot implement made in Canada because it would violate our trade agreements, like NAFTA. Baloney. This will not violate our trade agreements. I ask my colleagues to go back and read the bill. It is very simple and straightforward. Let us not confuse trade in goods commitments with rules for domestic procurement.

For example, restricting steel imports would contravene NAFTA and WTO rules and would be protectionist, but using public funds for state and local projects in order to favour U.S. suppliers to stimulate the U.S. domestic economy would not. In fact, Canadian steel imports have already seen litigation in U.S. courts under NAFTA and the tribunal in those cases rejected the Canadian companies' claims because public procurement is also exempt from NAFTA investment rules. The U.S. already does it and it has been cleared by NAFTA and the courts.

Direct federal procurements are constrained because of NAFTA and WTO agreements, but federal transfers to provinces, states or municipalities for infrastructure are not. This is how the American government requires 60% domestic content in infrastructure projects there while still complying with NAFTA.

The United States has had buy America requirements on its books since 1933. When are we going to get it? This is the reason that so many Canadian companies have opened up plants and shifted production and Canadian jobs just across the border to places like Plattsburg, New York, and Blaine, Washington.

The current buy America debate in the U.S. is about extending its policies yet further. Made in Canada offers flexibility on future trade deals when trading partners are fair. The government is currently negotiating a trade agreement with the European Union and its 27 members, all of whom are also party to the WTO's AGP.

I do say bravo to our Prime Minister for his efforts to diversify our international trade which is greatly needed. This can be profitable to all parties involved if agreements are crafted intelligently.

As I have already mentioned, direct federal procurements are already regulated under international agreements and preference cannot be made for domestic companies. It is therefore no surprise that a focus of ongoing negotiations for the Europeans is to ensure that provincial and other non-federal contracts are opened up.

The made in Canada act does not preclude any agreements with the Europeans or any other AGP country. That is flexible and it is fair, but what it will not do is let the government sell us down the river in the future.

In conclusion, Canada absolutely must pass an act mandating made in Canada requirements. Let us really stimulate the Canadian economy and not just the U.S. and Chinese economies.

Let us stand up for Canada. Let us stand up for Canadian companies and for Canadian workers. Let us get the most mileage from hard-earned Canadian taxpayer dollars.

Diane Bourgeois Terrebonne—Blainville, QC

Mr. Speaker, today we are voting on Bill C-392. I will read the summary because there are two aspects to this bill that promote employment and economic development in Canada by ensuring that the Government of Canada, while complying with its international obligations, gives preference to Canadian products or services in transfers to provinces, municipalities and private parties and in the procurement of its goods and services.

Let me say from the outset that the bill before us imposes conditions on cash transfers from the federal government to Quebec and the provinces. Once again, that is the sadly centralized and paternalistic vision of federalism rejected by Quebec. It is an insult to the Quebec nation and under no circumstances will the Bloc Québécois support a motion, bill or any other parliamentary initiative that seeks to undermine Quebec's autonomy by imposing conditions.

Furthermore, the members of the National Assembly have unanimously called for unconditional transfers. I see that my colleagues are paying close attention. I say to them that what we have here are the two visions of what Quebec should be. A sovereign Quebec would make it own decisions and would not let transfers or transfer conditions be imposed on it. But the bill before us is a federalist bill that says that when the Government of Canada makes transfer payments to the provinces and municipalities, it has to impose its vision. I would remind you that, in Quebec, the municipalities are creatures of Quebec, of the National Assembly. We have our own legislation in Quebec. We are not happy with this part of the bill.

The NDP bill also runs counter to Quebec's long battle to correct the fiscal imbalance. Quebec is calling for the right to opt out of federal spending programs in areas of shared and exclusive jurisdiction of Quebec and the provinces, with full compensation and with no strings attached. Unfortunately, the NDP has introduced a bill that interferes in Quebec's areas of jurisdiction.

We will oppose this bill for that reason, but also for another reason: the Bloc Québécois has already introduced Bill C-306, which would enable the government to use government contracts to promote economic development, while respecting the jurisdictions of all governments and complying with trade agreements. In Bill C-306, which is quite similar to the bill before us today, the Bloc Québécois ensures that, within international agreements, the federal government uses its procurement as an economic lever to promote the growth and prosperity of businesses here. This bill would enable Canada to purchase up to $600 million annually, which is the equivalent of 21,000 jobs a year. In a way, it is also a response to the Buy American Act, and it would add to the pressure on the U.S. government to drop this sort of measure. This bill we have introduced focuses specifically on purchases not subject to NAFTA. In other words, it complies with the rules and the spirit of NAFTA, which would address the concern my Liberal colleague expressed earlier.

However, this bill is much narrower in scope because it would affect Government of Canada goods and services procurement only. It would target purchases whose value falls under the threshold requiring the government to issue public tenders under NAFTA. It would target only small federal government expenditures under $25,000 U.S.

We know that the Government of Canada is the largest buyer of goods and services in Canada, that it makes about 3% of its purchases abroad, and that passing a buy Canadian bill like the one the Bloc Québécois is proposing, as opposed to the one before us today, would halt the flow of some $600 million to other countries. If only half of those purchases had been made in Canada, we would have created an estimated 21,000 jobs per year.

If the Bloc Québécois bill were passed instead of the one before us today, that would mean over $60 billion spent in Canada, perfectly legally, without having to deal with NAFTA legal negotiations.

The bill before us today contains conditions that are unacceptable to Quebec, conditions governing cash transfers from the federal government to Quebec and the provinces. We do not like that idea. We want our independence, and we will never accept such a federalist, paternalistic vision. Furthermore, the Bloc Québécois has already introduced Bill C-306, which would use procurement to promote the kind of economic development that does not impose conditions on Quebec and the provinces and that complies with international agreements.

That is why, unfortunately, we cannot vote for Bill C-392 even though it is well-intentioned.

Martha Hall Findlay Willowdale, ON

Mr. Speaker, I am rising today in response to the proposed Bill C-392, An Act respecting the use of government procurements and transfers to promote economic development.

I appreciate the efforts of my colleague from the NDP and I will acknowledge good intentions. I believe firmly that credit is due when it is appropriate, and I do appreciate good intentions.

However, this proposal, in effect, is a vague, protectionist and retaliatory response. It is an attempt at a response to the buy American provisions in the United States which we, as a group of parliamentarians, have vehemently opposed for some time now.

I wish to stand here today to show our lack of support for this particular bill. Let me add a little bit of context to our position on this. The buy American provisions were announced some time ago and are clearly creating significant challenges for Canadian businesses and therefore for Canadian jobs.

As much as I might have some agreement with some of the interventions from my colleagues across the way, I hate to inform them that I am not in fact part of their current coalition and I will take significant exception to some of what they said.

The challenge that we are facing now requires results. It does not require letters and words. So far, from the Conservative government that we have at the moment and since the buy American provisions were announced, we have seen nothing but letters, some of which have gone unanswered and words. This past week alone we have seen another photo op with the President of the United States, who once again acknowledged, in certain words, that the buy American provisions were not something that he felt were that important from a Canadian perspective, and that we really ought to focus on things of a more significant nature. From a Canadian perspective, these buy American provisions are in fact very important and very damaging. We need far more than a photo op and words and letters.

What we needed, and still need because we continue to not see any results, was a recognition of the impacts of the buy American provisions. Although the federal government is subject to NAFTA, the individual states of the United States and the many municipalities are not. The effect of the buy American policy, and not even just the provisions but the sentiment, has created significant efforts on the part of many states and municipalities in the United States to source specifically from the United States, which, as I have said, has created a real challenge for many Canadian businesses and therefore Canadian jobs.

The answer is not, at the top, to make noise and to protest weakly. The answer should have been and continues to be to have people on the ground in the United States, not just in Washington but at the various state levels and the municipalities, working with those people to ensure that Canadian businesses and Canadian jobs were not going to be sacrificed and put at risk because of the buy American provisions.

I feel very strongly in representing the Liberal Party saying that we stand for free trade. We stand against protectionism. We stand for the long-term economic benefits of free trade and against protectionism, and that one cannot do a knee-jerk reaction at the expense of long-term economic benefits.

We are critical of the buy American provisions, very much so. I, as a Liberal on this side of the House in opposition, am also very critical of the complete lack of results that we have seen from the Conservative government.

It is my distinct recollection that the other opposition parties have also been critical of the buy American provisions and have also been very critical of the lack of results seen from the current government.

How on earth does this response sound: “We do not like buy American. We want you to stop the buy American provisions or we are just going to do the same thing”? It sounds frightfully like children in a sandbox saying, “You have now thrown sand me, so I am going to throw sand at you”.

Retaliation does not good policy make. Simply recognizing the circumstances that we are now in, even if there were value to this, which I question, the appearance of having us as Canadians who as parliamentarians appear to have been unanimous in our critique and our criticism of the buy American provisions to simply even be seen to be promoting buy Canadian as a retaliatory measure would make absolutely no sense, and in fact would be somewhat embarrassing, frankly, for us as Canadian parliamentarians.

I would recommend that my hon. colleague think very seriously about moving this forward. I invite her to engage in a discussion on how we can achieve solid results collectively and ensure that the government finally works to achieve some results in challenging the buy American provisions.

However, this particular bill does absolutely nothing of the kind. On the contrary, it really diminishes our ability, when we are engaging with the Americans, to encourage them to reduce their buy American provisions.