Thank you for inviting me to appear on behalf of the Trade Justice Network. We are a coalition of environmental, civil society, student, indigenous, cultural, farming, labour and social justice organizations. We came together in 2010 to call for a new global trade regime focused on social justice, human rights and environmental sustainability.
The Canadian and U.S. economies are very tightly interconnected, with many goods, services and even workers crossing the border every day. The planned stimulus from the United States is good news for Canada's economy, and especially Ontario's, because a stronger U.S. economy generally has positive spillover effects on this side of the border too. I know that we're concerned about buy U.S. and buy American agreements excluding us from some of this money, but I think we need to keep in mind that any stimulus the the U.S. federal government is offering within the U.S. will have spillover effects in Canada, and we will likely benefit from it in the long run, even if we don't directly benefit from some of this spending.
Even so, Canadians are rightfully concerned about buy American clauses hurting Canadian businesses and the workers who had hoped to be able to bid on some of these large U.S. contracts. There's also often a lot of confusion in the Canadian public, because we've been told we can't attach buy local requirements to our public procurement, so how is it that the United States gets away with doing this so openly?
As the two previous speakers explained, the answer is quite simple. Canada is one of the very few nations that has given away our right to attach buy local provisions for subnational governments. The United States has never done so and does not intend to bind subnational government procurement to any of the international trade agreements they are a party to at the federal level.
As Professor Dufour said, the trade agreement that applies in this case is the World Trade Organization's Agreement on Government Procurement, or GPA, because there is no chapter covering government procurement in the updated CUSMA. The U.S. federal government must allow Canadian companies to bid on federal infrastructure projects that fall under the GPA. Despite the rhetoric from the government right now, there likely will be projects that Canadian companies can bid on because they fall under this trade agreement. The problem, as I'm sure others have already told the committee, comes when the federal government transfers infrastructure dollars to U.S. state or local governments, which are not covered by this agreement on procurement.
Since Canada has given away our access to subnational procurement under the GPA and also under the CPTPP and the CETA, we essentially have no bargaining chips left to play in offering the United States special access to any Canadian projects in return for special access there. In all of those deals, construction projects over $9.1 million cannot have buy local provisions, and the bar for goods and services is lower: $366,000 under the CETA and $650,000 under the GPA and the CPTPP.
Despite this, I think there is still a way for the federal government to follow Biden's lead, and that would be through setting sustainability criteria on inputs such as cement, steel, iron and aluminum. These criteria in Canada's own infrastructure projects would favour Canada and U.S. producers because our higher domestic environmental standards result in goods that have a much smaller carbon footprint. This would help level the playing field for high-quality Canadian and U.S. producers, while also helping Canada and the U.S. meet their climate targets, something that has been recommended before by Blue Green Canada.
Social criteria, which could also be allowed, could direct money to businesses, workers and populations that are currently underserved by the economy, such as first nations businesses and women-owned businesses and those types of things, allowing these firms to grow in line with Canada's inclusive trade agenda.
The Green Economy Network, which I'm also a part of, has called for $80 billion in green investments over five years in Canada. These investments would help us build national transit, both within cities and between cities. They would help us retrofit buildings across Canada and grow our renewable energy sector. This investment would directly create 200,000 jobs each year and would allow us to meet our climate targets. That would put us in line with the U.S.
Today, in her first speech as the U.S. trade representative, Ambassador Katherine Tai said that, on the environment, “the multilateral trading system has no rules to address the corporate incentive to participate in the race to the bottom.” She continued:
The view that environmental issues are not an inherent part of trade ignores the reality that the existing rules of globalization incentivize downward pressure on environmental protection. This puts countries with higher environmental standards at a competitive disadvantage.
She says that environmental rules are not a social issue. This is actually an economic issue.
If we put Canadian versions of buy American and buy American conditions, such as sustainability and social criteria, on federal transfers to the provinces and territories, that would bring our policy into line with the Biden administration. It would allow us to work together on a North American green jobs and procurement strategy.
The Biden administration has signalled interest in reforming the WTO and the GPA at the WTO to allow nations to get serious about their commitments to the climate, particularly the Paris Agreement. It would be very good for Canada's economy, job creation and environment if we joined the United States as global leaders on this front.
Finally, I want to point out that, as the committee knows, Canada has failed to support a motion at the World Trade Organization that would waive restrictions to ensure that vaccines and other medical supplies for the pandemic are affordable for developing nations. U.S. President Biden is under significant pressure right now to change his position on this issue to ensure that, globally, we can vaccinate as many people as quickly and as affordably as possible.
Canada should work with our U.S. allies at the WTO council to reverse course on this and allow a temporary waiver of IP rights for life-saving technologies and medicines.
Thank you very much.