Evidence of meeting #10 for Economic Relationship between Canada and the United States in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was steel.
A video is available from Parliament.
Co-Chair, Trade Justice Network
Sure. I definitely think more transparency, more information, and more consultation are always better, so yes.
Liberal
The Chair Liberal Raj Saini
Thank you, Ms. Alleslev.
We'll now go to Mr. McKay for five minutes.
Go ahead, please.
Conservative
Liberal
John McKay Liberal Scarborough—Guildwood, ON
Thank you, Chair.
I want to narrow the focus here and get the best advice we can from three very able people.
There's a $2.3-trillion proposal by the President—roughly the size of Canada's entire economy—and it's quite clear that if you look through the various elements in the bill, many of them have nothing to do with buy American or with any difficulties that we might have in the trade relationship. It's also clear that we haven't had a heck of a lot of really good access to the American economy. Even at the best of times, it's something in the order of about $600 million, according to an answer we received from the trade folks.
The real question here is what to focus on. What is your best advice to the Government of Canada in terms of what it should focus on, assuming this bill goes through? It won't go through at $2.3 trillion, but it will go through certainly north of $1.5 trillion. The question, really, that I have is, what is the area of focus, the areas that are most problematic, and the areas where the Government of Canada's arguments are strongest? What are the elements—and I'm not sure who said it—that are legally questionable?
I'd like to start with Mr. Hughes and then go to the two other witnesses for answers to those questions, if I may.
Distinguished Professor of Law, Loyola Marymount University, As an Individual
In a quick answer, I've not studied the initial administration proposal on the infrastructure bill. I don't know what the $600 million statistic is that you cited, Mr. McKay.
I will tell you that the Biden administration officials have told me that in terms of government procurement access, their estimates are that Canadian firms are open to address about $300 billion worth of U.S. federal procurement, versus U.S. entities having about $10 billion available to bid for on the Canadian side. I am conscious that folks in the government in Washington are aware of that differential.
My advice, if I were giving advice, would be to sit down carefully with Washington—because right now Washington is very, very concerned about supply chain issues—and figure out where the holes are in the North American supply chain, and let's jointly fill those. If that means a factory here that's refurbished and a factory there that's refurbished and we jointly do something here—great.
I'm sorry. I'll take just 20 seconds more. In testimony before this committee, you've been talking repeatedly about Ontario automobile plants suspending production because of lack of semiconductors, but the same thing is happening on the United States side. We have this common problem.
Liberal
Full Professor, Université de Sherbrooke, As an Individual
I completely agree with what Mr. Hughes just said. In my opinion, after a comprehensive analysis of the measures that will be announced—a process that will take some time—the Government of Canada must hold discussions to reaffirm the integration of our value chains. This bears repeating over and over again: the Americans can't close their territory today and think that they'll become self-sufficient. Our value chains are too integrated.
Mr. Hughes spoke about the automotive products that are constantly crossing the border from one jurisdiction to another. Unfortunately, a discussion after the analyses isn't a satisfactory solution. This leads to a great deal of unpredictability, which is the worst enemy of trade. That said, I can't think of a better solution.
Liberal
Co-Chair, Trade Justice Network
Thank you.
I would agree on the supply chains, but I think what we need to do as a government is to prepare our industry to be able to meet those types of sustainability criteria, to be able to help them show where they have clean energy supply chains and where they're using Canadian steel or Canadian aluminum that has a much lower footprint. We can easily prove that. Those are the types of things that will help them be competitive in the market globally and within the United States regardless of buy American policies.
Liberal
The Chair Liberal Raj Saini
Thank you, Mr. McKay.
We will now go to Monsieur Savard-Tremblay.
You have the floor for two and a half minutes.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
Thank you.
I'll turn to Ms. Dufour again so that we can pick up the discussion from where we left off earlier. Since I'm also keeping up with your work, I know that you have already described the presidential executive order as a mixture of everything done up to now. We're talking about scattered practices, meaning policies, executive orders and measures. They're being put under one umbrella and made official.
Is the Small Business Act part of this? Of course, I'm talking about the American legislation that ensures a minimum amount of content from SMEs in government contracts.
I also want to know how this relates to the overall picture that you painted.
Full Professor, Université de Sherbrooke, As an Individual
You're right to bring up this measure, which can affect Canadian businesses. You're talking about the measure whereby all contracts under $250,000 must be allocated to American small businesses. This means that Canadian companies are excluded from these contracts. However, American companies have the option of forming a joint venture with a Canadian company or at least co-contracting in Canada. Again, this isn't a perfect option. However, the option is available for up to 50% of the contract value. An American company can co-contract with a Canadian company.
It isn't perfect, but it's another limit that the Americans enshrined in their commitments. Under international economic law, they have the right to do that. We must then negotiate to obtain preferential access to their market. Within the WTO, the AGP rules apply to 48 states. If we want to be treated more favourably, we'll need to negotiate with them.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
In terms of the minimum amount of content from SMEs in the contracts, the same rules apply, meaning that the advantage given to one must be given to the other. Is that right?
Bloc
Full Professor, Université de Sherbrooke, As an Individual
It's the rule of the most-favoured nation, yes.
Any measure, privilege, law, directive or policy that would favour Canada, even if it isn't mandatory, must be extended to all the other states, unless it's included in a duly concluded and notified free trade agreement.
Liberal
The Chair Liberal Raj Saini
Thank you, Mr. Savard-Tremblay.
Now we will go to Mr. Blaikie for the final question, for two and a half minutes, please.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
Thank you very much.
I'm going to start with Professor Hughes because I just want to explore a little bit more the kinds of supply chain coordination you are talking about, or the potential for it between Canada and the United States.
I am wondering how that interacts with the prohibition on sector bargaining, and what those kinds of agreements on supply chain coordination might look like without engaging in any kind of sectoral agreements that would be prohibited under the World Trade Organization rules.
Distinguished Professor of Law, Loyola Marymount University, As an Individual
I'm happy to answer that.
On the sectoral agreements that Professor Dufour was discussing, I believe she was talking about GATT article 14, which means that if you have a preferential trade arrangement, including a free trade area, you cannot do it by sector. That has nothing to do with collaborative efforts on developing a semiconductor factory or in building a pipeline or a dam for generating electricity.
My analysis would be that's not an issue and we don't need to worry about that. I see Professor Dufour nodding her head with a yes.
Liberal
Full Professor, Université de Sherbrooke, As an Individual
I completely agree with this statement. These arrangements are outside the scope of the agreement when their purpose is to carry out a given project.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
Then what does the relationship look like between governments that are identifying a need in private markets and the private actors within those industries? It's not something that New Democrats and I are typically averse, but when we talk about that kind of coordination within a sector, what kind of public involvement are we talking about?
