Economic Relationship between Canada and the United States Committee on April 15th, 2021

[Geneviève Dufour]

We must be very careful when it comes to government contracts and environmental criteria.

I can tell you that this is one of my main concerns. I'm currently leading a battle with the Quebec government to require buyers to include environmental and social criteria in government contracts. Right now, in Canada, in Quebec and in several provinces, government buyers aren't required to include environmental criteria. Nothing encourages them to do so or makes their lives easier. However, in the United States, for the past 20 to 25 years, several states such as Maine, Vermont, California, New York and Massachusetts have been implementing these types of criteria in government contracts.

If we want to, we can play this game. I hope that we do. We must. To that end, the Government of Canada must require its government buyers to include environmental and social criteria in government contracts. We need to prepare the industry. You were talking about aluminum and the fact that ours is green. However, a number of our producers make green products. They can't even prove that their products are green at this point. They have never needed to do so since it isn't required in the bidding process.

Both the federal and provincial governments must do their homework, structure the market and give us the opportunity to be more competitive in foreign markets.

I don't know whether I'm answering your question. However, I think that we must be careful about this, because we aren't doing our homework when it comes to sustainable government procurement.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

That's fine.

I can see Mr. Chair turning on his microphone. I'll continue in an upcoming round of questions.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Savard-Tremblay.

You're very observant.

For the final question in this round, we'll go to Mr. Blaikie for six minutes, please.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

Thanks, everyone, for being here this evening or afternoon, wherever you happen to be across the continent.

I just want to follow up a little more on the theme of how we could use environmental and social criteria as a means not only to achieve important domestic goals, but also to try to access or provide access for Canadian companies to some of the work, not just at the federal level but at the state level in the United States, if we have common cause around.... I think that's one of the opportunities that some of our witnesses have pointed out, that the new administration in the United States is an opportunity to have more common cause around environmental and social goals.

What are some of the ways we might be able to mobilize those common goals in order to secure access to procurement projects in the United States under the spending that we're told is coming?

I know, Ms. MacEwen, you were speaking a little bit to that on the social side. There's a lot of talk in Ottawa and elsewhere about the virtue of community benefit agreements for public procurement. I wonder if that's one of the tools that might be used to define those social goods and how projects would achieve them. I wonder if you could speak a little bit to that.

[Angella MacEwen]

Absolutely. Community benefit agreements take a little bit longer to set up, but they generally have a number of benefits, in that the investment is sure to meet the needs of their community, because the community is involved in planning it. You can often target more concretely these underserved groups that we have elements for in the trade agreement.

Part of our inclusive trade agenda is to make sure that we're reaching indigenous-owned businesses or businesses owned by women, but this is a concrete way to make sure that a certain amount of the project is reserved for these types of investments and that there's training and those types of social investments. We call them “social investments”, but really they are economic investments.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Great. On the environmental question, I wonder if our other witnesses might like to speak to how Canada might both structure some of its own public infrastructure projects to support certain environmental outcomes, and also how we might use our willingness to do that in negotiations with the United States government in trying to ensure that Canadian firms might be able to access American public projects along these environmental lines and kind of create a reciprocal relationship there without violating any of the current strictures around preferential procurement.

Mr. Hughes, I wonder if we might start with you, and then I'll give my remaining time to Professor Dufour.

[Justin Hughes]

As a short answer, I think there has been very little discussion in the United States on the possible infrastructure package as it relates to environmental protection and favourable procurement for environmentally protective businesses and production methods. Personally, I certainly would like to see that. Of course, the easiest way to deal with the WTO procurement agreement is to make as many of your contracts as possible fall under the threshold. That's a limited strategy, but it is a strategy.

One also has to remember that we are in a period when all of these things are under discussion. I would agree with the spirit of many of the witnesses and members, in that now is an opportunity for like-minded countries to get together, even in an alternative forum, not necessarily the WTO, but perhaps at the OECD or perhaps within informal groups, to say that this is how we would like to reimagine some of these agreements, particularly government procurements.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you.

Ms. Dufour, would you like to comment on this?

[Geneviève Dufour]

Mr. Blaikie, you wanted to know how, in Canada, we could structure projects so that our government contracts include greener criteria. Is that right?

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

That's right.

Moreover, how could we use this willingness to get things done so that, if the United States shared this desire, Canadian companies would have access to projects promised by the Biden administration?

[Geneviève Dufour]

Global studies show that the process of greening our government contracts starts at the top, not the bottom. The government must require the addition of sustainable development criteria in government contracts. This can be done in a progressive and flexible manner. There can be short-term and medium-term goals. We don't want everything to be green tomorrow. However, the government must start requiring its own buyers to comply with environmental criteria.

In government contracts, the vast majority of bidding processes currently don't include any sustainable development criteria. It isn't right that this is the case in Canada, when we look at what happens in Europe, in Japan or in Tunisia, for example.

The government must impose obligations. We must develop a culture in our companies.

We know that small and medium-sized enterprises, or SMEs, run on a day-to-day basis. If we don't impose obligations on them as well, they won't change their methods. This isn't because they don't want to. It's because they operate in the here and now. They must develop another culture and change their methods. The SMEs that already have green assets must start documenting them.

I work with the Aluminium Association of Canada and glass producers. They don't always have the data to show that they're greener than other companies. Aluminum companies are really an exception, because they're ahead of many other companies. The most important thing is to give buyers tools. We need to give them the tools to make things easy.

[The Chair, Liberal, Raj Saini]

Thank you, Mr. Blaikie.

We will go now to the second round, with Mr. Strahl for five minutes, please.

[Leona Alleslev, Conservative, Aurora—Oak Ridges—Richmond Hill, ON]

Actually, I think Mr. Strahl has graciously given his time to me, Mr. Chair.

[The Chair, Liberal, Raj Saini]

I'm sorry, Ms. Alleslev. Go ahead, for five minutes, please.

[Leona Alleslev, Conservative, Aurora—Oak Ridges—Richmond Hill, ON]

Thank you very much.

Professor Hughes, you put it into context that the United States has been clear, in recent memory, in identifying where they're going. One of the areas has been the challenges with the global economic balance of power, the impacts of the playing field and the rules of global trade, not the least of which are the rules at the WTO.

The U.S. has made motions that it wants to amend some of them. Is that a fair statement?

[Justin Hughes]

The United States has become increasingly frustrated with some of the operations of the WTO. That is a fair statement.

I thank you for calling on me again, because I spoke so long the last time that I thought you never would.

There are those who say the WTO is dead because the appellate process is suspended right now, but I don't think that's fair either. We've really just reverted to the GATT system. The GATT system was a very constructive system for resolving trade disputes.

I'm optimistic, but we will go through a period of reassessment—and I think all of us together.

[Leona Alleslev, Conservative, Aurora—Oak Ridges—Richmond Hill, ON]

One of those is around domestic procurement and how we would use domestic money for our own industries and national security elements. Is that correct?

[Justin Hughes]

Absolutely. To riff off something Ms. MacEwen would say, many of us who believe in international trade also believe that localization is very important and that North American trade is more important than distant trade, so we should be fostering that.

[Leona Alleslev, Conservative, Aurora—Oak Ridges—Richmond Hill, ON]

That's fair enough. Possibly we might have an option to open chapter 13 of CUSMA, or perhaps we can look at the possibility of changing WTO rules. However, as you said, trade never operates in isolation. Some of the American policies are not necessarily directed at Canada, but the United States has been clear that there are some other aspects outside of trade, from the environment to security to defence, on which it would perhaps like Canada's position to change. That also might be a leverage point for our relationship on trade.

Is that how you're seeing it as well?

[Justin Hughes]

Yes, but I think the commonality of Canada and U.S. positions in multilateral fora is long and documented. I'm just reading a book on the development of GATT, and out of all the members of the Commonwealth at the time of the development of GATT, it was Canada and the United States that were trying to convince all the other members of the Commonwealth to come along.

[Leona Alleslev, Conservative, Aurora—Oak Ridges—Richmond Hill, ON]

So should Canada be looking at reviewing our position with respect to WTO, with respect to some of the North American NORAD defence principles, with respect to, say, our relationship with some other perhaps not-like-minded countries if we are hoping to reinvigorate and rebolster our relationship with the United States?

[Justin Hughes]

I think we need to find more common issues than just trade. We need to find the common things we care about—democracy, the environment, labour protection, human rights. Let me just say in 20 seconds that everyone needs to understand that after World War II, the trade system threw all of those things out in order to try to get the world economy started again. We're reaching a point now where it's time to bring those back in and to say that those count.

[Leona Alleslev, Conservative, Aurora—Oak Ridges—Richmond Hill, ON]

You're talking about a balance between world trade and domestic national security capability. Is that correct?

[Justin Hughes]

Yes, ma'am.

[Leona Alleslev, Conservative, Aurora—Oak Ridges—Richmond Hill, ON]

Ms. MacEwen, if I might, your organization published on February 21, 2020, a document making some recommendations on what information Canadians should have regarding economic impact. You recommended that economic impact assessments should be mandatory within the parliamentary process. I'm wondering if you still feel that way, and if understanding the economic impact of buy America or exclusion from a buy America process would help Canada's positioning on this topic?