Thank you, Mr. Chair.
I am going to make a brief presentation. My thanks go to the committee for giving me the opportunity to provide these remarks.
Government procurement makes up a significant part of our economic activity. So it is not surprising that the topic generates so much interest in our trade agreements and remains an important matter in all trade negotiations. Canada has been subject to international obligations for procurement approximately since the early 1980s. Currently, there are three international trade agreements that include obligations on government procurement: NAFTA, especially chapter 10; the World Trade Organization agreement that specifically deals with government procurement, and the free trade agreement between Canada and Chile, to which a chapter on government procurement was added in 2008.
The basic objective of international agreements on government procurement is to commit the parties to establish transparent, open and fair procurement policies. However, the obligations apply only to the federal government. No obligations apply to provincial or municipal governments.
Government procurement chapters are essentially structured in two parts: the substantive rules and obligations and the market access commitments. The substantive obligations, or rules, are essentially the same in all of our three agreements. The rules centre on the key principle of non-discrimination, that is, foreign suppliers should be treated the same way as domestic suppliers. The prohibition would offset, for instance, minimum local content requirement, the transparency of procurement laws and regulations and policies, and the transparency of the procurement process itself.
The agreement also contains provisions on dispute settlement, including what is known as the bid challenge mechanism whereby a supplier can challenge before an impartial body, in our case the Canadian International Trade Tribunal, any aspect of the procurement process. In fact, Mr. Masse has elaborated a bit on this topic.
In terms of market access commitment, each agreement defines in a precise and detailed manner the scope and coverage in terms of the type of procurement, the goods, services, construction, the minimum dollar value threshold of a procurement that is covered, as well as the list of government entities for which the procurement is made. I believe we have a one-pager that outlines the different thresholds that are used in our various agreements, and you'll see that there are some differences among the three agreements for goods, services, and construction.
In terms of the entities covered, Canada's commitment extends to procurements made by or on the behalf of a very large number of federal departments and agencies. And in the case of NAFTA and the FTA with Chile, we also cover ten federal crown corporations. In terms of the types of procurement, generally all goods are covered, with the exception of defence-related goods. There are, however, some purchases of the Department of National Defence and of the Royal Canadian Mounted Police that are covered, such as office equipment, but the bulk of the purchases of these departments related to procurement of military equipment is not included.
In terms of the coverage of services, the coverage is generally more limited than goods. Some very significant purchases, such as those related to information and communication services, are not included in these agreements.
Finally, Canada includes all construction projects, with the exception of dredging and construction contracts tendered by or on behalf of Transport Canada. These are the broad parameters. In addition to the specific coverage, Canada has retained a number of specific exceptions in these agreements. The most notable exclusions or exceptions are procurements in respect to shipbuilding and repair, urban rail and urban transportation equipment system components and material incorporated therein, as well as project-related materials of iron and steel.
We also have included an exclusion for set-asides for small and minority businesses. These exceptions or exclusions are included in all our three agreements. With respect to the set-aside for small and minority businesses, Canada originally retained this exclusion to match the same exclusion taken by the United States during our negotiation of the NAFTA and of the WTO agreement.
At that time, Canada did not have a minority or small business set-aside program in place. Since then, however, Canada has implemented the procurement strategy for aboriginal businesses, a set-aside program for aboriginal businesses, and that program is administered by the Department of Indian and Northern Affairs. With respect to our trading partners, as I mentioned, the United States has a set-aside program for small and minority businesses. This is a long-standing program dating back to the 1950s. The U.S. set-aside program has historically been a difficult issue for Canadian businesses because of the lack of predictability in that program and the fact that such procurement would have otherwise been subject to the obligation of these agreements.
It's worth noting, however, that other important trading partners of Canada, such as the European Union, do not retain a set-aside exception for small and minority businesses. In fact, the European Union has been and continues to be a vocal opponent of any such programs.
In conclusion, international trade agreements play an important role in the development and implementation of government procurement policies and practices. They foster our domestic policy objective of transparent and competitive procurement processes, and internationally they ensure that Canadian suppliers have fair and non-discriminatory access to government procurement in our trading partners.
Thank you, Mr. Chair.