Government Operations Committee on Nov. 2nd, 2017

[Peter Burn]

I'm sorry...?

[Ana Renart]

Sorry, how would you do...? Can you repeat the question?

[Kelly McCauley, Conservative, Edmonton West, AB]

You talked about doing the procurement process and identifying that a bidder would have to meet this environment issue, this social issue. How would you do that, then, for—

[Peter Burn]

If it were emissions, you'd have to have a standard, which would be referred to in the procurement, but we don't have that standard because we don't have the knowledge—I don't believe anybody actually has the knowledge—to be able to say that steel from there is generating x compared to somewhere else. I don't believe that information has been nailed down by anybody.

I would bring you back to—

[Kelly McCauley, Conservative, Edmonton West, AB]

It sounds like something in Alberta. We have a carbon tax that is just causing carbon leakage to other—

[Peter Burn]

The theoretical question is whether the carbon tax should be on all emissions or just on domestically generated emissions, with a tax on foreign, as the HST is.

I would suggest going back to see how they attempted to handle air emissions in a treaty that caused about four years of international turmoil. The Europeans attempted to do it on a territorial basis and got the Chinese and the Americans very upset.

[Kelly McCauley, Conservative, Edmonton West, AB]

I want to go to the NSEs, the national security exemptions. How big an issue is it complaint-wise with us? Do other countries—I assume, like the United States—use that as well, blocking Canadian businesses from bidding on items?

[Peter Burn]

I can't talk about that. That issue is before the courts right now, so....

[Kelly McCauley, Conservative, Edmonton West, AB]

How many complaints a year, then, are we getting on the NSEs?

[Peter Burn]

Eric, you figure out how we can stay onside.

[Eric Wildhaber]

I think that question is more for my colleagues from Global Affairs.

I think what Mr. Burn was referring to is that in the area of the national security exemption, there is a case currently under review by the Federal Court of Appeal of a decision of the tribunal. I think he was pre-emptively trying to say that it's difficult for him or me to—

[Kelly McCauley, Conservative, Edmonton West, AB]

The reason I ask is that when we were looking at it, we saw that it's very clear that departments are using NSEs when they're not required. We heard CSIS is using NSEs for 100% of their purchases, including paperclips and photocopy paper. I'm wondering how much the use of NSEs by the government is causing trade issues.

[The Chair, Conservative, Tom Lukiwski]

You'll have to keep wondering, I'm afraid, Mr. McCauley, because we're going over now to Mr. Poissant.

[Kelly McCauley, Conservative, Edmonton West, AB]

I don't think I was getting an answer anyway, so I'm going to keep wondering.

[The Chair, Conservative, Tom Lukiwski]

Mr. Poissant, you have five minutes.

[Jean-Claude Poissant, Liberal, La Prairie, QC]

Thank you, Mr. Chair.

I thank the witnesses for their presentations.

My question is for all of you. I would like to talk about the process through which bids are assessed. Earlier this week, we heard our public servants tell us that bids are evaluated in light of technical and financial components.

Under our trade agreements, would the government be able to add a third component in evaluating bids that are outside the set-aside programs? For instance, could it add a criterion to assess how many jobs will be created, or could it add a criterion taking the performance of enterprises into account?

[Matthew Sreter]

Perhaps I'll take a stab at this, and then we can look over to my colleagues.

We are already witness to something very similar to what you've described, in the context of defence procurement under the industrial and technical benefits policy. It's the use of the value proposition.

Within that policy and the use of the value proposition, you have there technical, as well as financial, and then you have the use of the value proposition. One of the benchmarks that they're using is a 10% weighting for value proposition elements. There they're looking at, for example, sustainment of defence industry, bolstering the supplier base, proliferation of export potential, and so on and so forth, as part of their criteria.

Therefore, you have an example already, outside of the context of trade agreements. It is a good example. It is working very well. We currently have in the tens of billions of dollars under that particular policy, and 100% of those dollars is going to Canadian businesses.

In the frame of what is covered under trade agreements, then, if you're looking at what is covered under trade agreements, part of our procurement modernization efforts over at PSPC is to do just that: to look at exactly how we can operate under trade agreement obligations to employ socio-economic criteria, whatever those may be. We have to make sure they're objective, we have to make sure they're quantifiable, and we also have to make sure they're agnostic to local development—domestic content, for example—and that they adhere to our trade agreement obligations.

This is what we're looking at presently and where hoping to move forward in the coming months.

[Jean-Claude Poissant, Liberal, La Prairie, QC]

Thank you.

I would have a second question, for Mr. Burn.

I would like to know how the World Trade Organization could get involved with these small businesses.

[Eric Wildhaber]

You would like to know how the tribunal would react?

[Jean-Claude Poissant, Liberal, La Prairie, QC]

No, I am referring to the World Trade Organization.

[Eric Wildhaber]

This question is more suited for my colleagues from Global Affairs Canada.

As an internal tribunal, the Canadian International Trade Tribunal receives complaints that originate mostly from small and medium businesses in this country.

In fact, I would like to say a word or two about this. The system was originally created to allow our businesses to go abroad and compete for external government procurement contracts, and conversely to allow foreign businesses to settle here.

However, 98% of the complaints that come before the Canadian International Trade Tribunal come from potential Canadian suppliers, either from Quebec or elsewhere. That is why we are an internal tribunal.

With regard to external trade policy, I have a good idea of what the WTO is going to do, but that is not part of my mandate. It concerns my colleagues from Global Affairs Canada.

[Pierre Marier]

If I understand the question correctly, you are asking what types of discussions are happening at the WTO in terms of small and medium-sized enterprises. I can tell you that in terms of Canada's participation as a member to the WTO GPA, we have an exclusion for small and minority-owned businesses. It gives us a lot of flexibility.

In the context of the GPA committee, which meets at least three times a year, there is a work program that looks at policies for small and medium-sized enterprises. That work program is just getting started in terms of some of the issues that it's looking at, but among them are the various set-aside programs that other WTO parties have in this space. There has been a lot of discussion around the U.S. system, which has a fairly robust set-aside program for SMEs.

[The Chair, Conservative, Tom Lukiwski]

We'll now go to Mr. Weir for a three-minute intervention, please.

[Erin Weir, NDP, Regina—Lewvan, SK]

Thanks very much.

I left off on the question of border adjustments to carbon pricing. I was pleased that Mr. McCauley took it up. It's great to see some evidence of bipartisan interest in the idea. Mr. Burn offered some thoughts. I'm wondering if, given all this time to mull it over, other panellists had anything to offer on that front. If not, it would be entirely reasonable to come back with something in writing.

[Ana Renart]

I think that border adjustments on carbon are just outside the scope of what we do on procurement. It's not a procurement-related question.