Government Operations Committee on Nov. 2nd, 2017

[Peter Burn]

That's me. Can I add something for your land claim issue? Since way back, the language was about small business and minority rights, “minority” being aboriginal. The latest language really clarifies things. Procurement rules of the CFTA do

not apply to any measure adopted or maintained by a Party with respect to Aboriginal peoples. It does not affect existing aboriginal or treaty rights of any of the Aboriginal peoples of Canada under section 35 of the Constitution Act, 1982. 2. For greater certainty, nothing in this Agreement shall prevent a Party from fulfilling its obligations under its treaties with Aboriginal peoples, including land claims agreements.

We have expanded to very, very clear language. It used to just say “minority rights”, so we have really spelled it out from the point of view of indigenous people in the latest agreements.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Those were all discussions that happened prior to and during those negotiations of agreement, so that they actually know that it's in compliance—

[Peter Burn]

That's the agreement on internal trade, CFTA. With CETA, my colleagues here have essentially made it very similar, very spelled out. It's expanded, so it's no longer this, “What is in the minority rights?”

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Okay.

[Peter Burn]

It's a much better situation in terms of clarity.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

There are cases of what they would call contract splitting that can appear before your tribunal. Knowing that this is a risk that can happen, and knowing that small and medium-sized businesses would take this as a risk that maybe they can't deal with, how do they manage those in terms of the posting? Does that curtail them in terms of their postings for procurement?

[The Chair, Conservative, Tom Lukiwski]

It would have to be a fairly short answer, as well. I know it's a difficult question, perhaps, but we need a very brief answer.

[Eric Wildhaber]

That would be before us. That's more in their realm as well. Contract splitting is not permissible according to the trade agreements.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much.

[The Chair, Conservative, Tom Lukiwski]

We will go now to Mr. Peterson for five minutes, please.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair.

Thank you, everyone, for being with us this afternoon.

This is a very rich topic with many avenues of questioning that we can go down. It's a pretty thick set of subjects we can discuss here.

I wanted to start with my friends on the trade tribunal.

I was a commercial litigator, myself, before I had the honour of serving the great people of Newmarket and Aurora in the House of Commons. I have, on behalf of my clients, participated in some contract dispute cases—not with the trade tribunal, but in the Superior Court of Justice in Ontario. I'm wondering what the case load is like, what types of people avail themselves of the trade tribunal, and what sort of disputes tend to be the most common.

[Peter Burn]

I'll let Eric start, and then I'll fill in.

I've been doing this for three years. Eric's had many more years than three, so he might have a better history.

[Eric Wildhaber]

I've had a few.

The CITT, on the procurement side, you have to remember, is really a domestic tribunal. The word “international” is a bit of a misnomer. Actually, at one point, when NAFTA came on board, the procurement review board was the body that was doing the procurement review, and that was absorbed by the CITT. There was an amendment to the NAFTA implementation bill, which didn't get through at the last moment, that would have had the name of the CITT changed to the “Canadian international trade and procurement review board”. That would have been a better descriptor of what we're doing.

What we do, in effect, is provide another forum for dispute settlement in the procurement field. A supplier can always go to the Federal Court or to the superior courts of the provinces to make essentially the same claim against the federal government, but just using the contract A/contract B paradigm of the Ron Engineering decision.

That law that was developed by the Supreme Court is essentially embodied inside the trade agreements as well. What the CITT provides is an easier, quicker forum for those types of settlements.

We track a lot of things. My executive director and general counsel is a former management consultant, so he's very big on metrics, and so am I. I almost became an accountant instead of a lawyer.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Luckily, cooler heads prevailed.

[Eric Wildhaber]

Well, there you go.

We track a lot of things, but surprisingly, we don't track the activity before us by small and medium-sized enterprises, and I think it's simply because we never have been asked. However, in preparation for today and in going on, I'm going to recommend that the secretariat keep numbers on that, only so that we would be able to answer the question the next time we come here.

I had a look. Yesterday I asked my articling student to go through the caseload that we had last year. We had 70 cases last year. It was the highest volume of procurement review ever to come to us; it was in the order of $5 billion. There were a couple of big-ticket items there, but usually it's about $1 billion to $3 billion.

We did realize yesterday, from using the Industry Canada definition of what a small business is and for those businesses that we could confirm just by looking at them—a quick web search—to see that they were indeed small businesses, that we can safely say anecdotally, from last year at least, that more than half—up to 45 of the 70 complaints—came from what looks like small and medium-sized enterprises. They come to us a lot.

The last part of your question asked what the usual things are that come to us. Well, there are a variety, but one regular one would be an undisclosed criterion. According to the system, you're supposed to disclose your criteria in your solicitation documents. Essentially, the suppliers have to know what the rules of the game are before they invest the time and money to put together these bids and to answer these calls for tenders, but sometimes things are not well defined, or things can creep in, and at the evaluation stage you'll have an undisclosed criterion that seeps its way in. Then you'll have a bidder who says, “Hold on; I didn't get this, and what's the reason?” They're told what the reason is, and they don't like it, because they realize that they didn't read that in the solicitation documents. They'll try to resolve it, and if not, then go to the tribunal, or they can go to the tribunal directly.

That's a big source of activity, I would say.

[The Chair, Conservative, Tom Lukiwski]

I'll have to cut it off there. Thank you.

Mr. McCauley is next. You have five minutes, please.

[Kelly McCauley, Conservative, Edmonton West, AB]

I wanted to get back to what Mr. Weir was saying about bidding with the environmental protections.

I'll give you an example. I want to go back to the cement industry in Edmonton. They're running into an issue of being priced out of the market against foreign bidders because of our carbon levy in the province.

What would the workaround be to protect local companies who are working within the rules, protecting—ostensibly—the environment? In the example Mr. Weir uses, it's about the steel from a foreign country, China, at five times the greenhouse gas emissions. Cement is the same. What would be the legal way, not to skirt it but to accommodate Canadian businesses to protect them, protect jobs, and protect the environment? How would we work that in our bidding process?

[Peter Burn]

I'll try it first. This is going back to a previous life, not at the tribunal, but as a lawyer. I would certainly be looking to have a cap and trade system with a lot of allowances that basically free the cement—

[Kelly McCauley, Conservative, Edmonton West, AB]

Well, we don't have cap and trade in Alberta.

[Peter Burn]

—or one would have to look to see whether you could move a government to a territorial-based—

[Kelly McCauley, Conservative, Edmonton West, AB]

Sorry?

[Peter Burn]

It could be a territorial principle system of levy, much as we have with the GST, whereby you would have to tax domestically generated emissions and argue.... You would need to put it on at the border.

[Kelly McCauley, Conservative, Edmonton West, AB]

Could that be written into the procurements spec?

[Peter Burn]

Well, yes. You would have to have a tremendous amount of knowledge, which I don't believe anybody has, as to what the level of the emission would be, or else you would be running afoul of international trade agreements, probably article 20 of the WTO.

You would have to be very tight on the levy that you were applying at the border. I don't believe anybody has that information, so it would be very, very tricky to do that and not be challenged.

[Kelly McCauley, Conservative, Edmonton West, AB]

Right. One of the panel said you could identify items environmentally within the procurement process. How would you do that, then?