Government Operations Committee on June 9th, 2026

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

I agree. It's not a bad thing to buy Canadian, but we need to think more about a policy of industrial sovereignty. When you make a commitment, you don't break it because of a change in party or government. This is a matter of ideology. Although there is positive discrimination and it is relevant, I fear that we are not well prepared for the next step.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Mr. Gill, go ahead, sir.

[Harb Gill, Conservative, Windsor West, ON]

Thank you, Chair.

Gentlemen, I was talking to the Windsor Construction Association this morning, and one of the questions they brought up was in terms of precedence. Municipal governments have their own version of buying local or buying Canadian. The Province of Ontario has something similar, the Buy Ontario Act, and now we have this new policy implemented by the federal government. Which side of the government takes precedence over all these things? That's the confusion that they have, and so do I.

Who is the top dog, let's say?

Dr. Fry.

[Dr. Noah Fry]

It certainly depends on the contracting entity. I'm not sure if I totally understand the question, but perhaps you mean who's leading the way in terms of policy design?

[Harb Gill, Conservative, Windsor West, ON]

Yes.

[Dr. Noah Fry]

We have different policies, and the reality is that when you navigate from one jurisdiction to another, you may have a completely different set of rules, and that creates some complications for suppliers.

Buy Ontario is more fixated on low-value contracts below international domestic thresholds, whereas buy Canadian is doing a very different strategy. It's fixated on high-value contracts where we can reasonably justify a national security exception and try to bring that contract home. Who do I think...? Now I'm changing the question. What more would you like to know? Is it which jurisdiction should lead the way and whether there should be more leadership on this front?

[Harb Gill, Conservative, Windsor West, ON]

Yes, in terms of auditing, oversight, is it going to be checked after the fact? Is it going to be checked before the contract is awarded, whether it's a provincial contract or...? Sometimes there are joint contracts that are offered. Who is going to be leading? Is it going to be dependent on who's spending the most money?

[Dr. Noah Fry]

Again, it comes down to the contracting entity, but you could also get into the complications around grants and contributions. We had this example with line two, for example, where the federal government had its own contribution and claimed that it was part of the buy Canadian policy. Ultimately, that was a contract to be awarded by the TTC, so it wasn't a federal government contract, but we are applying the logic to our grant and contribution.

[Harb Gill, Conservative, Windsor West, ON]

One other question that I heard from somebody else was, how does article 13.4 of the CUSMA impact this buy Canada policy? Article 13.4 has rules against discrimination against suppliers based on foreign ownership. Our affiliations, and as you pointed out, Dr. Fry, the origin loophole stays wide open, and the USTR has pushed back against this policy.

[Dr. Noah Fry]

We have seen some push-back internationally, not just from the United States. I will say that in my view, some of that is a tad hypocritical given the experimentation that's going on with some of those jurisdictions. In the United States, of course, it's going back to the 1930s.

The point taken, though, is that this policy purposely works and discriminates against suppliers based upon their origin and also introduces offsets, which are generally prohibited in international trade agreements and even domestic trade agreements.

Here we are explicitly trying to navigate those agreements by using the national security exception that's generally included for just about any agreement. The language sometimes varies. We're saying that the strategic procurements of these sectors are so fundamental to our national sovereignty that they are reasonably justified as an exemption. The United Kingdom is doing something very similar, so I think we're on solid ground here. It is plausible that an international partner may protest this in some way or raise a dispute. I think it's unlikely, but that is the risk of going for high-value contracts instead of the low-value contracts that you see in Ontario.

[Harb Gill, Conservative, Windsor West, ON]

Mr. Shimooka, would you like to contribute?

[Richard Shimooka]

My area of specialty is with basically federal procurements in defence.

I'll keep it very short. I think one of the challenges that you have there is who leads this in terms of capability versus the output for jobs or other objectives. I think this has become a somewhat fraught area, because I think there is a focus to try to develop economic activity. However, as I said before, inasmuch as I think there's an intent right now to hit 3.5%, that sort of funding level even now, because of the atrophy of the forces over the last 20 years here, isn't that much. That's not going to go as far as many people will believe.

As a result, I think there's going to be a bit of a struggle as to how much capability we can buy of either foreign or partner foreign, versus how much we can get domestically and look towards building a Canadian industry. I think that that's going to be a significant conflict point, for lack of a better word, that's going to exist within any future, upcoming procurements.

[The Chair, Conservative, Kelly McCauley]

Thanks.

Ms. Rochefort, go ahead.

[Pauline Rochefort, Liberal, Nipissing—Timiskaming, ON]

Thank you, Mr. Chair.

Mr. Shimooka, I must apologize, because when I first listened to you speak, I was very disappointed, as a Canadian, with your lack of belief in the capabilities of Canadians. That was my first reaction. As I listen to you, though, I have a sense that you actually believe in the framework that was introduced—the framework of Canada's—

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

On a point of order, Mr. Chair, I have no interpretation.

Perhaps Ms. Rochefort could speak in French.

[Pauline Rochefort, Liberal, Nipissing—Timiskaming, ON]

Yes, I can speak in French. I should do that more often.

[The Chair, Conservative, Kelly McCauley]

Are we working again? Okay.

I stopped the time. Go ahead, please.

[Pauline Rochefort, Liberal, Nipissing—Timiskaming, ON]

My sense is that what you're speaking about, to some extent, is Canada's defence industrial strategy, which speaks to building when we can, partnering when we can't build and buying when we're unable to either build or partner.

In your words, I sense that this is what you're basically saying. We will prioritize domestic production first, will have a joint development with trusted allies second and have off-the-shelf foreign purchases last. Am I correct in my conclusion?

The sense I get, then, is that maybe your overall concern is with longer-term sustainability. We're doing this now, but will we maintain it in 10 years, that investment and that support? Would that be a fair conclusion?

[Richard Shimooka]

I would agree to a certain point. The emphasis, to some degree.... I would change it a bit, where I think that a partner is really critical.

If you look historically.... Even during the Second World War, a great example is that Canada built tens of thousands of aircraft. However, Canada did not build a single aircraft engine in Canada because C.D. Howe, a minister at the time, and others realized that this would be too complex, would take too much time and would prevent us from actually making a usable output of our industrial capacity.

I'd like to think that.... Given how I view an industrial supply chain, whether it be a ship, a fighter or anything like that, the reality is that we're never going to have a defence autarky. There's always going to be a component built outside of Canada.

I think the build, partner, buy is fine. I'm not disagreeing with that, but we have to be really careful about trying to be too much, just doing the buy or the build at home. What I want to ensure, to some degree, is that the requirements for how we develop what we're buying are going to be commensurate with the potential scenarios that the Canadian Armed Forces in our country are going to face.

Again, I'm not disagreeing that we need domestic production. I'm not saying that. I think it's really important. This is an area that's been highly starved of funding for decades. You can even go to the Cold War to see that we didn't fund this properly.

It doesn't necessarily have to be an either-or, in some ways. It just requires a lot of care and attention, realizing that we may make decisions to procure from a certain country or have parts with a supply chain in a certain country, but they may close that off. There are European countries that are highly concerned about what's going on in the Pacific Ocean, with China and whatnot, but there are others that may not want to be participants, and they may close their supply chains. I think we have to be really flexible and just be more aware of how we go about this area.

[Pauline Rochefort, Liberal, Nipissing—Timiskaming, ON]

Thank you for expanding on that. I appreciate that very much.

Mr. Fry, when we say the buy Canada policy aims at building Canada strong, it in fact has two focuses. The first is leveraging every possible.... That's what I really like about the strategy. For me, it's about how we leverage every dollar from the public to strengthen Canada, but equally it's to leverage every possible public dollar to grow Canadian industries.

Would you agree with this viewpoint that there are really two focuses included in the buy Canadian policy?

[Dr. Noah Fry]

In large part, I would agree with that assessment, yes. I believe the policy clearly has a mission statement. I have no issue with those missions. I'm entirely in favour of buy Canadian and buy national procurement. I think it's a smart response at this moment.

I would disagree slightly in terms of leveraging every dollar. Part of what I'm raising as a concern in terms of leakages is that there are still ways in which foreign suppliers can benefit from our contract value, even if the contract is indeed covered by buy Canadian. We need to make sure that we're closing those loopholes so that more contract value becomes domestic value. Yes, I do agree with the aims of the policy.

[Pauline Rochefort, Liberal, Nipissing—Timiskaming, ON]

Building on that—

[The Chair, Conservative, Kelly McCauley]

I'm sorry, but that's our time.

[Pauline Rochefort, Liberal, Nipissing—Timiskaming, ON]

Is it, already? My gosh, that went fast.

All right. Thank you.

[The Chair, Conservative, Kelly McCauley]

Madame Gaudreau, go ahead.