We've been proponents of a Canadian content preferment for procurement—and it would not be possible at the federal level, but at provincial or local levels—to at least afford Canadian suppliers the type of access American suppliers have. Part of that is the transparency of the procurement process; part of it is making sure small companies are told about opportunities and can bid; a part of it would be volume issues too, because moving to higher volume to cut costs in provincial or local procurement has often excluded smaller Canadian companies. So all of that has a part in it. As well, most countries have some form of local procurement in terms of regional benefits. So that preferment is not a bad thing, and we have encouraged that.
What I would not want to see, though, are the same types of restrictions the Americans are putting on their procurement. To say all manufactured products have to be made in the United States, the rule will be substantial transformation of the product. What that's going to do will be to affect American suppliers to Canadian companies that then sell back into the procurement market. Those American suppliers will lose the business as well as the Canadian companies. It will tremendously complicate the procurement process, so if you want money out the door fast, this is not the way to do it.
The other problem Canada runs into far more than the United States is that we simply don't produce a lot of the technologies that are needed. I would say the Americans will find the same thing in particular areas like medical technology, security, environment, or energy as well.
All well and good. When we run into Buy America issues in the United States, they're extremely political. Of course, the argument is, well, we've got American taxpayers' money going into procurement and going into the recovery and the stimulus package, so why wouldn't that money be spent on American product? The irony is, of course, that the Americans borrow heavily from everyone around the world to finance their deficit and finance that procurement.
That's the problem. How do we solve it? I think the one thing that does get everyone's attention in the United States is the threat of retaliation. The Americans have paid a lot of attention to the fact that the Mexicans did targeted tariff increases there. They also paid a lot of attention to the Ontario Green Energy Act, because there is a local preferment policy there. So they're very sensitive to that issue and we should be leveraging that.
I think what we need to do is work on a sector-by-sector basis to find some form of reciprocal waiver that would allow American technologies into Canada and Canadian technologies into the United States based on the fact that federal money is being spent, and this could be a federal-federal agreement. At the heart of this is maybe the threat of some form of reciprocal action, that provincial procurement will remain open to suppliers from all countries as long as Canadian exports can freely flow into those markets.
At the same time—just one other thing—EPA has written guidelines about Buy America. At the very same time, EPA in the United States has just published a document for U.S. environmental technology industries saying look at the procurement opportunities in Canada and how can we help you take advantage of Canadian procurement in the environmental technology area? So there's a lot of commercial advantage to open-market access in both countries. I think that should be the basis for some form of reciprocal sectoral agreement that would waive Buy American restrictions there. It's going to be very difficult to negotiate that, though, given the political circumstances in the United States.