International Trade Committee on March 16th, 2010

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

That has concluded the round, but we'll go around again. If there are questions, we'll keep them short.

Mr. Byrne.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thank you, Mr. Chair, and thanks to our witnesses.

Just so we can have confidence in the vigour of your respective positions, Ms. Healy, would it be fair to say your position is that the U.S. actually took a responsible decision by initially enacting a Buy American policy; that it is a responsible course of action to close markets? I base that on the assessment that you say there is value and benefit to Canada in keeping some protectionist behaviour within our own procurement markets. Was it the responsible thing initially for the U.S. to close markets on procurement?

[Dr. Teresa Healy]

The United States has had that policy since the 1930s.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

So they should continue it.

[Dr. Teresa Healy]

We saw a certain intensification of this policy happening. What's important about that, as it's important for Canada, is that it's a policy tool. It's the way in which public money can be used to develop economic recovery, and it should be used in Canada. We are very much in support of such a way forward in Canada.

For example, if we could think of any ways in which the public sector--

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Ms. Healy, you have answered the question itself. In fairness, I'm going to have a crack at Mr. Laurin in a second.

So in essence, it was probably a good idea for the U.S. to do that. That's the take-home message I am taking out.

Mr. Laurin, just to get a balance of the consistency of your message here, have you ever come to this committee or to the industry committee and actually advocated that Canada should be a little bit protectionist? For example, in my own home province, members of the Canadian Exporters and Manufacturers have sometimes said--and I think it has been their position--that the offshore market should be a restricted or closed market, that we should be a little bit protectionist.

Are you telling us now that it probably wasn't a good thing, and we'll never do it again as an organization?

[Jean-Michel Laurin]

Actually, our message has always been consistent, and it is that we should use procurement policies as a strategic tool to develop our economy. In this specific case, with this deal with the Americans, what we're saying is that most of the time it makes more sense for us to guarantee other countries access to our procurement markets if we can get the same type of access to their markets. There are so many more business opportunities to be found in other markets than there are in Canada. Canada is, by and large, a fairly small economy, if you look at our size on a global scale. What we're saying is that if you want to use procurement strategically, in most cases it makes more sense, if we get reciprocal access to another market, to give another market access to our market in exchange for reciprocal concessions.

In cases where trade rules cannot be enforced effectively, or in cases where you cannot find such a reciprocal agreement.... That was the case made in the paper we released a couple of years ago. There's a very specific sector related to mass transit and highway construction where we haven't had access for years. What we're saying is that it's important, because we're losing business as a result of it. What's our strategy to address it? Obviously, our goal should be to open that market. It should always be to try to open new markets for us. In case we're not able to get those concessions, we should look at what we can do to use procurement as a strategic policy tool here within Canada.

I hope that answers your question.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Yes, basically, instead of having a blanket policy that the free market is the way to go....

[Jean-Michel Laurin]

I think we should look at it--and we think we should look at it--from a business perspective. What's the best deal possible we can get? I think in most cases, if we could use our procurement market strategically, it would be to say that we'll give you access to our procurement market if you give us access to yours. In the case of markets like the U.S. or the European Union, which we're negotiating with right now, those markets are 10 times larger than our own market. As a Canadian company, we have a lot more interest in having access to those markets than privileged access to our own domestic market.

However, in sectors where you don't have free trade and you don't have open markets, then maybe we should look at different policy alternatives and see if there are other options for us out there.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thank you, Mr. Chair. I appreciate that.

[The Chair, Conservative, Lee Richardson]

I've got time for a couple of quick ones.

Monsieur Laforest, you can have one quick one, and then we'll have Mr. Keddy to close.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you, Mr. Chair.

Mr. Sinclair, in the third part of the agreement that we are discussing, there is mention of exploratory discussions leading to a more permanent agreement. Given your rather critical analysis of the current agreement, in your opinion, what things would be most important to include or to exclude in the coming agreement?

[Scott Sinclair]

Thank you for the question.

I would be very concerned, given the price, the steep price, we paid for very little result in these further negotiations, as I said before. The one thing to note about this agreement with the United States is that it did not require any congressional approval. There was some consultation with Congress. It didn't require state governments to make any new commitments beyond what they had already done in 1994. To gain secure access to some of the markets where, say, Buy American preferences are currently applied, as Monsieur Laurin was saying, such as mass transit or highway construction, which have been excluded for decades, I think Canada would have to pay an extremely high price.

Basically, I think it's totally unrealistic to expect to make significant inroads, particularly in the current context, when Buy American policies have never been more popular.

I just want to say that I actually hear some common ground in the positions here. They are in areas where our major trading partners are clearly using procurement as an important tool for local economic development. Why shouldn't Canada and our provinces be doing that as well? In my case, I think it's an intelligent policy that can contribute to our international competitiveness. Others may believe that it's a way to increase our bargaining leverage in future negotiations.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you very much.

[The Chair, Conservative, Lee Richardson]

Mr. Keddy.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chairman, and thanks to our witnesses.

Given the train of thought that you were just beginning to follow, Mr. Sinclair, then to me it would make sense that the issue I think we're talking about here is reciprocity, and we didn't have reciprocity. We were at a disadvantage, and a very serious disadvantage, vis-à-vis our American competitors. Given what you just said, it would make sense, then, that if we follow that through to fruition, it would actually make our case even stronger, that now that the Americans have opened up procurement, we've opened up our procurement.

By the way, the provinces have been solidly onside here to open up procurement. They didn't come kicking and screaming to the table here. They were leading the way to the table. Then it would make a lot of sense that we have made major headway and we're positioned for the Main Street program, or any other Buy American type of program that comes out, to negotiate an end to those.

We're not going to do it by simply saying we've been hard done by. The Americans don't hear that; they don't pay attention to it. The protectionist measures you've been espousing, quite frankly, frighten me. Worse yet, I think it puts us at loggerheads with Americans, who are tough negotiators. They've always been tough negotiators. We know that.

But if you follow that through and we're able to open up the marketplace, what would you think of the deal then? And I mean open it up in future programs.

[Scott Sinclair]

Again, I think there has to be a dose of reality here. We didn't make any significant inroads. The U.S. did not make any significant concessions, despite the major effort and high priority that Canada put on this deal. This is not a new story. There were additional negotiations under the WTO, the government procurement agreement at the sub-federal level, and under NAFTA at the sub-federal level. Canada's position up until now has been that without genuine reciprocity we are not prepared to make these commitments, whether it's to sacrifice our policy flexibility or to give away the negotiating coinage.

At this moment in time, I honestly think it would be more astute for our Canadian consulates in the United States to be turning down the temperature a little bit. Even when Buy American preferences are applied, up to, in many cases, 50% of the content can be foreign. In many cases, Canadians are subcontractors in these deals. Over the decades that these policies have been in place, our companies have done a good job of adjusting to them. I don't think they pose the threat that some people seem to believe to the overall health of Canada-U.S. trade relations. That's certainly President Obama's perspective and I think the perspective of most members of Congress.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Some $700 billion worth of contracts that Canadian companies couldn't bid on I think poses a threat to Canadian businesses. I really do.

I'll go back to reciprocity, and I want to give one quick example—I know we have a vote coming up very soon.

All of us come from ridings that are dependent upon manufacturing. I represent a very rural riding in Nova Scotia, and our industries, many of them smaller industries, depend on manufacturing. In fact, 87% of the entire riding is manufacturing based. There might be a sawmill, but it's manufacturing dimensional lumber. Fish plants do value-added. The aeronautic sector depends upon international contracts, and some Canadian contracts.

If we somehow think we can depend upon our 33 million people in Canada for our marketplace, when the world is our marketplace, in my part of the world, the 85,000 people who live in South Shore—St. Margaret's would be out of work tomorrow.

We're a part of the world that took advantage of shipbuilding. We do business in many countries around the world, and we're well positioned to do that, in a very modest way in many instances, but without it we would be shut down and we'd all move out west, or to Quebec, or to Ontario, because there'd be no work at home, and then we'd just be competing for jobs there.

[The Chair, Conservative, Lee Richardson]

I'm sorry, Mr. Keddy, we've just run out the clock.

With that, we'll conclude the meeting. We have a vote scheduled very shortly.

I want to again thank our witnesses for coming. I'm sure you'd be welcomed back. Thank you for the time you've put in today.

To the committee, we are now adjourned until Thursday at 3:30.