Thank you for the question.
First, it was certainly not my intention to drop a bombshell. But I did want to draw committee members' attention to the significance of this agreement that is not on the same scale as the softwood lumber agreement or the free trade agreement, for example. This problem is much more focused, but government procurement is the area that all countries protect most, especially the United States. So negotiating is very difficult.
When I said earlier that we should hold our fire until a better opportunity arises, I really meant that the solution, as I see it, in the case of government procurement, is to wait for multilateral negotiations, at the WTO, that is. But, as we know, they are in a bit of trouble at the moment.
By the way, agreement has already been reached on a new text for the WTO's Agreement on Government Procurement—the agreement will be applied, and is being applied, in the Canada-United States agreement. But there have been no negotiations on the real heart of the matter, the entities that the new agreement will cover. I feel that we should have waited for that. Unfortunately, we are out of ammunition; so what will we use when the government procurement negotiations start up again in Geneva? I do not know.
It must also be said—and I do not think that any of the previous witnesses have pointed this out, nor have I seen it in any public comments I have read—that, from the outset, in 1979, Canada protected its position by saying that, in fact, small and medium businesses could be given preference. But we have never had a program to do so here, while the United States has had one since the 1950s. We have never done that here, for government procurement.
I also wanted to raise a technical point that has come up two or three times: the threshold. The threshold that Mr. Hammoud mentioned was too high, at 7 or $8 million. The threshold—and I apologize to Ms. George—was not invented by the provinces. It was invented during the negotiations in the 1990s. It is expressed in special drawing rights, the common currency created by the International Monetary Fund. I think I recall that, at the time, it was 5 million SDRs, and it was essentially for construction projects. Clearly, none of the countries around the table—the provinces were not there at the time, for the reasons I mentioned earlier—wanted to be forced into international competitive bidding for every project, given that it is quite a cumbersome, slow and expensive process. They wanted to keep a certain proportion of the smaller projects as ones that were clearly not worth putting out to international tender. That is why the threshold is the way it is.
I very much doubt whether the threshold will go down in the future, because, after all, it is an administrative necessity. Certainly, by breaking projects into parts—which is illegal, by the way—you can keep projects that are actually above the threshold, and therefore open to foreigners, under the threshold. But that is prohibited and, given that it is, there are consequences if it happens.
As for remedies, I think that we are going to have to think about that seriously because, as I said earlier, we do not have a lot of cards left to play.
