International Trade Committee on March 23rd, 2010

[Scott Brison, Liberal, Kings—Hants, NS]

There's a carve-out. What I'm saying is that the agreement shall not apply to restrictions attached to federal funds for highway projects. That's under the WTO GPA. I think it's just really important that all of us, as legislators, and you, as stakeholders, are aware of what the agreement does and doesn't do in terms of access. Part of what we're doing at the committee is scrutinizing the agreement.

For highway projects, mass transit projects, bridges, and construction-grade steel, the agreement does not apply.

The other issue is that in the Speech from the Throne, the government claimed that this provided permanent access to local and municipal government contracts in the U.S. Yet when we had the officials here before the committee, they confirmed to us that in fact there is no permanent access to local U.S.... That is very important, because in fact the agreement itself refers to it as a temporary agreement, but we're opening up our procurement, in terms of our municipal governments and our subnational government procurement, on a permanent basis. I think that's something we have to be concerned about.

The issue also of the scale of what we have attained and what they have attained is important. Earlier witnesses estimated that this will provide us access to approximately 2% of the U.S. stimulus package, which is around $5 billion. That's one figure. According to the data we were provided by the Canadian Manufacturers and Exporters, if you take Canadian federal, provincial, and municipal procurement, it's around $33 billion per year. So we're dealing with a comparison. I would appreciate your thoughts on effectively opening up our procurement, worth $33 billion per year, and our accessing what appears to be, on a temporary basis, U.S. potential contracts in the range of $5 billion. I'd appreciate your thoughts on that.

Mr. Ross, as a business person, I don't think that sounds like a deal you'd enter into.

[Steve Ross]

No, it doesn't sound overly attractive, but the United States is a big country, and the sphere of inputs where we work represents only a small percentage of the area, such as the northeast, we'll say. When you look at those kinds of numbers and the reciprocal side of their coming to eastern Canada to do work, it's again not as attractive because of the cost issues that we have going in the other direction, so I don't know from a very practical point of view whether there's any real net loss of trade back and forth.

[Scott Brison, Liberal, Kings—Hants, NS]

You also have the advantage of having perhaps the best workforce in the world in Hants County.

[Steve Ross]

It's pretty close, yes. That's right. It's a big factor in the equation.

[The Chair, Conservative, Lee Richardson]

With that commercial, you have 30 seconds remaining. You can divide it as you wish, but we're going to stick to seven minutes today.

[Michael Buda]

I agree that the best workforce definitely comes from your riding.

As I said in my remarks, we haven't really spent much time analyzing the reciprocal aspects of this agreement because that really isn't a mandate for municipal government to concern itself with. We really focused on what the impacts might be on municipal procurement. As I said in my remarks, there are many details left to answer, but from the information we have so far, it appears that the restrictions and the new rules are reasonable.

However, some of the information this committee is uncovering in its study is going to be helpful for us, and we certainly will be sharing it with our members. Our judgment on this is certainly not final.

[The Chair, Conservative, Lee Richardson]

Mr. Laforest?

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

Thank you, Mr. Chair.

Good afternoon and welcome to all the witnesses.

I would like to ask Mr. Shrybman a question about the dispute resolution mechanisms. In this agreement, mention is made of negotiations and of consensus building as a way to resolving disputes. I imagine that, if no consensus is possible, a dispute can be submitted to the WTO. Is that the case?

If so, I would like to ask you another question. If there is a significant delay, could a project be held up because of an approach to the WTO for the resolution of a dispute? If that happened, I suppose that people in a municipality, for example, might have to completely do without a major infrastructure construction project.

Is it possible that a dispute might not be resolved and then be referred to the WTO? Is it possible that there might be a very long wait?

[Steven Shrybman]

I'm afraid I can't answer that question with respect to the general procurement agreement of the WTO. I can answer it with respect to the dispute resolution provisions of the temporary agreement, which apply now. The general procurement agreement doesn't apply to municipalities, and from our perspective should never apply to municipalities, but the temporary agreement does.

Under the temporary agreement, Canada is obliged to establish a dispute process if a U.S. company doesn't feel it has been given the access to municipal procurement that the agreement allows. The dispute body does have the authority to say, “Stop the procurement process now, because there's a dispute here that needs to be resolved before it continues.” What is so problematic about the regime, from our perspective, is that there's no reciprocal obligation on the United States; if Mr. Ross's company is trying to bid on a construction project in Maine, and Maine maintains local preferences--as it probably will, because most U.S. states do--there's no recourse. There is no dispute body in the United States.

Mr. Ross's company has no right to access that market, so there's not much point in filing a dispute. It's just another example of how absurdly one-sided this temporary arrangement is.

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

I would like to ask you another question since you are a lawyer. Mr. Caron mentioned softwood lumber. I am sure that you have already looked at questions like that. Do you think that the loan guarantees to forestry companies contravene the softwood lumber agreements? Are there any negative consequences in London from the statements that the Conservative government made in the House, to the effect that it is illegal? For example, could a member of the panel point to statements like that and make them a factor in the ruling?

[Steven Shrybman]

I have considered that question. In my view, the loan agreements weren't problematic. But Canada's response is emblematic of the way in which it seems to approach negotiations with the United States, which is to cry uncle even before the fight really gets under way.

We have leverage in our relationships with the United States on trade, particularly with respect to oil and gas exports, but we won't use it. The United States knows that, and this is a game of hardball. They're not going to go easy on us because they know we won't fight back. Canada's position on those loan agreements is simply reflective of the fact that our federal officials do a terribly poor job in standing up for Canadian interests in negotiations with the United States. I think a lot of the dynamics of this procurement agreement have to do with the federal government trying to persuade Canadians that they will get tough with their U.S. counterparts.

It's why the work of this committee is so important. You need to blow the whistle on what is a capitulation to U.S. interests, not a negotiation to protect Canadian interests.

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

You say that the Americans are definitely going to put public policy in place that will allow them to increase the advantages of, and to derive maximum benefit from, the exemptions in the agreement.

Given those conditions, do you feel that Canada, Quebec and the other provinces could do the same thing? In fact, you are saying up front that Canada will not do so and that the Americans know it. But I would like to know if you feel that Canada could do the same as the United States under the agreement.

[Steven Shrybman]

Well, yes, I very much do. Local governments in the United States, state governments in the United States, governments in Europe, governments in China, and governments in Japan understand that when they spend taxpayers' money to create public infrastructure and to buy public goods, they should also think about providing benefits to local producers and local workers. Everybody does it but Canada. The question shouldn't be how are we going to get rid of their prerogatives? The question should be why don't we have the same in place?

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

If Canada does not do so, even though it is possible under the agreement, Quebec could still do it at some stage. I hope we will.

[Steven Shrybman]

Yes, but it has to preserve the right to do so. It has to protect its right to put those local preferences in place so that it can use the available tools to put people to work in Canada.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Julian.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair.

Thanks to all the witnesses for coming forward today.

The more we seem to know about the details of this agreement, the more I think one can question the wisdom of signing it.

First, I would like to talk to Mr. Caron and Mr. Shrybman.

We have heard from witnesses about this agreement. For a start, last week, March 18, to be precise, Mr. Carl Grenier said that, sad to say, this was the worst agreement that Canada had ever signed apart from the softwood lumber agreement, which, unfortunately, only the NDP opposed in committee. It became clear later that passing that bill was not a good idea. Jobs were lost all across Canada.

My first question is: is this agreement just as detrimental, less detrimental, or worse than the one on softwood lumber?

My second question goes to Mr. Scott Sinclair.

Mr. Sinclair testified on March 16. He said the Quebec Ministry of Economic Development estimated that the total value of non-allocated funds for the seven U.S. programs was only a little over $1 billion. In fact, the seven programs are actually six, because after the agreement was announced by the Conservatives, we found out that one of the programs had already been fully subscribed. We're actually talking about six programs of about $1 billion and we're giving up about $25 billion.

Do you agree with those figures? Are we trying to get access to $1 billion and giving up or opening up complete access to $25 billion? Do you feel it's an accurate assessment?

[Guy Caron]

Very quickly, in terms of being a worse agreement or a less worse agreement and so on, I won't necessarily get into this. In the end, the union I represent actually backed the softwood lumber agreement. We knew it was a bad deal, but with the state of the forestry industry at the time we didn't have much of a choice. Our members were suffering and we needed to put an end to this suffering. It was a very bad deal. And we feel that this is a bad deal, for the same reason that Monsieur Grenier advanced last week, which is that Canada always seems to be negotiating out of a position of weakness.

The United States doesn't necessarily need that. We went to the U.S. at a point when we were vulnerable, and we said we needed a deal--as Mr. Grenier said, at any cost--and we got that deal. We fully support Mr. Grenier's assessment on this. When Canada negotiates with the United States, because of the sheer difference in size we need to be very careful with what we're giving.

And what we're giving right now is a lot more. You mentioned $1 billion. I think the number that was mentioned by Mr. Sinclair was $4 billion to $5 billion maximum--it might be less than that--for temporary access. That actually ended shortly after.... All the contracts under the fiscal stimulus in the U.S. ended at the end of February. Now Canada will likely only have access--possible access--to subcontracts coming out of this. In exchange, the number that was submitted was a bit over $27 billion, and this is very possible as well.

Mr. Brison mentioned that the permanent access we'd be giving would be worth about $33 billion a year. Those numbers are coming from the exporters and manufacturers. It's very possible. The problem is that we'll be giving access almost without limits. We'll basically be shackling ourselves, our provinces, removing them from the possibility of using this procurement for local development.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Okay.

Thank you.

Mr. Shrybman.

[Steven Shrybman]

I would answer the question this way. When U.S. stimulus spending came down the pipe, much was made of the Buy America provisions attached to certain federal spending programs. Many of those had been in place since the 1930s. But the federal government made a bold commitment to negotiate a waiver with the United States, and it told Canadians that's what it would do.

When it went to the United States, I think the United States trade representative must have said to Canadian negotiators: “You have got to be kidding. We are not going to, and we couldn't conceivably, at a time when our economy is in such disarray, abandon one of the few tools we have for actually stimulating the economy and creating jobs. If we took that proposition to the states, we'd lose every seat in Congress.”

That's what I'm sure the Canadian negotiators heard. So what did they say at that point? Did they come back to Canadians and say, “Look, we're not going to get the waiver we told you we were negotiating. We should talk about how to put in place the same kinds of local preferences that every other member of the OECD establishes”? No. At that point they adopted a strategy of a deal at any cost.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Shrybman.

I have a question for Mr. Buda.

Thank you very much for coming today. You talked about the six principles, including consultation. I've been speaking to municipal councillors in my area, and they're concerned about the stand the FCM has taken. What consultation has the FCM done? Have you had any impact assessment on how many lost jobs will result from opening up complete access to American companies to bid on municipal procurement, even though Canadian companies can't access American municipal procurement?

[Michael Buda]

Well, as I said in my remarks, we don't feel there was much, if any, consultation on the agreement in principle, until now. The new minister made a commitment to change that position just a couple of weeks ago.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

So you're concerned. You have not been consulted. The FCM has not been consulted.

[Michael Buda]

No. As I said in my remarks, it was action by municipalities, starting with the town of Halton Hills, which spoke out on the urgency of this issue, that brought this issue to the top of the public agenda. Before that the government, and I would have to include Parliament, really wasn't thinking about or concerned with Buy America. There may have been negotiations going on in back rooms and in private, but it was not being debated publicly. So no, we were not consulted.

Now, as I said in my remarks as well, this is an area of federal-provincial jurisdiction, and we respect provincial jurisdiction in this area. As I said, though, you can't very well do a deal that includes municipal procurement without including the experts in municipal procurement.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Allison.