Thank you very much, Mr. Chairman and members of the committee, for giving me the opportunity to speak to you today.
I want to commend you for holding these hearings. These are extremely important international agreements, in terms of their impact on public policy and regulatory options available to Canadian governments. They're too poorly understood by Canadians, and there are too few opportunities for them to learn about the implications of the agreements that federal trade officials are keen to negotiate with the United States, Europe, Colombia, and other nations.
I'm appearing here today on behalf of the Council of Canadians. I'm a member of its board of directors. I'm a partner in the law firm Sack Goldblatt Mitchell. We have offices in Toronto and Ottawa. I have a public interest law practice that includes a healthy dose of international trade law.
The council is the largest Canadian citizens organization. It has tens of thousands of members. Many of them participate in the council's activities through community-based chapters, of which there are several dozen across the country.
Canada's international obligations, whether environmental, human rights, or trade, have always been a priority for the council. They've asked me to come here today to represent their views on this procurement agreement with the United States, and I do so as a volunteer.
You've heard, I believe--from my brief perusal of the transcripts of the proceedings before this committee--from other witnesses about how one-sided this agreement with the United States is, in that most of the benefits flow to U.S. companies seeking access to Canadian procurement markets. I believe that's an entirely fair characterization, and particularly true with respect to the temporary agreement rules that require provincial governments and municipalities to comply with international procurement rules for the very first time. I'm going to restrict my remarks today to that agreement on the temporary rules as they apply to municipalities, in part because of my fellow panel member here who represents the Federation of Canadian Municipalities.
You have a copy of my remarks. I'll simply paraphrase them to keep within my allotted time. You will see that in my view not only is this arrangement one-sided, it's egregiously one-sided. I hope that your assessment of the agreement will reveal and underscore the pressing need for much greater transparency during the process of international trade negotiations, if our trade agreements are actually to serve rather than betray the interests of Canadians.
So let me delve into some of the details of this temporary agreement. It's set out in part B of the main framework agreement and refers to appendix C, which itself has two parts. We learn when we look at appendix C that in terms of Canada's commitment under this agreement, construction projects of a value greater than $8.5 million are subject to rules of the regime if the government entities or governments that are engaged in the procurement are listed under part B of that appendix. There are lots of government entities that are listed. The commitments that the provinces have made vary from one province to another. British Columbia, for example, has committed all government entities and all municipalities in the province.
So you have an agreement that for the first time imposes some very significant constraints and resource demands on municipal governments that now have to inform themselves about an international trade agreement and comply with it. This includes providing recourse to those who have a complaint that Canada hasn't lived up to its commitments under this agreement, including an obligation to respond to litigation that the putative failure may provoke.
What's fundamentally important for people to understand about the agreement is that it's not about simply opening your market so that companies from other parts of the world can bid, which is certainly something that happens often in Canada now, and has for years, it includes a ban on something called offsets, which is a requirement, as you know, that as a part of your bid you are to source, to some extent, goods and materials and labour locally. It's not in a discriminatory manner; it's not as if we're saying if you're a U.S. company you have to do this. We may say that as a condition of bidding for a construction contract in our community, whether you're a Canadian company from down the road, from another province, or a European company, or an American company, you still have to source certain goods locally; you have to consider contracts with local environmental design services firms, for example, if it's green procurement. It's that type of proscription that we regard as particularly problematic. These are non-discriminatory rules that would favour local economies and that are precluded by this agreement.
What's particularly concerning about the agreement we negotiated with the United States is that it applies to Canadian municipalities but doesn't apply to U.S. municipalities. It's entirely asymmetrical in terms of the nature of the obligations that our municipalities have in relation to those of their U.S. counterparts. Many U.S. municipalities and state governments maintain the very types of local preferences that are precluded by this agreement, and the U.S. has not undertaken to remove them. The imbalance is even greater when one considers the fact that U.S. preferences at a local level may be maintained under this agreement but must be removed in Canada.
Apparently my submissions were only submitted in English, so you don't have copies of them. They haven't been distributed to you, so let me read, or at least paraphrase, a couple of the examples that I give in terms of Oregon procurement rules, which require that in public procurement preference be given to goods and services that are manufactured or produced in this state if price, fitness, availability, and quality are otherwise equal. I give another example from Alaska, which requires that a 5% preference be given to local bidders and bidders who include the use of local products in their bids.
Those rules are still permitted under this regime. The only thing the federal government in the U.S. has traded with us is an obligation to remove, as a condition of funding under certain federal programs and only certain federal programs, the requirement that U.S. states allow a preference for steel and iron and manufactured products that are made or produced in the United States. The United States has not undertaken to insist that states and local governments remove precisely those same preferences even on the projects that are funded under those federal programs. The United States has made a very limited commitment. When you compare the obligations of Canadian governments and U.S. government, they're entirely lopsided.
I'm going to wrap up by recounting a conversation that I had with a senior trade official recently who quoted one of the negotiators of this agreement working for the federal government as having said “any agreement is better than no agreement”. I take those remarks to indicate that Canada's agenda and bilateral negotiations with the U.S. reflected a parochial mandate, a parochial political mandate, not one that had the interests of Canadians or the Canadian economy at its root.
It is frankly inconceivable that such an egregiously one-sided agreement as this agreement with the United States could have resulted had Canadian negotiators been instructed to strike a fair bargain that served Canadian interests, failing which they would walk from the negotiations.
We are also very concerned that these same officials, responding to similar political direction, will do as poorly in serving Canadian interests in free trade negotiations with the European Union as they have in bilateral procurement negotiations with the United States.
Thank you very much for the opportunity to address you.