International Trade Committee on March 30th, 2010

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

Your throne speech says it provides permanent access. You've just said that it doesn't provide permanent access to local government procurement. In fact, on March 11, your director of multilateral market access at DFAIT agreed with the following statement, that there's no permanent access to local U.S. government contracts under this agreement.

Minister, to have in your throne speech something that you have confirmed today is not correct, I find unacceptable. It indicates that either your government does not understand the trade agreement it recently negotiated or it's intentionally misleading Canadians about it.

[Peter Van Loan, Conservative, York—Simcoe, ON]

No. I view the statement as much broader than that, as covering all aspects of the agreement we've entered into, including the waiver, which applies to all 50 states and which all municipalities in the United States enjoy, and allows them to bypass the Buy American provisions that every other country would be captured by.

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

You've read the agreement.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Yes, I have.

It also includes the permanent provisions of the WTO, which apply to the 37 states, and the future considerations, including the commitment to enter into negotiations, which we hope will lead to a deeper agreement.

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

Minister, in the agreement there is a section called “Temporary Agreement on Enhanced Coverage”. That seems pretty clear. Temporary typically means less than permanent. For the record, I just want to have you confirm, and in fact you have confirmed to this committee, that there is no permanent access to local government procurement under this agreement, and that your throne speech in fact misleads Canadians.

My second question concerns the area of local contracts and the value of these local contracts. Did the negotiating team have an estimate of the aggregate value of these local U.S. contracts covered under the temporary agreement?

[Peter Van Loan, Conservative, York—Simcoe, ON]

I think it's impossible at any point in time for one to have accurate numbers, whether you are looking at the Canadian infrastructure processes or the American infrastructure processes. At the point at which the agreement came into place, all of a sudden those numbers would change in any event. Anybody who has been involved in the real world, as I have been, knows there is a contract that you let, but when you let a contract for a project, that's just a top-line number. Most subcontractors have not been engaged, so even though it may appear that the contract has gone out the door, it hasn't; the bulk of the contract is still available through subcontracts.

If anybody could ever pretend to be able to give you an accurate estimate of what would be available, they would just be making it up.

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

So you didn't have those numbers?

[Peter Van Loan, Conservative, York—Simcoe, ON]

All the provinces that were participating in the negotiations had access to the same information we had from the Americans on their infrastructure programs, which were publicly available, and how far they were in the process. Everybody was taking their best guesses about what that would mean in terms of what was available. What we do know is that based on that, industry, and industries involved in infrastructure and contracting traditionally, felt there was significant value for them to capture, and wanted to see that captured through this agreement.

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

Minister, witnesses before this committee have estimated that only $4 billion to $6 billion worth of U.S. contracts remain to be tendered under the U.S. recovery act. The rest has been spent.

Would you agree that's a realistic figure?

[Peter Van Loan, Conservative, York—Simcoe, ON]

No, I wouldn't agree that's a realistic figure. I wouldn't commit to any figure because my experience tells me that I can look at infrastructure projects that were approved and let, and for which contracts were settled, as much as a year ago in Canada, and there is still considerable value in those contracts that are being decided today through subcontracting decisions.

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

Minister, you are saying you negotiated without knowing what we were giving up and what we were getting access to.

[Peter Van Loan, Conservative, York—Simcoe, ON]

We knew exactly what we were getting access to and what we were giving up.

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

Finally, Minister, Canadian access to U.S. local projects under this agreement ends with their 2009 stimulus package, but U.S. companies have guaranteed access to Canadian local stimulus until 2011, and this includes any new projects that have yet to be announced. Essentially U.S. companies were given a two-year advantage under this agreement. The U.S. can access Canadian local projects long after the U.S. local projects have dried up in terms of Canadian access to them.

Why would you have signed such a one-sided deal?

[Peter Van Loan, Conservative, York—Simcoe, ON]

The agreements provide that both countries have reciprocal access to their stimulus programs for the duration that their stimulus programs are running.

That is the structure of the agreement. Any subsequent stimulus programs that come through obviously cannot be covered in an agreement like this because you can only speculate on what those might be down the road, and you can't fetter your discretion, obviously, in either country on that basis through--

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

In fact, this agreement does open up for a new Canadian stimulus package--

[Peter Van Loan, Conservative, York—Simcoe, ON]

If I could finish...I tried to give you an opportunity. So from that perspective, we think it's pretty much a reciprocal agreement.

You have to remember that the real test here is that all the provinces were at the table, and industry was deeply involved. The terms that were established were done very much by the provinces and industry, in their interest, based on what they thought was a good deal and the best deal for their workers and businesses. The role of the federal government was very much a leadership role in carrying out those negotiations. If you will, if you were to do it as a lawyer-client relationship, our negotiators in the Government of Canada were the lawyers on behalf of our clients, industry, workers, and the provinces and territories in Canada.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Minister and Mr. Brison.

We now move to Mr. Laforest.

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

Thank you, Mr. Chair.

Good afternoon, Mr. Minister.

Concerning the Buy American Act, we met several witnesses in recent weeks who expressed their concerns, based on their knowledge of the American market, regarding the possibility that American companies will take advantage of the fact that municipal and state governments in the US are not very familiar with global trade rules, and will try to influence them to favour American companies. Those witnesses believe that when Canadian and Quebec companies submit bids, American companies will try to thwart their efforts, despite the international trade agreement and the rules in effect.

Does the department plan to introduce measures to avoid such situations?

[Peter Van Loan, Conservative, York—Simcoe, ON]

As I already indicated, we have encouraged our representatives in consulates throughout the United States, our trade commissioners, to inform not just the contracting companies but also municipal contracting authorities of the fact that a waiver is in place and they are not restricted in their procurement opportunities. They can seek the best value in their procurement processes, including not being restricted by any kind of Buy American provision. So we have made efforts to do that.

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

Mr. Minister, does the Department of International Trade plan to introduce a process to confirm whether Canadian and Quebec companies are within their rights and to ensure that they are not being seriously cheated?

[Peter Van Loan, Conservative, York—Simcoe, ON]

Well, that's exactly what I was saying. We have gone out there to promote that.

One has to look at the structure of the agreement. There are, again, three elements of it. The first element, the temporary element with regard to the Buy American provisions, is, if you will, permissive. It allows municipalities and states without restriction to entertain tenders from Canadian companies. It does not require them to. The requirement comes from the second element, the permanent obligation through the World Trade Organization government procurement agreement provisions, and, as has been noted, that applies to 37 states, subject to certain carve-outs. It doesn't have a municipal application.

So those that are in that situation are bound, and in the other cases, it's a permissive one, where we can encourage it. As I say, that same kind of structure is actually mirrored in the other direction by the commitments that Canadian provinces and territories have given, including the Province of Quebec, which of course was one of the most vigorous supporters of this agreement.

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

I have a question on another matter. It has to do with the free trade agreement with Colombia. Last week, you accepted a proposal made by the Liberal Party critic. You indicated that your party would agree to an amendment to the bill on the free trade agreement with Colombia. The amendment would require Colombia to provide an annual report on the state of the human rights situation there.

By agreeing to such an amendment, Mr. Minister, does this mean you acknowledge that there are serious human rights problems in Colombia?

[The Chair, Conservative, Lee Richardson]

Excuse me, Monsieur Laforest. This meeting is with regard to the procurement agreement in the United States. The minister was asked here to speak on it. It is out of order. The minister may wish to respond or not, but you only have three minutes left. I wondered if you wanted to stay with the topic or go out of order in terms of changing the subject here.

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

I always thought that ministers had full control over their files, especially when they agree to such a request. This is further to his speech. I assume he is able to respond.

[The Chair, Conservative, Lee Richardson]

You are out of order, Monsieur Laforest. We invited the minister to speak on one specific topic. I'm sure the minister is quite adept at answering any question, and we could have a meeting to discuss that topic if you'd like. The minister has said he'd be pleased to appear before the committee on that topic before you were a member of the committee. Maybe that's why you misunderstood.

Mr. Minister, I'll leave it to you.