International Trade Committee on March 30th, 2010

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

Thank you, Mr. Chair.

Welcome to Minister Van Loan and Mr. Stephenson. Minister, I have one question, and I will be splitting my time.

First of all, congratulations. This agreement was signed and brought to the table in record time. That only happened because the provinces, the municipalities, and industry were on board. To get them to the table was an accomplishment in itself, let alone to get the Americans to the table and sign an agreement in six months.

One other comment in line with trying to prejudge what is actually there for contracts was interesting. The witness we had in committee the other day, Steve Ross from the Cherubini Group in Nova Scotia, said he's not at all worried about the contracts his company will bid on because they are simply not let yet. All the easy contracts, such as the paint and all of those types of contracts, are let. The really serious stuff is yet to come.

Under questioning, he gave that answer three or four different ways. I think it's interesting to note exactly what you're saying. There may be some big contracts let, but the subcontracts haven't gone out, and the real dollars aren't spent yet.

Could you summarize how difficult it was to bring the provinces, the municipalities, and industry on board, and how supportive they were when they saw what they were facing and the opportunity to get around it?

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

I think what you speak to was something special that happened in the context of this unique situation, and I think it was the threat by America and the precipitous risk of loss of jobs and economic activity that helped bring an impetus to the efforts of my predecessor, Stockwell Day, to get the provinces around the table working together on this in a trade context that's unprecedented. It's a very positive thing, for which I think Minister Day deserves a lot of credit.

I think that was the key to our success here. As I said, this was an agreement largely of provincial and territorial obligations, and the consequences--the obligations they were assuming--were by and large theirs, as well as industry's, obviously. The opportunities were there, and we were very fortunate to have the support of the key industry associations, and their advice and their lobbying, I might add. The efforts of the provinces and the industries in lobbying the Americans on the importance of arriving at an agreement like this and educating the Americans on it was critically important.

By and large, Canada does enjoy a very positive, beneficial relationship with the Americans on trade issues, and I know when I was in the United States before I was trade minister and doing my job as public safety minister--of course, we wouldn't miss an opportunity to advance this agenda--the response you would always get was that this wasn't directed at Canada. Then you would have to say that although it might not be directed at Canada, they were catching Canada.

That attitude is what made it possible for the Obama administration to work its way rather than give Canada an agreement that no other country has, a waiver from Buy American provisions. That speaks to the special relationship we have with the Americans, with the Obama administration, on trade issues.

I think we should pay tribute to the provinces for having come together, across the political spectrum--even a couple of NDP governments were there--putting their oars in the water and pulling together to make sure this agreement came to pass.

[Ed Holder, Conservative, London West, ON]

Thank you.

If I may, through you, Mr. Chair, thank you very much, Minister.

I would like to remind members that our committee went to Washington, and we had four very significant areas we thought were of critical interest to us. One of the very top ones was Buy American, because of the incredibly negative impact that Buy American had on Canadian business.

Does any other country except Canada have a procurement agreement with the United States?

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

Some countries have reciprocal obligations under the World Trade Organization's government procurement agreement similar to the permanent element of the agreement we got, though only one small piece of it. As I said, no other country has an across-the-board waiver to the Buy American provisions we obtained.

[Ed Holder, Conservative, London West, ON]

Were the provinces and territories in agreement with our government with regard to implementation of the Canada-U.S. agreement?

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

As I indicated, a very common front was critically important. In fact, in order for the agreement to come into place, we had to wait for the assent of all the provinces and territories as parties to the agreement, if you will.

[Ed Holder, Conservative, London West, ON]

We had a witness, Michael Buda, who was the director of policy and research for the Canadian Federation of Municipalities, who said:

...this agreement helps to roll back the clock. It helps to stop the precedent that Buy American was going to set to encourage similar sorts of procurement practices to spread amongst United States municipalities, just like it could actually spread to Canadian municipalities.

Minister, a quick question. I'm looking at the NAFTA agreement signed 16 years, 2 months, and 29 days ago. At that time there was a provision in there in paragraph 1024(4)(a) “Further Negotiations” to:

...immediately begin consultations with their state and provincial governments with a view to obtaining commitments, on a voluntary and reciprocal basis, to include within this chapter a procurement by state and provincial government entities and enterprises; and...

It goes on a little bit longer.

Minister, 16 years and 3 months ago it didn't get done. You got it done.

I'm trying to get a sense of how hard it was to put in a deal that for 16 years no one could do.

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

It's interesting. It shows you the progress and the broad acceptance of free trade with the United States, and the benefits that have occurred since the free trade agreement was originally entered into. You will note that there are some who were not fans of it at the time who have since become converts. I think that's a pretty broad perspective. Obviously, that now includes the provinces and territories in Canada.

How hard was it to arrive at? I have to give the credit here to Prime Minister Harper and President Obama. I was actually in the room with the two of them when the subject was discussed in the Oval Office, again, wearing my public safety hat at the time. That's essentially when that issue was put on the table and hammered out, and it wasn't too long afterwards that we were able to formalize our commitment to include the World Trade Organization government procurement agreement piece. I think that was the critical linchpin to make this deal happen.

[Ed Holder, Conservative, London West, ON]

Well, thanks for getting the job done.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Holder.

The timing has gone very well today.

We're going to have the opportunity now to get into a second round. We may complete a second round if we keep it tight. We'll go to five-minute questions and answers.

We're going to begin with the vice-chair of the committee, Mr. Cannis.

[John Cannis, Liberal, Scarborough Centre, ON]

Thank you, Mr. Chairman.

Minister, welcome to the committee. We appreciate your time here.

Minister, this deal is described by trade negotiators as a deal where--and these are their comments--they were sent in to just go in there and do a deal at any cost.

Earlier, you said something that was very important. We have to talk to our local companies in our ridings about the jobs that are affected--to grow or not to grow, or to lay off. You said how the Federation of Canadian Municipalities supported the agreement. I'm not here to doubt what you said or what you might have heard they said, but they also did say, sir, and I want to quote what they said--that they were not consulted in the negotiations. They also pointed out to us here in committee, and I'll quote them: “...you can't very well do a deal that includes municipal procurement without including the experts in municipal procurement.

I'll leave that to your discretion and how you want to respond, sir.

You also said you included the provinces. I too am very pleased that all the provinces, NDP or not, have come together and put water in their wine to move forward for Canadian jobs.

What you're telling me, then, sir, is that I should respond to my constituents within the greater city of Toronto in this way: if they are losing jobs, if the companies are expanding, the provinces should be blamed. Is that what you're telling me, sir?

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

I'm not sure I followed the last part of your question. I'll deal with the first part, which was the role of the municipalities in the Federation of Canadian Municipalities.

Individual municipalities did play important roles both in advising and being consulted in the negotiations, but it should be said again that they also played a critically important role in lobbying their suppliers in the United States and others who had an interest across the border. They do deserve credit for having shaped the agreement that took place. Of course, many municipalities put their names down to these provisions as part of the negotiation process.

Those commitments, obviously, were not made by the municipalities without their consultation. They obviously made that commitment quite willingly, in an effort to see a broader and open procurement free trade between the two countries.

I didn't follow the second question you asked.

[John Cannis, Liberal, Scarborough Centre, ON]

The second question was that you said in your own words, Minister, how the provinces came together and they agreed on these terms. The municipalities are having problems. For example, in the United States the municipalities really don't understand the policy, as we've been told by expert witnesses. They're being muzzled, and as a result, Canadian companies are having difficulty getting their share of the pie. Similarly, from our side, the provinces spearheaded the effort, so are they to blame for this bad deal?

I'm going to defer to my colleague here, so you don't have to answer, Minister.

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

I think it's a good deal, and the provinces and municipalities deserve credit for their part in making it a good deal.

[Judy Sgro, Liberal, York West, ON]

I want to follow up on the issue with our municipalities. When this announcement first came out, the municipalities in the U.S. were free to keep us out as far as buying Canadian; they could stay strictly with Buy American. So I'm pleased to know that we've made real progress, which I think is very significant. But I would very much like to see that we've got a good solid deal on the table that allows municipalities into that whole procurement process.

But I have to ask you another question on the issue of this agreement not being tabled in the House. I find it very surprising that we're discussing it today, and it's gone so far in public that it's got a lot of discussion happening, and yet the trade agreement hasn't been tabled in the House yet. That clearly goes against what all of us have talked about, especially yourself and others, the openness and accountability. Somehow that seems to be very lacking when we talk about this particular agreement.

When are you planning on tabling it in the House so that it is much more open and accountable?

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

All honourable members will remember that before we became the government, treaties were not normally tabled in the House of Commons. That's a practice that has been instituted by our government pursuant to a campaign commitment. That of course relates to what are called significant treaties that take on significant federal obligations. The difference in this agreement is it doesn't create significant federal obligations. The obligations that are created are obligations of the provinces and the territories, so sub-federal entities. So in that sense, it's not the type of agreement that was contemplated for tabling in the House. In fact, you could argue that if this policy were applied in the provinces, that's where the tabling would have to take place. The essential ratification we were looking for was the indication and consent of the provinces and the territories to the final text of the agreement.

[Judy Sgro, Liberal, York West, ON]

With all due respect, it was your government that clearly said:

As of today, all treaties between Canada and other states or entities, and which are considered to be governed by public international law, will be tabled in the House of Commons,” said Minister Bernier. “This reflects our government’s commitment to democracy and accountability. By submitting our international treaties to public scrutiny, we are delivering on our promise for a more open and transparent government.

It doesn't seem that this is being carried out in practice. That's my question.

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

Again I'll explain. The North American Free Trade Agreement was an agreement that created obligations for the federal government and the country of Canada. This agreement doesn't actually create obligations for the Government of Canada. It creates obligations for the provinces, territories, and municipalities for their procurement processes. We cannot pass a law in the federal Parliament decreeing what provincial and territorial procurement practices will be. Only they can do that, and only they can assent to the voluntary provisions of an agreement like this. So that's why it's not the type of treaty that would typically be tabled in the House. It's not a federal obligation; it's a series of provincial and territorial obligations that have been assumed.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Minister.

Thank you, Ms. Sgro. It's nice to have you join us today.

Sorry we didn't have more time. We're going to have to move along.

We have five minutes of questions from Mr. Trost.

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

Thank you, Mr. Chair.

I have a couple of basic questions in regard to trade with the U.S. My first one, on our agreement on Buy American, is a very simple one: what do we do to build on the agreement? We've had several witnesses who have come before us, and I've stated in my opinion that the long-term permanent deal with the 37 states was more significant than the shorter-term agreement. I'd be curious to know your opinion on that, and also on what we can do as a committee to recommend and what you are doing as the minister to build on this agreement that we now have.

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

There are a number of things. First is the element of the agreement that provides for negotiations commencing this calendar year on a deeper, more significant, hopefully broader, agreement on government procurement, obviously taking it beyond the 37 states captured under the WTO permanent provisions that are there now.

We are currently in a process of working with the provinces on laying the groundwork for that negotiation. Again, as I said, these are broadly provincial-territorial obligations that we are talking about, so it would be inappropriate for the federal government to act without acting in concert with the provinces and territories on that. We're identifying the game plan and the groundwork issues for that negotiation to take place. Hopefully we will have our negotiating position fairly well set in a number of months so we can start that process.

Second, we are obviously working to ensure that we don't see Buy American provisions like this come along in future legislation that threatens the United States.... We've had some success with that. We are continuing to remain vigilant. We have certainly made ourselves known to the administration and to members of the Senate and Congress about our concerns.

The Waxman-Markey bill is one that passed the House of Representatives. It is now at the Senate, which has implications. There are no Buy American provisions in it. There are a couple of other bills that we thought might see Buy American provisions: Maria Cantwell's bill, the cap and dividend system, doesn't have it; and the Bingham energy bill doesn't have Buy American provisions. We are continuing to watch the items of legislation that come through and to make interventions where necessary to protect Canada's interests.

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

I'm aware that in our relationship with the United States a wide range of ministers have issues to deal with, but I'm curious as to what other issues, in particular on the trade agenda, have currently flagged your attention. In my constituency, coming from Saskatchewan, agriculture, the pool issue, in which Minister Ritz has been involved, tend to be fairly important. I'm curious as to what has currently been flagged as a potential problem or concern that you are dealing with in regard to the United States.

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

Any relationship, even the best relationship, has occasional bilateral irritants. We've heard a little about softwood lumber. We continue to engage in processes on that; I expect we'll be doing that in perpetuity. There is a very constructive development there, which is the Binational Softwood Lumber Council. You actually have the industries on both sides of the border working together to try to build the market for softwood lumber, to look for opportunities, and to have a better understanding of each other. Economic recovery will of course be the best antidote to those problems.

The country of origin labelling issue is a substantial one. We've sent that to the World Trade Organization for resolution. That doesn't preclude the possibility of a negotiated settlement, of course, though we don't see that on the horizon right now.

In a relationship as important as ours, we have to be vigorous and aggressive at all times. That's what we'll continue to be, both with those irritants and also in the legislative process.

One of the things that Americans often say to me is “You're sitting here talking to us, messing in our legislative process. How would you feel if we were always down there in your country messing around in your legislative process?” I don't know what our views would be, but we're certainly not going to stop, because it is important.

Canada is welcomed as a friend by most. The critical thing is to be present, not just with the administration but throughout the American political process, so that when decisions are made we don't become the collateral damage in anger or upset with another country.

[The Chair, Conservative, Lee Richardson]

Thank you.

It is right at 4:58. That's pretty close. We'll call it a day.

We're going to our final questioner and we will finish within the hour.

Monsieur Laforest, I take it you're going to take both sides of--

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

Thank you, Mr. Chair.

Mr. Minister, last week I put this question to a lawyer who appeared before the committee regarding the Buy American Act.

In the context of the softwood lumber dispute, the Americans have often contested certain measures. They have used dispute resolution mechanisms to get their point across, which has slowed procedures considerably in some cases. Trade continued and decisions were eventually handed down by the tribunals. Even if the tribunals decided against the Americans, they still had the dispute process to fall back on. Nevertheless, trade continued, fines were issued and so on.

Let us suppose that a call for tenders is issued for the construction of a bridge, and that American, Quebec and Canadian businesses submit their proposals, and a Canadian company wins the bid. Is it possible that the Americans, true to form, resort to various dispute procedures, invoke defence mechanisms and do everything they can to postpone the bridge's construction, thereby taking the people hostage for months, if not years? Would such a situation be possible under this agreement?