International Trade Committee on April 1st, 2010

[The Chair, Conservative, Lee Richardson]

Thank you for those answers.

We're going to move now to this side of the table and hear first from Mr. Holder.

I think we're probably going to have a brief second round, but if you want to split your time, Mr. Holder, I'll leave that to you. You have seven minutes.

[Ed Holder, Conservative, London West, ON]

Thank you.

I look forward to splitting my time with Mr. Trost.

I'd like to welcome our guests to today's meeting.

The very first question out of the gate today was rather interesting, because I really look forward to the time we start talking about our “Buy Turkey” procurement agreement, in which case we can get into that dialogue about what the approach should be to protect all interests. I know we'll do that thoughtfully.

Mr. Peppard, thank you for your comments. I must say I was encouraged when you talked about the economic recovery looking quite good. I salute you for that and for your acknowledgement of it.

However, I wasn't quite sure of your views, because when you first commented, it sounded at one level as if you supported less protectionism, because you talked about access. Could I get a very brief comment from you on that? Do you support less protectionism? I'm just trying to get a sense of that, sir.

[Wayne Peppard]

I would support what my brother and sister at the CAW said regarding that, which was that a smart Buy Canadian policy doesn't have to do with protectionism. It has to do with how we're going to excite and strengthen our local, provincial, and federal economies.

If that involves making trade relationships under a Buy Canadian policy rather than in response to a Buy American, Buy Turkey, or Buy Anywhere Else policy, first we have to say that we must have a good Buy Canadian policy that actually works, so that when I pay my taxes, I know they are going to be putting Canadians to work first--not necessarily always, but first--and giving the option for those moneys to be spent here in Canada with our contractors and service and goods providers.

[Ed Holder, Conservative, London West, ON]

Thank you.

I'd like to make reference to Michael Buda from the Federation of Canadian Municipalities, who said, “The vast majority of municipal procurement in Canada is actually open, just like the vast majority of procurement in the United States and at the state level has been open”.

Mr. DiCaro, I have a question for you. Did you support the government's decision to invest in General Motors and Chrysler?

[Angelo DiCaro]

Workers did support that.

[Ed Holder, Conservative, London West, ON]

Pardon me? I didn't hear that.

[Angelo DiCaro]

Yes, the Canadian Auto Workers did support that.

[Ed Holder, Conservative, London West, ON]

I applaud you for making that determination. It's rather interesting, though, that when some 80%-plus of our exports go to the United States, the Canadian manufactured position....

I'm trying to understand the consistency in your argument that at one level it's okay to have a Canadian-only policy because it serves interests, but when it serves our interest to export, you make that determination. As we say en français, “Je suis un peu confus”. Maybe you could explain that inconsistency.

[Angelo DiCaro]

Sure. That's no problem. When we're talking about establishing a Buy Canadian policy similar to policies in other jurisdictions, we're specifically talking about public procurement. We appreciate that a tremendous amount of private investment goes back and forth across borders; we do support managed trade and we would love to see the Canada-U.S. Auto Pact return.

But if the question is whether we would be in favour of shutting out markets to people who choose to buy foreign goods or Canadian-made goods, that's absolutely not what we're talking about. Buy Canadian policies are to guide public procurement to make sure that at least a portion of that procurement comes back to the Canadian economy.

[Ed Holder, Conservative, London West, ON]

While I agree with your position, sir, when you say we certainly do not want to shut out our markets in the United States, I would say for the record, with respect, that I do find some inconsistency between the two points.

I will tell you that Jean-Michel Laurin from the Canadian Manufacturers and Exporters said, “It should be said that provincial and territorial procurement markets were by and large already open to American companies”. Canadian companies were used to facing competition. I would even suggest to you that the business people we've had around this table have said: “You know what? We have great workers in Canada; give us the opportunity and open the doors, because we haven't had that door open. We can compete and we can compete successfully”.

Go ahead, Mr. Trost.

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

Thank you, Mr. Holder.

I will follow up on where Mr. Holder was going. You stated that $25 billion in Canadian procurement is now open to the United States, but when talking with Mr. Julian, you also said there were some protections in place for Canadian procurement at the local level.

Do you know how much procurement, in dollar value, was protected from the Americans? I'm assuming the fair wage probably wouldn't have stopped in the United States, because they pay more than $5 an hour for most of their work down there. Do you have any idea of a dollar-value number on what was actually protected?

[Wayne Peppard]

No, I do not.

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

You're more or less taking the broad sum and then guesstimating that something was protected. That's the way I'm understanding it.

[Wayne Peppard]

I was working from the information that I gathered from the discussions that occurred in the committee Hansard.

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

It's understandable. It's not always easy to get some of these very difficult numbers.

You've mentioned that you both supported the Auto Pact as the idea of a good trade agreement. Over the last 20 or 30 years, have you seen any other trade agreements, or even interprovincial agreements, that the Government of Canada has executed that you would consider good trade agreements? I'm assuming the upcoming ones from Colombia and the softwood lumber one, etc., would probably not fall into that category. Can you give me some examples of ones that would?

[Angelo DiCaro]

Each trade agreement that is struck needs to be validated and needs to be understood on its own merits. I don't think it's a shock to many people on the committee that not only the CAW but the progressive trade unions in Canada have raised an eyebrow at some of the trade agreements that have been struck, especially within the last 20 or 30 years.

Oftentimes we're not involved in the process of negotiating these trade agreements. We would have a tremendous amount of input that we could provide, I'm sure, in negotiating these deals.

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

But you do realize that trade agreements need to have good give-and-take. I remember the criticism about the trade agreement with Norway, because of shipbuilding. With Colombia, the reason is supposed to be human rights. With the United States, we got a bad deal. On softwood lumber, we got a bad deal. I suspect there will be something coming up with Jordan—and for the record, that was sarcasm in my voice.

I'm just not quite sure what you consider a good deal. I understand what you were saying, but that's the exact same point I'm making: that the union movement tends to be skeptical of almost all trade agreements.

[The Chair, Conservative, Lee Richardson]

Okay. Thank you, Mr. Trost.

I think we will try to do a very quick second round. We'll begin with Mr. Brison, for a quick five-minute round, and then go to Mr. Allison.

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

Thank you very much to our witnesses for joining us today.

I have a couple of questions.

One is about the $1 billion versus $25 billion lopsided nature of this agreement in terms of $1 billion of new access for Canadian companies versus $25 billion of new access for U.S. companies. I would agree with you that there doesn't seem to have been a substantial and granular analysis of the access in terms of dollar value. Our questions, both to the minister and to the officials, bore that out; in fact, the government had not done that level of due diligence.

So I'm concerned about this deal and share your concerns. However, I want to explore a little more your proposition to have more Buy Canadian proposals. I would have felt--and I do feel--that reducing, not increasing, barriers between our two economies is actually disproportionately in the interests of Canada. If you consider the degree to which we depend on their market versus the degree to which they depend on our market, it stands to reason that reciprocal measures—protectionist measures—would disproportionately hurt Canadian companies, because of that disparity between our relative dependence on each other's markets.

I'd really appreciate your help in explaining why some sort of reciprocal Buy Canadian measure is in the interests of Canadian companies. I can understand in some ways why it might be in the interests of the U.S., because they have very substantial markets. I would argue against it, and I would feel that any artificial barriers to trade between our countries will cost jobs in both countries, but I really don't understand the benefit of protectionist measures from a Canadian perspective. I'd like to hear more justification for that.

[Jenny J.H. Ahn]

Our position is not to say “close the borders” and not allow access from other markets, especially the United States. What we are saying is that when there are public dollars, they really should be spent back home. We're not saying that 100% of public dollars need to be spent here; we're saying that we need to have a certain level of Canadian content or Canadian work. Then, of course, we understand that there will be work given to the United States, for example, because of our close relationship with the United States.

But when we talk about having managed trade or about still having a relationship with other countries and other markets—with the United States, for example—what we don't understand is why our government cannot look at representing the good of the Canadian economy and, quite frankly, Canadian workers.

We see what happens when we have good jobs here in Canada. For example, let's look at the auto sector. If we were to maintain auto jobs, which are well-paid jobs, we know that the value added from one auto job is approximately seven spinoff jobs, so it's not only about job creation or retaining jobs, but also about the money that comes back into the economy. When we look at the aerospace industry, we know that from one aerospace job there are approximately eight spinoff jobs.

We believe there is a bigger picture of trying to keep as many of the jobs here, but again, when we're giving examples and talking about procurement policies, we're not saying that 100% of that work needs to stay here. We recognize that some of this work will go to the United States.

This has been working in years past with the United States, but as we have seen more job losses in the manufacturing sector, we want and need the government to recognize how we can ensure that we can keep some of those jobs here while still having that relationship with the United States at the end of the day.

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

If we were to bring in Buy Canadian proposals, do you not see the risk of that increasing the pressures on the largely protectionist U.S. Congress to bring in more barriers to our access? Have you factored in, for instance, what the Canadian job losses would be in our highly export-driven economy if the actions to protect our relatively small Canadian market led to reciprocal actions in the U.S. that cut off our access to that huge and incredibly crucial market?

[Angelo DiCaro]

I appreciate the question, and I think there is an ideological bit to this, too. If Canada said tomorrow that it would institute a Buy Canadian policy for rolling stock, for example, similar to, or even to the letter of, the current Buy American policy for rolling stock, there might be differences of opinion on that. But I would have a very hard time seeing how the United States could then justify triggering a trade war when what we had done was to equalize the playing field in that particular industry.

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

I have just one final thing to say.

I agree.... As a former minister of public works, I was involved in government procurement and there are particularly.... The aerospace industy was mentioned. There are strategic industries, defence and aerospace among them, where domestic procurement, government procurement, is absolutely essential to help validate a company's products and help enable them to go abroad and sell those products. I mentioned strategic industries like defence and aerospace, where I think we can do more.

We can adhere to our trade laws and agreements, but sometimes I think we run the risk of being a little too much like Boy Scouts on this. We can go a lot closer to the edge on some of these things in our practices, as other countries do.

So I agree with you on the point that in terms of strategic industries there is a role for government procurement as part of the effort to build national champions and that other countries potentially do a better job of that, but thank you very much for your intervention.

[The Chair, Conservative, Lee Richardson]

Thank you.

Thank you for the reference to the Boy Scouts. I won't go there.

Mr. Allison, you can take us home. Wrap this up. You have five minutes.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Thank you very much.

I want to thank our guests for being here today.

Wayne, I have a question for you. I can appreciate the comments about large companies coming in and maybe bringing all the people with them, and what have you, and about our not having a lot of jobs. I just want to know if that's the exception or the rule.

In the small town that I represent, a number of years ago there was a large project for a nursing home. One of the benefits of that project was that, while outside contractors came in, a lot of the subtrades were actually done by people from town. Maybe the Olympic experience was a little different and the timelines were rushed and that wasn't there, but would you say it is the exception or the rule when companies come in that local subcontractors have an opportunity to do that? Maybe that's part of how we need to look at this thing as we move forward.

What would you say your experience has been overall, Wayne? Were the Olympics an exception or standard practice?