International Trade Committee on April 1st, 2010

[Angelo DiCaro]

There was a notice about the particular up-fits that were going to be conducted in terms of putting decals on the cars and things of that nature. We have yet to get any confirmation that this work will be produced in Canada either.

[John Cannis, Liberal, Scarborough Centre, ON]

My last question is to Mr. Peppard.

You indicated that you weren't involved in the negotiations. We asked the minister, who was kind enough to meet with us the other day, and he indicated that stakeholders were involved--the Canadian Federation of Independent Business. We had a statement from Mr. Buda who said that they weren't involved in the negotiations. So for me, and for my constituents who are asking me, what really happened? Were they involved or were they not? Do you know? As a third party, can you clarify it for us?

[Angelo DiCaro]

I'm sorry, but I don't....

Oh, I'm sorry. You were talking to....

[John Cannis, Liberal, Scarborough Centre, ON]

You say you weren't involved in the negotiations.

[Angelo DiCaro]

Yes.

[John Cannis, Liberal, Scarborough Centre, ON]

We were told--

[Wayne Peppard]

I can say--

[John Cannis, Liberal, Scarborough Centre, ON]

Go ahead, please.

[Wayne Peppard]

I can say that through the reading I have done of the committee Hansard and everything that I read on the site, the only thing I saw was that there were large business associations involved in the consultation process. I spoke with our director in Ottawa. At no time has he been aware of any of us or the labour groups having been involved in any kind of consultation on this.

[John Cannis, Liberal, Scarborough Centre, ON]

Thank you, Mr. Chairman.

[The Chair, Conservative, Lee Richardson]

That was very well done. Thank you.

We're going to proceed now to Monsieur Laforest, pour sept minutes.

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

Thank you, Mr. Chair.

Good afternoon, everyone.

First off, I have a question for Mr. Peppard. I want to hear your thoughts on my next comment.

The committee has heard from a number of people in the business world. They told us they were concerned that U.S. companies competing with Canadian and Quebec companies could take advantage of the ignorance of governments in the United States. U.S. government procurement opportunities will now be accessible to Canadian companies. Governments in the U.S. will be very attentive to U.S. companies, which could take advantage of governments' ignorance of international trade or international legal instruments to present points of view that are solely in their favour. That could result in contracts being awarded to American companies, even though they may not be in full compliance with, if not in violation of, international trade rules.

[Wayne Peppard]

I would suggest that we're sleeping with a giant here. The large international companies and those that operate out of the United States of America know very well how to play the rules. As I said in my statement, the subcontractors and those who will be responsible for delivering to the prime contractors are going to be the ones who are left out.

In the United States of America, it's a very large industry. They know how to work their industries, and in fact, their procurement policies that are held within the states and at the municipal level are going to interfere with any Canadian involvement.

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

I have a second question for you, Mr. Peppard.

On the whole, do you think the agreement is good or bad? What is needed to make it better?

[Wayne Peppard]

I think I stated at the end of my presentation that had there been some consultations with our groups, for example, the labour groups, some changes could have occurred. I think this is basically an agreement that was made in the heat of a significant economic event that happened in the last year and half to two years.

With all due respect to what has been going on in the United States and the Buy American policy and trying to get in with a Canadian allowance in order to get into it, we're giving up far more than we're going to gain. I'm very much afraid that if this is negotiated into permanence over the next 12 months we'll be significantly impaired by it.

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

Thank you.

My question is for Ms. Ahn or Mr. DiCaro.

You said that, unlike what is happening in the U.S., we do not really have very clear procurement policies on this side of the border, either in Quebec or in Canada. I would add that—and please tell me whether or not you agree—it is as if the current government were really afraid of always challenging the U.S. administration.

But there are some rules. You said that there needs to be some balance. You started off by talking about a bilateral agreement. You said there needs to be some balance in terms of the compromises and benefits on each side. The fact that we do not have very clear procurement policies puts us at a great disadvantage.

I would even go as far as to say that this is very similar to what the Conservative government is doing right now, in terms of giving loan guarantees to forestry companies. Furthermore, officials from the department of international trade have told us that it was very clear that these loan guarantees could be applicable under international agreements, so long as they do not give a company a greater advantage.

I would like to hear what you think about all that.

[Jenny J.H. Ahn]

Yes. What we'd like to see is where the trade is more balanced. There is not a balanced trade agreement or a procurement policy. There is something in Quebec, and then there was the example that I spoke of as well in terms of the procurement policy that the City of Toronto passed recently, over the last couple of years.

But outside of that, in terms of other provinces and in terms of other municipalities across the country having a balanced trade approach or a procurement policy where we see taxpayer dollars being used back into building the Canadian economy, we don't see that, quite frankly. I guess that's the piece here. We feel that especially where there are taxpayer dollars they should be used to benefit the Canadians who have given those dollars. Of course, we need those dollars to come back to enhance and stimulate our economy.

There are examples of fair trade deals. We've seen that in the past with our Auto Pact, but unfortunately that's been dismantled. There is an example of a clear procurement policy, but that's only where we've seen it in the City of Toronto. We'd like to see something like that expanded or even see an improvement on where the City of Toronto has started to have that procurement policy, because that's just a small piece. For example, Toronto has a 25% Canadian content policy. It could be much higher than that. Why would it be only 25% of Canadian dollars that would be used back here?

I think my colleague is going to add a little bit more to this piece as well.

[Angelo DiCaro]

Yes, very briefly. I don't want to take up too much time since there are two of us here answering this one question.

Specifically on the issue of balancing trade, when all of this stimulus funding from the United States has come and gone and has dried up, at the end of the day the United States will have a very progressive and very well-established procurement policy on transit vehicles, let's say. So for Canadian companies—and there are many of them—that decide they're going to put in a bid for any of these contracts down the line, nothing is going to stop the United States from having them exercise that policy.

Conversely, if we were to tender a project on transit, this now, under the WTO, would be opened up for free bidding from anybody, including the United States, whereas, you know, a similar policy doesn't exist here. This is just one example of how there's an imbalance in terms of the existing procurement policies.

[The Chair, Conservative, Lee Richardson]

Merci.

Now we'll go to Mr. Julian.

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

Thank you, Mr. Chair.

Thank you to our witnesses. All three of you are offering very substantive testimony and raising very substantive concerns. Hopefully we can consult with you regularly on the trade committee, because you're providing a lot of important information.

I certainly noted the criticism that all three of you had about there being absolutely no cost-benefit analysis at all around this deal. It seemed to have been done on the back of a napkin.

I wanted to address specifically Mr. Peppard's issue on the municipal procurement policies, because Minister Van Loan said on Tuesday, when he appeared before the committee, that municipalities almost all ran broad, wide-open procurement. I think many of us around this table were concerned about that comment, because he didn't offer any facts to back it up.

Mr. Peppard, you're actually saying that many municipalities have a wide variety of conditions around municipal procurement. You mentioned living wage or fair wage policies. Could you comment a bit more on the procurement policies in place that are threatened by this agreement?

[Wayne Peppard]

Yes, most certainly. I can speak to my own community in Burnaby, where in fact we do have a fair wage policy, and I know that this was brought up at a recent council meeting.

There is some concern that has been exhibited as to what effect it would really have, because when you read the act, there's nothing explicit. When you read about the offsets, the offsets could be read as actually applying to fair wages, to local procurement. If you're trying to excite the economy of your local community with your own contractors, service providers, and goods providers, then those may be at risk.

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

Thank you for that. It's important to note that Burnaby, British Columbia, was proclaimed by Maclean's magazine as the best-run city in the entire country, so their policies obviously pay off for the benefit of their citizens.

Mr. DiCaro and Ms. Ahn, I'd like to go on to the issues you've raised around Buy Canadian and the fact that we've lost about 550,000 manufacturing jobs in this country over the last few years. Apologists for current government policy like to say that Canada makes things together with the United States, but when you cite these figures, the reality is that Canadians make things less and less. That's a fundamental reality.

Since domestic procurement policies do make that difference, and since they're in place in virtually every industrialized country, I'd like to ask you why you think government policy has been so backward on a Buy Canadian policy. Could you, as well, offer that list of missed opportunities to us? I think it would be useful for committee members to have the list of the opportunities government missed to create jobs and stimulate the value-added jobs that most Canadians want to see.

[Angelo DiCaro]

I think there are probably a number of reasons that the Canadian government has been reluctant to establish domestic content policies that are in line with other jurisdictions we trade with. In some cases, to us it feels as though we keep this mantle of being the Boy Scout on international trade issues and we're going to stand strong and fast by the doctrines of free and unchecked trade. At the same time, that's absolutely not the process adopted by other countries that are our major trading partners, so it's a bit of a head-scratcher on that front.

I can tell you, too, about the real, direct, and smart use of procurement dollars through the City of Toronto. Jenny mentioned the $1.2-billion light rail contract, but prior to that there was a tender for refurbishing subway cars. With the leadership of the City of Toronto, that also ended up going to a Canadian firm because of the benefits associated with manufacturing in Canada and the return on investment to taxpayers. That seems like a logical argument, but it was those policies that actually saved Canada's last high-tech railcar manufacturing facility.

If we're going to compete on the global scale for both public and private dollars in these projects, we have to take real stock of the strategy that we're going to employ and what industries we want to lead in. If we think we're going to let the market decide, and then may the best player win.... It seems that this approach has failed us so far, so I don't see why we would continue down that path.

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

Thank you.

I'd like to go on to the issue of the loss of quality of jobs and the loss in the quantity of jobs, as well as the economic benefit of having smart procurement policies in place.

Mr. Peppard, you mentioned that it's not just the quantity of jobs we're losing, but that when we open up procurement to foreign companies, we're also losing Canadian engineering jobs and other jobs that tend to have high pay and be of higher quality. I'm wondering if you could comment on that a little more.

As well, could you comment on the issue of whether, in the last few years, we're seeing more companies bringing in temporary foreign workers who are not subject to the kinds of checks and balances, health and safety regulations, and minimum wage legislation that they should be subject to?

I'll ask at the same time, Mr. DiCaro and Ms. Ahn, for you to comment on the economic benefit you mentioned from the rule of ten, whereby there were ten times the economic benefits in the Toronto streetcar contract from having a Canadian content requirement in place than if we had simply shipped the contract out of the country, which seems to be current government policy. Do you have any other studies that show the benefits of having domestic procurement policies, including the actual benefits for Canadian taxpayers and Canadian communities?

Those are my final questions to both of you.

[Wayne Peppard]

I'll go ahead and cite two recent examples here in the province of British Columbia that have given us some trouble.

One was the construction of the new ferries. We have had a very vibrant shipyard industry in the province of British Columbia for many, many years. What the Province of British Columbia did was to go to Germany and have those ferries built in Germany at the expense of the shipbuilding industry here in the province of British Columbia. I suggest to you that in the United States, under their procurement policies, that would never have happened. They protect their industry, their shipbuilding industry.

The second one is that yesterday I was over in Esquimalt, where there was a $5.5 million crane that Public Works had purchased through a Finnish company but that had been manufactured in China and shipped over here. There are 25 Chinese workers waiting to put it together on the docks in Esquimalt. None of that funding flows back to this community or this country, none of it.

Those are two very special examples.

On the other side of the coin, what we have seen with regard to foreign workers coming in was on the rapid transit line--a federal investment project as well--that was built out to the airport before the Olympics. We found out that many of the workers brought here from other countries under the term “specialized”, the loophole that's used by big business to get people into the country, were working for less than $5 an hour.

We had to chase this issue, as no one else was monitoring or enforcing it at any stage of government involvement, whether federal or provincial. We went after that. We brought it forward and have been consistently fighting for it. There are many examples of that on the Golden Ears Bridge. We found Filipino workers who were seven, eight, or nine to an apartment. It's these kinds of people who drop through the cracks. They're the ones who are forced. Then when they're left here, after those projects are over, as temporary foreign workers many of them are falling into the underground economy rather than returning home.

We have a lot of problems that develop around investment. We have to look at the whole array of it. We have to look at all of the regimes involved when we invite the world to come to work here.