International Trade Committee on Sept. 27th, 2011

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Off the top, I would say I disagree strenuously with the comment made in your presentation that, to quote you, “our Minister of International Trade took quick and decisive action by writing to his U.S. counterpart”--after the fact. We have a saying on the farm: it's pretty hard to deal with an issue after the horse has left the barn. In this case, the horse has left the barn.

I want to know, who fell down on the job? Starting on June 28, President Obama telescoped that this was where he was going to be. He was talking about “made in America” in at least six speeches prior to his announcement. Was there any representation to the administration by the minister, DFAIT, PMO--any ministry--prior to that speech of President Obama's?

[Jon Allen]

Not that I'm aware of, Mr. Vice-Chair.

[Wayne Easter, Liberal, Malpeque, PE]

But why not? Listen, I can't understand why DFAIT, through the embassy in Washington and all the other means through which you should be monitoring U.S. policy activity on an issue that is so critical to us in this country...that nobody was talking to the administration before.

As a second question, then, has DFAIT or any other ministry raised these kinds of concerns over this jobs plan in other broader discussions--perimeter security, defence cooperation, and those areas? Are you raising our concerns in those other discussions?

I know there are umpteen discussions going on with the U.S. Are we going to sit back and say, “Well, we'll give you perimeter security”, or, “Well, we'll sell you more oil”, when they're taking jobs right out of Canada's hands? Have there been any discussions in those areas?

[The Chair, Conservative, Rob Merrifield]

Mr. Easter, we'll get a response first.

I think you responded to some of that in your address.

[Jon Allen]

We did.

Let me just say that we do not receive previews of legislation put forward by the United States. Indeed there was some surprise, both at the U.S. embassy here and within the offices of a number of our contacts, because that legislation is not previewed to bureaucrats in the U.S. or to us before it's introduced. I can certainly confirm that as soon as it was introduced, the minister reacted extremely quickly by doing really what was the most important thing, to request consultations and then to get on the phone to Ambassador Kirk.

In respect of your second point, Mr. Vice-Chair, in terms of our “beyond the border” discussions, for example, in those discussions, which are aimed at improving trade facilitation, improving the economic relationship, and, as you know from your previous incarnation, improving the security between our two countries at the same time, we were able to advance those negotiations and deal with separate trade disputes at the same time.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Allen, I understand that. As the chair would know, we have a secretariat at the embassy in Washington. Is the Canadian government not monitoring potential policy implementation in the United States that is going to have an impact on Canadian jobs and our economy? You ought to be doing that. If you're not, this should have come as no surprise to anyone. On July 22, at the University of Maryland, President Obama made it clear that he was talking about made in America. I could go through the other dates. Is nobody monitoring what is happening, in all our embassies and consulates in the United States?

I think it's shameful, to be honest, that the Department of Foreign Affairs is not on top of these issues, given the number of embassies and consuls general we have in the U.S.

I want to come back to a previous recommendation that is pertinent to this issue. The second recommendation in this committee's report of May 2010 said:

That the Department of Foreign Affairs and International Trade (DFAIT) set up a mechanism to collect economic data regarding the application of the Canada-U.S. Agreement on Government Procurement, and thus enable it to assess the agreement's impacts on enterprises and employees in Canada. DFAIT should submit a report on this issue to the committee.

Previously, an assistant minister for trade policy and negotiations said that the department hadn't done that. Well, we're at a crucial stage in procurement now.

Have you abided by the recommendation of this committee yet?

[Jon Allen]

Well, I can tell you, Mr. Vice-Chair, that what we have done is spent a considerable amount of money through our consulates and our embassy in the United States to identify markets in the U.S. where our companies will be able to procure. We have been working with Canadian business, U.S. business, and with states to look forward to try to identity how we can take advantage of our existing new agreement and the previous agreements to better place our Canadian companies and industry so they can take advantage of them. We thought that looking forward with our limited resources and providing them with those opportunities was the best way to help Canadian companies in that regard.

[The Chair, Conservative, Rob Merrifield]

Okay. Thank you very much.

We'll now move to Mr. Cannan, who has seven minutes.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair, and thank you to our witnesses for being here.

First of all, I'm not going to take any lessons from Mr. Easter and the Liberal Party on trade agreements. In 13 years, they accomplished very little as far as our global commerce strategy was concerned. Under Prime Minister Harper and our leadership, there have been nine trade agreements and we have negotiations under way with over 50 countries right now.

The fact is that Mr. Easter and I are on the executive of the Canada-U.S. Inter-Parliamentary Group, and I'd like to hear Mr. Easter say to Mr. Doer that he's not doing his job. I think our embassy in the United States and our officials there are number one. We've had several chances to go down there, both with this and the previous trade committee, and I don't fault them one bit. In fact, this is a non-partisan issue from a Canadian perspective. All of us around the table are concerned about Canadian jobs and the economy. It's strictly a political issue for the U.S., as President Obama is running for his life and throwing out everything he can. So this is a political policy, and you don't interfere with the Americans.

I'm sorry, Mr. Easter, but they don't tell us or consult on their policies.

The fact is that right from the get-go, Minister Fast and the officials contacted Mr. Kirk and other officials down there. I know first-hand that they called them and wrote to him. We're doing everything we can. We have a full-court press on from here and Washington. We'll continue to do that, because we're all really frustrated with the fact that the Americans have pulled this stunt again.

I'd like to ask our witnesses about the following. I've heard from several economists that we're the most broadly and deeply integrated economies in the world. This policy will affect not only Canadian jobs but also will hurt American jobs. Maybe you could expand a little bit on how this will have an effect on American jobs as well.

[Laurent Cardinal]

That is exactly the point we make to our U.S. friends. Because of the supply chains and the integration of the economies, putting restrictions and requirements on local content is going to prevent some of the companies in the U.S. from being able to bid on the contracts that are offered because of that program, especially considering that according to the last figures we saw, about 30% of Canadian exports to the U.S. are inputs to manufactured goods in the U.S. So the U.S. companies that are sourcing in Canada won't be able to bid on those contracts because of the Buy American provision.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

My understanding is that it is about $1.8 billion a day. That's about nine million U.S. jobs it relied on, and 35 of the 50 states have Canada as their number one trading partner. Is that correct?

[Jon Allen]

That is correct.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

So do you have any idea what we're looking at in terms of the number of jobs this could potentially have an impact on?

[Jon Allen]

Well, again, as we've tried to explain, trying to predict that is very difficult, given the $105 billion we're talking about and then parsing that down to how much money we're actually talking about in terms of contracts. You're talking about contracts that would have a Canadian connection, because that's the issue we're talking about. There has to be a Canadian connection to an American contract.

In terms of a prediction of hundreds of millions or billions of dollars, we can't say that. What we can say, as suggested, is that if 30% of the inputs into U.S. manufacturers come from Canada, and they can't have access to those inputs in order to bid for contracts under this bill, they're going to have a problem. But I can't put a number on that. It's significant enough that we're here trying to explain why we're making our case with the U.S. It resonates in the U.S. with members of Congress and with the business community there, because we have allies who agree with us that they're going to be hurt by this.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

From a broader perspective, we're working with the World Trade Organization. What's WTO's perspective with regard to this procurement and “turtling in” or inward protectionism in terms of WTO objectives?

[Jon Allen]

I'll let my colleagues continue, but I would simply say that the whole point of the WTO is to keep trade as open and free as possible. They have their own procurement agreement, obviously, and believe strongly in that. I guess the one thing we have to note, though, is that the U.S. has claimed that these provisions are consistent with their WTO and international trade obligations. We are not alleging that they are contrary to those obligations. We are trying to suggest that this is going to hurt us; it's going to hurt them; and it sends a very bad signal.

[Kevin Thompson]

If I could just elaborate for one second, the WTO government procurement agreement signatories held a meeting last week in Geneva. At that meeting, Canada reiterated its concerns about this legislation. The position or the response of the U.S. government was twofold: one, this is draft legislation; and two, we have undertaken in the legislation to apply it consistently with our international obligations. That is the formal response of the U.S., that they will do this consistently with their WTO obligations.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you.

I have just one quick question. You mentioned you're working with the private sector as well. Who else have you worked with within the Canadian private sector associations that are helping with the lobbying in getting this policy amended?

[Jon Allen]

We're working with the Canadian Manufacturers and Exporters; with the CCCE, the Canadian Council of Chief Executives; and with the majority of those individuals, companies, and associations that are being affected or potentially could be affected if this legislation were to go through. In addition, of course, we're working with the provinces and the territories. We've briefed them. We've kept them up to speed on the nature of the proposed legislation and what we've done in order to respond to it.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you. I wish you the best of success in your continued efforts.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We've gone the full round, and I want to start the second one.

I wonder if the committee would allow me just one quick technical question regarding something you brought up in your draft. You said that the wording in this procurement agreement is slightly different from that in the previous one, so the wording in the bill before us is a little bit different from that in the Buy American clause that was in the 2009 stuff. I've talked to congressmen who are suggesting that the wording is significant enough that it protects Canada, but in your dialogue you said there is a slight difference in the wording. Can you describe what that difference would be?

[Kevin Thompson]

There's no substantive difference in the scope of the Buy American provision. There are a few textual differences, but the substantive provision is nearly identical to the one found in the recovery act.

[The Chair, Conservative, Rob Merrifield]

Monsieur Ravignat.

[Mathieu Ravignat, NDP, Pontiac, QC]

Thank you, Mr. Chair.

I want to thank the witnesses, whose being here is very important.

If it's okay, I will try to share my floor time with Mr. Chisholm.

I have two concerns. In the current climate, the Americans are facing economic issues they see as more important than this one. However, this matter is of the utmost importance to us. So I am especially worried by this industry consultation. You said the following:

We are also coordinating with industry groups in both Canada and the U.S. that oppose Buy American [...]

I think it's important to look at a variety of perspectives. That's my main concern. Could you provide us with more details, and tell us who those groups are and where they come from?

In addition, like other members of this committee, I am very disappointed to see this happening all over again. That's why it's all the more important to stop it from happening. I am wondering what kinds of efforts are being made specifically to resolve this issue once and for all.

[Laurent Cardinal]

I will start by answering your second question on what we are doing to ensure this doesn't happen again.

As Mr. Allen said, the 2010 agreement contained a provision for discussions on possibly enhancing the procurement commitments between Canada and the United States. Those discussions have begun, which is all the better because the bill before us contains a provision stipulating that the legislation must be implemented in compliance with U.S. international obligations. So, the goal is to enhance the procurement commitments. That's why the preliminary discussions are being held.

I will ask Kevin to answer your question on which groups have been consulted.