Mr. Speaker, I rise today to speak to Bill C-392, An Act respecting the use of government procurements and transfers to promote economic development.
Let me begin by recognizing the good and honourable intentions of the member for London—Fanshawe in drafting this legislation.
The purpose of the legislation, as stated in its summary, is to promote employment and economic development in Canada. This is a goal we can all support. Strengthening Canada's economy in order to provide Canadians with meaningful, good-paying jobs is a top priority of members on all sides of the House. However, to achieve this goal we need responsible public policy that acknowledges and addresses the reality faced by Canadians. The reality is that Canada has a small population that relies on international trade for our collective prosperity.
We produce far more than we can consume, and this is the source of much of our wealth. Put another way, Canada is our classic small, open economy. When we consider the value of our exports and imports together, this represents more than two-thirds of Canada's GDP.
Approximately three-quarters of Canada's trade is with the United States. That is about $1.6 billion in two-way trade between Canada and the United States on a daily basis. That is the largest bilateral trading relationship in the world. No existing Canadian trade issue or policy area is as important or complex as Canada's relationship with the United States. The level of integration between our economies requires that we constantly build and strengthen that relationship, especially during times of economic uncertainty.
It is true, with so much of the Canadian economy depending on trade with a single partner, it does leave us vulnerable to protectionist provisions like buy American.
It is also true that buy American is killing Canadian jobs. Workers across Canada have watched their shifts disappear as Canadian manufacturers lose contracts in the United States. For example, Cherubini Metal Works in Atlantic Canada has had to lay off workers, blaming between 30% and 40% of its slowdown on buy American. Canada needs an exemption from buy American provisions. It is in the best interests of both Canada and the United States.
Unfortunately, the Conservative government has been late to act on the file. The Conservatives lost precious months after the U.S. stimulus package was passed when they tried to convince Canadians there was not a problem instead of working to solve that problem.
The Conservatives were wrong to declare victory over buy American when the United States amended the stimulus package in the U.S. recovery act to ensure it respected U.S. trade obligations. Their premature declaration of victory showed they did not understand our trade agreements. U.S. stimulus money is being spent by its state and local governments, and this spending is not covered by our trade agreements.
When buy American proposals first took shape, the Canadian government should have immediately sat down with the provinces to work out a proposal for an exemption that extended coverage of Canada's trade agreements with the United States to provincial, state and local governments. Instead of doing this immediately, the Conservatives waited. In the meantime, a number of Canadian manufacturers gave up on our federal government and began moving both their operations, and the Canadian jobs that go with them, to the United States.
A recent CIBC report blames U.S. protectionist provisions like buy American for slowing down Canada's recovery in 2010, so there is no question that buy American is hurting our economy. We owe it to Canadians to work on responsible solutions to the problem.
Bill C-392 certainly appears to be a reaction to the buy American provisions in the United States. Yet reacting in kind is not the answer. Here is what Gary Shapiro, president of the Consumer Electronics Association, said about buy American.
The “Buy American” provisions...will signal to our trading partners around the world that the United States is returning to the bad old days of protectionism and economic nationalism.
Why would we want to do the same in Canada?
Bill C-392 not only will not work, it would actually worsen the problem. While we work to address a growing number of trade irritants with the United States, like buy American, country of origin labelling, and the western hemisphere travel initiative, we must not lose sight of the fact that the Canadian and U.S. economies are still highly integrated. We do not simply trade with each other, we build things together.
One-third of Canada-U.S. trade is between divisions of the same company. Two-thirds of Canada-U.S. trade takes place within established supply chains. Over 3 million Canadian jobs rely on trade with the United States. Implementing protectionist provisions here at home would put these Canadian jobs at risk.
The unintended consequence of this legislation would be to hurt Canadian companies that have U.S. companies as part of their supply chain. These consequences have been identified by prominent leaders, such as Leo Gerard, president of the United Steelworkers of America. In a written submission to the Congressional Steel Caucus, he said:
Because we are an International union, and because Canadian and US manufacturing is so integrated, we encourage you and other members of the Steel Caucus to approach your counterparts in Canada to discuss a coordinated approach for the North American industry to strengthen its ability to create and preserve these good jobs in both countries.
American manufacturers often use Canadian suppliers. When American manufacturers are shut out of the procurement opportunities, their Canadian suppliers lose out too. This hurts Canadian workers.
Each additional barrier to trade along the 49th parallel increases the cost of doing business in North America, both in Canada and in the United States.
Instead of reacting to the rising U.S. protectionism with our own Canadian brand of protectionism here at home, instead of erecting trade barriers and contributing to the global trade war of the likes of Smoot-Hawley during the Great Depression, we should focus our efforts on removing trade irritants and bringing down unnecessary trade barriers, particularly between Canada and the United States.
In the face of increased competition from emerging markets like China and India, the best way to grow the Canadian economy is to work closely with our largest trading partner, the United States, to improve our competitiveness and make our shared market the best, most efficient place to grow our business.
To summarize, while I recognize that Bill C-392 is motivated by the best of intentions, it does not reflect or address the realities of the Canadian economy. A recent statement made by Ontario Premier Dalton McGuinty highlights this fact. He said:
Closing the border to companies south of the border is not the way to combat American protectionist policies.
McGuinty told the delegates at the Association of Municipalities of Ontario that the best way to ensure both countries enjoy a strong and sustained recovery is if they work together. He called on municipal leaders and politicians to reach out to their counterparts across the border.
Bill C-392 will not do this. Instead, it would in fact achieve the opposite of what the member for London—Fanshawe intends to achieve by needlessly risking Canadian jobs. It is not in Canada's interest to contribute to global protectionism.
Instead, our federal government must focus on gaining and securing access for Canadian exports to foreign markets, so that Canadians can sell their goods and services to businesses and consumers around the world. That is the most effective, most responsible way to protect and create Canadian jobs.
