The new Buy American deal giving Canadian businesses access to procurement projects through United States' stimulus funding is drawing passionate opposition and praise throughout Northern Ontario and the rest of Canada.
Critics of the deal, signed between the Canadian and American federal governments in mid-February, argue it gives too much for too little, while supporters hail the move as a victory for international trade relations.
Others, such as New Liskeard’s Wabi Iron and Steel president Peter Birnie, say the deal is an important stepping stone but one replete with issues and one which needs to be seen as the start of continued discussions.
“It’s not perfect, and there’s a lot of work to be done,” says Birnie, who sits on the executive of the Canadian Foundry Association, which lobbied against the protectionist provisions in the stimulus bill.
“It’s a positive step forward but not the end of the journey.”
Birnie actively and aggressively campaigned through 2009 for the protectionist measures in the U.S.’ stimulus package to be lifted. With 50 per cent of his business consisting of exports, Birnie even travelled to Washington, D.C. to speak with Canada’s then-U.S. ambassador, Michael Wilson, on the subject. The protectionism directly affected his business, as a southern Ontario firm he regularly supplied with pump casings, could no longer bid for municipal jobs south of the border.
"It's a positive step forward but not the end of the journey."
Peter Birnie,
president,
Wabi Iron and Steel
These days, Birnie’s tone has softened, with his biggest concern now about keeping the discussion alive for more equitable terms between the two major trading partners. Those like him who “fought hand-to-hand in the trenches” on the issue, need to see talks continue, despite the willingness of politicians and media to let the issue drop.
“Those who see this deal as a failure feel like they’re drowning. Those who see it as a success just want to move on because they don’t want to be held accountable.”
As another Northern Ontario voice who drew international attention for his aggressive political campaign for Buy American concessions, North Bay Mayor Vic Fedeli says he’s “very, very happy” with the results of the deal, but the time has come to focus on other efforts.
“I would hope now that our work is done and we can move on with other important works,” says Fedeli. “I don’t think we need to revisit it any further. We were successful and a wonderful experience but it’s solved now. Let’s put the file away and move on.”
Despite the criticism over the terms of the deal, Fedeli says the net result for communities such as North Bay will be negligible. After reviewing the deal with the municipal purchasing department, Fedeli says he discovered the city will not have to change any policies or procedures.
This is especially true as the municipality already makes big purchases from American suppliers.
“We want what’s best for the taxpayer,” says Fedeli.
At the heart of the issue is the United States’ $787-billion stimulus package passed in February 2009, which includes $275 billion in procurement.
However, experts estimate all but roughly $4 billion of that total was spent by the time the Buy American exemptions were signed. This represents less than two per cent of related funding, providing Canadian suppliers access to any remaining contracts under seven American stimulus programs.
In exchange, Canadian provinces are providing American suppliers access to a host of infrastructure projects at the provincial and municipal levels until September 2011. Studies from the Canadian Centre for Policy Alternatives (CCPA) estimate the total value of these projects to be roughly $25 billion.
The deal also makes some permanent changes, binding Canadian provincial government purchasing to the World Trade Organization’s (WTO) Agreement on Government Procurement in exchange for opening similar commitments to 37 U.S. states to Canada.
There is no shortage of exceptions built into this portion of the deal. Canada is restricted from supplying construction-grade steel, coal or printing services and will not have access to public utility contracts nor federally-funded highway construction projects.
What’s more, neither arrangement provides future assurances of Canadian exemptions in legislation or funding which contain Buy American preferences.
Critics, such as Ontario Federation of Labour president Sid Ryan, argue the deal now means cities and provinces that make purchasing decisions with preferences made for local goods or suppliers could now theoretically be challenged by American suppliers.
Ryan also charges that the deal puts Canada on a slippery slope, and may grease the wheels for future concessions to other international trade bodies such as the European Union, which is demanding access to municipal and Crown corporation procurement.
“We’ve fought these concessions for years and years, and now we’ve opened it up,” says Ryan. “This is a disastrous deal.”
Scott Sinclair, senior trade researcher with the CCPA, agrees that the deal may be a sign of the willingness of Canada’s current Conservative government to reduce the flexibility of local-decision-making. Government procurement from local or regional suppliers can be an effective industrial and economic development policy, he says, something which is being greatly challenged with the new Buy American agreement.
“It’s a remarkably unbalanced agreement with most of the benefits going to the United States,” says Sinclair. “It’s not a very happy story for Canada.”
