Harper’s Buy American proposal to President Obama
Weakening local democracy and curbing local solutions with little gain for Canada
There has been much concern and confusion in Canada around the Obama administration’s proposed
stimulus legislation, which contains a “Buy American” clause stating the following:
“None of the funds appropriated or otherwise made available by this Act may be used for a
project for the construction, alteration, maintenance, or repair of a public building or public
work unless all of the iron, steel, and manufactured goods used in the project are produced in
the United States.”
The law is a temporary measure aimed at boosting the U.S. national economy, which suffered a major
blow when the U.S. banking and real estate markets collapsed last year, dragging the global economy
into recession. It was a rational policy decision based on a fear that, without protection, America’s
manufacturing sector and other industries would be decimated. Already, more than ten million jobs have
disappeared in North America since the economic crisis hit.
But, despite the magnitude of the crisis, which was caused by failed free-market economics, Prime
Minister Harper has latched onto the “Buy American” controversy to further limit what provincial and
municipal governments can do locally.
Decrying “Buy American” policies as protectionist, Prime Minister Harper and International Trade
Minister Stockwell Day have proposed an ambitious new agreement with the United States that could
bind provinces, states, territories, municipalities and cities to international trade rules prohibiting any
conditions on local government procurement (i.e. spending public money on infrastructure, goods
or services). The conditions could limit minimum local content rules for materials or services, ethical
purchasing policies, commitments to hire from the community, and requirements that companies
reinvest a portion of revenues or profits locally.
There is little, if any, evidence that further deregulating local and provincial economies in this way would
benefit the companies that have been shut out of U.S. infrastructure contracts, or the Canadian cities
and towns in which these companies operate. The federal proposal would unfairly and unreasonably
restrict the powers of local governments to set economic and social policies that directly benefit their
own communities at a time when they need that flexibility the most.
What’s in the proposed Canada-U.S. agreement?
According to Inside U.S. Trade, a media source that researches and covers trade developments, the
following items would be in the proposed Canada-U.S. agreement:
-
Canada would guarantee that U.S. firms have the same access as Canadian firms in bids on Canadian
subnational (i.e. provincial, municipal and perhaps school board, university, health agency,
etc.) public procurement bids. That equal access would end when funds currently being distributed
by the Obama administration under the U.S. stimulus package expire.
-
There would be a list of subnational procurement that U.S. firms would not have guaranteed access
to, including procurement that is “necessary to protect public morals, order or safety,” which
would include contracts involving prison labour and procurement contracts involving intellectual
property protection. This is identical to NAFTA’s procurement chapter exceptions.
-
The deal would include a dispute resolution process for U.S. firms claiming they have been unfairly
excluded from subnational procurement in Canada. Presumably, this would be separate from
NAFTA’s Chapter 11 dispute process on investment.
-
In return for added, albeit temporary, access to Canadian subnational contracts, the Harper government
wants the U.S. to grant a waiver to Canadian firms from the “Buy American” provisions in
the $787 billion U.S. stimulus package.
- As a second phase to its proposal, the Harper government wants a commitment from the Obama
administration “to explore the scope for a permanent, reciprocal government procurement
agreement.”
President Obama has suggested that Canadian provincial governments could sign on to the World Trade
Organization’s Government Procurement Chapter, as 37 U.S. states have voluntarily done. This would
have the same effect as a new bilateral agreement with the U.S. of banning a whole list of government
conditions on goods and services contracts.
What you can do
A growing list of unions and civil society groups are asking the premiers not to endorse any agreement
that would unreasonably restrict their democratic right and duty to spend public money on local
economies and local job creation. This isn’t about fighting U.S. protectionism; it is about choice and
about democracy. The truth is that “Buy American” policies have existed in the United States for more
than 75 years and most Americans are committed to keeping them in place. They are so popular
because they provide U.S. states and municipalities the freedom to choose to spend public tax dollars
locally. That doesn’t mean they purposely exclude Canadian companies. Often, it simply means that
local governments buy locally, or from the American bidding company, even if it costs upwards of 15 per
cent more than an out-of-country competitor – a practice that was once widespread in Canada.
While Prime Minister Harper refuses to renegotiate NAFTA to improve labour and environmental
protections, he’s willing to open up the agreement to bind municipalities and provinces to trade rules
curbing their powers over local economies. Local procurement is not the problem. In fact, the power
to decide what and where to buy from is one of the last vestiges of public control over how local
communities develop and grow, and an important tool for improving and expanding their economies in a
sustainable way.
The McGuinty government has lent its support to the Harper government plan without consulting
Ontarians or Ontario municipal governments. Write to or call your local MPP and ask them to cancel
Ontario’s support for the bilateral procurement agreement until Ontarians have had a chance to debate
its merits and dangers.
« previous | next »
