Repeat after me: “Buy American” policies are bad because they’re protectionist, defined only by examples like “Buy American” policies. That’s the extent and depth of the Harper government’s circular critique, and the basis of a dangerous but hopefully fruitless campaign to solve the “Buy American” problem once and for all.
International Trade Minister Stockwell Day wrote to US Trade Representative Ron Kirk last week with a formal proposal to negotiate a temporary exemption for Canadian companies from “Buy American” conditions on US federal stimulus spending as a first step toward a more permanent bilateral agreement that would bind provincial and municipal government spending to restrictive NAFTA rules.
“We want something that will deal with the time-limited effect of `Buy America’ and their legislation, their specific legislation on the Recovery Act, but I am also asking for a second phase, longer-term approach on procurement so that when … we get a shift in the economic climate, the commitment against protectionism will remain the same and that is why this is really a two-phased approach that I am proposing,” Day told journalists.
While some municipalities have been calling for federal action on Buy American, backed by heavy lobbying from the Canadian Manufacturers and Exporters, many cities, unions and other groups are concerned that a permanent agreement under NAFTA would restrict what our governments can do to support local economies while adding new costs and bureaucracy as more tendering would have to go out to U.S. and other non-local bidders.
If anyone has a copy of the letter to Ron Kirk I’d love to see it. We’re working with a coalition of groups opposed to including subnational procurement under NAFTA, which issued a statement about the importance of procurement to democracy and economic development.
“We oppose expanding NAFTA to cover all sub-national procurement and the related effort to negotiate a ‘free trade’ deal with the European Union that would also bind sub-national governments to NAFTA-like restrictions,” reads the statement. “This approach would drain needed stimulus from the Canadian economy, worsen the current crisis in manufacturing and interfere with provincial and municipal governments’ authority to provide and regulate local services.”
As I wrote in the Toronto Star several weeks ago with Blair Redlin, a senior researcher at CUPE:
“‘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 cities 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.
“States in the U.S. said no when free trade talks with Canada and Mexico threatened to take that choice away from them, which is why subnational governments are exempt from NAFTA now. They will say no again to Harper and Day’s proposal. In the end, the provinces will have agreed to tie their hands on public spending without any guarantee of new access to American markets in return.”
So what to do? The evidence is stacked against Harper and Day, and we know that support for their counter-productive “solution” to ‘Buy American’ policies in the U.S. is not unanimous. Local procurement is a right and duty of all subnational governments, and a vital tool for economic development that we cannot let the Harper government trade away so casually.
Canada’s cities need to stand up for their spending powers. Stand up and Canadians will stand with you.