The District of Summerland, British Columbia decided this February to award a five-year garbage pickup contract to a multinational firm over the local competition because “they were bound by the rules of a trade agreement,” writes the Summerland Review. The trade agreement in question was the New West Partnership (or TILMA plus Saskatchewan), which says the lowest bidder must win all service contracts over $75,000 despite the many benefits municipalities can find from buying locally.
The offer from BFI Canada Inc., the third largest waste management firm in North America, was 20 per cent lower (or $60,000 per year of the contract) than the one from Summerland Waste. That’s a big cost saving on first glance. But Summerland owner Andy Tiel tells the Review BFI pays its workers less, and that the district could have considered, “This town is going to lose two or three young couples because they can’t pay their mortgages on what they’re paying.
“Summerland has lost at least six full-time jobs and numerous part-time jobs,” he adds. “The spin-off effect of our business and our employees who live in the community will be dramatic.”
Procurement agreements–whether part of interprovincial agreements such as the New West Partnership, bilateral deals like the one Canada signed with the U.S. in February 2010, and another we are now negotiating with the EU, or internationally at the WTO–ban local preferences and enforce those bans. Say you want to choose the local company, even if it’s more expensive, because of the spin-off benefits in terms of jobs, local development, or sustainability. Tough luck.
Dave Hill, public works superintendent for the municipality, tells the Review that the district had no choice but to award the deal to BFI, which runs waste removal in cities across North America. In this case, he’s probably right. In others, there is the risk under these trade deals of a chill effect where municipal councillors or city staff refuse to buy local simply because they are afraid of provoking a legal challenge from a multinational competitor with deep enough pockets to soak up the court costs.
The Summerland decision and justification based on trade agreements also sheds light on what we can expect much more of if the Canada-EU Comprehensive Economic and Trade Agreement (CETA) is passed. The EU would like municipalities, school boards, Crown corporations, hospitals and other public agencies across Canada to be bound, as Summerland is, to procurement rules that favour multinationals. The EU is the world’s leading exporter of public services such as waste, water, transit, energy. With a procurement deal in place they’ll be able to challenge and threaten to challenge any number of municipal contracts they do not win.
The Summerland waste management decision also exposes an unfortunate dynamic in the CETA negotiations. Canada’s three westernmost provinces have already bound their municipalities, without asking them first, to trade rules restricting how they spend public money. So they are ready to automatically offer the same rights to challenge lost bids to EU firms. More cautious central and eastern provinces and the territories are under enormous pressure to give the EU what they’re going to get anyway in Alberta, B.C. and Saskatchewan. Under these kinds of negotiating pressures, it will be difficult to get anything approaching a good deal.
To learn more about how CETA will affect municipalities, see the legal opinion Steven Shrybman produced for the Columbia Institute’s Centre for Civic Governance.
To TAKE ACTION by demanding that municipalities and schools be taken out of the CETA agreement altogether, click here.