Buy American Deal Fell short, MPs Told

March 25, 2010 Updated: March 25, 2010

PARLIAMENT HILL, Ottawa—Canada got whipped in its last trade deal with the United States according to some of the witnesses that testified before the Standing Committee on International Trade on Tuesday afternoon.

The committee was taking a closer look at the deal Canada negotiated with the United States to alleviate the worst effects of the Buy American policy.

Provisions in the policy had favoured U.S. companies and excluded Canadian businesses from participating in projects that used funds from the massive U.S. stimulus effort. Many sectors said Buy American provisions were hurting their bottom lines.

The deal saw both sides guarantee access to infrastructure projects for domestic firms operating across the border. Some witnesses testifying before the committee said Canada gave up too much for too little, giving American companies free access to Canadian markets in exchange for more limited access to the United States.

Steven Shrybman, an international trade attorney who works with the Council of Canadians, the country’s largest citizens’ organization, described the deal as “egregiously one-sided.”

Shrybman said Canada should not have given up the right to ensure Canada could exercise its own “Buy Canadian” policies so that infrastructure investments could be targeted towards local businesses and Canadian firms.

He also criticized the agreement for forcing Canadian municipalities to learn the ins and outs of international trade agreements that will now have a bearing on their local infrastructure projects.

That may not have a significant impact, however, because most project bids are already open in the manner outlined in the agreement, said a representative from the Federation of Canadian Municipalities.

A union rep also blasted the deal, saying Canadian firms need a level playing field with the U.S. and they didn’t get it from this deal.

“Canada always seems to be negotiating out of a position of weakness,” said Guy Caron, a national rep with the Communications, Energy and Paperworkers Union of Canada. He said the deal was “history repeating itself” and another example of Canada getting short thrift from the United States.

But Steve Ross, the general manager of Nova Scotia steel construction company Cherubini Metal Works, says he is optimistic the deal will help open up access to US$20 billion worth of stimulus projects in the U.S. still to come online.
He said Buy American had blocked the steel company out of projects, but a poor U.S. economy and high Canadian dollar were also major factors that caused Cherubini’s business with the U.S. to plummet from over half their revenue to just two or three percent.

Another major issue, he said, was that with the downturn U.S. companies have gotten extremely competitive.

“They are working and bidding projects just to survive,” he said.

The government did get some praise for the speed of the deal from Michael Buda, a policy director at the Federation of Canadian Municipalities. He said it was nothing short of remarkable that the government got 13 provinces and territories to sign onto the deal in just six months, each with their own exemptions and caveats, like Ontario’s transit exclusion.

But he also criticized the government for not including municipal procurement experts in the negotiations, and said he looked forward to Trade Minister Peter Van Loan’s promise to work much closer with the federation.

Tuesday was the third time the committee heard from experts on trade with the United States. Previous witness have both praised and criticized the agreement. The Canadian Chamber of Commerce is among those that have called it a “step in the right direction” and said there was no point evaluating whether it was good enough because it was all that was available given the U.S. Congress’s projectionist tendencies.