Public Values

Buy America provisions give away Canadian farm for little return

Public services previously excluded from NAFTA now on the table with new deal.

Provinces and municipalities will lose out even more than original 1987 dealA new trade agreement between Canada and the United States opens the door for American companies but does nothing to counter the "Buy America" policy south of the border. Both the Canadian Union of Public Employees (CUPE) and The Canadian Centre for Policy Alternatives (CCPA) have come out with statements

"The new trade agreement forged by Canada and the United States as a way to side-step U.S. 'Buy America' provisions amounts to Canada giving away the farm for very little in return," says CUPE National President Paul Moist. "This agreement is certainly good news for American corporate interests, but there is very little assurance that this agreement will create good jobs for Canadians."

"The agreement is highly unbalanced and provides significantly better access for U.S. suppliers to the Canadian procurement market than for Canadian suppliers to U.S. stimulus projects," says senior CCPA trade researcher Scott Sinclair.

According to the analysis, Canadian suppliers have a brief opportunity to compete for an estimated $4 to 5 billion US of federally funded stimulus projects, representing less than 2 per cent of the approximately $275 billion US of procurement funded under the Recovery Act. In return, Canada has guaranteed U.S. suppliers access to a range of provincial and municipal infrastructure spending projects until September 2011, estimated to be valued at more than $25 billion CDN.

  "With the bulk of U.S. stimulus money already spent, the deal does very little to resolve the issue that started the dispute specifically, that Canada could not profit from U.S. stimulus dollars. However, the new agreement will leave the 'Buy America' provisions basically intact."

"Most significantly, Canada has bowed to U.S. pressure to permanently bind purchasing by Canadian provincial and municipal governments under the WTO agreement on Government Procurement," says Sinclair. "This proposed deal will prevent Canadian provincial and municipal governments from preferring local goods or suppliers while leaving Buy American policies almost fully intact."

"The Harper government has taken advantage of the economic crisis to justify what it has wanted for a long time more private access to public sector resources and further restrictions on the ability of all levels of governments in Canada to negotiate local benefits when the procure goods and services."

With the bulk of U.S. stimulus money already spent, the deal does very little to resolve the issue that started the dispute, specifically, that Canada could not profit from U.S. stimulus dollars. However, the new agreement will leave the "Buy America" provisions basically intact, and only applies to the 37 states that have signed on to the World Trade Organization (WTO) Government Procurement Agreement (GPA).

Meanwhile, under WTO rules provinces and municipalities will lose an important policy tool in the form of local purchasing power.

"Buy local policies are good for the environment and for Canadian businesses, and they keep jobs and tax revenues in the community. Why the Harper government would enter Canada into such an uneven deal for Canada is baffling," said Moist.

The agreement may also open the floodgates to increased privatization of public services such as water and hydro. While provincial and municipal procurement was previously excluded from NAFTA, now U.S. investors will be able to launch Chapter 11 investor rights challenges if they feel provinces or municipalities are taking policy actions that harm their interests.

"This deal commits Canadian governments to forfeit valuable procurement sovereignty, while the U.S. offer is largely empty. This kind of risk is the last thing we need during an economic slowdown. Our government needs to look at improving its own record of research, development and innovation, instead of selling our provinces and municipalities short."

Links and sources
  Canadian Centre for Policy Alternatives - Buy American Basics study download

Posted: February 12, 2010

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