Ken Neumann, [url=http://www.thestar.com/comment/article/584887]"'Buy American' policies not all bad news for Canada,"[/url] Toronto Star, February 10, 2009.
Alarmist reports on "Buy American" rules for steel used in public infrastructure projects have misinterpreted the rules, ignored a number of characteristics of the Canada-U.S. steel trade and failed to recognize the potential of using Canadian and American procurement policies to create jobs at home.
Instead of lecturing Americans about the merits of unregulated global trade, Canada should have its own "Buy Canadian" policy and recognize that, due to the integrated nature of the Canadian and U.S. economies, this current debate in the U.S. is really an opportunity for Canada.
Using Canadian and American tax dollars to create jobs in Canada and the United States is just good sense, and that is what our federal government should be working toward. Canada should enter into dialogue with the United States about how to implement procurement policies in both Canada and the United States in a way that recognizes the integrated nature of North American manufacturing and benefits the citizens and workers of both countries.
Accusations of protectionism and claims that this program will seriously harm Canada are overstated. The "Buy American" provisions as currently written apply only to federally financed infrastructure projects that are not covered by existing domestic procurement requirements.
Highways, airports and transit projects already have these requirements. There is no procurement requirement at all for most goods. In addition, Canada and the U.S. have signed the WTO Agreement on Government Procurement, which will impact how the "Buy American" provisions apply to Canadian products.
It is true there is talk about expanding the "Buy American" provisions beyond federal infrastructure, but if that happens, the rules will have to be consistent with current trade obligations. Although NAFTA specifically excludes certain domestic infrastructure projects, existing trade obligations with Canada on other goods would pre-empt an expanded "Buy American" program.
Even so, there is room to argue that these limited procurement rules should not apply to Canadian-made steel. Steel trade between our two countries is quite balanced and production is integrated (a steel slab poured in the U.S. may be shipped to Canada for rolling, and then shipped back to the U.S.). Canada should be making these arguments.
But there is a bigger prize that Canadians should keep their eyes on – a co-ordinated approach to managing domestic procurement and a stronger manufacturing sector in both the U.S. and Canada.