Ottawa Pushes for New Chapter in Free Trade with U.S.

(The Globe and Mail – Campbell Clark and Rhéal Séguin)

To get around Buy American provisions, PM hopes to bring awarding of local contracts under the free-trade umbrella

The Canadian government is asking the provinces to join it in creating a new trade deal with the United States. Motivated by growing concern that Canadian firms are being frozen out of billions of dollars worth of bids in an increasingly protectionist United States, the Prime Minister is attempting to redraw the U.S.-Canada trade map.

Because the 1993 North American free-trade agreement does not include spending by local jurisdictions, contracts across North America involving everything from sewage systems to subway repairs are being awarded outside the framework of continental free trade.

And as the recession continues, Canadian firms have reported it is increasingly difficult to win rich contracts in U.S. cities because of the Buy American provisions of President Barack Obama’s massive economic stimulus package, even though NAFTA countries are supposed to be exempt from them.

So at a press conference yesterday, Prime Minister Stephen Harper said he wants to bring the awarding of local contracts – in both the United States and Canada – under the free-trade umbrella.

Any Canadian proposal to add a new chapter to NAFTA, however carries the risk that the United States will demand trade concessions in other areas. Read more here.