New ‘Buy American’ Restrictions Could be Coming Down Pipeline

(Embassy – Carl Meyer)

A new protectionist American stimulus bill that could be signed into law soon has prompted fresh accusations from the opposition that the government has severely mishandled the recent Buy American deal. However, the trade minister says the new Canada – U.S. agreement, while not perfect, will in fact give Canadian businesses a competitive advantage.

The US “Jobs for Main Street Act, 2010,” colloquially known as Stimulus II, or the Jobs Bill, has billions in construction projects that will be covered by another Buy American provision. A version of Stimulus II has already been passed by both the U.S. House and the U.S. Senate, and the two versions are currently being reconciled. On Monday, the Senate took steps to avoid a Republican filibuster. U.S. President Barack Obama is intent on signing the bill into law, demanding in his recent State of the Union Address to see the bill on his desk “without delay.”

On Feb. 5, the Canadian government announced it had reached a deal with the U.S. exempting Canadian businesses from Buy American requirements in the original federal stimulus spending program, known as Stimulus I. This deal had three parts. One is access to seven U.S. stimulus projects, which had to be ready to proceed to construction within 12 months of February 2008.
Critics have said this provided very little time for Canadian companies to compete. In exchange, all provinces and territories signed on to the World Trade Organization’s General Procurement Agreement, allowing American companies to bid on provincial and municipal procurement contracts. The third part of the deal is an agreement to enter into negotiations within the year to set up a permanent procurement deal.

Because the U.S. - Canada deal only covers Stimulus I, if the U.S. passes Stimulus II before a permanent agreement is reached – a situation that is almost certain – Canada will have to negotiate again to receive exemptions. Read more here.