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Commentary

Retaliation to U.S. Protectionism: Canadian Town Penalises US companies

John Ivison: Canada starts to feel the bite of new U.S. protectionism:

President Obama’s American Recovery and Reinvestment Act includes a section that stipulates all iron, steel and manufactured goods used in projects paid for with stimulus funding must be sourced from the U.S. When he came to Ottawa, the President re-assured Canadians that the stimulus package would be subject to NAFTA and World Trade Organization rules, which specifically bar discriminatory practices.

However, those agreements don’t apply at sub-national level and Canadian companies like Hayward Gordon say they are already being squeezed out of projects at state and municipal level, even if those projects are funded with federal dollars.

Worse is likely to come, since new legislation governing the billions of dollars to be spent by municipalities in the U.S. on drinking water improvements include the same Buy America provisions. The Water Quality Investment Act has already passed through the House of Representatives, replete with language that bars foreign firms from bidding on waste and sewer infrastructure projects, and the legislation is set to begin debate in the U.S. Senate next week.

The inevitable response in Canada has been a call for retaliation. “My members are saying ‘I’m being locked out of the American market but Americans have unfettered access to Canadian procurement’. There are growing pressures to have Canadian municipalities impose some reciprocal provisions,” he said.

The Town of Halton Hills has already passed a resolution that stipulates only companies from countries that have not imposed their own trade barriers can compete for infrastructure projects. “This supports the notion of free trade and is very distinct from a Buy Canada resolution,” said Mr. Hayward, who promoted the resolution’s adoption. “Halton Hills is a small town and this action is largely symbolic. But it will be presented to the Federation of Canadian Municipalities and if they acted it would not just be symbolic.”

Funny. Buy American will eventually mean only Americans will be allowed to.