Posted: Thursday, 20 May 2010

Passed by the CLC Executive Council, May 18, 2010

The Canadian labour movement is of the view that the Canada-U.S. Agreement on Government Procurement, which came into effect on February 16, 2010, is an unbalanced deal that does not serve Canadian interests and does not provide a meaningful exemption from Buy-American policies in the American Recovery and Reinvestment Act, 2009.

What we need instead are meaningful policies to support Canadian manufacturing and public services while continuing to be part of an integrated and co-operative North American market. We need domestic investment practices that support local economies and economic development. We need managed trade and sectoral agreements with the United States. Such arrangements could provide mutual exemptions from procurement preferences for products manufactured in highly integrated industries.

The Government of Canada has suggested that it was necessary to open government procurement markets to overcome rising protectionism in the U.S. The decline in Canada-U.S. trade during the economic crisis is not the result of U.S. protectionism, however. Canada is highly dependent upon the state of the U.S. economy, and that economic relationship was severely affected by the most dramatic market failure since the Great Depression.

We are concerned about the Canadian government’s massive international campaign to undermine the call for Buy American, and along with it, Buy-Canadian policies. As the economic crisis deepened, communities needed more, not less support from the federal government.

Now, for the first time, Canada has made permanent commitments in the World Trade Organization Government Procurement Agreement (GPA). Under the rules of the GPA, governments are not allowed to require local content, nor seek local benefits to enhance job creation and economic development. We see this as a regrettable action.

The federal government should not require sub-national governments to give up policy instruments capable of directing public monies toward local benefit.

Until now, the Canadian government has considered the quality of U.S. sub-federal commitments at the WTO as poor, and as a result, has not been willing to make an offer without secure, reciprocal access to U.S. procurement markets. We fail to see why the Canadian government has come to a different determination now, even though the U.S. offer has not changed.

Where there was anecdotal evidence of negative impacts of the Buy American provisions on Canadian suppliers, the government did not reveal the extent of the problem, citing business confidentiality.

Canada has been well-served in managed trading relationships in the past, and these offer a more targeted way to deal with contentious bilateral issues.

Unfortunately, the Canadian government has now set the stage for highly ambitious negotiations with the European Union which will further compel provincial/territorial and municipal governments to ignore any potential local benefit when awarding contracts with public money. The E.U. has said clearly that its priority in these negotiations is to have the unrestricted right to supply purchases by sub-national governments in Canada.

In the temporary agreement with the United States, which was also concluded, provinces and territories will, for the first time, compel large municipalities and listed agencies to accept bids from U.S. corporations on construction projects without having to ensure the creation of good jobs or sustainable practices.

The Government of Canada intends to engage the United States in negotiations on a permanent agreement within twelve months that goes far beyond commitments made at the WTO and under the NAFTA.

Before the commencement of future negotiations toward a permanent agreement, the Department of Foreign Affairs and International Trade must provide the Canadian people with a cost-benefit analysis of such action.

Further, there should be broad consultations to consider the alternative to liberalization, i.e., how procurement policy could help strengthen the quality of public services and enhance local economic development.

It is imperative that governments maintain the capacity to consider wisely the impact of their contractual transactions to acquire property or services. Any restriction of this ability undermines freedom and, indeed, democracy.

We believe that governments have a right and a duty to use public procurement as a tool for economic development, environmental protection, ethical purchasing, equality in hiring, and job creation. To this end, we call on the Canadian government to support Buy-Canadian policies.