If governments are using public funds to purchase goods and services in an effort to stimulate a depressed economy, then it's a no-brainer that those products should be made at home. When governments build infrastructure or purchase equipment, they must steer maximum benefit toward tax-paying citizens: creating jobs, stimulating industries and strengthening communities.
The practice of domestic procurement is both logical and common. It's widely used by countries throughout the world. And, for the most part, it's totally legal: Even under the terms of NAFTA and the WTO, sub-national governments have full powers to source locally, and national level governments have great leeway to favour domestic suppliers. Why then has the U.S. government's decision to uphold the same core idea, embedded in its 76-year-old Buy American Act, sparked such a firestorm of criticism from self-righteous Canadian government officials?
The over-the-top Canadian reaction suggests that our own officials either need a refresher course on economic history, or simply a wake-up call regarding their own inaction to protect Canadian industrial jobs.
The Buy American Act has its roots in the Great Depression and is still enforced today. Under the act, government purchases must meet strict U.S.-content standards. These rules have been around for decades and, in some instances, have become more stringent over time - all before the Obama Administration's American Recovery and Reinvestment Act was ever dreamt up.
I couldn't help but cringe after hearing both Conservative and Liberal officials threaten to challenge President Obama's Buy American provisions under NAFTA and the WTO. There's hardly anything new about U.S. governments which profess free trade, but go the other direction when it suits their national economic interest. No one should be surprised at this. What should be surprising is that our politicians, after so many failures, still pretend that NAFTA's legalities can somehow protect us.
And it's not just the United States that does this. Most other developed and developing nations have similar domestic purchasing policies in place, including China, Japan,Korea, Mexico and countries throughout the European Union. Public procurement can be a crucial, effective tool to support the development of high-value industries, by giving them a head start in their home market. The issue isn't why no one has stopped these countries from using procurement as an economic tool. The issue is whyCanada has failed to use this powerful tool itself.
Instead of putting on a Boy Scout's uniform and wringing our hands about others' domestic-sourcing practices, Canadian officials should play hardball. They must defend our jobs with just as much determination as the Americans defend theirs.
Indeed, Canadian governments at all levels are squandering the opportunity to support the economy through public purchases. In recent years, billions have been sent offshore to purchase new buses for the Department of National Defense, ferries that ply the B.C. coastline, transit infrastructure in Ottawa and even uniforms for our Olympians in Beijing.
The most recent, and perhaps most infuriating example was the federal government's decision to award a $274-million contract for new military trucks to a U.S. company, Navistar, that will build them in Texas. Meanwhile, Navistar's plant in Chatham, Ont., which is completely capable of doing this work, is laying off hundreds. It is hard to imagine why our own tax dollars are not being used to support our own industry and workers.
Canadians understand that government must play an active role steering us through the current economic crisis. In a recent Vector Poll, nine out of 10 Canadians said governments should favour Canadian-made goods in public transit. Stronger domestic procurement has also been supported by groups like the Canadian Manufacturers and Exporters and the Ontario Chamber of Commerce. And in recent months, over a dozen municipalities have passed resolutions committing them to maximize Canadian-content when purchasing goods and services.
The damage that the U.S. provisions would do to our Canadian industries has been overstated. In fact, if we implemented our own buy-domestic strategy, we'd have a bargaining chip to negotiate sectoral partnerships or mutual exemptions (in steel, auto, and other key sectors) with the Americans that make better sense for our hard-pressed industries than the current free-trade free-for-all. That would give manufacturers on both sides of the border a chance to compete with the offshore imports that are destroying hundreds of thousands of jobs in both Canada and the United States.
After all, the meltdown of North American manufacturing in the face of imports from China and elsewhere has destroyed communities and lives in both Canada and theUnited States. Now the U.S. government is tying its stimulus plan to the recovery in the manufacturing base.
Our government should get off its high horse and figure out how to do the same thing here. Yes, that will involve stepping outside the narrow strictures of the free trade model - but then that model has failed our industries abysmally, anyway.
Ken Lewenza is president of the Canadian Auto Workers union.
This article originally appeared in the Financial Post.
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