Losing sight of the economic forest for 'Buy American' trees

Who knew? It turns out the biggest threat to the Canadian economy and jobs is not collapsed global financial institutions, weak markets, lack of innovation or declining infrastructure. No -- apparently the clear and present danger Canada suddenly faces is "Buy American." As if out of nowhere, Buy American polcies are at the top of the agenda for the Harper government, premiers, business lobbies and the media. It matters little that the Buy American provisions of the recent Obama stimulus bill are much the same as those first instituted way back in 1933 and strengthened by the Reagan administration in the 1980s. It's now all hands on deck to stop the Americans from insisting that U.S. jobs be created when U.S. tax dollars are invested, even though Canada has had little problem with the policy for nearly eight decades.

Surely taxpayers in both Canada and the U.S. have every right to expect local opportunities and jobs when tax dollars are invested. Local procurement policies are a legitimate economic and social polcy tool that can be especially powerful during an economic slowdown. They also make particular sense when we're trying to address environmental concerns - such as encouraging "100 mile diets" and reducing the transportation of goods over long distances.

Yet Canadians are being told that in order to persuade the U.S. to give up Buy American, Canadian municipalities and provincial governments should voluntarily tie their own hands when it comes to local purchasing. On June 9th, the premiers called for a whole new trade agreement between Canada and the U.S. that would restrict the ability of local, provincial and state governments to use their purchase of goods and services to pursue community objectives. These restrictions could seriously limit policies intended to create local jobs, encourage equity hiring and support ethical suppliers.

There is currently nothing in either NAFTA or the WTO that limits local or subnational governments from giving preference to local suppliers when purchasing goods or services. Indeed, in the U.S., this practice is longstanding and widespread. A 2007 survey by the National Association of Procurement Officials found that 39 states use the location of a firm as a tiebreaker if all other aspects of a bid are equal. Fifteen states allow in-state bidders to ask for a higher price (between five and 15 per cent) and still receive the contract. Several dozen cities in the U.S. favour local businesses and products when they purchase and many use procurement as a tool to leverage greater opportunities for minorities.

Given how widespread these practices are, it seems unlikely that U.S. communities will agree to give them up just because Canadian governments volunteer to. In reality, the pressure from the Harper government for provinces and municipalities to give up local procurement powers may have as much to do with negotiations with the European Union for a new Canada/EU trade deal as with the concern about Buy American. European corporations and the EU have made it clear that gaining access to Canada's $22 billion provincial and municipal procurement market and to services in provincial jurisdiction are their top priorities in the talks.

There are many better and more hopeful options for Canada than hassling the U.S. about its longstanding economic policies or volunteering to hobble our democratically elected local governments.

Instead of fretting about U.S. purchasing policies, Canada's government and business leaders should focus on our own poor record in innovation and research and development. We could be making post-secondary education, apprenticeships and skills training more accessible so workers can adapt rapidly to changing economic circumstances. We could quickly change E.I. rules so the unemployed are not forced onto social assistance. We could develop and urgent national action plan to create green jobs in energy efficiency and retrofitting, alternative energy and transit.

There is much that could and should be done right now to reduce rising unemployment in Canada. Lighting our national hair on fire about "Buy American" policies is not one of them.

(This is a CCPA opinion editorial [2] reposted from the July 14, 2009 edition of the Vancouver Sun)

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