Scott Brison: Canada's raw deal on trade

Monday, October 19, 2009

Source :  National Post

There is no doubt that U.S. protectionist policies, such as the “Buy American” clause in the U.S. Recovery Act, is wiping out Canadian Jobs. U.S. rules like these are shutting Canadian manufacturers out from hundreds of billions of dollars in U.S. government contracts.

For example: Pipes made by IPEX Inc. in Southwestern Ontario were ripped out of the ground in California because they were stamped “Made in Canada.” In Hamilton and Nanticoke, hundreds of former Stelco (now U.S. Steel) employees have been laid off as contracts go to American steel plants instead. In Mississauga, Halton Hills, and throughout Southern Ontario, workers are watching their plants cut shifts as U.S. contracts dry up.

The scope of these rules is enormous: They cover any U.S. project funded even in part by U.S. stimulus money. And the impact of these rules on the Canadian economy is widespread. Manufacturers are scrambling to avoid being locked out of the giant U.S. market by moving their operations to the United States. A recent CIBC report suggests U.S. protectionism will significantly slow down Canada’s economic growth in 2010.

Over the last few weeks, the Conservative government in Ottawa has been trying to negotiate a deal — a Canadian exemption from “Buy American” — but they are about to give away the store for little in return. It’s a symptom of doing too little, too late.

Canada is offering the United States a giant carrot to get them to sign on to a deal: U.S. companies would get guaranteed access to billions of dollars worth of provincial and municipal government contracts here in Canada. But this offer appears to be rather one-sided.

According to U.S. ambassador David Jacobson, Canada and the United States are using the World Trade Organization (WTO) rules for government contracts as the basis for these negotiations.

Currently, Canadian provinces and municipalities aren’t covered by such rules. Under the deal, this would change. And in exchange, Canada would get access to U.S. contracts under existing WTO rules.

This seems fair, until you read the fine print.

Buried in the WTO rules are more protectionist policies for the United States, including a separate Buy America clause and additional U.S. safeguards for a large number of U.S. projects and states in important areas such as transportation and construction. On top of this, American municipalities are completely protected under the WTO rules.

Last week at the House of Commons trade committee, Canada’s top Buy American negotiator admitted that “much of the stimulus spending under the Recovery Act would be implemented at municipal and state levels, and therefore would not be captured under the existing U.S. obligations in the [WTO].”

So securing a Buy American exemption using WTO rules won’t make much of a difference to Canadian manufacturers — U.S. states and municipalities will still be free to discriminate against Canadian suppliers.

After getting the provinces and cities to open up their contracts to the U.S., it appears the Conservatives are moving ahead with a bad deal for Canada. We’re giving up a lot and not getting much in return.

Sadly, it looks like the Conservatives in Ottawa will still sign a bad deal as long as they believe they’ll get a few good headlines here in Canada.

Last February, the Conservatives didn’t understand that Canadian jobs were still at risk when they tried to declare victory over Buy American. They wasted valuable time and energy trying to convince Canadians there was no problem, instead of actually trying to solve the problem.

It appears that in the coming days or weeks, the Conservatives are getting ready to prematurely declare victory over Buy American once again.

I expect the families of Canadians who are losing their jobs won’t be joining the celebration.

Scott Brison is the Liberal MP for Kings-Hants (Nova Scotia), and his party’s critic for international trade.