Much has been said this week about Washington’s “Buy America” policies and their effect on Canadian businesses.
The “Buy America” provisions are part of the American Recovery and Reinvestment Act, more widely known as the stimulus package that was signed into law by U.S. President Barack Obama on February 17, 2009.
Under the act, American companies receiving federal aid money must only purchase materials and equipments made in the US.
There has been a considerable backlash against the provisions – much of it coming from U.S.-based transnational corporations hoping to expand free trade. Currently, spending by local and provincial governments is not bound by the rules of NAFTA or the WTO. This means that local governments have some control over how they spend their money.
The Conservative government is on board with the business lobby to bring provincial and local procurement under NAFTA.
Last week, Industry Minister Tony Clement visited Washington to lobby against “Buy America” policies. International Trade Minister Stockwell Day has been trying to persuade premiers to commit to trade talks with the U.S. that would bind local and provincial governments to free trade policies. And in a press conference yesterday, Prime Minister Stephen Harper urged the provinces to support a new trade deal with the U.S.
But the benefits of maintaining procurement rules and local preferences far outweigh the perceived advantage of binding local government spending to free trade agreements.
Local procurement policies are what keep communities strong. They create greater local employment, increase tax revenues, encourage communities to buy locally, and help to diversify local economies. They also allow governments to set proactive policies that are best for their communities.
If communities are bound by free trade agreements, much of a local government’s ability to create policies that are best for its citizens will be sacrificed for what is best for big business.
A better option is to encourage municipalities to “buy Canadian”, and purchase goods and services with as much Canadian content as possible. “Buy Canadian” and local procurement policies will help create many jobs across Canada, particularly at the local level, where we need those jobs the most.