– International Trade Law Expert Steven Shrybman, Feb. 2009
The Act legislates two areas: direct federal government procurement, and access to federal grants or transfers for infrastructure and other projects.Direct federal procurements
– a minimum of 50% domestically-sourced products are required for all direct federal purchases in the areas of:
- ship building and ship repair;
- urban rail and rail equipment
- transit and transportation components, materials, iron, steel and equipment;
- transportation services that are part of, or incidental to, a procurement contract
These procurement areas lie outside of restrictions imposed by NAFTA and other treaties.Access to transfers for specific projects
– a minimum of 50% domestically-sourced products are to be used in provincial, municipal, or private projects if that project is to have access to federal funds. This applies to transfers or grants intended to fund specific, defined projects (eg. an infrastructure project), not general transfers (eg. equalization).Exceptions
– there is flexibility in the Act for specific circumstances, such as:
- transfers less than $100,000 are exempted
- where it is a domestic product of sufficient quality or quantity is not available
- if the product is for use outside of the country (except ships & aerospace products)
- if the domestic product is more than 6% more expensive than the foreign product
- if there is an emergency need for a product or it is for foreign humanitarian assistance
- procurements or transfers specifically subject to NAFTA and the WTO’s AGP are exempted
Why Mandate Canadian Content?
Unlike Europe, Mexico, the USA, and most other industrialized countries, the government has ignored our rights to buy Canadian. This is a sad reflection on the persistent failure of our government to show courage and resolve in trade negotiations and dispute resolution, whether concerning softwood lumber exports or toxic substance regulations.Value for taxpayer dollars.
Mandating a minimum level of Canadian content in government procurement is a question of getting the most mileage from hard-earned taxpayer dollars. Spinoff benefits such as local jobs, an increased tax base, increased industrial capacity, and stimulus for innovation are lost to other jurisdictions when significant parts of projects are outsourced to foreign competitors.Leverage in trade negotiations.
Exercising this legislative muscle is key if Canada wants to be taken seriously when it asserts the interests of Canadian suppliers to US other export markets. For Canada to have any leverage in trade negotiations we must implement our own domestic procurement policies. Only then would we be in a position to pursue a managed trade agenda that would optimize and fairly allocate the beneficial impacts of public procurement. Simply abandoning such key decisions to the free market makes no more sense for the industrial sector than it did for banking or financial services.Stimulating the domestic economy.
The fact that this Harper government fails to include any domestic procurement requirements on the billions in stimulus spending it is announcing is a major oversight. This would mandate domestic source requirements for federal rail, transit, and shipping contracts, and a minimum of Canadian materials and products be used in infrastructure projects supported by the federal government.
Canada Playing Catch-up
It's important to remember that such “Made in Canada” requirements will just bring us in line with measures that other countries have already had for decades. In the United States for example, the Buy American Act has been around since 1933, and has mandated 60% US-made products in federally-supported projects involving buses, rail cars, ferries, and other transportation infrastructure, for example. The new “Buy America” Act currently before the US Senate would take that even further, by requiring all manufactured goods procured for federal projects be made in the USA.