Canada Proposes Plan to Open Sub-Federal Procurement Markets with U.S.

September 28, 2009

Canadian Trade Minister Stockwell Day has sent a letter to U.S. Trade Representative Ron Kirk (USTR) proposing a process by which the two countries may bilaterally open-up their sub-federal government procurement practices. Sub-federal procurement has become a heated issue between the two countries since the U.S. Congress included a “Buy American” provision that restricted the purchase of foreign manufactured goods under its stimulus package.

Canadian businesses claim that this provision has prevented them from competing for state and local contracts in the U.S., and Canadian municipal governments have retaliated by approving a measure that would implement similar “Buy Canadian” requirements if an agreement between the two countries is not reached by October 4.

In order to quell the burgeoning dispute, Minister Day’s is proposing a two step process under which (a) the U.S. would issue a waiver for Canadian companies from the Buy American requirements in the stimulus bill and pending legislation, in return for which Canadian provincial and municipal procurement would remain open to U.S. firms, and (b) the two sides would then negotiate a long-term agreement providing permanent access to each other’s sub-federal procurement markets.

However, the proposed agreement may be difficult to implement as neither federal government has the ability to compel state, provincial or municipal governments to comply with such rules. Additionally, the U.S. administration’s position on the matter is rather ambiguous as President Obama has continually downplayed the effects of the Buy American Requirements.