Buy American revision reopens threat to Canadian economy

WASHINGTON—Canadian companies hoping to bid on the crumbling road and bridge system in the U.S. may find themselves behind yet another Buy America law prohibiting them from bidding on any government-funded construction project if it has the smallest amount of federal funding.

U.S. Sen. Sherrod Brown, a Democrat from the steel-producing state of Ohio, convinced the Senate to endorse a new Buy America regulation as part of a sweeping transportation funding bill called “Moving Ahead for Progress in the 21st century Act,” or MAP-21.

Brown’s amendment, which was accepted by the Senate in March, would prohibit state governments from contracting outside the country if any part of the project receives U.S. government funding. Both the Senate and the House of Representatives are now in complex negotiations to finalize the law, which is also known as the Surface Transportation Reauthorization Bill.

“The proposed MAP Act includes provisions that represent a significant departure from existing ‘Buy America’ preferences,” Amgad Shehata, chair of the Washington-based Canadian American Business Council, said in a letter to the Senate and the House conferees this week.

“Specifically, if at least one contract for a project receives any federal funding under this act, then all contracts for a project, regardless of their funding source, would be subject to Buy America preferences” he said.

Canada and the U.S. have long butted heads on various Buy America laws dating as far back as the 1933. The various Buy America provisions try to create U.S. jobs through restrictions on imported construction materials, mostly steel and iron.

Canada thought it bought some peace in February 2010 when the two governments agreed on reciprocal bidding in each other’s countries on infrastructure projects such as bridges and roads following President Barack Obama’s US$787-billion economic stimulus bill.

But to support his state’s struggling steel industry, Sen. Brown successfully included a new Buy America provision in the Senate bill.

“We leave our manufacturing sector vulnerable when we buy steel and iron from foreign countries,” Brown said earlier this year. “When taxpayer dollars are invested in highway and infrastructure projects, they should be spent on American-made goods.”

Although the amendment is aimed mainly at Chinese steel and iron producers, the CABC feels Canadian bidders would get sideswiped.

“‘Buy America’ provisions applied to Canadian companies will inhibit, not create, economic growth in both the U.S. and Canada given the integrated nature of our two countries’ economies,” said Shehata, vice-president of the delivery service UPS.

Sen. Barbara Boxer, a Democrat from California, said this week at the first of what is expected to be a number of House-Senate meetings,

said the Senate version of the bill would create as many as 1.8 million American jobs.

The CABC, in a letter to the conference committee, called for both the House and the Senate members to consider a special exemption for Canada so that “purchases of goods from Canada (have not been) deemed to violate this agreement.

“To enhance our countries’ collective competitiveness, it is important to reduce barriers to trade and investment and transition away from outdated ‘Buy America’ provisions that fail to recognize the integration of our economies.”

Neither the Senate nor the House politicians have responded yet.

Canada and the U.S. have the largest bilateral trade relationship in the world. In 2010, it was US$527 billion. As well, 8 million American jobs are linked to trade with Canada.

U.S. highways and bridges have been deteriorating for years. As far back as 2009, a bi-partisan National Surface Transportation Infrastructure Financing Commission said at least US$100 billion a year is needed to bringing U.S. highways up to standard.