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Odds stacked against Canadian exemption from Buy American provisions

The chances of Canada winning an exemption from the Buy American provisions in the new U.S. jobs bill are slim at best, government officials quietly predict, in part because the Harper government can't offer what the Americans will demand: reciprocity.

The federal government is launching a multi-pronged effort to persuade Congress and the Obama administration to eliminate a section of the proposed American Jobs Act that would allow only U.S. firms to bid on $100-billion (U.S.) worth of government contracts.

International Trade Minister Ed Fast has already spoken to the U.S. ambassador, David Jacobson, to protest against the American action. Mr. Fast is activating an existing process that allows either country to launch fast-track consultations if it feels the other is unfairly protecting government procurement, though the outcome of those consultations is not binding.

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"We aim to once again show our American friends that free and open trade is the best way to protect and create jobs, lower prices and grow our respective economies," Mr. Fast told The Globe and Mail on Thursday.

Gary Doer, Canadian ambassador to the United States, is heading to Capitol Hill to lobby senators and representatives, and Canadian diplomats will also be lobbying key administration officials and industry representatives, pointing out that the restriction could shut American firms with Canadian operations out of the bidding.

But the odds are stacked against success, thanks to domestic political considerations on both sides of the border.

Democratic President Barack Obama is locked in a to-the-political-death struggle with Republicans in Congress over the legislation, which aims to lower unemployment and stave off a possible double-dip recession.

In that contest, Canada is "completely small potatoes," said David Biette, director of the Canada program at Washington's Woodrow Wilson Center, a public policy research institute. Canadian concerns, he said, will not figure in the titanic political struggle between Democrats and Republicans.

Even if the Canadians can find allies on Capitol Hill, this country will be expected to offer a quid pro quo: American access to provincial and municipal contracts. That swap was the key to a similar exemption negotiated after Congress passed the original stimulus package in 2009.

But any such move would require provincial consent, which is bound to delay any agreement until after the bill is passed, if it is passed, government sources predicted.

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Even so, they cautioned, the Americans might not be interested, since the Harper government is not planning a stimulus program of its own, meaning there will be fewer Canadian contracts for American firms to bid on.

Although the Harper government is chagrined by this latest bout of American protectionism, sources report that the imbroglio has not affected last-minute preparations for the Beyond the Border action plan, which seeks to further integrate continental security, harmonize regulations and ease obstructions at the border. That plan is scheduled to be rolled out later this month.

In fact, the constant aggravation of Buy American clauses cropping up in U.S. legislation argues for a similar long-term approach to reaching a bilateral agreement on government procurement, Canadian officials believe.

Although that, too, could be problematic as the United States enters the protracted political season before choosing the next Congress and president in 2012.

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About the Author

John Ibbitson started at The Globe in 1999 and has been Queen's Park columnist and Ottawa political affairs correspondent.Most recently, he was a correspondent and columnist in Washington, where he wrote Open and Shut: Why America has Barack Obama and Canada has Stephen Harper. He returned to Ottawa as bureau chief in 2009. More

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