Trade Minister stands firm on Buy America, Newfoundland at CETA talks

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Trade Minister Ed Fast arrived in a trade meeting in Rome hounded by two potentially explosive trade problems at opposite ends of Canada – British Columbia and Newfoundland – and vowed to stand firm on both.

In B.C., Mr. Fast said that unless Alaska bends on the Buy America trade provisions, the rebuilding of the B.C. ferry terminal is doomed though the Alaskans have other ideas.

"The decision is for the Governor of Alaska to make," he said Wednesday on the sidelines of a conference on the Canada-European trade agreement hosted by Confindustria, the Italian employers' association.

"We have made it very clear that the Buy America provisions will not be applied on Canadian soil, property owned by the federal government. He now has a choice to make. [If Buy America persists], then the project will not get built."

Mr. Fast was referring to the ferry terminal that sits on Crown land in Prince Rupert, B.C., near the Alaska panhandle. Since the terminal is leased to the Alaska Marine Highway System until 2063, and the project is funded by the United States and Alaskan governments, Alaska Governor Bill Walker is insisting that the Buy America rule applies to the steel used in the construction and is proceeding with the call for tenders. The bidding process for the terminal upgrade, worth about $15-million (U.S.), is to end Friday.

After Alaska showed no signs of bending, the Canadian government resurrected the Foreign Extraterritorial Measures Act to counter Buy America. The act, last used more than 20 years ago to counter the U.S. trade embargo on Cuba, means that Canadian companies or individuals working on the ferry terminal project would run afoul of Canadian law if they agree to the Buy American provisions.

Mr. Fast seemed perplexed by the Alaska Governor's hardline stance, since there is a precedent for waiving the American law. In late 2012, Michigan Governor Rick Snyder received a waiver that allowed Canadian steel to be used in the $2.1-billion bridge, called the New International Trade Crossing, that connects southwest Detroit to Windsor, Ont. Mr. Snyder argued that use of Canadian steel was justified because the Canadians were paying for most of the project. "He received that waiver in order to get that bridge built," Mr. Fast said.

At the Rome conference on CETA –the Canada-EU Comprehensive Economic and Trade Agreement – Mr. Fast tried to explain to the Italian delegates that a dispute between Ottawa and Newfoundland and Labrador should not derail the deal. CETA, a more ambitious form of NAFTA designed to open up trade and investment between Canada and the European Union, is long delayed. It is now undergoing "legal scrubbing" before it is sent to the European Council and European Parliament for approval. It may also have to be approved by the parliaments of each of the 28 EU member states, among them Italy.

The dispute with Newfoundland stems from the EU's insistence that the province relinquish minimum processing requirements, known as MPRs, that require a certain amount of fish caught under Newfoundland licences to be processed in the province. Ottawa in effect tried to buy Newfoundland's willingness to give up the MPRs by offering to pay $280-million into a fund to upgrade the province's fishing industry. Later, Ottawa made it clear the funds would go to compensate only demonstrated losses to the fishery, at which point Newfoundland announced it was suspending co-operation with Ottawa on all trade agreements.

Mr. Fast said the money on offer is not a general purpose "slush fund" and that the fund is designed only to compensate Newfoundland for the elimination of the MPRs. "The signing of the trade agreement falls within the exclusive jurisdiction of the federal government," he said. "Newfoundland does not have the ability to stop us."

While Canada can go ahead, it might have to do so without the ability to ensure that Newfoundland will enforce all aspects of CETA within the province, such as the elimination of the MPRs. That theoretically would allow the EU to use investor-protection clauses to sue Canada if Newfoundland violates CETA.

Mr. Fast would not say whether Ottawa had a plan to bring Newfoundland on side other than to say that "we are going to resolve it by continuing to dialogue with the government of Newfoundland and Labrador. … We will continue to reach out to them."