So-called "Buy American" or domestic sourcing provisions in the U.S. economic recovery plan have sparked much debate and alarmist discussions, particularly from some in Canada and other countries. USW Canadian National Director dispels some of the myths and explains how the measure would help workers across North America in an editorial he penned for The Toronto Star. Read it below, then check out our "Buy American" resolution tool kit, which explains how you can help make sure "Buy American" rules are followed as stimulus funds are spent at the state and local level.
'Buy American' should be seen as opportunity for Canada to create jobs
Alarmist reports on "Buy American" rules for steel used in public infrastructure projects have misinterpreted the rules, ignored a number of characteristics of the Canada-U.S. steel trade and failed to recognize the potential of using Canadian and American procurement policies to create jobs at home.
Instead of lecturing Americans about the merits of unregulated global trade, Canada should have its own "Buy Canadian" policy and recognize that, due to the integrated nature of the Canadian and U.S. economies, this current debate in the U.S. is really an opportunity for Canada.
Using Canadian and American tax dollars to create jobs in Canada and the United States is just good sense, and that is what our federal government should be working toward. Canada should enter into dialogue with the United States about how to implement procurement policies in both Canada and the United States in a way that recognizes the integrated nature of North American manufacturing and benefits the citizens and workers of both countries.
Accusations of protectionism and claims that this program will seriously harm Canada are overstated. The "Buy American" provisions as currently written apply only to federally financed infrastructure projects that are not covered by existing domestic procurement requirements.
Highways, airports and transit projects already have these requirements. There is no procurement requirement at all for most goods. In addition, Canada and the U.S. have signed the WTO Agreement on Government Procurement, which will impact how the "Buy American" provisions apply to Canadian products.
It is true there is talk about expanding the "Buy American" provisions beyond federal infrastructure, but if that happens, the rules will have to be consistent with current trade obligations. Although NAFTA specifically excludes certain domestic infrastructure projects, existing trade obligations with Canada on other goods would pre-empt an expanded "Buy American" program.
Even so, there is room to argue that these limited procurement rules should not apply to Canadian-made steel. Steel trade between our two countries is quite balanced and production is integrated (a steel slab poured in the U.S. may be shipped to Canada for rolling, and then shipped back to the U.S.). Canada should be making these arguments.
But there is a bigger prize that Canadians should keep their eyes on – a co-ordinated approach to managing domestic procurement and a stronger manufacturing sector in both the U.S. and Canada.
We believe that "Buy American" rules that exempt Canada, or some new form of integrated "buy North American" rules, would be the best-case scenario. Canadian producers would be able to sell into the American market with less competition from corporations operating in countries with poor labour, human rights, and environmental standards. Conversely, American producers would be able to do the same in Canada
This could be win-win for Canadian and American workers. If the "Buy American" policy works and puts more Americans back to work and strengthens the American economy, that will be good for Canadian manufacturers who make products consumed by Americans.
Since there is cross-border ownership in the steel industry, even if a disproportionate amount of the additional steel orders go to U.S. steel mills, that may make it easier for some steel companies to shift other work to Canadian operations. The same possibilities exist for American manufacturers with respect to the Canadian economy.
The United Steelworkers union, in Canada and the United States, has a long history of helping the steel industry. We saved Algoma as a worker-owned company in the early '90s, and we helped rescue Stelco about five years ago.
On this issue, our union will be an advocate in both countries of a co-operative effort by the U.S. and Canada to strengthen the ability of manufacturers to create and preserve jobs in both countries. Government procurement is key strategy in achieving that goal.
We believe the current challenge for Canada is to develop meaningful policies to support Canadian manufacturing while continuing to be part of an integrated and co-operative North American market. This is an approach that will work for both Canadian and U.S. workers and their economies.
Ken Neumann is the United Steelworkers (USW) union's national director for Canada.