Trade Compliance

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Fast “Deeply Concerned” Over U.S. Procurement Rule Applied to Construction Project in Canada

Posted November 26, 2014

As reported in the press yesterday, the latest absurdity regarding the “Buy American” program is that of a new ferry terminal being constructed at the Port of Prince Rupert located just south of the Alaska border. The terminal is owned and operated by Alaska’s Department of Transportation on land leased from the Prince Rupert Port Authority. Although situated in Canada, because the work is being funded by the Federal Highway Administration, the U.S. government is insisting that no Canadian iron and steel products can be used in the $15 million project.
US Steel
While not as patently ludicrous as the recent case where the tiny Colorado town of Morrison was almost forced to dismantle a bridge built with a small amount of “Canadian” steel (that was actually American steel, rolled in Canada by a U.S.-owned company) after U.S. government officials initially deemed the entire structure as being “foreign” and therefore ineligible for federal highway funds, the situation has nonetheless caused the Harper government to become “deeply concerned” about the issue.

“The extraterritorial application of these protectionist restrictions on trade within Canada by a foreign government is unreasonable," said International Trade Minister Ed Fast in a statement.

The trade minister and others such as the Canadian Manufacturers & Exporters (CME) organization are right to be worried about the growing protectionist trend in U.S. government procurement considering that in addition to federal legislation incorporating U.S. content-only requirements; at least 64 “Buy America” bills were introduced in 24 states over the past two years. Although many died before becoming law, both New York and New Jersey still have legislation pending that would require all state contractors to use exclusively products manufactured in America subject to certain supply availability and cost exceptions.

Fast told the Canadian Press, “We are exploring all options to address this situation,” even though it is unclear what, if any, options actually exist. Short of a retaliatory ban on all foreign materials going into major federal infrastructure projects, ironic resignation seems to be the order of the day. As CME president Jayson Myers recently observed about the contradictory nature of U.S. trade policy: “You can’t on one hand talk about the benefits of free trade and economic integration and on the other hand penalize companies who have invested in the other country.”