Procurement becomes new flashpoint under USMCA
New concerns are emerging about Canadian access to U.S. government contracts under the revamped North American trade pact.
Government procurement has long been an irritant between Canada and the U.S. and was among the thorniest issues tackled in the talks leading to the $1.2-trillion deal known as the Canada-u.s. Mexico agreement or “USMCA” in Washington and “CUSMA” in Ottawa.
In the end, Canada gave up the provisions on U.S. government procurement it held under the original North American Free Trade Agreement, relying instead on the World Trade Organization’s Government Procurement Agreement or GPA — a 47-country deal, including the U.S., that aims to open access between member countries on a reciprocal basis.
Now, U.S. President Donald Trump’s administration is pondering a potential exit from the GPA if it isn’t reformed, Bloomberg reported earlier this month.
The idea has the backing of U.S. Trade Representative Robert Lighthizer who favours an approach to procurement through bilateral deals, according to a subsequent report from the trade publication Inside U.S. Trade.
Though the White House has yet to make an official statement on a potential withdrawal from the GPA, a spokesperson for Deputy Prime Minister Chrystia Freeland said she raised the issue with Lighthizer in a meeting on Feb. 7. The spokesperson would not comment on whether the U.S. had offered any reassurances regarding Canadian access to government contracts.
“Canada’s reasoning was sound because the rules under the GPA were actually better than what was in the original NAFTA,” said Inu Manak, a trade policy expert at the Cato Institute in Washington, D.C. “So if the U.S. does this, it really is like pulling the rug out from under Canada’s feet. This is definitely not what Canada wanted.”