Potential battle looms over trade

Canadian government sends letter to U.S. lawmakers over ‘Buy American’ sentiments

WASHINGTON — The Canadian government has fired off a letter to a group of U.S. lawmakers who support tougher Buy American rules, foreshadowing a possible tussle ahead as American procurement policies get debated this year.

David MacNaughton, Canada’s ambassador to Washington, sent a letter last week to four Democratic lawmakers who have urged President Donald Trump to restrict suppliers, including on the Keystone XL oil pipeline.

The issue is especially relevant this year for three reasons. A big U.S. infrastructure bill is coming, potentially worth US$1 trillion in contracts; procurement could be an issue in NAFTA negotiations; and the winds of protectionism are blowing in Washington.

“Imposing local content requirements on the purchasing decisions of private companies is unprecedented and would have potentially severe and wide-ranging consequences, including vis-a-vis international trade obligations,” said MacNaughton’s March 16 note.

“These are crucial principles that Canada and the United States have together championed for decades.”

The letter goes on to say that while the U.S. procurement market is larger, the Canadian one is more open — that just three per cent of U.S. federal contracts are won by foreign suppliers, while 11 per cent are in Canada.

It says Canadian suppliers win 0.15 per cent of U.S. contracts, while American suppliers win more than nine per cent of feder- al contracts in Canada — including Microsoft, North American Steel and 3M Cogent. The letter concludes by making the case against protectionism: It drives up prices, results in fewer projects and ultimately costs jobs.

A Canada-U. S. trade lawyer says the letter from MacNaughton makes sense, given that NAFTA and the infrastructure bill could be coming up.

“I don’t think the ambassador’s letter is going to make the issue go away but it is not a surprising opening gesture,” said Mark Warner of MAAW Law in Toronto.