January 25, 2021 | Local, Aerospace, Naval, Land, C4ISR, Security
Canadian companies that bid on American government contracts could be cut out of the procurement process if Joe Biden follows through on his Buy American plan after he becomes U.S. president today, according to business and trade experts.
Jan 20, 2021 4:00 AM By: Canadian Press
Updated Jan 20, 2021 4:05 AM
Canadian companies that bid on American government contracts could be cut out of the procurement process if Joe Biden follows through on his Buy American plan after he becomes U.S. president today, according to business and trade experts.
Manufacturers and exporters in Canada supply a vast range of equipment to public works projects in the U.S. from school buildings to wastewater treatment facilities.
But Biden's promise to prioritize U.S.-based suppliers and products made on American soil could hurt Canadian companies by blocking them from bidding for work, especially after he unveils an infrastructure plan next month.
The Made-in-America endeavour could disrupt the Canada-U.S. supply chain and lead to significant trade tensions, experts say.
Yet the hardest hit firms will be those directly involved in U.S. government contracts, they say.
“If you're in the business of supplying government procurement projects like municipal infrastructure, those are the companies most at risk,” said Dennis Darby, president and CEO of the Canadian Manufacturers and Exporters.
Stricter Buy American rules for federal procurement could hurt manufacturing on both sides of the border, he said.
“Manufacturers are so integrated across North America,” Darby said, noting that a lot of what Canadian companies make are the “bits and pieces” that go into the continental supply chain.
“When U.S. manufacturers do well, so do Canadian manufacturers. We're all part of the same supply chain.”
The biggest losers in an era of greater U.S. protectionism are likely to be a broad cross-section of Canadian firms supplying products to American municipalities, rather than specific sectors, experts say.
Companies that supply pumping equipment for municipal water facilities, pipes for new sewage lines, or play structures for new playgrounds could all suffer, they say.
Meanwhile, both Canada the U.S. already have “buy national” provisions carved out of existing trade agreements. Military procurements, for example, exclude foreign suppliers.
Donald Trump pursued his own Buy American policies but it's unclear how much further Biden can expand these provisions without facing a legal challenge, said trade expert Lawrence Herman.
“The question will be whether the expansion of the Buy American provision is permissible within the scope of the (World Trade Organization) agreement," said Herman, international trade lawyer at Herman and Associates.
Yet the impact of the Buy American agenda on Canadian businesses could be widespread, he said.
“There are a lot of Canadian companies that supply products to American municipalities,” Herman said. “They could all be affected.”
Colin Robertson, one of the negotiators of the original Canada-U.S. Free Trade Agreement and North American Free Trade Agreement, said Canada should come to the table with solutions.
“If Biden goes through with this, you're going to hear from Canadian companies that feel they're being excluded from U.S. projects,” said Robertson, vice-president and fellow at the Canadian Global Affairs Institute.
“You're almost better to deal with it on a one-by-one basis,” said the former Canadian diplomat. “If the guy who builds playsets in Ontario can't bid on a new playground, what you want to do is try and get the province and state to work something out.”
If Biden's massive stimulus package is approved, the demand for construction materials – especially steel and aluminum – could be huge, Robertson said.
But if the Buy American plan is ramped up and starts to affect materials from Canada, he said negotiators need to point out that ultimately they'll get better value including materials produced in Canada.
“If you want maximum value for these dollars, it's better to open up bidding,” Robertson said. “The challenge with these sorts of Buy American programs is you can get cartels forming within your locality that drive up prices.”
This report by The Canadian Press was first published Jan. 20, 2021.
Brett Bundale, The Canadian Press
April 8, 2024 | Local, Land
Two years after being ordered on an urgent basis, a new defence policy for Canada that promises to bolster the military's surveillance and combat capabilities in the Arctic was unveiled Monday.
October 17, 2022 | Local, Aerospace, Land
National Defence and top firms that produce arms, such as Lockheed Martin, are financing a conference in Ottawa on Oct. 25.
January 6, 2020 | Local, Aerospace, Naval, Land, C4ISR, Security
By Charlie Pinkerton; iPolitics Published on Jan 2, 2020 3:02pm Although Canada's defence minister has been tasked with working toward creating a new defence procurement agency to improve the country's often slow-moving system for purchasing military equipment, there's no clear timeline for when the new body will be put in place. In the mandate letter addressed to him by Prime Minister Justin Trudeau and published last month, Harjit Sajjan was told that part of his job in this Parliament will be to “bring forward analyses and options for the creation of Defence Procurement Canada,” which the Liberals promised to advance toward in this mandate while they campaigned in the fall's election. “A lot of work has already started on (Defence Procurement Canada) and the goal of this is to make sure that we get the procurement projects done as quickly as possible to make sure the Canadian Armed Forces has what they need,” Sajjan told iPolitics the day before his mandate letter was released. Sajjan also said the Department of National Defence (DND), Innovation, Science and Economic Development Canada and Public Services and Procurement Canada still need to complete “more work” before a timeline for the creation of the new procurement agency would be set. Some of the first steps of the Trudeau government to improve Canada's military procurement system was in transferring the responsibility of military procurements to being managed internally at DND. When the Liberals published its overhauled defence policy in June 2017, DND said that 70 per cent of procured projects were being delivered past their deadlines. “Cumbersome decision making and approval processes have introduced undue delays. Accountability among departments has been diffuse and at times unclear,” says the Liberals' defence policy (it's titled Strong, Secure, Engaged). As a response, the defence policy declared that DND would internally manage the contracts of all projects of under $5 million — an initiative which it said would reduce departmental approval times by 50 per cent for 80 per cent of all contracts. The defence policy is intended to lead how Canada's military operates beyond this decade. At the same time as developing the new agency for military procurement projects, Sajjan has also been tasked with choosing which company the government will choose to pay almost $20 billion to build Canada's next generation fleet of fighter jets. According to the current timeline laid out by the Canadian Armed Forces, the government will receive the final bid proposals from the three companies it deemed in 2018 as being capable of meeting Canada's needs (which includes Saab, Lockheed Martin and Boeing) early in 2020. If it sticks to its timeline, the government will pick which company will be its fighter jet provider by next year and will receive the first next generation jet as early as 2025. Sajjan's mandate letter includes another procurement-related list item; he's also tasked with advancing the renewal of Canada's naval fleet. There are four major navy procurement projects that are nearing their conclusion. Canada is buying new surface combatants, new Arctic and offshore patrol ships, new joint patrol ships and retrofitting its 12 frigates. The combined cost of these projects is expected to cost taxpayers more than $83 billion. Investments in procured projects account for a large portion of the $32 billion jump in annual defence spending that Canada is planning for by 2027. If achieved in that year, Canada's defence spending as it relates to a portion of the country's gross domestic product (GDP) would equal about 1.4 per cent. Canada currently spends just over 1.3 per cent of its GDP on its military two years ago. It has pledged to NATO to work toward spending two per cent of its GDP on its military, which is a common goal amongst allied countries. Over the past few years, U.S. President Donald Trump has repeatedly called on Canada to increase its military spending to surpass two per cent of GDP. Global News reported less than a month ago that Canada had multibillion-dollar discrepancies in the last two years in how much it planned to spend on its military and how much it actually spent. According to documents obtained by the publication, it had a discrepancy of $2.29 billion in military spending in 2017-2018 and a shortfall of $4.45 billion in spending last year, compared to what it outlined in its defence policy.