Backgrounder – Buy American
The American Recovery and Reinvestment Act of 2009 (Recovery Act) requires that all iron, steel and manufactured goods used in the construction, maintenance or repair of a public building or public work funded by the Act is produced in the United States. These provisions were more restrictive than before as they expanded the scope of projects subject to the requirements; pre-existing Buy American requirements only applied to transit-related procurement. Canada raised its concerns on these expanded Buy American provisions at all levels.
While Canada and the United States have procurement obligations in relation to each other at the federal level, no such obligations existed at the state, provincial or local level. As a result, Buy American provisions in the Recovery Act blocked Canadian access to U.S. state and local procurement markets, some of which were relatively open to Canadian suppliers for years—even in the absence of formal trade commitments. Furthermore, these new restrictions had an impact on the integrated supply chains developed between our two countries, negatively affecting businesses on both sides of the border.
The initial Canadian proposal to address this issue was developed with the provinces and territories and delivered to the United States on August 20, 2009. Negotiations and technical discussions continued until February 3, 2010, when lead negotiators concluded an agreement-in-principle pending final approval processes in both countries.
Canada and the United States signed the Agreement on February 12, 2010. On the same date, Canada and the U.S. each provided a notification to the World Trade Organization to give effect to the Canada-US Agreement on Government Procurement.
The Agreement
Canadian companies have the ability to participate in a number of infrastructure projects funded under the American Recovery and Reinvestment Act.
Under the provisions of the World Trade Organization Agreement on Government Procurement (GPA), Canada and the United States have agreed to offer each other permanent market access at the sub-federal level. This means that Canadian suppliers have guaranteed access to U.S. sub-federal procurement and U.S. suppliers have guaranteed access to provincial procurement in accordance with undertakings under the GPA.
In addition, the deal provides Canadian companies with preferential market access in a number of programs that are not accessible to other nations, such as certain programs of the U.S. Department of Housing and Urban Development, the U.S. Department of Energy, the U.S. Department of Agriculture and the Environmental Protection Agency.
Both countries have agreed to establish a fast-track consultation process should similar Buy American provisions apply to future funding programs in the United States. In the coming months, they will also initiate discussions to explore widening the scope of our mutual market access obligations, through a permanent, reciprocal procurement agreement that goes beyond the existing GPA.
This agreement sets an important precedent. The Government of Canada recognizes the deeply connected nature of our economies and the agreement speaks to the need to work together to encourage economic prosperity on both sides of the border.
Next Steps
To ensure Canadian companies benefit as much as possible from this agreement, Canada’s embassy and consulates throughout the United States are informing local governments and companies in the contracting and distribution businesses that Canadian companies are now eligible to bid on contracts covered by this agreement.
