February 10, 2010

International trade

Canadian firms optimistic about reciprocal agreement

RICHARD GILBERT

staff writer

The Canadian construction industry is cautiously optimistic about an agreement allowing contractors access to stimulus-funded projects in the U.S.

“It’s a good first step forward,” said Michael Atkinson, president of the Canadian Construction Association.

“We still have a lot of work to do as far as insuring access for Canadian suppliers to U.S. state procurement. States and provinces are now subject to the procurement code of the WTO (World Trade Organization). What they have done is agree to agree.”

The two counties agreed to offer each other permanent access to state and local infrastructure projects.

“Canadian suppliers of products such as steel and iron, who were heretofore (previously) locked out of the U.S. procurement plan will now have access,” said Atkinson.

“We are in essence giving them the same access to our provincial projects.”

Canadian companies can now participate in public works projects in 37 states that are funded by the US$787 billion American Recovery and Reinvestment Act.

“I expect when further details are nailed down and made available this would be a good thing for us,” said Marv DeVries, president of Trojan Technologies, a water-treatment products firm based in London, Ontario.

“We are not sure what the impact will be in the short term. It is not clear from anything we have seen what the cut off point will be for the projects in question.”

The Buy American Act has proved to be especially problematic for the construction of water and waste treatment facilities, because it is highly integrated and uses materials and components made in both countries.

“When funding is made available to municipalities to buy equipment, they must go through a process to see if they want to insist the equipment is made in the U.S.,” explained DeVries.

“What we don’t know is whether stimulus dollars that are put into the state revolving loan fund will still carry the same expectations, or whether the restrictions have been unilaterally lifted. We need to see the fine print details.”

The restrictions have also been applied to Canadian firms owned by U.S. companies, such as Trojan Technologies, a wholly owned subsidiary of Washington, D.C.-based Danaher Corp.

The act previously made things difficult for the company.

“We own a facility in California and had to set up a small production line to do the final manufacture of equipment, so we could comply with the provisions of the Buy American Act,” said DeVries.

The company might not ship an order for six to 12 months.

So, orders received before the deal will still be built in California.

“We are adopting a business as usual approach until we get clarification on how this will affect projects we are bidding on,” said DeVries.

However, the response hasn’t all been enpositive.

Some people, such as the national president of the Canadian Union of Public Employees, is worried about the impact north of the border.

Paul Moist said this new agreement will give American companies access to more than $100 billion in Canada’s municipal and provincal procurement market.

“This agreement is certainly good news for American corporate interests, but there is very little assurance that this agreement will create good jobs for Canadians,” he said.

According to Moist, the bulk of U.S. stimulus money is already spent, so the deal does little to give Canadian companies access to U.S. stimulus dollars.

He also pointed out that the new agreement will leave the ‘Buy America’ provisions basically intact, and only applies to the 37 states that have signed on to the agreement.

“This deal commits Canadian governments to forfeit valuable procurement sovereignty, while the U.S. offer is largely empty,” said Moist.

“This kind of risk is the last thing we need during an economic slowdown.”

Prior to the new agreement, the Buy American Act barred Canadian contractors and businesses from bidding or supplying materials to new building or renovation projects worth less than US$8.8 million.

Print | Email | Comment