Buy American: Surprise! No linkage!

Since I mentioned it before, I thought it worth noting that Canada and the United States have reached a tentative deal on the “Buy American” stimulus package, in which Canadian suppliers are allowed to bid on contracts funded by what remains of the $US 787 billion in stimulus money. In exchange, Canadian provinces and (according to the government press release) “a number of municipalities” will be covered by the World Trade Organization’s Government Procurement Agreement. (The federal government is already covered by that agreement.) What this means is that American companies can now bid on government-procurement contracts in these provinces, territories and municipalities, and that Canadian companies will have access to government procurement contracts in 37 states, including New York, California, Texas and Pennsylvania. The provinces still have to sign off on the agreement.

Whether or not this is a good deal (of which more in a second), note that the agreement was reached without linking the issue (government procurement contracts) to any other separate issue (like copyright, for example). Which is what one would expect, given the complex nature of the Canada-U.S. relationship.

Is the deal itself a good one? Without a lot of digging (and I really do have to get back to writing my chapter on the Mexican implementation of the WIPO Internet treaties), it’s impossible to say. The fact that the press release, joint statement and the backgrounder on “Buy American” and the tentative agreement contain no numbers whatsoever (or useful links to where these numbers might be living) is, shall we say, less than helpful. They don’t even mention the size of the U.S. stimulus package. Not good.

There are a bunch of questions I hope the media and opposition politicians ask the government, for which the answers aren’t immediately clear. (Hey, wouldn’t it be nice if Parliament were in session? Then the issue could be raised in Question Period and discussed in more depth in committee hearings. Ah, the good old days.)

Specifically, what were the government’s assumptions regarding:

  • How much of the remaining in stimulus funds would find its way to Canadian contractors (and, for that matter, how much is remaining). Obviously most won’t go to Canadians, so the direct benefit of this agreement is likely to be much lower than this headline number.
  • How much of the U.S. states’ government-procurement market would go to Canadian firms and workers?
  • How much of the $22-billion provincial and municipal government-procurement market would go to U.S. companies. (It would’ve been nice to mention the size of this market in the Backgrounder.)
  • The importance of government procurement for provincial and economic development.
  • How having more competitors for provincial and municipal contracts would affect the costs faced by provincial and municipal governments (presuming that more competition leads to lower prices).
  • Net employment, domestic economic activity and tax revenue, since the opening of this market could cut both ways (some effects will reduce employment, others increase it, everything else being equal).

As I said, without these basic facts, it’s impossible to evaluate the agreement. I’m hoping that the fact that they weren’t provided along with the announcement of this tentative deal was only an oversight. It would be nice to know that this government reached a deal that they believed made economic sense for Canada based on empirical evidence, not on some short-run political calculations. We’ve had enough of that lately.

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