OTTAWA - The Honourable Peter Van Loan, Minister of International Trade, today announced that Canada and the United States have reached an agreement that would allow Canadian companies to participate in U.S. infrastructure projects financed under the American Recovery and Reinvestment Act (Recovery Act).

“Preserving and creating jobs is the Canadian government’s top priority,” said Minister Van Loan. “Our government stood up for Canadian businesses and workers in resolving this issue with our U.S. partners.”

Under the agreement, Canadian suppliers will be provided access to state and local public works projects under the Recovery Act in a range of areas, including programs of the U.S. Department of Energy, the U.S. Department of Housing and Urban Development and the Environmental Protection Agency. These are areas of procurement where Canadian companies have traditionally been suppliers or sub-contractors in the United States.

Minister Van Loan expressed his appreciation to the provinces and territories, as well as to key industry associations whose support throughout the discussions leading to this deal has been of great value to federal negotiators. All those involved expressed the desire to work toward a stable and prosperous trade relationship with the United States to ensure supply chains and business relations are not unduly affected.

The provinces and territories collaborated to develop an offer that enabled Canada to reach this agreement with the United States. By opening up their procurement markets, the provinces and territories have ensured that Canadian firms have continued access to U.S. markets and that North American supply chains remain strong.

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 will have guaranteed access to U.S. sub-federal procurement and U.S. suppliers will have guaranteed access to provincial procurement in accordance with undertakings under the GPA.

As some of the measures announced today are temporary, Canada and the United States have agreed to begin discussions within the year to explore the possibility of additional reciprocal access to procurement markets on a permanent basis. In this spirit, both countries have also agreed to establish a fast-track consultation process should similar Buy American provisions be applied to future funding programs.

“Today’s agreement further strengthens the Canada-U.S. relationship to the benefit of Canadian workers and businesses. We are able to resolve these challenges because of our strong and enduring continental friendship,” said Minister Van Loan.

“This is an important agreement. It is a good step in the right direction and puts Canada in a stronger position in our efforts to fight Buy American restrictions in the future,” said Jayson Meyers, President and CEO of Canadian Manufacturers & Exporters.

“The prosperity of both Canada and the United States depends heavily upon our ability to work together in overcoming shared challenges. The Canadian Council of Chief Executives therefore congratulates the Canadian government for its success in negotiating an agreement that will enhance the free flow of goods and services between Canada and the United States,” said John Manley, President and CEO of the Canadian Council of Chief Executives.

“This agreement represents an important step forward that puts Canadian companies in a better position to benefit from remaining U.S. infrastructure stimulus funding,” said Perrin Beatty, President and CEO of the Canadian Chamber of Commerce.
Both countries must complete their respective approval processes before the agreement can come into force.
Canada and the United States hope to conclude this process by February 16.


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.