Canada Drawing Their Own Line on American Protectionism

This morning in Whistler the Federation of Canadian Municipalities passed a resolution that it will only support municipalities that adopt policies stating they will only buy from companies that reside in countries without trade restrictions against goods from Canada.

This story begins in Halton Hills, a community of 58,000 people. Hayward Gordon Ltd., a pipefitting company, moved its operation to Halton Hills a few years back. It recently lost a pipe-fitting contract in Ontario to a Salt Lake City firm. The mayor of Halton Hills learned around that time that, because of the “Buy American” policies in place, Hayward Gordon couldn’t bid on projects in Salt Lake City.

So while US companies are still free to come take work away from Canadian firms IN Canada, we’re not able to have our companies try to source business south of the border. As the mayor put it in a Toronto Sun story:

I am not against free trade, but it has to be fair trade.

Halton Hills fought back in their own way: they passed a resolution that the municipality would only deal with companies whose country of origin allowed Canadian companies opportunities to bid on work as well. It was this act that started a movement, with other Ontario municipalities passing similar resolutions and ultimately to the resolution voted in this morning at the FoCM summit.

But what about NAFTA? Isn’t there already a free trade agreement in place that should be taking care of all this stuff? Unfortunately, as an article from Investors.com points out, NAFTA is too high level:

…much of the money allocated to infrastructure projects such as roads, bridges and the like is being spent at the city and state level where Nafta rules do not override "buy American" provisions or sentiment.

The Washington Post cites examples such as the town of Peru, Ind., which told a Canadian supplier it was rejecting sewage pumps that were made near Toronto. John Hayward, president of Hayward Gordon, the Canadian pump-maker, says many U.S. towns have told him they can no longer buy his products because of stimulus provisions.

Work done on a construction project at Camp Pendleton was literally pulled out of the ground when someone noticed Canadian pipe fittings had been used. The fittings were made by a Toronto-based company that had been doing business in the U.S. for 60 years. The company had supplied plastic pipe to be used in a new health care facility at the Marine Base north of San Diego.

The Canadian government isn’t sitting on its hands during all of this. Stephen Harper is entering discussions with the US to try and get Canada excluded from the “Buy American” provisions, although that will only go so far as there’s nothing that can be done to the protectionist sentiment in America. Still, the resolution passed by the municipalities also includes a 120 day waiting period to see how the US responds before putting it in action.

Some have suggested that this sort of tactic isn’t necessary and will backfire; that we should let the elected leaders sort this out and “convince our customers to remember who their real friends are”. As I’ve stated before, “friends” don’t treat each other this way. This is business, and in business relationships both sides need to be satisfied with the agreement.

We want to do business in the US, and we want US companies to do business in Canada; but the rules of opportunity need to be the same on both sides.

Canada needs to start standing up for itself and not playing the nice guy with friends that seem more like opportunistic bullies.