The South Park Bridge Project (the “Project“) in Morrison, Colorado has recently attracted a great deal of attention. At issue was the fact that Canadian steel was used in the reparations to the South Park Bridge. As a federally funded initiative, the use of Canadian-origin steel in the Project repairs would violate Buy America provisions. As a result, this may lead to a complete withdrawal of U.S. federal funding if the Canadian steel is not entirely removed from the bridge. The cost of removal, which would require that the bridge be dismantled, was estimated to be around US$30,000.00.
The Buy America provisions require that U.S. products and materials be used in transportation infrastructure projects valued over US$100,000.00. Specifically, mass transit-related projects in the U.S. must only use 100% U.S. steel, iron and manufactured products.
Although the U.S. government recently decided not to require that the Canadian steel be removed, there is mounting pressure on the Canadian Government to implement reciprocal local content restrictions. For instance, the Canadian Manufacturers and Exporters (CME) organization has been actively lobbying the Canadian Government to retaliate against the Buy America provisions by banning the use of foreign products and materials in any major federal infrastructure projects. The CME specifically suggested a ban for the $5 billion replacement of Montreal’s Champlain Bridge. As it stands, the Canadian Government has not shown any intention to acquiesce to CME’s request.
This retaliatory approach does raise an important question in terms of the impact such potentially reciprocal provisions may have on free trade, and specifically, on U.S. – Canada economic integration. If both Canada and the U.S. adhere to and/or implement retaliatory bans on each other’s products, the impact is forcefully negative for both Canadian companies having invested in the U.S. and for American companies having invested in Canada. The situation also raises the question of consistency of the U.S. Buy American provisions with North-American Free-Trade Agreement (“NAFTA“) and World Trade Organization (“WTO“) obligations.
