We began exploring Buy America provisions in the wake of the South Park Bridge Project in Colorado [https://www.wl-tradelaw.com/buy-america-and-the-integrated-north-american-economy/]. In that case, the U.S. Government ultimately decided not to require that Canadian steel used in the Bridge Project be removed. However, the Canadian Government faced mounting pressure to implement reciprocal local content restrictions to retaliate against Buy American provisions. These desired restrictions would effectively ban the use of foreign products and materials in any major federal infrastructure projects.
In November 2014, the U.S. again attempted to apply Buy America restrictions, but this time to a project on Canadian soil, at the Port of Prince Rupert in British Columbia [https://www.wl-tradelaw.com/buy-america-affecting-projects-in-canada/]. In response, the Canadian Government issued an Order under the Foreign Extraterritorial Measures Act (FEMA) to counter the application of the Buy America provisions to the Port of Prince Rupert Project, valued at $15 million [https://www.wl-tradelaw.com/canada-u-s-cuba-the-spirit-of-free-trade-and-building-ports-part-1/]. This order effectively prohibits compliance with the Buy America requirements in connection with this particular project and means that bidders cannot agree to use only U.S.-made iron and steel.
On January 22, 2015, the Government of Alaska cancelled bids for the Port of Prince Rupert Project “for the time being”, likely to avoid the implications of a trade dispute with Canada. The Alaskan Government stated that regular operations would be maintained at the facility until a proper solution can be found. Suggested courses of action have included Alaska seeking a waiver from the U.S. Federal Government of the Buy America provisions, as well as having the State directly fund the project, none of which have proved acceptable or feasible to Alaska thus far. The State of Alaska’s Governor’s Office has suggested that they are hoping to re-engage in the late fall.
The Government of Canada’s response to this potential trade dispute has been widely applauded by Canadian steel industry advocates as a strong showing of leadership in upholding the spirit of free trade. Minister of International Trade, Ed Fast, stated that the application of Buy America on Canadian soil was completely unacceptable and an “affront to Canadian sovereignty” and that “Buy America provisions deny both countries’ companies and communities the clear benefits that arise from our integrated supply chain and our commitment to freer and more open trade.”
We will have further observation in Part III, coming shortly.
