Urgent National Debate Needed on Harper Trade Deal

(This post appeared in the online edition of the Toronto Star.)

In the middle of a period of prorogation, when parliament is not sitting, the Harper government has sprung a sweeping new trade deal on Canadians. The agreement the Harper government has reached with the Obama administration is the most important extension of the North American Free Trade Agreement (NAFTA) since that deal went into effect in 1994.

The Harper deal will allow Canadian companies to bid on many, but not all, of the contracts involving government funded economic stimulus projects in the U.S., which are restricted to U.S. companies under Buy American provisions that have been inserted into the U.S. government’s Recovery Act.

In return for this “concession” from Washington, Ottawa has agreed to pay an unacceptably high price. Under the deal, Canadian provinces and municipalities will permanently give up the right to favour local companies in awarding contracts. Government procurement at the municipal and provincial levels is an extremely important economic development tool, crucial for job creation, the encouragement of Canadian firms and the development of home-grown technology. At a time when cities are rebuilding their transit systems and are refitting homes to make them more energy efficient, it is the height of folly to open all these contracts to American bidders. (Given the multiplicity of measures used to protect them from outside bidders, it is foolish to imagine that Canadian firms will have an equal opportunity to bid on U.S. state and municipal contracts.)

What makes the Harper government’s deal particularly maddening is that the Buy American provisions in the U.S. Recovery Act violate the spirit if not the terms of NAFTA that guarantee the right of Canadian firms to bid on U.S. federal government projects with the exception of defence contracts. Instead of publicly and loudly asserting that Washington is violating NAFTA, the Harper government is bribing the Obama administration to stop doing that by opening up tens of billions of dollars worth of public contracts in Canada to American corporations.

Moreover, out of the total of $275 billion in infrastructure contracts to be awarded under the U.S. Recovery Act, $200 billion worth have already been signed. The rash deal Harper has made will open up only the last contracts to be awarded to Canadian firms, and at best, a small proportion of those. On top of that, the Obama administration has shifted gears toward fiscal restraint and plans to reign in further stimulus spending.

The Harper government is getting Canadian companies in on the tail end of a U.S. program in return for giving away a very important part of Canada’s ability to nurture Canadian firms and research and development at the provincial and municipal levels. This is an assault on what remains of Canadian economic sovereignty.

It is well known that the Harper government has been negotiating this deal with Washington since last September. Now the government has sprung it on the country when parliament is not sitting.

Expanding NAFTA, as this deal does, requires an open and wide-ranging national debate, both inside parliament and outside. A trade deal of this magnitude should only enter into force following a vote in parliament. (Debates are needed as well in provincial legislatures. Provincial governments should also not be permitted to agree to the deal without debate.)

In the national conversation that must begin, Canadians should examine where the global economy is headed in coming decades and how Canada’s economy can best fit into it so as to create the jobs and opportunities Canadians need. It should now be abundantly clear, as a consequence of the economic crisis through which we are passing that the United States is ensnared in a long-term struggle to cope with its international indebtedness and the indebtedness of its citizens. Whether American policy makers do a good or a poor job coping with the vast problems they face, the U.S. role in the global economy is diminishing and is bound to diminish further.

Canadians need to ask themselves whether this is the moment to put all our eggs in the American basket for the future.

The experience of the Buy American provisions in the Recovery Act ought to teach us something. Whenever the United States needs, in the pursuit of its own interests, to violate trade deals with Canada, it does so. It has done this for years on softwood lumber and now on the operations of the U.S. Recovery Act. Let’s now be fooled again.

Finally, it’s time for us to face up to the implications of allowing a secretive government to foreclose our options without us having a say in the matter.