- Home
- About Us
- Education
- What's New
- Photo Gallery
Hamilton and District Labour Council
Buy Local policies important for economic development and jobs says CME; Legal opinion backs Buy Local policies
May 6, 2009
A position paper issued in 2008 by Canadian Manufacturing & Exporters, a leading business lobby group, argues that procurement policies at every level of government are key tools in promoting economic development. The CME recommends:
"In order to maximize Canadian domestic economic benefits of government procurement and offer Canadian manufacturers and exporters a business environment that is competitive with the one their competitors benefit from in their domestic markets, Canadian Manufacturers and Exporters recommends the following:
1. that the Federal government and the provinces implement every measure possible when funding projects to stimulate economic development, in accordance with standards imposed by the international agreements to which Canada is a signatory;
2. that the Government of Canada apply rules and regulations favouring Canadian content when it funds infrastructure and mass transit projects under its authority, or under the authority of provinces and municipalities;
3. that provincial governments also use funds invested to develop and renew infrastructures as economic development levers."
Why is a “buy local, buy Ontario, buy Canadian” purchasing policy beneficial? The CME says:
"This strategy, which maximizes the economic impact of sums invested and granted by
governments, has four main benefits."
"First, by favouring domestic companies, governments use public funds to stimulate the local creation of quality jobs."
"Second, these measures reinforce the supply chains of national companies, especially small and medium-sized businesses in two ways. When governments require that a certain percentage of a given finished product's components be made domestically, it facilitates the entry of locally based small and medium-sized manufacturers into the supply chains of major suppliers in charge of the project. These companies tend to be large, internationally renowned companies, and constitute an excellent base on which to build on for a small or medium-sized manufacturer."
"Third, these measures favour the attraction and retention of private investment. This is perfectly understandable, considering the fact that domestic companies use local employees, pay taxes to the government which funds the infrastructure project and generate benefits for the country's economy. It is therefore normal for governments to favour companies which have decided to invest domestically when choosing partners. The example of transportation equipment in New York State that we will examine later on is an excellent example of this."
"Fourth, these measures help reach a high level of transparency in governmental tendering processes, while ensuring competition that is based on fair rules for the various vendors."
In concluding comments on its recommendations, the report strongly urges governments to use their procurement policies to support local job creation and economic development:
"Beyond any specific measure proposed in the recommendations herein, CME asks federal
and provincial governments, as well as municipalities, to use every aspect of federal funding awarded to infrastructure and public transit projects to stimulate domestic economic development and job creation, within the guidelines imposed by international agreements to which the Canadian Government is a signatory, and the Agreement on Internal Trade. CME expects Canadian governments to be innovative when awarding government procurement contracts. CME want to eliminate the existing reflex of hiding behind international agreements instead of identifying business opportunities to legally use government procurement to foster economic development and reinforce the Canadian entrepreneurial fabric."
"Considering the considerable scope of their purchasing power, they should always strive to use this manoeuvring room to support economic development in Canada when it is economically viable to do so."
"CME therefore asks the provincial governments to unite, and collectively use their government procurement as an economic development lever. Joint action is important in this respect because one province alone cannot favour the industry of its province to the detriment of others, because of the agreements on internal trade. The temptation for provinces is therefore to always award contracts to the lowest bidders because there are no guarantees that these contracts will be awarded to a company from its province. Unfortunately, if every province follows this logic, then collectively everyone loses. This is why it is important for provinces to enact legislative measures which will force them to use their government procurement to foster economic development. This may prove to be a little more expensive for public finances when awarding some contracts, but collectively governments will win out because of the domestic economic activity generated."
The entire paper, Renewing Canada's Infrastructure: An Opportunity to Invest in Our Future, is available below.
The CAW has been promoting “Buy Canadian” too. A legal opinion, commissioned by the CAW, strips away any cover from those who argue that buying local contravenes NAFTA and other international treaty obligations.
The opinion, authored by Steven Shrybman of Sack Goldblatt Mitchell LLP, reads in part:
"Procurement policies are used by many nations as a critical tool for fostering economic development and employment, and from time to time Canadian governments have done so as well. However, Canada's approach has been ad hoc, and public purchasing has often favoured foreign goods and services even during times of economic downturn. Moreover, unlike many nations, including the United States which has enacted two federal statutes to implement “Buy American” policies, the Canadian federal government has declined to legislate to ensure that public spending is used to favour Canadian goods and services."
On the legal authority of each level of government to shape purchasing policies that support local, provincial and national economic development, Shrybman writes:
"… neither international nor domestic trade agreements prevent municipal governments from adopting policies that favour Canadian goods and services…"
"Provincial governments also have the same latitude to adopt procurement policies that foster economic development and employment in Canada because international procurement agreements do not apply to either provincial or municipal governments … The provinces are free to legislate for the purpose of implementing Buy Canadian policies for both direct purchases and as a condition of provincial funding to municipalities and other bodies."
"The options of the federal government … are more constrained because of commitments federal officials have made under various international trade agreements. However, these agreements include important exceptions, including for urban rail and transportation equipment and related services, and more importantly for federal funding support for provincial and municipal projects and spending."
The full text of the legal opinion is available below.
