U.S. and Canadian officials announced on Feb. 5 that they had reached an agreement that will allow Canadian companies to participate in U.S. infrastructure projects financed under the American Recovery and Reinvestment Act. The deal is likely to ease tensions between the two nations and allow some ARRA-funded projects that have been held up in bureaucratic limbo to move forward.
The Buy American requirement in the ARRA had caused some friction between the United States and Canada, the United States' largest trading partner and close ally. It stipulated that all equipment and components used on projects receiving ARRA funds be manufactured in the United States. This summer, President Obama tried to downplay the requirement’s impact when meeting with the leaders of Mexico and Canada, saying that the Buy American requirement applied only to the ARRA and would have minimal impact on trade between the nations. But he also said that he would be willing to continue discussing the matter.
Under the Feb. 5 agreement, which must be ratified in each country before going into effect, Canadian suppliers would be able to gain access to state and local ARRA public works projects. Canadian and U.S. officials say they hope to have the agreement ratified by Feb. 16.
Engineers and construction firms, as well as municipalities, are likely to welcome the news. Particularly in the water and wastewater sector, projects often use components manufactured in countries outside of the United States. Although waivers can be obtained, the process is cumbersome and takes time, says Dawn Champney, president of the Water and Wastewater Equipment Manufacturers Association. Champney says some municipalities have simply walked away from ARRA-funded projects rather than comply with the Buy American requirements.
Associated General Contractors’ CEO Stephen Sandherr agrees that the ARRA’s Buy American requirements have caused delays on ARRA infrastructure projects, particularly water infrastructure projects. “We are optimistic this agreement will allow dozens of projects to move forward without having to wait for federal waivers and clarification,” he says. Equally important, he adds, “This deal signals that the administration understands that Buy American provisions are as counterproductive as they are anachronistic.”
Because the agreement applies only to ARRA projects, officials from both nations have agreed to begin discussions within the year to explore the possibility of making the reciprocal access to procurement markets permanent. Both countries have also agreed to establish a fast-track consultation process should similar Buy American provisions be applied to future funding programs.
