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U.S. plans to shut out Canadian defence firms
‘Buy-America‘ policy could cost industry billions, spark layoffs
Norma Greenaway
The Ottawa Citizen
Sweeping "Buy-America" provisions in proposed U.S. defence-spending legislation could cost Canadian defence and aerospace companies billions of dollars in lost contracts and throw thousands of their employees out of work, Canadian and U.S. industry officials warn.
A provision also would end Canada‘s special status as a member of the U.S. National Technology and Industrial Base under which it is not treated as a foreign country for defence procurement purposes.
Norbert Cyr, spokesman for the Canadian Defence Industries Association, said the sector has been on high alert over the effort to "put a line through the Canadian exemption" and now is working closely with the Canadian government, the Canadian Embassy in Washington, and supportive U.S. industry groups to try to quash the initiative.
The effort comes as Canada is already battling a U.S. import ban on Canadian cattle and penalties on U.S. imports of softwood lumber.
The defence proposal, already approved by the U.S. House of Representatives, would require "critical" components of most military systems be acquired from U.S. sources; raise the required "domestic content" in a military system‘s labour and materials to 65 per cent from 50 per cent; and require major defence acquisition programs use only machine tools made in the U.S.
Mr. Cyr said the measures, if implemented, could result in layoffs of 13,000 to 20,000 defence-industry workers, most of them in high-technology jobs in Ontario and Quebec.
Officials estimated Canada sells more than $3 billion worth of goods and services to the U.S. defence industry each year, including high-tech communications systems, armoured personnel carriers, sensor systems, and aircraft landing systems.
They also said it puts at risk billions of dollars in potential revenues from a joint project with the U.S. and Britain in which the three are working together to develop the next generation of military fighter aircraft.
Canadian and U.S. industry officials trace what some described as the "protectionist" move, spearheaded by Republican congressman Duncan Hunter of California, to a combination of factors.
They acknowledge heightened concern in some U.S. circles over protecting the country‘s economic and security interests in the aftermath of the Sept. 11, 2001, terrorist attacks. They also note all foreign suppliers, not just Canada, would be affected by the "Buy-America" provisions.
Nevertheless, they suggest support for stripping Canada of its longstanding special exemption from procurement rules could be fuelled in part by irritation over things such as Canada‘s refusal to join the U.S.-led war against Iraq and statements made by members of Prime Minister Jean Chrétien‘s government that were critical of U.S. President George W. Bush.
"We‘ve done things in the past that have bugged them," Mr. Cyr said. "All that adds to the atmosphere. It serves the purposes of those who wish to take some action against Canada."
The provisions are contained in proposed legislation, approved by the House of Representatives, that is designed to authorize about $400 billion in defence spending for the fiscal year beginning Oct. 1.
Mr. Hunter, chairman of the House of Representatives‘ armed services committee, led the effort to have the more stringent rules inserted in the legislation, which was approved in late May. The U.S. Senate subsequently passed its own version of the defence spending legislation and it did not contain the "Buy-America" provisions sought by the House.
The two ruling bodies must now reconcile their respective versions, a process that promises weeks of intensive negotiations during which the lobbying for and against the more stringent contracting rules will be fierce.
‘Buy-America‘ policy could cost industry billions, spark layoffs
Norma Greenaway
The Ottawa Citizen
Sweeping "Buy-America" provisions in proposed U.S. defence-spending legislation could cost Canadian defence and aerospace companies billions of dollars in lost contracts and throw thousands of their employees out of work, Canadian and U.S. industry officials warn.
A provision also would end Canada‘s special status as a member of the U.S. National Technology and Industrial Base under which it is not treated as a foreign country for defence procurement purposes.
Norbert Cyr, spokesman for the Canadian Defence Industries Association, said the sector has been on high alert over the effort to "put a line through the Canadian exemption" and now is working closely with the Canadian government, the Canadian Embassy in Washington, and supportive U.S. industry groups to try to quash the initiative.
The effort comes as Canada is already battling a U.S. import ban on Canadian cattle and penalties on U.S. imports of softwood lumber.
The defence proposal, already approved by the U.S. House of Representatives, would require "critical" components of most military systems be acquired from U.S. sources; raise the required "domestic content" in a military system‘s labour and materials to 65 per cent from 50 per cent; and require major defence acquisition programs use only machine tools made in the U.S.
Mr. Cyr said the measures, if implemented, could result in layoffs of 13,000 to 20,000 defence-industry workers, most of them in high-technology jobs in Ontario and Quebec.
Officials estimated Canada sells more than $3 billion worth of goods and services to the U.S. defence industry each year, including high-tech communications systems, armoured personnel carriers, sensor systems, and aircraft landing systems.
They also said it puts at risk billions of dollars in potential revenues from a joint project with the U.S. and Britain in which the three are working together to develop the next generation of military fighter aircraft.
Canadian and U.S. industry officials trace what some described as the "protectionist" move, spearheaded by Republican congressman Duncan Hunter of California, to a combination of factors.
They acknowledge heightened concern in some U.S. circles over protecting the country‘s economic and security interests in the aftermath of the Sept. 11, 2001, terrorist attacks. They also note all foreign suppliers, not just Canada, would be affected by the "Buy-America" provisions.
Nevertheless, they suggest support for stripping Canada of its longstanding special exemption from procurement rules could be fuelled in part by irritation over things such as Canada‘s refusal to join the U.S.-led war against Iraq and statements made by members of Prime Minister Jean Chrétien‘s government that were critical of U.S. President George W. Bush.
"We‘ve done things in the past that have bugged them," Mr. Cyr said. "All that adds to the atmosphere. It serves the purposes of those who wish to take some action against Canada."
The provisions are contained in proposed legislation, approved by the House of Representatives, that is designed to authorize about $400 billion in defence spending for the fiscal year beginning Oct. 1.
Mr. Hunter, chairman of the House of Representatives‘ armed services committee, led the effort to have the more stringent rules inserted in the legislation, which was approved in late May. The U.S. Senate subsequently passed its own version of the defence spending legislation and it did not contain the "Buy-America" provisions sought by the House.
The two ruling bodies must now reconcile their respective versions, a process that promises weeks of intensive negotiations during which the lobbying for and against the more stringent contracting rules will be fierce.
