Government should leverage investments to enhance opportunities for businessWritten by Rob Colman February, 20 2008
Canadian government should leverage public investments in transportation equipment and infrastructure to enhance opportunities for Canadian manufacturers and exporters who are facing an increasingly difficult competitive situation, according to a recent policy paper released by Canadian Manufacturers & Exporters (CME).
“By leveraging these investments, governments in Canada would level the playing field to international standards for transportation equipment and infrastructure manufacturers in Canada, reduce business uncertainty by forcing clear, full and open competition for all contracts, and help government effectively address the legal and political controversy surrounding sole-source contracting,” CME President Jayson Myers said in releasing the policy paper. “Canadian governments need to catch up and follow the lead of our main trading partners in that regard. This responsibility should be shared by all levels of government in a joint commitment.”
The rapid rise of the Canadian dollar, growing offshore competition, the slowdown in the U.S. economy, and the accelerating pace of technological innovation have all put increasing pressure on Canadian manufacturers and exporters in recent years.
“In this context, it more imperative than ever for governments to make sure that domestic manufacturing and exporting companies benefit from a globally competitive business environment. Moreover, businesses expect their governments to create policies which support their competitiveness, establish rules and regulations which provide them with equal footing, and apply these rules in an even and systematic way.
“Government funding, specifically in the case of infrastructure and mass transit projects, is one of the tools that governments have at their disposal to foster domestic economic development. This approach is well-established and desirable for any economy which endeavours to support the development of a strong and dynamic domestic industry. This is why many countries use this approach,” the policy paper says.
In particular, the report singles out the U.S. in this regard. “Highway, road, airport facilities, and mass transit infrastructure projects are
governed by laws, bylaws and policies which maximize economic benefits for U.S. domestic companies and, by the same token, support the development of the local manufacturing industry while allowing competition that is based on fair rules for all vendors.”
According to the policy paper, the Canada-U.S. free-trade agreement also doesn’t guarantee that Canadian manufacturers and exporters automatically
have access to infrastructure and mass transit projects which are funded by the U.S. government. “Even though Canadian exporters take part in certain projects which are funded by governments in the U.S., several contracts or sub-contracts are reserved for companies which are in the U.S. In spite of NAFTA and the WTO’s Agreement on Government Procurement, which provide fair treatment to signatory nations when granting certain contracts, the U.S. government succeeds in promoting manufacturing on U.S. soil while respecting these agreements.”
For example, the CME points out that restrictions exist regarding a manufacturing presence in the U.S. for all projects funded by the U.S. government
in the sectors of mass transit, airports or road construction. These policies, the report states, are designed to maximize the impact of government funds on U.S. industry.
“However, Canadian companies do not benefit from the same support from their own governments, even though Canada has economic development goals which are similar to those of its main trading partner, and even though it is important for Canadian companies to have support that is similar to
the one obtained by foreign companies from their governments in order to be competitive on a global scale. Too often, international agreements to which Canada is a signatory have been estimated to be restrictive regarding the actions it can take, to the point where it is powerless.
“However, Canada does have a scope of concern that is does not use, to the detriment of companies that choose to design and manufacture their products here,” the report states.
For instance, the CME notes that both provinces and states are not subject to NAFTA. “Several U.S. states use government procurement
to maximize domestic economic benefits. In Canada, because of the Agreement on Internal Trade (AIT), provinces cannot do the same; they must give free access to their government procurement for all Canadian companies. They can therefore use government procurement to support Canada’s
economic development, but not of their province specifically.”
In order to maximize Canadian domestic economic benefits of government procurement, the CME makes several recommendations . For one thing, the CME urges 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; that the federal government 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; and that provincial governments also use funds invested to develop and renew infrastructures as
economic development levers.
Published in Magazine
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