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P 091547Z JUN 09
FM AMEMBASSY OTTAWA
TO RUEHC/SECSTATE WASHDC PRIORITY 9522
INFO RHEHAAA/WHITE HOUSE WASHDC
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RUEHME/AMEMBASSY MEXICO 1986
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UNCLAS SECTION 01 OF 02 OTTAWA 000440 
 
SENSITIVE 
SIPDIS 
 
STATE FOR E, EB/DCT, WHA/EX, WHA/CAN 
 
STATE PASS USTR (SULLIVAN) 
 
COMMERCE FOR ITA/MAC (WORD; WOODWARD) 
 
TREASURY FOR IA (WEYER) 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD EINV EIND PREL PGOV CA
SUBJECT: Canadian municipalities adopt resolution to counter US Buy 
American measures 
 
Ref: Ottawa 424 
 
SENSITIVE BUT UNCLASSIFIED.  PLEASE PROTECT ACCORDINGLY 
 
¶1. (U) SUMMARY:  On June 6, the Federation of Canadian 
Municipalities (FCM) adopted a non-binding "Buy Canadian" resolution 
on municipal procurement to counter alleged Canadian losses 
resulting from "Buy American" legislative provisions.  The 
resolution called on municipalities to only purchase goods and 
materials from countries that did not impose trade restrictions 
against Canadian suppliers of government purchases.  However, in 
light of the federal government's June 5 announcement that it 
intends to seek a negotiated solution to U.S. procurement barriers 
through the North American Free Trade Agreement (NAFTA), the FCM 
will not formally endorse the resolution for 120 days.  According to 
an FCM news release, "The timeframe of 120 days will give the 
Canadian and U.S. governments some breathing room.  At the same 
time, it will continue to shine a light on this issue and ensure 
that everyone4s energies remain focused on finding a quick 
resolution."  End Summary 
 
¶2. (SBU) The Canadian municipalities have pledged to work with the 
federal government - in particular, Trade Minister Stockwell Day - 
by providing technical advice on local procurement and by reaching 
out to municipal counterparts in the United States (including the 
U.S. National League of Cities and the U.S. Conference of Mayors). 
In a rare show of bi-partisan support, Liberal opposition leader 
Michael Ignatieff also endorsed U.S.-Canada talks on procurement 
issues to avoid escalating protectionism.  Speaking to the FCM on 
June 6, Ignatieff stated, "We need to say very clearly and very 
toughly to the Americans, 'Let's pull back now.  Let's sit down 
around a table and do serious business between neighbors and friends 
who have lived beside each other for a long time and know what's in 
our long-term interest.  Let us mobilize.'" 
 
¶3. (SBU) For its part, the federal government has talked down the 
possibility of raising Canadian barriers against U.S. goods.  On 
June 8, Finance Minister Jim Flaherty warned that retaliation "is 
not the kind of action that helps industry in Canada.  We need to 
talk to the Americans.  We need to have a discussion with the 
Americans." 
 
Rhetoric and Reality 
-------------------- 
 
¶4. (SBU) Canadian interest in expanding NAFTA procurement 
commitments appears to be growing.  The FCM resolution follows on 
the heels of a provincial announcement (reftel) that the provinces 
will consider expanding procurement market access for U.S. 
suppliers.  (Comment: The Prime Minister, Trade Minister, and senior 
staff would like to reconfigure anti-Buy American rhetoric into 
positive action toward securing and expanding market access in the 
United States.  End comment.)  However, Canadian trade watchers do 
not expect rapid action on the procurement front.  As one veteran 
trade lawyer told us, "There is simply too much embedded 
protectionism in the provinces to root this stuff out overnight - 
even if the United States were willing to open up everything to us 
in exchange."  Jayson Myers, President of the Canadian Manufacturers 
and Exporters and a prominent voice calling for Canadian action in 
response to Buy American, is similarly cautious about the how much 
Qresponse to Buy American, is similarly cautious about the how much 
can be achieved in a short period of time since the ARRA funds must 
be under contract by February 2010. 
 
 
¶5. (SBU) Helmut Mach - a former Alberta trade minister - has called 
the federal government's June 5 announcement "a rushed gesture that 
will not solve the problem at hand, will not deal with the real 
issues of government procurement differences between Canada and the 
U.S., seems more like an effort to show that 'something' is being 
done, and tries to lay the groundwork to blame provinces if no 
results are evident." 
 
¶7. (SBU) Comment:  Canadian officials believe - or profess to 
believe - that offering to open up Canadian procurement markets will 
induce USG and sub-federal officials to do the same.   Canadian 
enthusiasm for this tactic may quickly fade if:  (1) U.S. states and 
 
OTTAWA 00000440  002 OF 002 
 
 
municipalities show little interest in guaranteeing access to their 
procurement markets in exchange for access to Canadian markets; or 
(2) it becomes clear that any potential procurement negotiations 
would be complex and offer no immediate relief to Canadian concerns. 
 End Comment.