Ottawa threatens to use rare law in Buy America dispute in B.C.

OTTAWA—The federal government is threatening to throw a wrench into Alaska’s plans to build on Canadian turf exclusively with American steel and iron.

International Trade Minister Ed Fast said Canada took a rare step when it signed a legal order to block the state of Alaska from imposing the protectionist Buy America Act on a project to construct a new ferry terminal on the British Columbia coastline.

“We have been clear: The application of protectionist Buy America provisions on Canadian soil is unacceptable and an affront to Canadian sovereignty,” Fast said in a statement after the Canadian government signed the order under the Foreign Extraterritorial Measures Act.

The law opens the door for Canadian authorities to prevent anyone in Canada from complying with the Buy America provisions in the project.

The federal government signed the order on the grounds it hurts the country’s interests after Alaska rejected its demands to ditch its restrictions for a ferry terminal in Prince Rupert, B.C.

The Alaska Marine Highway System (AMHS) has operated the ferry terminal since 1963.

The tendering document for a new terminal states the roughly US$15-million project must only use iron and steel sourced from the United States, as per Buy America legislation.

If the process moves forward with the Buy America policy, the Canadian government could exercise the order against the winning contractor and any violations could lead to police investigations.

The project’s call for tenders is to close this week.

“Buy America provisions deny both countries’ companies and communities the clear benefits that arise from our integrated supply chain and our commitment to freer and more open trade,” Fast said.

Alaska Gov. Bill Walker said he has been in communication with Gary Doer, Canada’s ambassador to the U.S.

“I think we’ll get through this,” Walker said. “It’s a little bit of a bump in the road, as far as that project, but ‘Buy America’ is there for a reason, when it’s our funds.”

The previously delayed bid opening for the project was pushed back again, from Jan. 21. to Jan. 23.

Walker said he wasn’t sure if it would get pushed back again.

In November, an official for the AMHS said the Prince Rupert contract had to comply with Buy America provisions because the funding came from the U.S. Federal Highway Administration (FHA).

Fast said he had been calling on the state to seek a waiver that would remove the protectionist barrier.

“We remain committed to working with our U.S. partners to resolve this unacceptable situation,” he said.

A spokesperson in Fast’s office says the only other time the federal government used the Foreign Extraterritorial Measures Act was in 1992, after the U.S. tried to restrict trade between Cuba and U.S.-owned subsidiaries based in Canada.

The Prince Rupert dispute comes after another Buy America controversy over a bridge in Morrison, Colo.

In October, the U.S. government reversed a decision that would have forced the small town of Morrison to dismantle a bridge constructed with a small amount of American steel manufactured in a Canadian plant.

The new ferry terminal in B.C. was part of an agreement in a 50-year lease, signed in 2013, between the Prince Rupert Port Authority and the Alaska Department of Highways, which operates the ferry between Prince Rupert and Alaska.

An economist for the United Steelworkers (USW) union criticized Fast’s approach, accusing him of “doing nothing” to encourage the use of Canadian steel in Prince Rupert or for any other project.

“If the whole terminal were built with Chinese steel, the Conservative government wouldn’t bat an eye,” Erin Weir, who is running for the NDP in Saskatchewan, wrote in an email.

“Simply removing ‘Buy America’ requirements would enable the project to use steel from offshore.”

Weir suggested the government maintain procurement preferences for domestic steel, but that it negotiate a “Buy North American” policy between Canada and the U.S.