The Donald Trump administration has released a summary of objectives for the upcoming North American Free Trade Agreement (NAFTA) renegotiations, and while it is vague, Canadian construction industry stakeholders are concerned the U.S. is proposing to retain Buy America provisions and that Canada and Mexico will have to provide concessions to the U.S.
"It's still early days. It's hard to say where all of this will end up," said Bill Ferreira, vice-president of government relations and public affairs with the Canadian Construction Association (CCA).
"Certainly we would have some concerns with the fact that they wish to retain Buy America provisions which we feel fly in the face of free trade. At the same time, we are a little disappointed that we are not going to see the same sort of expansion of the agreement down to the sub-national level that we have seen in CETA (the Canada European Union Trade Agreement).
"I'm not really sure that there is anything beneficial in here right now for Canada."
Trump released the 16-page list of goals in his speech to kick off Made in America Week July 17. The first objective listed is to "reduce the trade deficit" either by increasing American exports or by reducing those to Canada and Mexico.
John Gamble, president and CEO of the Association of Consulting Engineering Companies — Canada (ACEC), called the goals "vague" and "naive."
"First, the U.S. trade deficit is not because of NAFTA, per se, it has much more to do with macro-economic issues, for one thing the comparative value of the Canadian dollar versus the U.S. dollar," explained Gamble.
"Secondly, it's important to note that the U.S. actually has a slight trade surplus with Canada if you set aside the energy sector. Frankly, the energy sector and importing Canadian energy has been somewhat of a priority for the United States as part of their plan for energy security and energy independence. In fact, this was part of the rationale President Trump determined to approve the Keystone XL pipeline."
"To say that we want to keep everything we have plus get a whole bunch of concessions from everyone else is not a serious negotiating position."
Association of Consulting Engineering Companies — Canada
Buy America has a significant impact on many suppliers in the Canadian construction industry, explained Ferreira. CCA would like to see provisions similar to those that exist in CETA adopted by NAFTA countries which would extend the application of the rules for government procurement down to sub-national governments.
"It would open up significant opportunities for the Canadian construction industry and interests that are looking to the U.S. to increase their market share," Ferreira pointed out.
"That would, to some degree, protect us from Buy America provisions because the way it worked the last time is that the Buy America provisions could not be applied to federal contracts but they certainly were applicable at the sub-national level, the state level and the municipal level."
Ferreira said the CCA is also concerned with the administration's plans to eliminate the dispute settlement mechanism, which has often ruled in Canada's favour, particularly on the long-running softwood lumber dispute.
It's time to modernize NAFTA, Gamble noted, especially with significant changes in terms of the legal and geo-political context as well as technology and intellectual property rights.
"It is certainly timely to have the discussion but people have to go into this being very pragmatic and very reasonable in terms of their expectations," said Gamble.
"To say that we want to keep everything we have plus get a whole bunch of concessions from everyone else is not a serious negotiating position. To say that we're looking for opportunities to improve the movement of goods and services to the benefit of both our economies is certainly what the objective is.
"I think that's what will actually play out in negotiations once the negotiators are allowed to sit down across the table and get away from some of the political hyperbole."
While the document seems to be focused around manufacturing, ACEC's primary concern is what it means for the services sector.
"For us the first concern is labour mobility," said Gamble.
"The fact is that the evolution of the industry in the last 20 years is that it is very much an integrated market where we have many ACEC member firms active in the U.S., some of them are American-owned, many are Canadian-owned."
Some North American and global engineering companies are not necessarily divided along national borders, he added.
"Many of our firms are organized east-west rather than north-south," explained Gamble.
"It's very important to our industry that they can move employees effectively and freely to participate in their business."
In response to the Trump administration's release of NAFTA priorities, the United Steelworkers issued a media statement July 19.
"We have yet to see meaningful, transparent and open discourse with the Canadian public on this government's trading priorities and objectives regarding NAFTA," said Ken Neumann, national director of the United Steelworkers Union.
"It's time for the Liberal government to tell Canadians what it wants to achieve in renegotiating NAFTA and how it will stand up for Canadian jobs, defend our key industries and strengthen labour and environmental standard...We call on the (Trudeau) government to clearly detail the specific components, principles and provisions which make up what it has called its 'progressive trade agenda.' "
Negotiations are slated to get underway in August.