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governments for more foreign sourcing stems from what happened before the eventual creation of the 2010 Canada- U.S. Agreement on Government Procurement, which greatly expands the bilateral trade relationship of Canada and the United States. The 2010 agree- ment was born out of the controversy fostered by the American Recovery and Reinvestment Act of 2009 and its con- troversial "Buy American" provisions into force. The U.S. stimulus program, put in force during the darkest days for the U.S. economy, was "enacted in the spirit of old-fashioned protectionism in the midst of the financial crisis, had the effect of effectively shutting out Canadian suppliers from sub-central stimulus-funded procurement con- tracts for iron, steel and manufactured products," McCarthys' Swick wrote in a summary paper on the agreement. Her international government pro- curement practice has her advising procuring entities as to their rights and obligations under new and older trade commitments and on the other side advising tendering companies and, when necessary, seeking the review of contract awards for government requests or tendering procedures that are seen to be "offside." The plight of a number of Canadian firms caught in the Buy American frenzy — some having pipes and other "made in Canada" equipment liter- ally ripped out of U.S. soil — was well publicized and became a top prior- ity for the federal government as a result. Prime Minister Stephen Harper made it a chief topic of discussion with the U.S. government throughout 2009. U.S. President Barack Obama told the media Harper brought the issue up every single time the two leaders met. The Buy American Act, tied as it was to the American Recovery and Reinvestment Act, is "just another layer of pre-existing rules and regulations," says David Hamill, a trade policy and dispute lawyer with the Washington, D.C.-based law firm Arent Fox LLP, who advised a number of Canadian companies, including Ontario-based industrial equipment supplier Hayward Gordon. The Buy American Act "just got a lot of attention because it applied some additional rules to a current pot of money, if you will, that was part of the [ARRA]." Government procurement is always a political issue and when a program is dubbed Buy American and is part of an effort to get a struggling economy back on its feet, the idea of handing taxpayer funds to foreign suppliers is controver- sial. Hamill doubts that the anti-for- eign mood behind the effort will fade any time soon. "I think there is going to be continued pressure encouraging U.S. government contracts to source locally. In the case of the ARRA, that suppliers as we can," Stobo says. "The real winners in that whole process were the politicians who can say that when Canadian businesses screamed at being locked out of U.S. purchasing opportu- nities, the politicians listened. Whether it is going to be all that meaningful in an actual purchasing sense remains to be seen." What the Buy American dispute laid bare was that for the 15 years or so that NAFTA and the World Trade Organization Agreement on Government Procurement have been active, neither the United States nor Canada had opened up spending at the sub-federal level to each other's suppli- ers. (While provinces were exempt from The Europeans have viewed access to sub-federal procurement in Canada as the golden egg. GERRY STOBO, Borden Ladner Gervais LLP they did it a certain way doesn't mean that they won't do it again but maybe they will do it [in a different form]." Flexibility on the foreign firms seek- ing U.S. business could be key. "With ARRA, that money has already been spent . . . we could have new laws next year that provide for funding of various infrastructure projects and they could have their own requirements including Buy American requirements." From his Ottawa office, Stobo views the 2010 U.S.-Canada agreement forged to resolve the Buy American dispute as an indication that Canadian sub-federal government entities, at least, will award contracts on a best-supplier basis. "The provinces have said 'OK, we are going to open opportunities up to everyone,' and, frankly, Canadian governments rarely discriminate against suppliers on the basis of geography. We so desper- ately want to get the best price, the best product, that we open it up to as many the agreements, U.S. commitments to the WTO-AGP did cover for the pro- curement activities of 37 states with many exemptions and exclusions.) Business entities in both countries wanted access to those state/provincial and municipal outlays because that is where most of the government spend- ing occurs. In Canada, it is estimated that all levels of governments combined spend almost $100 billion per year and of that about 70 per cent is estimated to be spent by municipalities, hospitals, and academic entities. "We learned something from NAFTA," says Cyndee Todgham Cherniak, an international trade lawyer with McMillan LLP in Toronto. "We had quite robust and open bidding pro- curement systems and bid challenges for when there was a perception or actual problem." She adds, however, that with the Buy American situation they learned the provinces, municipalities, INHOUSE JUNE 2011 • 27