Canada: Canada Announces Anti-"Buy American" Order Under The Foreign Extraterritorial Measures Act

Last Updated: January 26 2015
Article by Gregory A. Tereposky, Jennifer Radford, Vincent J. DeRose and Daniel Hohnstein

Most Read Contributor in Canada, November 2016

Considering Canada's Response to "Buy America" Restrictions on Redevelopment of the Prince Rupert Ferry Terminal Facility in British Columbia.

On January 19, 2015, the Government of Canada made an Order pursuant to the Foreign Extraterritorial Measures Act (FEMA) that prohibits any person in Canada from complying with U.S. "Buy America" requirements in relation to the redevelopment, including any "alterations or improvements" generally, of the Prince Rupert ferry terminal facility in British Columbia. Specifically, the Certain Foreign Territorial Measures (United States) Order, 2014 (the "Order") directly responds to a solicitation for bids issued by the Alaska Department of Transportation and Public Facilities (DOT&PF) which specified that all iron and steel products associated with the ferry terminal redevelopment project are subject to the "Buy America" legislation.1 This is the first time that Canada has invoked the FEMA outside of the context of the U.S. Cuba legislation. The FEMA is a "blocking statute" that prohibits compliance with foreign laws that are viewed as being applied to Canada in an extraterritorial manner. In this instance, Canada is targeting the extraterritorial application of the "Buy America" legislation to a project being undertaken in Canada.

It is now being reported that, as a result of the impasse between the Canadian and American legal requirements, the DOT&PF has suspended the redevelopment project until further notice.

When the solicitation is re-issued or otherwise proceeds, all parties involved will need to ensure that they comply with both Canadian and U.S. law.

The Prince Rupert ferry terminal facility is a crucial transportation hub for residential and commercial traffic in the Alaskan Marine Highway System, connecting the ferry system that serves remote communities in Alaska with the North American highway and rail system. The facility is operated by the Alaska DOT&PF on land in British Columbia that is leased by the State of Alaska. The DOT&PF solicited bids for a major redevelopment project involving the removal and replacement of the facility. This solicitation specified that the "Buy America" measures would apply to all iron and steel products incorporated into the project, which meant that such materials had to be manufactured in the United States.

On the basis that these "Buy America" restrictions would preclude Canadian producers of iron and steel materials from participating at all in the procurement process or the subsequent redevelopment project, the Government of Canada responded by issuing the above-referenced Order pursuant to paragraph 5(1)(b) of the FEMA. This provision authorizes the Attorney General of Canada, with the agreement of the Minister of Foreign Affairs, to make an order prohibiting "any person in Canada" from complying with foreign measures that, in the opinion of the Attorney General: (i) have had or are likely to have an adverse effect on significant Canadian interests in relation to international trade and commerce involving business carried on in whole or in part in Canada; or (ii) have otherwise infringed or are likely to infringe Canadian sovereignty.

The wording of paragraph 5(1)(b) of the FEMA indicates that the scope of this legal prohibition is very broad. In the present case, it covers not only compliance with the "Buy America" measures themselves, but also with any directives, instructions, intimations of policy or other communications supporting the application of the "Buy America" restrictions – including those contained in any tender documents issued in respect of the redevelopment project – from a person who is in a position to direct or influence the policies of the "person in Canada". The Government of Canada has expressly stated that one of the effects of the Order "is to prohibit any person in Canada from complying with any certification or declaration requirements that state that the successful bidder will comply or has complied with applicable 'Buy America' measures, such as those found in the applicable tender documents (e.g., Material Origin Certificate)."

It should be noted, however, that the Order provides that a person who has already acted contrary to the prohibition before the Order comes into force will only contravene the Order if they take a further prohibited action on or after the date that the Order comes into force. It is also noteworthy that such a contravention will only lead to an offence and potential liability under the FEMA if the "person in Canada" has been served with a copy of the Order. On the other hand, the FEMA provides that a contravention of an order under paragraph 5(1)(b) that would be punishable as an offence under the FEMA if it were committed within Canada may be tried and punished as an offence under FEMA even if it is committed outside of Canada. Maximum penalties under the FEMA for each offence include fines of up to $1.5 million for corporations and fines of up to $150,000 and/or imprisonment not exceeding five years for individuals.

The Order raises important questions for parties who were – or who will continue to be – involved in the procurement process and also other stakeholders. The extent to which such an order might affect a contract that is awarded entirely in the United States, or the execution of such a contract within Canada, remains uncertain. In this respect, the applicability of such an order may depend upon whether potentially prohibited activities occur in Canada, or in the United States, or in a combination of both countries, and the exact nature of those activities. Related to these questions is the uncertainty with respect to the meaning and effect of the term "any person in Canada". Taking these considerations into account, it is not clear whether, or to what extent, or on what terms participants in the procurement process or the subsequent work related to the Prince Rupert ferry terminal redevelopment project may risk contravention and liability under the FEMA if both the Order and the "Buy America" measures continue to apply when the solicitation is re-issued.

What is clear, however, is that all parties will need to carefully consider the ramifications of both the Canadian legal requirements and the U.S. legal requirements in planning their next steps.

Footnote

1. The U.S. "Buy America" regime is provided for in Section 313 of Chapter 3 of Title 23 of the United States Code and Section 410 of Part 635 of Title 23 of the United States Code of Federal Regulations.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.