Canada: "Buy America" In US Stimulus Package

Last Updated: February 9 2009
Article by Milos Barutciski, Jesse Goldman and Darrel Pearson

On January 28, 2009, the U.S. House of Representatives approved an $819-billion economic stimulus bill, including strict "Buy America" rules for steel and iron used in infrastructure projects funded by the bill. The U.S. Senate is currently considering a bill that would extend the "Buy America" requirement to manufactured goods used in infrastructure projects. In their current form, these provisions would effectively shut out Canadian and other foreign suppliers from a significant portion of the U.S. infrastructure market.

These provisions are likely contrary to U.S. international trade obligations under the WTO, NAFTA and other international trade agreements. Prime Minister Harper has spoken out against these provisions in the House of Commons and Trade Minister Day has compared these measures to the "beggar-thy-neighbour" protectionism that prolonged the Great Depression in the 1930s. It is expected that the threat of mounting U.S. protectionism will be high on the agenda for U.S. President Obama's first foreign visit when he meets with the Prime Minister in Ottawa on February 19, 2009.


Canada – EU Air Transport Agreement

On December 9, 2008, Canada announced the successful conclusion of negotiations with the EU on a comprehensive air transport agreement, setting the stage for significantly liberalized air travel and foreign investment for carriers.

The agreement is multi-phased and immediately provides both Canadian and EU carriers unrestricted direct point-to-point service, including provisions for third-country flights for all cargo carriers.

The agreement will also raise airline foreign ownership limits for EU and Canadian investors to 49 percent. The Canadian limit is currently 25 percent. A 49-percent equity interest in a widely held airline could amount to de facto control, thus allowing for an unprecedented degree of integration between Canadian and European airlines. An acquisition by a European investor of a 49-percent voting interest in a Canadian airline would also be subject to review by the Minister of Industry under the Investment Canada Act to determine whether the transaction is of "net benefit to Canada".

Trade And Investment

Canada-EU Trade Agreement Consultations

The Government of Canada has initiated preliminary consultations with businesses and other stakeholders with regard to determining areas of potential interest in expected Canada-EU free trade agreement negotiations. The scope of the proposed negotiations is broader than any of Canada's or the EU's existing regional or bilateral free trade agreements and will include services, investment, air transportation, and procurement.

Early 2009 will see Canada and the EU engage in a pre-negotiation scoping exercise to determine the range of issues and areas of mutual interest. The Canadian government has initiated a formal consultation with business and other stakeholders and senior EU officials will travel to Canada in February and March to further the process.

The Canadian government will be seeking provincial governments' commitments to negotiate in areas of provincial and joint federal– provincial jurisdiction, such as trade in services, professional/technical qualifications and procurement, which have been identified as key areas of interest for the EU. Of critical interest to Canadian exports will be reduction in technical barriers to trade, liberalized trade in services and improved market access for agricultural products.

The Canada-EU initiative may be the most significant international trade development for Canada since the NAFTA.

For a more comprehensive discussion of the Canada-EU initiative and its consultations with the public, please go to http://www.bennettjones. com/Images/Guides/Update4256.pdf.

Product Regulation

Proposed US Country-of-Origin Labelling Rules Delayed

The U.S. Department of Agriculture (USDA) has delayed the implementation date of a mandatory country-of-origin labelling (COOL) final rule.

The mandatory country labelling of all beef, pork, lamb, chicken and goat meat and "certain perishable commodities" sold in U.S. stores was implemented on September 30, 2008, as an interim final rule, triggering a six-month transition period prior to enforcement. As a result of consultation requests brought by Canada during the transition period, the final COOL rule stated that the order of the countries on the label would not matter, pleasing Canadian producers.

The USDA's announcement will extend the final COOL rule's March 16 implementation date by 60 days. It is expected that the USDA's decision to invoke a 60-day delay will be followed by an immediate reopening of a comment period for 30 days.

If the COOL rule is put out for notice and comment, U.S. cattle groups that now oppose the final COOL rule in such a future comment period would certainly seek to include changes designed to reduce the use of Canadian animals in U.S. packing operations—changes that would reverse provisions Canada had successfully worked with the USDA to have included in the final rule.

Canada undertook to suspend for at least eight months a World Trade Organization challenge against the COOL rule as inconsistent with the WTO Agreement on Technical Barriers to Trade. That commitment will certainly not be honoured if the new administration significantly alters the relevant provisions in the final COOL rule.

Trade Regulation

EU REACH Legislation Proceeds with Phase In

The EU Registration, Evaluation, Authorization, and restriction of Chemical substances regulation (REACH) on chemicals and their safe use phased in compliance for non-EU registrants on January 1, 2009. Non-EU chemicals and cosmetics companies that did not register substances under REACH by January 1, 2009, are barred from the EU market.

The relatively short period for non-EU company substance regulation has resulted in a number of problems, mostly related to the EU's reliance on its own European List of Notified Chemical Substances and the European Inventory of Existing Commercial Chemical Substances. Some imported chemicals and cosmetics were not so listed and the EU has refused to modify REACH to address different standards and nomenclature for chemicals outside of the EU. Of note, 21 countries filed a complaint at the last WTO Technical Barriers to Trade Committee regarding REACH and its discrimination against non-EU suppliers.

Trade Facilitation And Security

Borders Report

The Canadian International Council (CIC) issued an important report titled A New Bridge for Old Allies in November 2008. The CIC report was co-authored by Michael Kergin, Senior Advisor to Bennett Jones LLP and Chair of the CIC Border Issues Working Group.

The CIC report examines how security modalities and vital Canada–U.S. trade can effectively co-exist in the context of an integrated North American economy. The report examines factors that have contributed toward a thickening of the border and consequent impairment of trade and supply chain competitiveness in both countries. Mr. Kergin's report recommends, among other things, a Parliament Joint Border Commission, a joint transportation strategy and a Bi-national Regulatory Council to promulgate trade sensitive border rule making in Canada and the U.S.

To view the report visit: workinggro/borderissu.


WTO Draft Texts of Anti-Dumping and Subsidy and Countervailing Measures Agreements

The WTO Negotiating Group on Rules released its latest draft text on anti-dumping and subsidies on December 19, 2008. This text supersedes the previous draft released in December 2007. Reform of anti-dumping and subsidies agreements has been a significant point of disagreement between WTO members in the stalled seven-year-old Doha Round talks.

The new draft text continues controversial proposals such as mandatory 10-year termination of anti-dumping measures, anti-circumvention provisions that would shift anti-dumping measures to related products, and limited provision for "zeroing" when calculating dumping margins, contrary to certain WTO jurisprudence.

The draft subsidies text also proposes a "roadmap" for introducing subsidies disciplines into the fisheries sector. The inclusion of fisheries subsidies are contentious to say the least, given the reliance of developing economies on fisheries exports and global environmental-sustainability concerns with fisheries.

The WTO Negotiating Group on Rules is expected to resume talks in February.

Trade – WTO

Lamy Hopes G20 Meeting Will Restart Doha Process

World Trade Organization Director-General Pascal Lamy said in a speech on January 22 he hoped world leaders use the occasion of a meeting of the so-called G20 countries in London in April to commit to conclude Doha Round modalities on agriculture and non-agricultural market access (NAMA) this year.

Lamy also noted that key differences remained on the special safeguard mechanism (SSM) that is to help developing countries shield their farmers from import surges and sudden price drops. Nevertheless, he insisted it was the lack of political will rather than technical solutions that had prevented agreement on either the SSM or the sectoral initiatives.

Although it was feared that the round would go into hibernation as administrations change in several countries and the economic crisis continues around the globe, the April meeting of world leaders in London will give renewed focus to Doha as part of a coordinated response to the world economic crisis and a guard against trade destructive protectionism.

The next steps will likely be a review of the progress made thus in the Doha Round and an assessment of whether countries are willing to try to conclude a breakthrough deal before August. If they are, there could be a resumption of negotiations by the time of the G20 summit in April.

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

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

Milos Barutciski
Jesse Goldman
Darrel Pearson
In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
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 you may opt out by clicking here

    Terms & Conditions and Privacy Statement (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

    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’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.


    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.


    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.

    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 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.


    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.


    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.


    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.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    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

    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

    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

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

    By clicking Register you state you have read and agree to our Terms and Conditions