OTTAWA—The tentative Buy American deal fails to gain a meaningful exemption for Canadian suppliers from provisions in the U.S. stimulus package while permanently curtailing provincial and municipal procurement sovereignty, says a new analysis of the deal from the Canadian Centre for Policy Alternatives (CCPA).

“The agreement is highly unbalanced and provides significantly better access for U.S. suppliers to the Canadian procurement market than for Canadian suppliers to U.S. stimulus projects,” says senior CCPA trade researcher Scott Sinclair.

According to the analysis, Canadian suppliers have a brief opportunity to compete for an estimated $4 to 5 billion US of federally funded stimulus projects, representing less than 2% of the approximately $275 billion US of procurement funded under the Recovery Act. In return, Canada has guaranteed U.S. suppliers access to a range of provincial and municipal infrastructure spending projects until September 2011, estimated to be valued at more than $25 billion Cdn.

“Most significantly, Canada has bowed to U.S. pressure to permanently bind purchasing by Canadian provincial and municipal governments under the WTO agreement on Government Procurement,” says Sinclair. “This proposed deal will prevent Canadian provincial and municipal governments from preferring local goods or suppliers while leaving Buy American policies almost fully intact.”

“The Harper government has taken advantage of the economic crisis to justify what it has wanted for a long time—more private access to public sector resources and further restrictions on the ability of all levels of governments in Canada to negotiate local benefits when the procure goods and services.”

The latest bit of weirdness emerged from B.C.’s Minister for Economic Development Colin Hansen on a CKNW talk show. Host Michael Smyth asked Hansen how he could square the throne speech promises for strong climate change regulation with TILMA. Hansen boldly claimed: "There is absolutely nothing in the TILMA agreement that will prevent us from bringing in the climate change program set out in the throne speech."

Well, that should make you wonder whether there are any real guts to the climate change program. Because TILMA states clearly that governments are prohibited from introducing new standards or regulations if they "impair" investment. Higher vehicle emission standards would violate TILMA because they would impair auto industry investments by adding to the industry’s costs.

With TILMA who really makes the laws we all must live by?

In talking up the agreement to a business crowd in Richmond last June, Alberta minister Gary Mar emphasized that TILMA has some "very big teeth." It provides for independent dispute panels whose decisions are enforceable through the courts. Governments can get socked repeatedly (something else Hansen doesn’t get) with up to $5 million in penalties if they do not withdraw regulations found to be violations of the agreement.

Just the threat of a TILMA challenge might be enough to make the B.C. government back off higher vehicle emissions standards.

And to make matters worse, Gordon Campbell is doing a TILMA sales job on Ontario’s Premier Dalton McGuinty. If TILMA is signed by Ontario, the home of most of Canada’s auto manufacturing industry, it will mean the number of potential complainants against B.C.’s new auto emissions standards will expand exponentially.

Read more about the ‘fine print’ – click here     and here

A few points:

* TILMA does not allow governments to violate the agreement just because they have good intentions — like protecting the environment.

* It provides for independent dispute panels whose decisions are enforceable through the courts.

      * defending governments only get to pick one of the members of a TILMA panel.

     * Private complainants also get to pick a panel member, and their choice is likely to be whoever on the list of potential panellists would be most sympathetic to their case.

* TILMA stipulates that workers qualified to work in one province have to be recognized as qualified to work in the other province without additional training. So it seems pretty clear that standards will go down to the lowest common denominator

* There is a two-year phase-in for municipalities and school boards, and the agreement also applies to crown corporations.

* When fully implemented, TILMA would allow legal challenges to the location and size of commercial signs, environmental set-backs for developers, zoning, building height restrictions, pesticide bans, and green space requirements in urban areas.

*  It also could allow challenges to restrictions on private health clinics, halt stricter rules for nursing homes and almost certainly overturn the current ban on junk food in B.C. schools.

* With respect to the environment, regulations regarding air quality are at risk, as are restrictions on tourist developments, the establishment of ecological reserves, the Agricultural Land Reserves and the authority of the Islands Trusts.

* individuals can demand compensation (up to $5 million per challenge) if a regulation or law merely "restricts or impairs" an investment.

( A similar law in Oregon just dealing with land use has resulted in over 6,000 claims worth $6 billion.)

* TILMA has a clause (Article 4) but in addition it has a clause (Article 5) that enforces what is called "mutual recognition." That means, for example, that an investor from Alberta can choose to bring with him to B.C. the Alberta regulations that apply to his business.

* business has said virtually nothing about interprovincial trade barriers over the years. That is because such barriers, as normally understood, are minimal. That was the conclusion of a 1998 study done for the B.C. government by UBC economist Brian Copeland.

 * The Conference Board of Canada prepared a deeply flawed study upon which the grossly exaggerated claims of onerous interprovincial trade barriers which are supposed to exist, but in reality do not.

Introduced in April 2007, the TILMA “Trade, Investment and Labour Mobility Agreement” was sold as a proposal to “break down barriers to trade” and give Alberta and BC a “competitive” tool to deal with Ontario’s vast economic advantage.

In reality, TILMA turns BC and Alberta into a large deregulated zone, a place where corporations and individuals can sue over barriers that regulate or restrict investment. Because the agreement seeks to eliminate regulations that might “impact or impair” profit making, individual investors can now sue governments to remove impediments to growth, inlcuding public policies, and receive compensation for potential loss of revenue.  TILMA destroys the rights of communities, provinces, and municipalities to “impact or impair” the free flow of goods or labour within BC and Alberta.

TILMA creates labour laws to facilitate the immediate entry of “temporary guest workers” from places like Mexico and China to work in the tar sands (and prevent them from leaving their camps). Canadian Natural Resources Ltd began employing 500 Chinese labourers on a guest-worker program at their “Horizons Oilsands Project” last year.

Those employed through the guest-worker program will not receive the same wages or benefits as
status-holding workers.  These non-status workers can be exploited in much the same fashion as prison labour – a fitting analogy since they have no legal right to even visit the community of Fort McMurray.

When considered from the standpoint of capital, nearly anything can be seen as an impediment to trade and investment. The language of TILMA intensifies the deregulation enabled by the North American Free Trade Agreement (NAFTA). As for environmental standards, TILMA represents a race to the bottom.

NAFTA allows for “challenges” and third-party rulings on “disputes” about regulation – a situation which now sees Canada paying to maintain legislation around tobacco and the environment. TILMA pushes the project one step further. Prioritizing the rights of investors over democratic process, even municipal regulations are potentially open to legal challenge.

Unlike the resolution process outlined in Chapter 11 of NAFTA, the current TILMA agreement includes an automatic penalty of up to $5 million for any municipal or provincial government that violates the rules of “free access” for capital. If, for example, a city were to block the construction of a building for heritage or environmental reasons, the corporation could sue the city for its projected loss of projected profits. TILMA turns NAFTA’s Chapter 11 into a sacrament.

Ontario and Quebec have speeded up cabinet meetings by 1 year to have a TILMA agreement in place by April, 2009. It’s not at all clear what the rush is all about. Despite the premiers’ rhetoric about trade barriers, there is scant evidence that there are any meaningful impediments to interprovincial trade. Yes, Quebec has funny rules about the colour of margarine and you don’t get the full glory of B.C. wines in an Ontario liquor store. As well, professional accreditation is sometimes difficult and the provinces have varying regulations for highway trucking.

However, as the C.D. Howe Institute noted in October,2007, the research – and rhetoric of business groups – overstates the impact of measures that increase inefficiency, raise consumer prices and restrict consumer choice. “Barriers impose only a small cost on the overall economy,” the institute said, estimating that removal of barriers would increase Canada’s gross domestic product by less than 0.5 per cent.

It’s noteworthy that Ontario’s Economic Development Minister, Sandra Pupatello, agrees with those who think there are fewer barriers than supposed. She said, for example, that Ontario manufacturers selling to Alberta’s oil patch have encountered only physical barriers, such as bridge overpasses in Saskatchewan that are too low to deal with heavy equipment.

Given all this, it’s a mystery why Ontario and Quebec still seem so keen on a bilateral trade TILMA pact  similar to that between BC and AB. 

Both Mr. McGuinty and Mr. Charest have expressed enthusiasm for TILMA, which is philosophically much different from the 1994 agreement on internal trade. Whereas that earlier document required negotiations among the provinces, TILMA would require provinces to align their regulations to the lowest common denominator among signatories or face damages from aggrieved companies of up to $5-million.

Both Ms. Pupatello and Quebec trade official Laurent Cardinal say any decisions on joining TILMA won’t be made until the pact is finalized in April, 2009.

Google "TILMA" for a lot more.