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Will 'Buy American' drive wedge between New York and Canada?

ALBANY – New York and Canada have had some high-profile disputes this decade over Peace Bridge project, and dairy exports into Canada and Quebec.

Now, add iron and steel to the list.

Legislation passed in June adds “Buy American” provisions for bridge and road projects in the state. Gov. Andrew Cuomo, who wanted an even tougher provision, supported the legislation and is  expected to sign the bill before the end of the year.

Now officials from  Ontario and Quebec - where most of that nation’s steel is produced - are not ruling out taking retaliatory trade measures against New York State.

"We will keep a close eye on the impact on our workers in Ontario,’’ said Monique M. Smith, Ontario’s Representative to the United States at the Canadian Embassy in Washington.

“Protectionist initiatives in the public procurement sector have a damaging effect for the North American economy. Open government procurement on both sides of the border not only increases business opportunities for our businesses, but also allows them to be more competitive while allowing taxpayers to obtain the best products and services at the best possible price,’’ the Quebec Ministry of Economy, Science and Innovation said in a statement to The Buffalo News.

The Cuomo administration defended the measure.

“We make no apologies for seeking to promote the continued growth of our manufacturing industry and, with this agreement, we were able to strike the right balance that allows us to reinvest in our workforce, address concerns from our trade partners and allow a way forward to expanding Buy American provisions,’’ said Richard Azzopardi, a Cuomo spokesman.

Albany on Buy American

Cuomo in January proposed a far more sweeping “Buy American” plan when he unveiled his 2017 budget. It would have required all state procurements over $100,000 to be produced in the United States.

Officials from Ontario, Quebec and the Canadian consulate in New York were seen throughout the Capitol’s halls last spring trying to un-do the Cuomo plan. They also hired Bolton-St. Johns, an influential lobbying firm with long ties into the Cuomo administration and the Legislature.

In April, after sending economic and diplomatic officials to Albany, Ontario officials breathed a sigh of relief when the initial Cuomo plan died in budget talks. At the time,  Ontario Premier Kathleen Wynne said the death of the provision “reflects a clear understanding among New York State’s political leaders of just how important our ongoing partnership is to both economies.’’

Just two months later, Cuomo announced a new “Buy American” deal with legislators, which left the Ontario premier telling Canadian reporters that she hoped to still get a carve-out for Canadian iron and steel producers. That would seem a tough sell with New York politicians when a new session convenes in 2018 – an election year for the governor and all state lawmakers.

The final legislation that passed at the end of session slapped a requirement on all bridge and road projects in New York State with procurement over $1 million must include iron and steel “produced or made in whole or substantial part in the United States, its territories or possessions.” The legislation sunsets in 2020 if not extended.

The “New York Buy American Act’’ passed unanimously in the Senate. The Assembly passed it 140-2, with Kenmore Democratic Assemblyman Robin Schimminger, a longtime advocate of cross-border trade, voting no.

State Assemblyman Robin Schimminger, D-Kenmore, was one of only two Assembly members to vote against the "Buy American" road and bridge legislation passed by the state Legislature in 2017.

New test to New York-Canada relations

The June measure was greatly watered down from the earlier Cuomo plan, and it includes exceptions to the “Buy American’’ rules, such as letting state agencies sign procurement contracts that include foreign steel if there is an emergency or it can be shown that U.S.-produced steel would hike the price of the work. But those provisions are vague.

Smith, the Ontario representative at the Canadian Embassy, did not respond when asked if Ontario plans to retaliate against New York with its own restrictive trade rules if the bill is signed.

“There are countless Canadian and American jobs that rely on the robust economic activity that flows between our borders each day. The final legislation took some steps to recognize the importance of this partnership, and we will keep a close eye on the impact on our workers in Ontario,’’ said Smith, who traveled several times to Albany this past spring on the matter.

Officials at the Quebec Ministry of Economy, Science and Innovation did not directly say if the province is considering retaliatory measures against New York State. The Consulate General’s office in New York, which represents Canada’s federal government's interests in several Mid-Atlantic and Northeast states, including New York, did not comment on the looming steel law.

The steel industry in Ontario and Quebec, centered along the Great Lakes and St. Lawrence River corridor, has been declining for years. But there are still 22,000 steel industry jobs in Canada, according to the Canadian Steel Producers Association in Ottawa. And the U.S. Commerce Department’s International Trade Commission reported that Canada in 2015 was  the world’s 19th largest steel exporter, sending 87 percent of those exports to the United States.

Canadian officials worry that the steel legislation this year maybe followed next year with stronger procurement rules.

Supporters hope to create jobs

When the steel measure agreement was struck June 20, it drew praise from Cuomo and the top legislative leaders. Cuomo at the time said the bill “will reinvest in the talent that made this state and this country what it is today and strengthen our role as a global leader in manufacturing for years to come.’’

The bill was sponsored by Assembly Majority Leader Joseph Morelle, a Democrat, and Republican Sen. Joseph Robach, both from the Rochester area. When his house passed it, Morelle said the state’s procurement practices for too long “have favored foreign manufactured products rather than domestic and, in turn, hindered our economic growth, threatened American jobs and encouraged outsourcing.’’

Unions in New York, led by the state AFL-CIO,  strongly pushed the measure. And it sets a standard for other states, its president, Mario Cilento, said last week.

“It will stimulate manufacturing, create jobs and ensure that state taxpayer dollars are used first and foremost for the benefit of New York workers, as well as our state and national economy,’’ the AFL-CIO leader said.

Cilento added that Canadian officials had a “seat at the table” in Albany this past session and that “their concerns were addressed.’’

The only bow to Canada might be a clause that calls for convening of a “workgroup” that will be charged with evaluating “reciprocal trade access for any foreign state that may be significantly impacted by the implementation of this act.’’

The AFL-CIO said Canadian officials were the ones who suggested the workgroup provision.

In a state with the nation’s largest unionized workforce, New York legislators from both parties and throughout the state embraced the bill. All except a Long Island Assembly Republican, Michael Fitzpatrick, and Schimminger.

“Obviously, this is another poke in the eye to our friends across the border,’’ Schimminger said.

 

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