Act locally. Sell Globally.

  • National Newswatch

The Government of Ontario announced recently a $30-billion transit expansion plan for the GTA. This historic investment, the province correctly notes, could have a massive positive impact on families, commuters, and jobs, injecting a breath of fresh air in Toronto's aging infrastructure. And while the economic impact of this project will be felt by all users of the system, it has the additional potential to drive growth throughout the province by leveraging this investment to boost manufacturing output, investment, and innovation. Due to the massive economic benefits of large-scale transit and infrastructure projects most countries, including all of our major trading partners, most jurisdictions have significant local content requirements. The “Buy America Act” stipulates that 65 per cent of the cost of all components and, final assembly be done in the US (moving to 70 per cent in 2020). Japan has a 100 per cent local content requirement and, Israel, 20 per cent. China has a 70 to 90 per cent local content rule along with a requirement for the inclusion of a Chinese partner as part of foreign bidding teams. And, across Europe, local governments are allowed to require up to 50 per cent local content. Ontario has retained a similar right under Canada's international trade law to require 25 per cent of projects be manufactured at home. Unlike our international competitors, and despite significant high paying, high skilled, manufacturing jobs in transit and infrastructure related sectors across the province they create, the government habitually forgoes these requirements. By electing to not include any local content rules in the bidding process, governments potentially miss billions in economic spin-offs. To make matters worse, given how these local content requirements are enforced, Canadian companies are blocked from exporting these products abroad. This sends manufacturers the message that it is unnecessary to remain in Canada to be awarded Canadian contracts but, that it is critical to have an industrial presence abroad to penetrate foreign markets. While procurement barriers are just a small sample of the challenges of global trade, it is no wonder that Canada has lost half of its global export market share since 2000, and over the past decade the country ranks amongst the worst in attracting foreign direct investment across the entire OECD. Canadian manufacturers are free traders but, that requires a fair and level-playing field. Reciprocity must be a fundamental principle of our trade practices. As such, we must be conscious of what others are doing and, react in kind. It's just good business. The Government of Ontario should take into consideration global trends in procurement, make use of the local content requirements that have been negotiated, and leverage the opportunity to boost manufacturing investment and jobs. This will ensure that this historic investment turns into an historic opportunity for Ontario's economy, and ensures the benefits of this investment go far beyond only the riders on the new Ontario Line. Dennis A. Darby P.Eng., ICD.D, is the President & CEO of Canadian Manufacturers & Exporters.