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July 21, 2009

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Americans light years ahead of us on ‘local first’ economics

CUPE leader calls for community-based investment revolution

In their zeal against so-called “protectionism”, business leaders who have been pushing Stephen Harper to reach a new free trade agreement on local procurement, as a response to “Buy American” laws in the U.S., have missed the point.

They don’t realize that municipal authority over local procurement policy actually works because it increases a community’s wealth. Nor do they seem to have noticed that our neighbours to the south have long been setting the bar when it comes to local procurement. In fact, the U.S. has had so-called “Buy America” federal laws in some form since 1933. But after 76 years with nary a complaint from Canada, Mr. Harper and his supporters suddenly see it as a problem.

In May, I spoke at a conference held by the Business Alliance for Local Living Economies (BALLE) in Denver, Colorado. The conference revealed that Americans are far ahead of us in terms of developing revenue streams by encouraging local small business. Hundreds of municipalities, large and small, are looking at creating more stable and sustainable communities through a very different lens: by maximizing the potential of small- to medium-sized businesses. These businesses are the real engine of local economies, and when we find ways to make them successful our communities thrive as a result.

In the U.S., there is widespread use of local procurement as an economic development tool. A 2007 survey by the National Association of State Procurement Officials found that 39 states use the location of a firm as a tiebreaker if all other aspects of a bid are equal. In fact, half of the 50 states, half of the 26 largest cities and five of the 18 largest counties offer between a four- and 10-per-cent uplift to local businesses on local government contracts. Cities like Denver, San Francisco and New York, and states like Michigan, have come to the conclusion that central governments have a role, in fact a responsibility, around infrastructure and procurement. But at the end of the day, local sustainability will come as a result of actions taken by local governments. Mexico, our other NAFTA partner, also has extensive Mexican content and local procurement policies.

In Canada, progress is slower—but we are seeing some examples of success. In Alberta, at least two communities have taken up the cause of green jobs in the name of community sustainability, and they are using local firms to do it. In Ontario, Canada’s largest city has a fair wage policy that supports Canadian jobs and a local-food procurement policy that supports Southern Ontario’s agricultural sector. Toronto has also increased Canadian content in its new streetcars, as well as contracting with Bombardier to create thousands of well-paying high-tech jobs. Meanwhile, the Canadian Auto Workers’ “Buy Canadian: Build Communities” resolution encourages municipalities to maximize the Canadian content of goods and services purchased. It proposes, for example, 50-per-cent Canadian content for new transit vehicles. So far, at least 21 municipalities have passed this resolution.

Last year, I visited 20 communities in all regions of British Columbia, talking to boards of trade and chambers of commerce, as well as municipal and provincial politicians, about some of these issues. What I proposed was that continued increases in property taxes and cost development charges cannot—and must not—be the only two revenue streams that make our communities sustainable, especially not during tough economic times. Instead, local governments need to be more proactive in looking for other revenue streams.

For starters, we need to conduct economic leakage analysis in all our communities to find out how we can keep the local economic multipliers—those lucrative and uniquely local ideas that generate more business dollars for local citizens’ benefit—working for us within our communities. What tools can we use to make import substitution a reality in practice, rather than a dream? How can we make better use of capital stock, such as community-owned land, to build local incubators—businesses that generate other business—that would encourage young entrepreneurs to stay in their communities? How can we establish businesses that are sustainable but at the same time help to build the regional economy, which in turn benefits both provincial and federal governments? Local procurement is even good for the environment: better support of farmer’s markets, for example, would reduce the food industry’s carbon footprint resulting from imports, a multi-billion-dollar problem.

At the recent Federation of Canadian Municipalities (FCM) convention held at Whistler, CUPE supported a successful resolution that called on the federal government to ensure an open public consultation before negotiating any internal or international trade and security agreement, and that this consultation process include municipal input through the FCM. One reason the Harper government is sounding the drumbeats of NAFTA is anticipation of the Canada/European Union trade deal. European corporations have been pushing hard for access to provincial and municipal procurement. These corporations have made it clear that they want access to procurement and services, including health and water services that are within provincial jurisdiction.

Trade expert Steven Shrybman, in a legal opinion prepared for the CAW’s “Buy Canadian” resolution found that there is nothing in the NAFTA, the WTO or the Agreement on Internal Trade which prevents local procurement policies that favour Canadian goods and services. The Trade, Investment, and Labour Mobility Agreement (TILMA) between B.C. and Alberta, on the other hand, has several provisions that punish municipalities for local procurement. Proposals to limit local purchasing options are a direct threat to municipal power and authorities and a direct threat to the ability of democratically elected local officials to represent and act on behalf of their communities. Local governments must retain the power to create local jobs in local communities when they invest local tax dollars.

You don’t need to have worked in the rocket engine room at NASA to figure this stuff out. In fact, many communities in the U.S. have already figured it out. So those who believe that any law we might pass in Canada could stop Americans from doing what they believe to be in the best interest of their families, friends and communities are dreaming in technicolour.

Barry O’Neill is president of the Canadian Union of Public Employees, British Columbia division.