Complaints about Buy-American provisions contained in the economic-stimulus measure are growing louder in the U.S. and Canada. The U.S. Chamber of Commerce and the Canadian Manufacturers and Exporters say that the problem is focused on the estimated $280 billion in American Recovery and Reinvestment Act funds that are being administered by states and localities, including aid for drinking water and wastewater treatment facilities and other infrastructure sectors.

"It is really apparent to us that Buy-American requirements are having a major impact on projects administered by state and local government," says Myron Brilliant, the Chamber's senior vice president responsible for international issues. He says that if the provisions aren't applied consistently, "We could have declining trade and we could lose a lot of jobs here in the United States."

The U.S. and Canadian business groups contend that some localities are interpreting the ARRA statute in ways that exclude Canadian companies. The U.S. Chamber warns that if the situation continues, it could result in retaliatory restrictions by Canada towards U.S. products, and could spread to other countries.

Officials from the chamber told reporters June 11 that they want the Office of Management and Budget to issue new clarifying guidance advising states and localities to interpret the ARRA less restrictively than they are doing now. "We're asking for the OMB to fix this problem," says Brilliant.

Jay Myers, president of Canadian Manufacturers and Exporters, says his country is concerned about the Buy-American provisions' impact on Canadian companies in industries such as water and wastewater, structural steel and alternative energy technologies. "We're losing jobs on both sides of the border as a result of these restrictions," Myers says.

The economic-stimulus measure, signed into law on Feb. 17, requires that for all ARRA-funded construction projects, "all of the iron, steel and manufactured goods" must be "produced in the United States."

ARRA does have some exceptions to that mandate. The broadest exception allows the heads of federal agencies to waive the Buy-American requirement if they determine that using U.S-made products "would be inconsistent with the public interest." Other exceptions could be granted if the U.S. products are found to be not available, have "unsatisfactory quality" or would boost a project's total cost by more than 25%. In addition, ARRA says the Buy-American language must "be applied in a manner consistent with United States obligations under international agreements."

The Environmental Protection Agency has issued two waivers--one dealing with projects whose debt financing was in place before ARRA was enacted, and another, published June 2, waiving the Buy-American requirement for components that equal less than 5% of a project's total cost. Chris Braddock, the chamber's senior director for procurement policy, says EPA's waivers represent "a step in the right direction, but it's far from a full solution."

Chamber vice president Brilliant says his organization doesn't find fault with how federal agencies have been applying the Buy-American provision for the funding those agencies control and use to issue contracts directly. The beef is over the money that passes through federal agencies to states, cities and counties, which in turn issue contracts.

The Canadian Council of the Federation, which is composed of the leaders of Canada's provinces and territories, issued a statement June 9 calling for "negotiation of a broad, reciprocal procurement liberalization agreement," among federal, provincial, territorial and state governments "to secure mutually beneficial market access and to exclude Canada from the negative effects of measures such as Buy-American provisions."

The Federation of Canadian Municipalities on June 6 said it supports a resolution that it would back local governments in their country that ensure their infrastructure projects use materials only from companies in countries don't impose trade sanctions against Canadian-made products. But the federation held back from fully endorsing retaliatory procurement actions for 120 days, to let Canada and the U.S. work on a solution. "The clock is ticking," says Myers.