Will Mark Carney's 'Buy Canadian' plan run afoul of other trade deals?

Part of that vision involved the staid domain of public procurement, where — as veteran trade lawyer Lawrence Herman recently explained to the Star — trade deals brought the global marketplace to government purchasers. “Non-discrimination” clauses in such agreements, including many of Canada’s, were meant to give fair access to government contracts to businesses from other countries. 

It was one slice of what is often called the “rules-based international order.” But, at least in Herman’s view, it no longer exists. And the federal government, he suggested, may be ready to accept that with its promised “Buy Canadian” procurement plan. 

“The world has changed. We’re in an era where national programs are being implemented to favour local producers, domestic industries, at the expense of globalization,” Herman said, arguing it is seen in the protectionism of the United States and China’s long-standing central planning policies to favour its own industries.

“Canada is only doing what many, many other countries have already done,” Herman said.

Prime Minister Mark Carney announced the new “Buy Canadian” plan at a Mississauga aerospace plant earlier this month, billing it as a key part of his Liberal government’s plan to bolster Canadian businesses rocked by trade wars and the upheaval of U.S. President Donald Trump’s tariffs on almost every country in the world.

But to Herman and other experts, the extent to which the federal government can entrench “Buy Canadian” requirements into the roughly $37 billion in procurement contracts it pursues every year remains unclear. Carney and senior figures in his government have spoken about deepening trading relationships with like-minded partners, with Industry Minister Mélanie Joly stating last week that “the world is being redistributed in economic blocs right now, and that is why, for countries that believe in free trade, there is a space we can work with others.”

There are also already obligations in trade deals that, at least theoretically, clash with the idea of favouring Canadian suppliers over those from even trade-friendly countries, said Noah Fry, a post-doctoral fellow at Dalhousie University who has written about rising “procurement localism” around the world. 

“There is very clearly a tension,” said Fry. “The whole point of including public procurement in trade is to limit discriminatory practices. Buy Canadian is by definition discriminatory.” 

How the government resolves any such tensions remains to be seen, Fry said. He pointed to thresholds in certain trade deals, like Canada’s 2014 agreement with South Korea, which says any government procurement contracts worth more than $100,000 can’t be discriminatory in favour of domestic suppliers. There’s also a new “reciprocal policy” the government is working on, which the Carney government also supports. Fry said the intent of the policy is to “liberalize” procurement so that Canada opens bids on government contracts to countries that allow the same openness to Canadian companies in their own procurement plans. 

“The actual value of the Buy Canadian plan may be severely reduced because they have to work around these trade agreements,” said Fry. 

The Star requested interviews this week for Public Procurement Minister Joël Lightbound, International Trade Minister Maninder Sidhu and Stephen Fuhr, secretary of state for defence procurement. None were available, their offices said. 

Emailed statements from government spokespeople, however, said the Carney government is intent on reacting to what the prime minister routinely dubs a “rupture” in the global order — Trump’s tariff policy — that requires bold changes from Ottawa to preserve and promote Canadian prosperity. 

“Federal spending should create jobs here at home, grow Canadian businesses and build stronger communities. That’s why we’re putting Canadian suppliers first,” said Lightbound’s spokesperson, Laurent de Casanove. 

“In a changing global economy, Canadians expect their government to back them.” 

Samantha Lafleur, a spokesperson for Global Affairs Canada — the department that oversees Sidhu’s international trade portfolio — referred to “one of the largest transformations in decades” in global trade and “unprecedented risks to Canada’s prosperity.” The Buy Canadian policy is meant to address this by maximizing domestic benefits of government procurement dollars, she said, including by requiring companies that contract with Ottawa to source materials from Canadian companies, a pledge that Carney first made in Mississauga. 

The plan Carney outlined would prioritized Canadian suppliers and products in “all federal spending,” starting with “key materials” like steel and lumber for defence and construction procurement “above a certain threshold,” according to a government backgrounder explaining its vision. Lightbound’s spokesperson did not say what that threshold will be. The policy also says that, when non-domestic suppliers must be used for “strategic” purchases, the government will create new Canadian-content requirements. 

For Mary Ng, a former Liberal MP who was Canada’s international trade minister from 2019 until last March, the Carney Liberals are certainly not acting alone in looking for ways to bolster the domestic economy. As Fry noted, Australia, the United Kingdom and the European Union are working on localized procurement plans, and Ng participated in World Trade Organization talks last year where industrial strategies were discussed. 

In a world upended by Trump’s trade turmoil, Ng said Canada could play a role in finding a new path where countries can use policies to preserve and promote domestic industries while maintaining rules-based trading relations in an improved system. 

“It’s reform by doing, which I think is what you’re seeing here,” she said.