Vol. 149, No. 3 — February 11, 2015

Registration

SOR/2015-12 January 20, 2015

FOREIGN EXTRATERRITORIAL MEASURES ACT

Certain Foreign Extraterritorial Measures (United States) Order, 2014

Whereas the United States has adopted section 313 of title 23 of the United States Code and section 410 of part 635 of title 23 of the United States Code of Federal Regulations;

And whereas, in the opinion of the Attorney General of Canada, those provisions contain measures that are likely to adversely affect significant Canadian interests in relation to international trade or commerce involving business carried on in whole or in part in Canada;

Therefore, the Attorney General of Canada, with the concurrence of the Minister of Foreign Affairs, pursuant to paragraph 5(1)(b) (see footnote a) of the Foreign Extraterritorial Measures Act (see footnote b), makes the annexed Certain Foreign Extraterritorial Measures (United States) Order, 2014.

Ottawa, January 19, 2015

PETER MACKAY
Attorney General of Canada

Concurred

JOHN BAIRD
Minister of Foreign Affairs

CERTAIN FOREIGN EXTRATERRITORIAL MEASURES (UNITED STATES) ORDER, 2014

“Buy America” provisions

1. It is prohibited for any person in Canada, in respect of alterations or improvements to be made to premises leased by the State of Alaska from the Prince Rupert Port Authority, to comply with section 313 of title 23 of the United States Code or section 410 of part 635 of title 23 of the United States Code of Federal Regulations, or with any directive, instruction, intimation of policy or other communication supporting their application from a person who is in a position to direct or influence the policies of the person in Canada, including those contained in any tender documents issued in respect of those alterations or improvements.

Clarification

2. A person who complies with a provision, directive, instruction, intimation of policy or other communication referred to in section 1 before the day on which this Order comes into force contravenes this Order only if they take some further action on or after the day on which this Order comes into force that constitutes compliance with such a provision, directive, instruction, intimation of policy or communication.

Application before publication

3. For the purpose of paragraph 11(2)(a) of the Statutory Instruments Act, this Order applies before it is published in the Canada Gazette.

Coming into force

4. This Order comes into force on the day on which it is registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order.)

Issues

The State of Alaska intends to apply “Buy America” restrictions with respect to the redevelopment of a ferry terminal facility on federal Crown land in British Columbia leased by the State of Alaska from the Prince Rupert Port Authority.

Background

The Alaska Department of Transportation and Public Facilities (DOT&PF) operates the Alaska Marine Highway System, a ferry system connecting remote communities in Alaska to British Columbia and the State of Washington.

In British Columbia, the Alaska Marine Highway System operates out of a ferry terminal facility on premises leased by the State of Alaska from the Prince Rupert Port Authority. The Prince Rupert Port Authority is a port authority continued under the Canada Marine Act, and letters patent issued under the Act, to operate the port in the Prince Rupert Harbour.

The Alaska Highway Marine System has exclusive use of the Prince Rupert ferry terminal facilities. The ferry terminal facility is the only Canadian port of call for the Alaska Highway Marine System, providing a crucial link for both Alaska residents and commercial haulers to the North American highway and rail system.

The Alaska DOT&PF is soliciting bids for the removal and replacement of the Prince Rupert ferry terminal facility. The project is funded by the United States Government through the Federal Highway Administration and the State of Alaska. According to the tender documentation, all iron and steel products associated with this project are subject to “Buy America” requirements provided for in section 313 of chapter 3 of title 23 of the United States Code and section 410 of part 635 of title 23 of the United States Code of Federal Regulations. This means that all iron and steel products incorporated into this project must be manufactured in the United States. “Manufactured in the United States” means that all manufacturing processes from smelting to any subsequent process that alters the material’s physical form, shape or chemical composition must be undertaken in the United States.

As a result of the “Buy America” restrictions, suppliers of Canadian iron and steel products and related services are not permitted to participate, either as a primary contractor or a subcontractor, in the redevelopment of the Prince Rupert ferry terminal facility.

The imposition of such restrictions by the State of Alaska on the redevelopment of the ferry terminal facility has or will likely have a significant adverse effect on Canadian interests in relation to international trade or commerce involving business carried on in whole or in part in Canada.

Objectives

This Order is intended to mitigate adverse effects on Canadian interests in the bidding process for the redevelopment of the ferry terminal facility and give a fair access to all suppliers of Canadian products and services to this project in view of the significant impact on the Canadian economy in the area.

Description

The Foreign Extraterritorial Measures Act (FEMA), section 5, permits the Attorney General of Canada, with the concurrence of the Minister of Foreign Affairs, to issue an order to block the application in Canada of foreign measures that have had or will likely have an adverse effect on significant Canadian interests in relation to international trade or commerce involving business carried on in whole or in part in Canada, or that have otherwise infringed or are likely to infringe Canadian sovereignty.

As a result of the above considerations, the Attorney General of Canada is of the opinion that the application of “Buy America” measures to the redevelopment of the Prince Rupert ferry terminal facility will likely have an adverse effect on significant Canadian interests in relation to international trade or commerce involving business carried on in whole or in part in Canada. The Minister of Foreign Affairs concurs with the making of an order to address these concerns.

The Order prohibits any person in Canada from complying with “Buy America” measures found in legislation or emanating from a person of influence with respect to any alterations or improvements to premises leased by the State of Alaska from the Prince Rupert Port Authority, starting on the day the Order comes into force. The effect of the Order, amongst other things, is to prohibit any person in Canada from complying with any certification or declaration requirements that state that the successful bidder will comply or has complied with applicable “Buy America” measures, such as those found in the applicable tender documents (e.g. Material Origin Certificate). The Order would also prohibit any person in Canada from complying with any audit procedure seeking to verify compliance with applicable “Buy America” measures.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this Order, as there are no administrative costs to business.

Small business lens

The small business lens does not apply to the Order, as there are no costs to small business. As the Order prohibits compliance with requirements that discriminate against suppliers of Canadian iron and steel and related services, Canadian small business may, in fact, benefit from the application of this Order.

Consultation

Consultations with the Government of the State of Alaska and the Government of the United States with respect to the imposition of “Buy America” measures in Canada have taken place at the diplomatic level, through the Department of Foreign Affairs, Trade and Development.

Rationale

The imposition of a “Buy America” requirement denies suppliers of Canadian iron and steel products and related services an opportunity to compete for a project that is taking place on Canadian territory. This restriction is likely to have an adverse effect on Canadian iron and steel producers and fabricators in the region and may disrupt long-term business relationships between these companies and the construction contractors who are their customers. Furthermore, as a matter of Canadian public policy, the extraterritorial application of discriminatory measures on trade and commerce within Canada by a foreign government is unreasonable. The Order does not prohibit the use of steel or iron made in the United States. Rather, it prohibits the compliance with the “Buy America” restrictions that discriminate against using steel or iron from Canada for this project.

Implementation, enforcement and service standards

Possible violations of the Order would be investigated by the Royal Canadian Mounted Police. Under subsection 7(3) of the FEMA, no proceedings with respect to an offence under the FEMA may be instituted without the consent of the Attorney General of Canada. It is an offence under subsection 7(1) of the FEMA for any person in Canada to contravene a ministerial order made under section 5 of the FEMA that has been served on the person.

Such a contravention is guilty of an offence and liable to

Also, under subsection 7(2) of the FEMA, a contravention of an order made under paragraph 5(1)(b) that would be punishable as an offence under subsection 7(1) if committed in Canada is, if committed outside Canada, an offence under the FEMA and proceedings in respect of such offence may be instituted, tried and determined at any place in Canada.

Contacts

Gregory Newman
Senior Counsel
Department of Justice — Legal Services Unit (Department of Foreign Affairs, Trade and Development)
Telephone: 343-203-3933

Kevin Thompson
Director
Government Procurement, Trade and Environment Division
Foreign Affairs, Trade and Development Canada
Telephone: 343-203-4349