Shifts in market access agreements could have in impact on government procurement, especially the ability of U.S. firms to compete for Canadian government work.
On the campaign trail, Donald Trump called the 1993 North American Free Trade Agreement, "the single worst trade deal ever approved in this country" and vowed to renegotiate the agreement.
At a scheduled round of NAFTA talks underway in Montreal, government procurement is under discussion. One proposed change would address perceived inequities in U.S. companies' access to Canadian and Mexican government contracts. But a group that represents U.S. tech vendors is concerned that a push ostensibly designed to defend U.S. interests could have unintended consequences.
For instance, an effort to track foreign access to U.S. government markets on a dollar-for-dollar basis with U.S. access to foreign markets could negatively impact U.S. access to Canadian government contracts.
"With the U.S. government procurement market valued at over $500 billion and Mexico's and Canada’s markets together equaling approximately $90 billion, the dollar-for dollar approach would significantly alter the access provided under NAFTA," wrote Eminence Griffin, director of federal procurement and counsel for the Information Technology Alliance for the Public Sector (ITAPS) in a blog post.
"A change in the government procurement chapter has the potential to affect all aspects of IT procurement, including services," Griffin said in an email to FCW.
Gary Hufbauer, senior fellow at the Peterson Institute for International Economics in Washington, D.C., took that concern a step further. He said the "dollar for dollar" approach is a stalking horse for the administration's ultimate NAFTA exit in 2019.
"It would be hard to track" dollars going to contracts in the U.S., Canada and Mexico, said Hufbauer, because of the myriad of ways contracts in each country can be put together and awarded. "It throws uncertainty into the process," which he suggested, might be the aim.
ITAPS is reviewing the best approach to use, but it urged the Trump administration to use procurement mechanisms in previous agreements that sought trading partners to open coverage for comparable entities and markets, Griffin said.
"They have allowed for coverage of comparable entities and markets rather than a dollar-for-dollar approach, which could indiscriminately limit access to all markets, harming consumers, businesses, and the objectives of the parties involved,” she said.
Hufbauer agreed that historically, the comparable entities and markets approach has been fairly sound.
Ultimately, he said, the administration is “interested in ‘Buy American’ at the federal level and not necessarily in modernizing” NAFTA.
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