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Canadian officials upset with Republican “Buy American” iron and steel bill

A recent call from Texas lawmakers to “Buy American” iron and steel has upset some northern neighbors worried about the implications such a measure will have on Texas-Canada trade relations.

Construction in downtown Austin's warehouse district on Tuesday, May 2, 2017.

Editor's note: This story has been updated with a statement from Friends of Texas Iron and Steel.

A recent call from Texas lawmakers to “Buy American” iron and steel has upset some northern neighbors worried about the implications such a measure will have on Texas-Canada trade relations.

In a letter dated May 15, three representatives of the Canadian government wrote that they were “deeply concerned” with a bill that recently passed both chambers that would expand a Buy American provision already in effect for the Texas Department of Transportation and the Texas Water Development Board to all state agencies.

The bill now heads back to the Senate, where lawmakers will either accept the lower chamber's changes to it or request a conference committee. 

Senate Bill 1289 by state Sen. Brandon Creighton, R-Conroe, would require large state projects — such as buildings, roads and bridges — to purchase iron and steel from an American supplier if the cost doesn’t exceed 20 percent more than the price of cheaper, foreign imports. The bill also says that if American suppliers aren't prepared to supply a project or if there is a compelling state interest, any country's iron and steel can be used.

Canadian officials are asking members of the Texas Senate to move the bill to a conference committee and tack on an amendment that would exempt Canadian steel.

“Canada, Ontario and Alberta are deeply concerned about this bill, which we believe could undermine the strength of our partnerships with Texas and which risks disrupting the efficient, integrated supply chains that span our border across countless sectors,” the letter, signed by three Canadian officials, reads.

“Should the legislation be enacted as it stands, there will likely be pressure by the Canadian business community on all levels of government to respond,” the letter adds. “This could have a harmful impact on Texas businesses who supply the Canadian market.”

The letter notes that Canada is the top export destination for U.S. steel products, representing roughly $9.7 billion in trade last year. It continued: “If the bill can not be sent to conference, we believe it should not be passed until an amendment excluding Canada can be inserted.”

Both chambers' approval of SB 1289 comes amid President Donald Trump’s “Buy American, Hire American” executive order, which the bill's House author, state Rep. Chris Paddie, R-Marshall, said may help garner momentum for the measure. Last session, a similar measure was filed by state Rep. Yvonne Davis, D-Dallas, but died in a House committee.

In a Tuesday evening statement, Friends of Texas Iron and Steel expressed dismay that "members of a foreign government" were meddling in the Texas Legislature.

"We call on the Legislature to continue to stand with Texas manufacturers and workers and refuse to bend to retaliatory threats from a foreign country by concurring on House Amendments to SB 1289," the statement read.

Opponents of SB 1289 argue that the bill's 20 percent provision could drive up costs for entire projects. Paddie has said, however, that this was not the case. He said his measure includes a “public interest” exception that allows agencies to accept iron and steel products made outside of the country if they believe the price of their project would be significantly increased.

Because of these concerns, both chambers attempted to tack on amendments that would remove “Buy America” language from the Texas Water Code, meaning water infrastructure projects wouldn’t be required to use American-made iron and steel. Addition of the amendment was successful in the Senate, but was stripped off in a House committee.

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