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Canada and U.S. battle over steel for Alaska ferry terminal

  • Author: Pat Forgey
  • Updated: July 8, 2016
  • Published December 17, 2014

JUNEAU -- A new $10 million-plus Alaska Marine Highway System ferry dock planned in Prince Rupert, British Columbia, is the subject of dueling protectionist policies in the U.S. and Canada.

Because it will be funded in part through the Federal Highway Administration, the project is subject to restrictions -- known as "Buy America" provisions -- requiring such projects to use American steel.

British Columbia Premier Christy Clark has blasted that provision as "unacceptable" when it is enforced on Canadian soil.

But some top Canadian politicians are criticizing those "Buy America" provisions, and saying the contractor chosen by the Alaska Department of Transportation and Public Facilities should be required to use Canadian steel to build the dock instead.

"The application of these protectionist trade restrictions on projects on Canadian soil by a foreign government is unreasonable," a spokesman for Canada's Trade Minister Ed Fast told The Globe and Mail, Canada's largest newspaper.

Alaska Gov. Bill Walker has rebuffed calls to join the Canadians in calling for a waiver.

"Bearing in mind that this project is being fully funded with US and State of Alaska dollars, and and that there is an adequate supply of the necessary iron and steel products manufactured in the United States, I do not feel it is appropriate to submit a "Buy America" waiver request at this time for this project," Walker wrote in a letter to Canadian Ambassador Gary Doer, who has also requested Alaska seek a waiver.

But Alaska this week delayed the big closing, scheduled for Thursday, until Dec. 6, in an effort to allow more time for negotiations, said Jeremy Woodrow, spokesman for the Alaska Department of Transportation and Public Facilities.

Canadian officials and groups representing Canadian manufacturers are recommending an increasingly tough response and invoking a rarely used law to fight back against Buy America.

What's at stake isn't just the Prince Rupert ferry terminal, but a larger trade battle between powerful competing forces in Ottawa and Washington, D.C.

In Juneau and Prince Rupert, local officials are trying to defuse tensions, Woodrow said.

"Our goal is to get this project moving forward, the conversation with Federal Highways is more about what is possible and what can be done to make this happen," he said.

Federal Highway Administration spokesman Doug Hecox said that waivers from the Buy America Act are not common, but are possible.

"There is a waiver process available," he said.

The circumstances of getting a waiver will likely depend on the specifics of the Alaska project and what's sought, Hecox said.

The Prince Rupert dock that DOT wants to rebuild is more than 50 years old. It was the southern terminus of the Alaska Marine Highway System before state ferries begin running south to ports on Washington's Puget Sound.

While traffic to Prince Rupert has declined in recent years, it's still popular with travelers and shippers trying to shave time or cost on trips to and from Alaska, or for making connections to the U.S. Midwest by rail or via the Yellowhead Highway.

But the aging dock has faced problems that have at times forced Alaska ferries to use an adjoining BC Ferries terminal until emergency repairs could be made on its dock. That led Alaska officials to appropriate $11 million for a replacement facility and sign a 50-year lease with the Prince Rupert Port Authority for a new dock. Local officials say travelers passing through town to catch Alaska ferries are also an important part of the economy.

The law Canada is now considering invoking is called the Foreign Extraterritorial Measures Act. It prohibits suppliers from bowing to foreign laws on Canadian soil, reported the Globe and Mail, citing industry sources. That law has only been used once, in 1992, to stop impositions of sanctions against Cuba in Canada, it said.

But the Buy America Act is popular with U.S. politicians, who can promise more local jobs with little economic downside.

Prince Rupert Port Authority General Counsel and Vice President for Commercial and Regulatory Affairs Andrew Mayer declined comment Tuesday, referring questions to a spokesman who did not return phone calls.

The Alaska DOT's Woodrow said the signing of a 50-year lease shows the value of the relationship to both parties, and they are working to see that the clash over "Buy America" provisions doesn't damage relations

"We obviously don't want to build a project that is not well received by Canadian residents or the Canadian government," he said.

Alaska officials say that both U.S. and Canadian contractors are eligible to bid on the job, and the project was advertised in Canada as well as the U.S. The Buy America requirements were included in those bid notices because Canadian contractors may not have been familiar with the U.S. policy, Woodrow said.

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