Can we spare $12 billion for a good cause? What about $3.6 billion? These figures have been suggested as the potential cost to the federal government to purchase goods and services under a Buy Canadian policy. In this time of economic uncertainty, we are being asked how far we are willing to go to favour local suppliers.

For Canadian decision-makers, the benefits would appear to outweigh the costs. Prime Minister Mark Carney’s government fulfilled a campaign promise in December, when it launched the plan. It aims to favour domestic suppliers to build industry and reduce supply-chain risk.

Ontario, Quebec and New Brunswick already have their own buy local strategies and other countries like the United Kingdom and Australia are thinking about “procurement localism” as well.  

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But the strategy has its fair share of detractors. One critique frames it as “corporate welfare” while another compares it to “the strategy deployed by the Soviet Union.” A study by the Montreal Economic Institute argues that favouring Canadian suppliers could cost taxpayers as much as $12 billion.

That figure incorporates some challenging assumptions. The study uses the estimated cost of small-business preferences in California and applies that range to Canada’s entire public-procurement spending, which is roughly 13.4 per cent of our gross domestic product (GDP).

This does not make sense. A national bid preference is not the same as a small-business bid preference. The latter is far more exclusive than the former, which renders it more costly. Moreover, there is no Buy Canadian........

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