Canada fears US protectionism

21 June 2009

22 June 2009 | Jake Kanter

Buy American provisions could "lengthen and deepen" the recession, according to Perrin Beatty, the Canadian Chamber of Commerce (CCC) chief executive.

Beatty told SM that US "protectionist" measures were tantamount to "going into a forest and playing with matches" and economies around the world would feel acutely the effects of the US barring foreign companies from public procurement.

Buy American policies were introduced in the US in February's American Recovery and Reinvestment Act and cover $280 billion (£172 billion) of state and local government projects. They require states and municipalities to purchase only US produced iron, steel and other manufactured goods for government-funded infrastructure projects.

But Canadian politicians and business groups are worried about negative fall out for firms in the country and fear similar "protectionist" measures are surfacing in other pieces of legislation.

Following a board meeting on 5 June, CCC declared plans to solve Buy American policies "once and for all".

The premiers of Canada's 13 provinces and territories issued a joint statement on 9 June, expressing "deep concern" about these rules and calling for a "renewed era" of collaboration between the two countries.

But US Secretary of State Hillary Clinton said during a visit to Canada on 13 June the Buy American legislation was "not being enforced in any way that is inconsistent with our international trade obligations".

"Canada is our number one trading partner. It is a mutually beneficial relationship that we intend to not only nurture, but see grow," said Clinton.

"I am well aware of the concerns that there may be elements of the international trade obligations or absences of agreements that should be looked at so that we can promote more procurement."

Beatty said it was important Canada and the US established an agreement that guaranteed suppliers "reciprocal access" to public procurement.

"The single biggest loser in a case like this is the taxpayers. The reason you put a prohibition on someone's ability to bid on a contract is that they might win," he said.

"[Barring these bidders] mean taxpayers end up with a product that is inferior, or a higher price."

World Bank president Robert Zoellick also waded into the debate at a conference in Ottawa this month. He said there were signs of economic recovery, but "dangerous risks" such as protectionism could "reverse progress

 

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