24 September 2009 | Jake Kanter
"Buy American" provisions may hamper economic recovery in Canada and Europe next year.
A report by the Canadian Imperial Bank of Commerce (CIBC) this month said suppliers in Canada would not benefit from growth generated by the US economic stimulus package because they have been barred from contracts.
Buy American rules cover $280 billion (£168 billion) of government infrastructure projects and require US states and municipalities to purchase only US-produced iron, steel and other manufactured goods.
Elsewhere, a spokesman for the European Confederation of Iron and Steel Industries told SM the regulations would hold back economic growth.
He added that although many EU countries were exempt from the provisions under the World Trade Organization's Government Procurement Agreement, it would have a "psychological" impact on US public sector buyers, who will turn to local suppliers.
CIBC chief economist Avery Shenfeld said: "In the case of 2010, with a lot of the growth coming out of that US stimulus, that will be one reason why Canada may underperform."
While the CIBC has upgraded its forecast for Canadian economic growth next year by half a percentage point to 2 per cent, it is lower as a result of the impact of the American policy, the Canadian Press reported.