Buy American: Trouble for Canada, World Trade

Buy American: Trouble for Canada, World Trade

By: Laura Steiner

An initiative that would see exclusive use of American made iron and steel, and pre-manufactured goods for infrastructure projects means trouble for Canada.

The clause dubbed `Buy American' calls for all infrastructure projects funded from the stimulus package to be built using American steel and iron- a move, which, causes significant trouble for Canadian industry and world trade.

Opposition to the idea:

The World Economic Forum in Davos Switzerland put up a united front against the proposed policy. Officials are concerned that the clause may start a trade war that could worsen the economic downturn. “Trade protectionism serves no purpose as it will only worsen and prolong the crisis,” remarked Chinese Premier Wen Jiabo. China is the world's second largest exporter.

The proposal has also sparked vocal criticism from Canada the USA's largest trading partner. “Protectionism ends up hurting economies,” International Trade Minister Stockwell Day commented last week. $1.7 billion in pre-manufactured goods cross the border on a daily basis, and as of 2007 $5.8 billion in iron and steel were exported to the USA.

While attending the forum Day spoke to an American representative and emphasized the level of concern the initiative caused with Canadian steel producers and manufacturers. The response gave him hope for a possible exemption for Canada if the policy is implemented.

America's defense:

Officials view this merely as a way of stimulating the economy. On the weekend Vice President Joe Biden defended the proposal saying he didn't see anything wrong with it because it stimulated the economy.

Steelworker Union leader Leon Gerard also defends it, saying the Canadian government should do more to protect the domestic industry. Both Stelco and Dofasco have been sold to foreign interests. He adds: “Canada's not the problem now. It's China, it's the Asian countries, it's the Russians who are dumping their stuff in America, they're dumping it in Canada.” He also insisted on the need to make sure taxpayer dollars were going to help create jobs.

Discussion of the plan is expected to be on the agenda for the mid-February meeting between President Obama and Prime Minister Stephen Harper.