Obama on Buy American: Please stay calm, Canada

September 17, 2009

17 September 2009

Obama on Buy American: Please stay calm, Canada

The following appeared in today's edition of "globeandmail.com".

The Buy American policy that riles up certain Canadians is not really about Barack Obama. It's about congressional politics, U.S. states and municipalities - and, critically, about our provinces.

When Canada negotiated the free-trade agreement with Washington, the provinces demanded exclusion for their own procurement preferences and other protectionist measures. States were also excluded, so the deal applied only to national governments.

Thus, U.S. states will never be interested in yielding their capacity to favour American products and service providers if our provinces don't do likewise for things Canadian. And even then, states might balk.

So what we saw yesterday - an agreement by Mr. Obama to see whether a solution might be found for the Canadian complaints either through some sort of bilateral deal or use of multilateral trade provisions - represented progress of a sort, but of a limited kind.

The President guaranteed nothing, because he could do no else. He paid a compliment to Prime Minister Stephen Harper for being so persistent. But he also put the whole tiff in context: It's a minor matter in the overall trade between the two countries, a point conceded by Mr. Harper. Mr. Obama was too skilled and smooth to say so directly, but he was really asking Canadians to calm down.

Buy American is not only a low priority for Mr. Obama, but it also formed part of his stimulus package that emerged from Congress. He is most certainly not going to use any of his precious political capital on Capitol Hill - capital he needs for big issues such as health care, energy, climate change, financial regulation and immigration - on something as minor for him and as popular for so many legislators as Buy American.

From Canada's perspective, the push against Buy American is good domestic politics and sensible policy, even if the push doesn't succeed (as is likely). But the push reveals a welcome change of attitude by the country's provinces, a change not sufficiently noticed in Canada.

Provinces have been pressing the Harper government to take up Buy American, as Mr. Harper and his ministers have repeatedly done, knowing they're having to discipline themselves against their parochial instincts to favour things local. This discipline is being shown in interprovincial deals on purchasing and procurement between Ontario and Quebec, B.C. and Alberta, and among the Atlantic provinces.

More important from a foreign policy perspective, the provinces have encouraged Ottawa to negotiate a sweeping free-trade agreement with the European Union.

The EU's key objective in these negotiations is to eliminate preferential provincial procurement policies. The EU had to be assured by premiers of the big provinces that they would eliminate these practices in any comprehensive deal. After all, the Europeans had been blindsided before when Canadian negotiators agreed to lower trade barriers, only to see those commitments wrecked by provinces, as in the discriminatory practices of liquor boards.

If the EU negotiations succeed, provinces (read Canada) could hardly offer freedom to bid on provincial contracts to Europeans without offering the same deal to Americans. Opening up now to U.S. companies as part of an exemption from Buy American - supposing one could be negotiated - would be part of liberalization by provinces among themselves, toward Europe and the United States.

Finally, Buy American also illustrates episodic Canadian efforts to seek exemptions from U.S. policies of general applicability that are detrimental to Canada. Sometimes, these Canadian entreaties succeed; sometimes, they fail.

The most recent Canadian effort for special treatment faile


Topic(s): 
Canadian Economy & Politics
Information Source: 
Canadian News Channel
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