26 August 2009

U.S. trade waiver `no silver bullet'

The following is excertped from the 25 August 2009 edition of "The Star".

Asking that Canada be exempt from the "Buy American" provision in the U.S. federal stimulus bill is just the first step to more cross-border business, says International Trade Minister Stockwell Day.

But while observers say a waiver would be a step in the right direction, they question whether it will be enough to stem the tide of protectionism at the state and local levels.

Day sent a letter last Thursday to U.S. Trade Representative Ron Kirk offering "time-limited" guaranteed access to purchases by provincial and territorial governments and major municipalities in exchange for a speedy waiver of "Buy American" provisions.

Day said he and Kirk have agreed to meet soon.

"I'm not sure the extent to which a waiver at the federal level is going to go down, especially when the people at the state and local levels are much closer to the electorate," said Walid Hejazi, an associate professor of international business at the Rotman School of Management in Toronto. "It's not going to hurt, but it's not the silver bullet that is going to make this go away."

Maryscott Greenwood, executive director of the Canadian American Business Council, said any action by Kirk could only go so far.

"It is a step in the right direction... " Greenwood said. "I actually think there is a much broader challenge, which is to have a dialogue about how integrated the North American economy is and how it is actually in the U.S. business interest to be able to source in Canada if they want."...

[Minister Day] noted his proposal is a two-step process that will work beyond the short-term waiver to help combat protectionist tendencies in the future.

"We want something that will deal with the time-limited effect of `Buy America' and their legislation, their specific legislation on the Recovery Act, but I am also asking for a second phase, longer-term approach on procurement so that when ... we get a shift in the economic climate, the commitment against protectionism will remain the same and that is why this is really a two-phased approach that I am proposing," Day said....