2 February 2009

Flaherty fears growing protectionism

The following article is excerpted from the 31 January 2009 edition of “globeandmail.com”.

Canadian Finance Minister Jim Flaherty said Saturday any protectionist moves by the United States or other countries would meet resistance around the world but Canada would not erect trade barriers of its own.

“There is a clear consensus here that protectionism needs to be avoided, that protectionist is a direction we need not go,” Mr. Flaherty said during a conference call after a meeting with other finance ministers in Davos, Switzerland.

When asked what reaction any moves by Washington toward protectionism might provoke globally, Mr. Flaherty said: “They will be met by resistance by the finance ministers. That's been a consistent message here.”…

The U.S. Senate is to begin debate Monday on its version of the stimulus bill, including a measure that expands the House language of “Buy American.”

The Obama administration said Friday it was reviewing its position on “Buy American” after trading partners sounded the alarm that it could shut out foreign-made steel and iron used for projects funded by the stimulus package -- or an even broader range of manufactured goods under the Senate version.

Canada, the top trading partner of the United States, every year exports about $6-billion worth of steel and iron to its southern neighbour.

Canada and other nations fear “Buy American” barriers could trigger a cycle of retaliation that would strangle world trade and undermine efforts to end the global economic crisis….

When asked by the CBC whether Ottawa would react in kind, Mr. Flaherty said: “That's exactly what countries should avoid ... That would start a snowball effect that is very negative for standards of living and quality of life.”

Mr. Flaherty said Canada was completely in favour of open markets, a position that reflected the central role of trade to the national prosperity.

“We are going to respect our obligations under NAFTA, the WTO,” he said….