Andrew Mayeda and Sheldon Alberts, Canwest News Service Published: Thursday, January 29, 2009
Source: U.S. stimulus plan's 'protectionist' clause concerns Harper
Prime Minister Stephen Harper expressed serious concern Thursday over a provision of the U.S. stimulus bill that would require infrastructure projects to use American steel, putting Canada on the edge of its first trade dispute with the United States since Barack Obama was inaugurated.
The "Buy American" clause would ban the use of most foreign iron and steel from infrastructure projects funded under the US$819-billion stimulus bill, which passed the U.S. House of Representatives on Wednesday.
Thursday, Mr. Harper added Canada's name to the growing list of U.S. trade partners, from the European Union to Australia, who are seeking to overturn the provision.
"This is obviously a serious matter and a serious concern to us," Mr. Harper told the House of Commons, adding that he had spoken about the matter with Canada's ambassador to the U.S., Michael Wilson.
"I know that countries around the world are expressing grave concern about some of these measures, that go against not just the obligations of the United States, but frankly, the spirit of our G20 discussions," the prime minister added.
"We will be having these discussions with our friends in the United States, and we expect the United States to respect its international obligations."
Mr. Harper's comments came a day after he confirmed that the U.S. president will visit Canada on Feb. 19. The Prime Minister is now expected to raise the Buy American provision during their first meeting.
But given the rush in Washington to pass the stimulus bill -- House Speaker Nancy Pelosi has said she would like Congress to pass the bill early next month -- Canadian diplomats have already begun a concerted lobbying effort to convince U.S. politicians to change their minds.
Trade Minister Stockwell Day, on his way to Davos, Switzerland, today for the World Economic Forum, said he would raise the matter with senior U.S. trade officials, as well as Pascal Lamy, head of the World Trade Organization.
Mr. Day said the clause appeared to violate the free-trade principles of the WTO, of which the United States is a member, as well as the North American Free Trade Agreement. But he said it is too early to say if Canada will launch any formal complaint.
"We respect every country's autonomy when it comes to passing legislation," Mr. Day said in an interview. "At this time we're using all the diplomatic channels that are available."
Mr. Obama's successful campaign for president included repeated vows to reopen the North American Free Trade Agreement and make changes that would protect American jobs.
The steel provision is reminiscent of the Buy American Act passed by Congress amid the depths of the Great Depression. Passed in 1933, it required the U.S. government to favour made-in-America products when making purchases.
Mr. Day warned the U.S. against falling back on trade barriers as a means of protecting itself against the recession.
"History shows clearly that you can't fall back into protectionist measures. That happened in the 1930s and what could have been a bad one or two-year recession turned into, as we know, the Great Depression."
The stimulus package has also triggered a wave of anxiety among Canadian and U.S. companies that do extensive cross-border business.
"We've very concerned," said Scotty Greenwood, executive director of the Canadian-American Business Council, which lobbies on behalf of companies with interests in both countries.
The economic stimulus bill passed by the House of Representatives is "not well thought out" because it does not recognize how integrated the Canadian and U.S. economies have become.
"It's a big mistake with Canada because it doesn't fundamentally recognize the way we do business," Mr. Greenwood said.
The provisions banning foreign steel and iron from being used in any infrastructure project could deal a serious blow to the $13 billion Canadian steel industry, which exports about 40% of its product to the U.S.
But of potentially more concern is the Senate version of the bill --which is still being debated and currently includes language to require only American-made equipment and goods be used on projects created by the stimulus.
"U.S. policy-makers need to be better educated," said Mr. Greenwood, whose group is now focusing its efforts on getting the Senate to amend its legislation. "For the purposes of the domestic market in the U.S., it's useful for Canada to be considered domestic."
The Senate is expected to vote next week on its version of the stimulus bill. At that point, the Senate and House would meet in "conference" negotiations to reconcile the two pieces of legislation, which could be Canada's last chance to have the bill altered.
Mr. Obama technically has the authority to veto the bill, but is under intense pressure to get his recovery package through Congress as soon as possible.
Canwest News Service