A column in the February 19 2009 issue of the Financial Post summed up Canada's first response to the "Buy American" provisions of the $800-billion dollar stimulus package: What The #!%*?
In March and April, "Buy American" spread through American municipalities and labor unions, hurting businesses in both the US and Canada, while the US Congress moved on to antagonizing Mexico with violations of NAFTA that authorized counter-veiling tariffs.
On June 6 2009, Canadian mayors launched a retaliatory salvo: "Don't Buy American" policies go into effect in 120 119 days.
Let's not let this bickering get entirely too far out of control, eh?
A column in the February 19 2009 issue of the Financial Post summed up Canada's first response to the "Buy American" provisions of the $800-billion dollar stimulus package: What The #!%*? At the time, it looked like (after objections from trading partners) the provisions had been sufficiently relaxed by the US Congress that Canadian Trade Minister Stockwell Day called the amendment legislation "a great step forward." (Toronto Star, February 09 2009)
By March, over 100 American municipalities passed a "Buy American" resolution (Market Watch, Mar 17 2009) drafted by the United Steelworkers (PDF) and championed by other unions (AFL-CIO blog, May 26 2009). By April, over 360 municipalities had passed such resolutions (Examiner.com, April 25 2009). American companies expressed concerns about their ability to source materials from partners and subsidiaries and Canadian businesses began reporting discriminatory behavior from American municipalities and customers. When the US Congress reneged on the NAFTA-era treaty obligation to open the southern border to Mexican trucks, many Canadians decided that the Obama Administration could not be trusted to honor American trade commitments (Toronto Star, March 27 2009).
On Saturday, Canada's mayors launched a retaliatory salvo: "Don't Buy American" policies go into effect in 120 119 days.
Delegates at the Federation of Canadian Municipalities (FCM) convention in Whistler voted 189-175 Saturday in favour of a resolution that would see cities block U.S. bidders from city contracts... The resolution gives 120 days of breathing room for the [Canadian] federal government to press the administration of U.S. President Barack Obama to change the [Buy American] policy. (Surrey Leader, June 08 2009)
The resolution says the federation should support cities that adopt policies that allow them to buy only from companies whose home countries do not impose trade restrictions against Canadian goods. (CBC, June 8 2009)
After Canadian companies were barred from bidding for American business, news reports say that some 12 Canadian cities passed ordinances against buying American. (New York Times, June 3 2009)
The Canadian Manufacturers and Exporters Association estimated that as many as 250 Canadian companies have lost out on contracts because of "Buy American" rules. "What we are seeing so far may just be the tip of the iceberg," according to Jayson Myers, president of CMEA.(American Metal Market, Jun 8 2009)
"We need to remind the Americans that we've got a multibillion-dollar municipal and provincial procurement market in this country," [Canadian Liberal Party Leader Michael] Ignatieff told the [FCM] municipal delegates. "Americans have unfettered access to it right now, but if they shut down their markets, there will be consequences." (Calgary Herald, June 7 2009)
The resolution by Canadian municipal governments has forced the Canadian federal government to take action: Trade Minister Stockwell Day has called in "called in its trade commissioners from across the United States to lobby congressmen and Senators personally on Capital Hill... [as] part of the ongoing campaign by the government to get the U.S. government to drop Buy America provisions". Meanwhile, Finance Minister Jim Flaherty is making the rounds north of the 49th: "Protectionism is bad for Canada and bad for the United States. It's bad for cities, it's bad for provinces, it's bad for American states."The Canadian Press, June 8 2009)
The "analysis" you won't find anywhere else:
I'm sure you all remember the uproar during the US Election when both Clinton and Obama went to Ohio and said they favored re-opening NAFTA to include labor and environmental protections. Maybe you also remember something about Canadian diplomatic documents being leaked (and possibly misrepresented). You might even remember Canadian Prime Minister Harper making not-so-veiled threats about ending America's privileged access to Canadian oil and energy markets if the US dared to re-open NAFTA.
Well, here is your chance to include environmental and labor regulations into NAFTA: this "Buy American" movement has caused PM Harper enough trouble that he's making noise about re-opening NAFTA.
But I warn you: it's not going to be pretty. Eastern manufacturing provinces (i.e. Ontario) want the US to honor NAFTA's national treatment provisions and Western provinces want an end to the Softwood Lumber idiocy. Mexico is (at a minimum) going to demand that the US immediately open its southern borders to trucking (and it probably has some immigration reforms to request too). Both nations are going to demand enforceable leverage in case the US decides to continue ignoring its treaty obligations.
Now, some are inevitably going to argue that the US shouldn't negotiate with Mexico and Canada, that the borders should be shut and we don't need them anyway. I'd like to preempt that bad noise with a reminder that almost 30% of the US' petroleum imports come from NAFTA countries (never mind the 33 billion kilowatt hours/year in electricity imports). Let's not let this bickering get entirely too far out of control, eh? It would kind suck if they turned off the lights.
UPDATE 26 FEB 2010 Canadian Foreign Affairs Minister Lawrence Cannon announced announced a deal that would have Canada provide US firms access to construction contracts tendered by provinces, territories and municipalities in exchange for Canadian access to programs funded by the American Recovery and Reinvestment Act of 2009. This agreement essentially exempts both country's firms from Buy American/Buy Canadian legislation. cite: Buy American exemption for Canada confirmed, Vancouver Sun, 5 FEB 2010.