Be Canadian, Buy Canadian

Canada’s ambassador to the United States has openly warned American lawmakers their nation’s moral authority on global trade issues is being put at risk. Michael Wilson stepped up diplomatic pressure on U.S. senators yesterday to restrict “Buy American” policies, warning they could start the kind of worldwide trade retaliation that led to the Great Depression.

Wilson said the measure could create a “global economic calamity.”

“If Buy America becomes part of the stimulus legislation, the United States will lose the moral authority to pressure others not to introduce protectionist policies,” Wilson said in the letter to Senator Harry Reid, the Democratic majority leader, and Senator Mitch McConnell, the Republican leader.

“A rush of protectionist actions could create a downward spiral like the world experienced in the 1930s.”

Wilson’s letter came in light of the U.S. Senate’s move today to debate on the massive economic stimulus package that President Barack Obama is aiming to complete before the end of February.

The Harper Conservative government is under pressure in the House of Commons to intensify their attempts to persuade the United States to exempt Canada from the measures.

“We will be having these discussions with our friends in the United States, and we expect the United States to respect its international obligations.” said the prime minister

Harper commented on the issue after he confirmed the U.S. president will visit Canada on Feb. 19. The prime minister is now bound to raise the Buy American provision during their first meeting.

Until now, Canadian officials in Washington have been talking off the record to officials in the U.S. administration about the matter. Mr. Wilson’s letter comes as Canada’s first formal complaint and jas now become a public record, unlike behind-the-scenes talks at lower levels.

International Trade Minister Stockwell Day said that the Harper government is in daily contact with American officials on the issue.

“We are warning them of the dangers of protectionist movements. They say that they are concerned about this,” Day said.

Canada and the U.S. form the world’s largest bilateral trading relationship with about CAD$1.5 billion in goods crossing the border every day between inter company transfers.

I can see it is this high level of integration in the economy that would make protectionist measures by either country difficult and would constitute the basis for seeking a Canadian exemption.

For the most part the controversial provision, part of the $819-billion US financial stimulus package before Congress requires all public works projects funded by the stimulus package to use only U.S.-made iron and steel. The Democratic-controlled U.S. House of Representatives approved the package in a vote last week and the Senate began debating it on Monday.

The Canadian government is very concerned the Buy American clause “takes it further than just steel and just iron products, but it could go across the board to many other products,” said Stockwell Day. He was addressing the House of Commons during question period.

Liberal Leader Michael Ignatieff accused the governing Conservatives of lingering on too long to intervene, and acted only after the legislation passed the House of Representatives which became a late move.

Day took a defensive stance and said ” Canada cannot get involved in drafting U.S. legislation.” The letter is a rebuttal to the Buy American policy provision.