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  • Tit for Tat, "Buy American" Starts Backfiring

    By now, you are well aware of the infamous “Buy American provisions” inserted into the $787 Billion stimulus package. These were even watered-down and reworded after concerns their language lead to outrage from many of the United States’ key trading partners.  In the end, language was added to alleviate international fears stating the provisions “shall be applied in a manner consistent with United States obligations under international agreements.”

    The purpose of this was to ensure that trading partners like Canada and Mexico were not effected by the provisions because of language in the North American Free Trade Agreement (NAFTA), and signatory nations of the World Trade Organization’s Governmental Procurement Agreement (GPA).

    However, as the slow trickle of stimulus money goes out across America, the Washington Post reported many local municipalities and state governments are either are ignorant of international trade agreements, or just simply ignoring the added language all together.

    The results are having effects across both sides of the Canadian-U.S. border.

    Ordered by Congress to “buy American” when spending money from the $787 billion stimulus package, the town of Peru, Ind., stunned its Canadian supplier by rejecting sewage pumps made outside of Toronto. After a Navy official spotted Canadian pipe fittings in a construction project at Camp Pendleton, Calif., they were hauled out of the ground and replaced with American versions. In recent weeks, other Canadian manufacturers doing business with U.S. state and local governments say they have been besieged with requests to sign affidavits pledging that they will only supply materials made in the USA.

    Outrage spread in Canada, with the Toronto Star last week bemoaning “a plague of protectionist measures in the U.S.” and Canadian companies openly fretting about having to shift jobs to the United States to meet made-in-the-USA requirements. This week, the Canadians fired back. A number of Ontario towns, with a collective population of nearly 500,000, retaliated with measures effectively barring U.S. companies from their municipal contracts — the first shot in a larger campaign that could shut U.S. companies out of billions of dollars worth of Canadian projects.

    One such town is Halton Hills in Ontario, Canada, which last week passed a resolution asking for the U.S. government to repeal the “Buy American” provisions; a movement which appears to be gaining steam in Canada.

    On the surface Halton Region’s recent resolution calling for the U.S. legislature to repeal ‘Buy American’ requirements in a number of already-passed or proposed bills may appear to be a case of David versus Goliath.

    Members of the U.S. congress, which passed the legislation— including the $787-billion stimulus bill endorsed by the U.S. government and signed into law by President Barack Obama in mid-February— likely don’t know where Halton Region is.

    They may, however, soon find out.

    Taking the lead from Halton Hills council, which passed a similar resolution several weeks ago, Region officials last week adopted a resolution that also calls for Canadian municipalities to consider buying goods and materials from companies in countries that don’t impose local trade restrictions against products manufactured in Canada (read U.S.).

    Some may see this as a case of tit for tat. Not so, say Region officials.

    “This is not ‘Buy Canadian,’” said Halton Hills Regional Councillor Clark Somerville of the resolution. “This is (about) fair trade and free trade.”
    Somerville, Halton’s representative on the Federation of Canadian Municipalities, said the issue will be discussed at the executive committee of FCM later this month and will likely be debated at the organization’s annual general meeting in early June.

    That could mean municipal leaders across the country jumping on the Halton bandwagon.

    This is a new modern form of the classic trade war, but instead of raising taxes, nations will require preferential treatment in governmental procurement under various legislation.  Violations that mock the tradition the United States has had being a leader in free trade and open markets for decades.

    Heritage Foundation scholars have long said the “Buy American” provisions were a misplaced and poorly thought out idea which would kill jobs.  Congress would best use its time repealing these provisions instead of throwing new roadblocks to trade up which could have harmful effects to the American and world economies.

    Posted in International [slideshow_deploy]

    11 Responses to Tit for Tat, "Buy American" Starts Backfiring

    1. Steve -- Fort Myers, says:

      The sooner the free trade agreements are rescinded, the sooner Americans will start to revive the near dead American economy. The permanent stimulus resulting from this action will signal the rebirth of the American economy.

      Americans must start producing for their own needs if we are to have a viable nation. The alternative is a slowly decaying economy which can only lead us into a position as a third world country! We need to take our jobs,factories and industries back into the United States TODAY!

    2. Sandy, Indiana says:

      I wonder how our TOTUS will feel when our foreign trade partners start touting, "Buy Un-American"?

    3. Thomas, Anchorage, A says:

      Steve from Fort Myers is exactly bass ackwards. Free trade and globalization are largely what allow this country to afford its high standard of living. They are also what helps developing countries develop, not to mention being a significant reason for countries not to take arms against each other. Countries that have strong economic interests in one-another are not likely to attack each other as it doesn't make cents (I know, har har).

    4. Pingback: » Financial News Update - 05/21/09 NoisyRoom.net: “Extremism in the defense of liberty is no vice. Moderation in the face of tyranny is no virtue.” Barry Goldwater

    5. Barb -mn says:

      Remember when the president said he would penalize the companies that outsource? Why doesn't he lower the unnecessary taxes and mandates doing with man-made global warming (scam)so businesses won't outsource? So the free market will grow? So the economy will strengthen?

      It makes no sense that he allows imports of products he doesn't allow to be manufactured here, due to government fraudulent man-made global warming. And IF you buy that product you'll be charged a carbon tax. So the consumer pays the penalty of a foreign company who's manufacturing is ban in this country due to government fraudulent man-made global warming… sorry, I hope this is understandable?

    6. Greg says:

      yes, let's protect american jobsd, which were being shed to low cost countries at an astounding rate under the Bush administration. don't worry, canada's fractious italian style parliamentary system will have another coalition before long and they will decide what they always decide, nothing or political correctness gone riot.

      american

      first!

    7. Kate Vancouver says:

      The inherent stupidity of protectionism, it would seem, needs to be learned all over again by Americans. This time however, there are many countries with whom Canada will trade to avoid this sort of nonsense being put out by the worlds first community organizer as POTUS. This elephant, this so-called ally, needs to find out the hard way that Obama dissing our PM with his 10 minute chat and a photo op before running to the market to buy cookies for gawds sake, diplomatically speaking, was a non starter. America needs to learn that Canada really does NOT need to be fighting in Afghanistan, does not need to be supporting the US in their fights against "overseas contingency operations"or whatever the hell else those idiots in Washington are calling it now. Canada needs to take note. Obama is in over his head and America is not to be trusted.

    8. Ed Dallas TX says:

      Good thinking Steve. Get rid of our free trade agreements so that we can't export anything. Then our trade deficit will just be the enormous amount of oil we import and we can see the economy really tank. Let me guess, you're a union guy.

    9. Gerald, Vancouver, C says:

      No matter HOW the US government will word it and deny it. Protectionism is what is going on there. If the US continues and pushes Canada away. I don't think other countries dealing with the US as far as trade goes. Will be lining up to shop US. Does Washington not realize its shooting its own foot? Just because we sit on the map north of the US. Does not mean we have to do business with them. (There are other countries around the world). If the US wants to invalidate the trade agreements. Fine. Just stop lying to the rest of the world about what you're NOT doing.

    10. Jim, California says:

      Kate in Vancouver,

      If protectionism is stupid how did the USA ever become the economy we are? We were the world’s most protected economy from 1828 until after World War II when we began this free trade nonsense. Under free trade real wages of Americans peaked in 1973 and are DOWN since. Free trade, not protection, got us to where we are today.

      The current business strategy is shut down product, move it offshore, import and sell to those Americans who still have jobs. That can not last.

    11. Jim, Halton Hills says:

      You want to protect American jobs? Guess what? What do you think will happen when you lose a significant chunk of your largest trading partner? When Canadian municipalities stop purchasing American equipment for wastewater treatment plants and snow removal and construction and everything else? Especially since they're getting their own stimulus packages up here to spend even more than ever on municipalities? Do you think the snow plow companies are selling their product to Florida? I'm sure the U.K. and Germany and Japan and many other countries (as well as Canadian businesses) are eagerly anticipating the chance to sell more in Canada as Canadian municipalities stop buying American.

      Even your U.S. Department of Commerce had warned President Obama that such protectionist measures will hurt American businesses more than it will help them. I'd think they'd be in a position to know. And, according to the US Department of Labor's own statistics, "protectionism" destroys eight jobs in the general economy for every one saved in a protected industry. Still think it's a good idea just because it initially looks good on paper and makes you feel all warm and fuzzy when offered as an election promise? Losing 8 for every one saved, seems like a loss of 7 to me, but maybe I'm just not so good at math.

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