Canada Opposes ‘Buy American’ Provisions in U.S. Stimulus Package

The ‘Buy American’ clause in President Obama’s American Jobs Act is like déjà vu for Canadian politicians and industries. The 2009 U.S. stimulus package contained a similar clause and the Canadian government fought for an exemption to it and won. Canada and the United States are, after all, part of the North American Free Trade Agreement (NAFTA), which guarantees equal access to government procurement contracts of a certain size. However, the stimulus package now proposed by Obama contains a clause that says projects will be denied funding unless “all of the iron, steel and manufactured goods used in the project are produced in the United States.”

According to the CBC, Canada’s Minister of International Trade, Ed Fast, is seeking an exemption from the ‘Buy American’ provisions to ensure that Canadian companies have equal access to projects stemming from stimulus funding. “We believe that protectionism is counterproductive, especially during these difficult economic times around the world,” Fast told the CBC.  Around 75% of Canada’s trade is with the United States and blocking Canada from more than $100 billion worth of projects that involve renovating schools, constructing roads and bridges, and improving transit, is likely to hurt Canadian industries and reduce the return on investment of the stimulus package. If the United States is only looking for a taxpayer subsidized temporary jobs boost, then protectionist measures may provide that. However, as Fast told the CBC, “history shows protectionist measures stall growth and kill jobs.”

Ultimately, as a result of NAFTA, the Canadian and American economies are strongly linked. If Canada is not given an exemption, it is not only Canadian companies that will suffer, but also American companies that may need to completely re-tool their supply chains because they use some Canadian inputs. Jason Myers, president of the Canadian Manufacturers and Exporters, told the CBC that U.S. business owners will likely find the deal “tremendously confusing.” Even if Canada is able to obtain an exemption under NAFTA, as it has in the past, there is concern that U.S. businesses and local government procurement staff will only see the “Buy American” box that they need to tick off and will not read the fine print that indicates that it doesn’t apply to Canada.

At the same time as seeking an exemption to the ‘Buy American’ clause, the Canadian government is continuing to focus on trade agreements with other countries, such as the European Union. The World Trade Organization (WTO) is also working on possible revisions to trade rules involving government procurement.  An editorial in the Globe and Mail concluded that “the Canadian government should indeed work hard to turn this problem into an opportunity for comprehensive agreements on governmental purchasing, with Europe, the U.S. and all WTO members.”

Ultimately, there is a difference between a positive ‘Make it in America’ agenda that seeks to provide conditions for success for American industries and a protectionist clause that seek to shut Canadian companies out of a competitive process. The former seeks to make the United States more competitive, while the latter promotes complacency and can stall economic growth.

Related stories

Buy Local is an Economic Stimulus

Bernanke: No New Stimulus

Debt Ceiling Watch: No Stimulus, No Tax “Hike”, No Deal

Photo credit: srqpix on flickr


Patrick F.
Patrick f.5 years ago

Obviously, idiots like Marilyn haven't heard of NAFTA. Must be a Republican.

Arthur W.
art W.5 years ago

Well then, in retaliation, why doesn't Canada forbid the transport of their super foul TAR SAND oil across US territory? It's going to go abroad anyway. Let them transport it on their pipe lines, to their refineries and out thru their ports.

Marianne C.
Marianne C.5 years ago

But I LIKE Canadians!

Sharon Blodinger
Sharon Blodinger5 years ago

It is very, very difficult to buy something made in America, which to me includes Canada. Really, I live in the US, not in "America" which covers a lot of territory! Ever try to buy a wonderful handbag or shoes that are made in "America", can't find them that I know of since good ones come from Italy, France, etc.

That said, I refuse Canadian seafood and as many other Canadian products as possible because of Canada's position on the seal hunt; when they stop murdering seals, I will again buy Canadian. This, of course, is a whole new subject. Apologies for that.

Richard H.
Richard Hyde5 years ago

If Canada does not get an exemption like it did in 2009, then Canada could pass a law that precludes American companies from bidding on Canadia supply products/services. If that happens, will America be better off? Don't both countries lose?

Marilyn L.
Marilyn L.5 years ago

Sorry Canada, it's time America started thinking about and taking care of Americans. We have tried taking care of and policing the world for far too long and pretty much without so much as a thank you. Most often the opposite happens and we get vilified for something done along the way. This is one American who has had enough.

Mike and Janis B.
Janis B.5 years ago

When America is in trouble it finds the nearest targets to penalise. God know why we entered Nafta. We are treated like dirt by the US and frankly it would be better to separate the Nafta agreement and deal with a more civilised place like Europe.

Patrick F.
Patrick f.5 years ago

Steve R. You call yourself patriotic? More like IDIOTIC. Patriotic includes your allies, which you are willing to turn your back on. You don't have any allies because the minute they became inconvenient to your gain, you would turn your back on them as well. If there were another draft, you would be a deserter...and don't flee to Canada, we don't want you.

Patrick F.
Patrick f.5 years ago

NAFTA is how Brian Mulroney screwed Canada over, and it hasn't stopped yet. How convenient that now NAFTA has the chance to work for Canada as well as the U.S., like usual, the American government ignores it. It is an AGREEMENT, not a , I'll only honor it if it suits us.

Linda T.
Linda T.5 years ago

It's about time we got a President that stands for american made products and workers. Don't back down Mr.President. American's have been telling our government for a long time that it is time to rewrite all trade deals to make them fair trade deals to the american worker. Were with you Mr. President!!!