Possible end-game on Buy American?


As mentioned in a previous post, Jayson Myers, president of the Canadian Manufacturers and Exporters, is wrapping up four days of meetings here in DC. His main goal was to the press the Obama administration and lawmakers on Capitol Hill on the importance of reaching a resolution on Buy American provision in the US stimulus bill, and to nip it in the bud before similar provisions continue to spread to other government spending legislation.

His message was that the clock is ticking: an agreement on a clear exclusion for Canada must be reached before the February 17 deadline by which contracts under the stimulus will have been granted. “By mid-February, if the negotiations are prolonged, then there is not a great deal of value because most of the money will have been spent,” he said.

Myers said he was repeatedly told that Canada was never meant to be the target of the Buy American provisions, but that the issue is low on the administration’s priority list and is therefore moving slowly. So what is the likeliest resolution? Few people expect Congress to vote to amend the legislation. More likely, the process would be a bit more discreet:  It could involve the Obama administration (i.e. the US Trade Representative’s Office) issuing a “notification” to the relevant congressional committees of jurisdiction that negotiations with Canada have concluded in an agreement that Canada is excluded from the provision. This would be done after behind-the-scenes consultation with relevant members of Congress. The theory is that there are lawmakers who would not object to an exclusion for Canada, but do not want to be seen openly voting to water-down the law. At least that’s the theory.

Myers also said he’s learned a thing or two about talking to Americans: “One of the things I’ve learned is how important the terms of the discussion are here,” he said. Rather than talking about the importance of keeping “open trade”, he says he’s learned to say that an exclusion for Canada is ” important to creating jobs in the US by keeping business opportunities open between Canada and the US.” He adds, “trade is a bad word here.”

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Possible end-game on Buy American?

  1. The whole Buy American is utterly protectionist — and, in my view. in contravention of the provisions and principles of NAFTA. Apart from the damage this protectionism does to the global economy, we as Canadians, in particular, must stand up to this blatant disregard for free markets and international agreements.

    • I'm no fan of Buy American, but I don't think it violates NAFTA.

      If I recall the history of the free trade agreement, it was the provinces which did not want to give up that power, thus the individual states were also exempt.

      Since the stimulus it allocated to the states to spend, (with conditions from Congress), they can spend it anyway they like.

      Ontario is also allowed under NAFTA to have a Buy Ontario with govt. contracts if they choose, but I'm not in favour of that.

  2. I wish Mr. Myers good luck but, frankly, expect that even if he gets the 'quiet agreement' he seeks, it will likely result in little or no benefit to Canadian exporters. Why? Because U.S. state and local governments are at least as protectionist (and/or afraid of being seen as a free traders) as Congress. So, quiet administration guidance to exempt Canada will simply be ignored or remain unknown in most jurisdictions. Kudos to Mr. Myers for trying, but in the end, it will matter little.

  3. An agreement ? To do what? What we get and what we give?
    We know what the bleating headlines have been saying but
    what does the agreement say ?
    Nice horse race. Who won ?

    • I think most of the provinces have agreed in principle to drop their exclusion from NAFTA rules. They have done this because they want access to the much larger pot of stimulus money in the US and because stimulating a "made in province" requirement for Canadian spending is very difficult since most Canadian manufacturing is very highly integrated with the US.

  4. Why do people continue defend NAFTA?

  5. Agreed. That's what the headlines have said.
    We have no idea what an agreement (if it exists ) says … let alone what it might really mean.

  6. everything i buy in america these days either has to be highest quality from china or not from china at all. what does america manufacture these days, anyway?

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