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Monday, February 02, 2009

A lesson in trade retaliation from President Obama: I’ll see your Buy Canada policy and raise you one Buy America policy

As recently as December 17th, International Trade Minister Stockwell Day was championing the federal government’s Buy Canada policy. Today he’s forced to defend Canada’s trade interests against the Obama administration’s protectionist Buy America policy. Day also faces a hostile opposition in Parliament demanding an explanation for Canada’s weakened trade relationship with the US.

With Public Works Minister Christian Paradis, Day announced in December that he authorized Export Development Canada (EDC) to make available up to $380 million in financing and guarantees for Davie Yards Inc. to help the company complete an order for five ships for two buyers. These contracts were said to be necessary to maintain 1,100 direct jobs and possibly add 500 new jobs to the Quebec City region.

“Our government is committed to procure, repair and refit vessels in Canada according to the government’s Buy Canada policy,” said Paradis. “Today’s announcement will help ensure that Davie remains a viable contributor to Canada’s shipbuilding capacity.”

In a press release from Davie Yard at the time, the company stated it is “also pleased that the government is committed to procuring, repairing and refitting vessels in Canada, according to its Buy Canada policy. ‘We work hard to be competitive, and with the financing tools in place, we will be there for their projects,’ concluded CEO Kulen.”

Free traders caution against even minor trade restrictions or preferential treatment like that given to Davie Yard for fear that each and every measure will be met by a contra measure from a trading partner in a downward race toward protectionism.

The Obama administration’s recently announced Buy America proposal may not be a reprisal for the Buy Canada policy, but it does make the protests of the Conservative government less credible – and could keep Canada’s $7 billion steel export industry from benefiting from Obama's US$819 billion stimulus plan which promises to focus on infrastructure spending.

"I'm hoping and I do believe that President Obama is enough of a student of history to know that these protectionist measures, in a time of recession, only make things worse," Day said today in an interview with CBC.

Day believes the Obama administration is responding well to Canadian pressure on Congress to reconsider the Buy American clause in its stimulus legislation.

"We believe that with our input on this and constant involvement with the administration, that something is going to come of this that will be better than what's being proposed right now in the U.S. Senate," Day said.

Support for free trade has been an important and hard fought victory for free market advocates. But just as the once-universal aversion to deficits was discarded in Canada for $85 billion in reckless spending, free trade could be the next casuality as politicians move the exploit the financial crisis to advance their various statist objectives.

Posted by Matthew Johnston

Posted by westernstandard on February 2, 2009 | Permalink


The age of globalization really began in the 16th century and we eventually came to dominate about 80% of it. It was when we fully committed ourselves to the current unfair “free” trade model that our share of the global economy shrank to approximately 20%.

It is how we chose to do business in the latest manifestation of globalization that has brought us to where we are today.

Read: http://paleoconservatist.blogspot.com/2008/05/technology-misconstruct-saving-americas.html

Posted by: The Paleo Conservatist | 2009-02-03 1:06:24 AM

It just goes to show you that no self-respecting "progressive" knows anything of history. They suck at math, too.

Posted by: Shane Matthews | 2009-02-03 12:04:23 PM

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