Clement says American protectionism 'expanding' and 'cascading'

WASHINGTON - American protectionism is expanding rapidly despite President Barack Obama's commitment to free trade, Industry Minister Tony Clement said Wednesday.

WASHINGTON - American protectionism is expanding rapidly despite President Barack Obama's commitment to free trade, Industry Minister Tony Clement said Wednesday.

The so-called Buy American provisions in Obama's economic stimulus bill are increasingly slamming the door on Canadian companies looking to bid on contracts in the United States, Clement said following a speech to the National Association of Manufacturers.

"What's happened is these provisions seem to be expanding in scope, and they're cascading down the system," said Clement, in Washington to meet with key Obama officials and legislators.

"It seems to be metastasizing a little bit, which is of grave concern to Canada."

The trend continues despite Obama's stated support of free trade, he added.

"The Obama administration is our ally on this. They understand the need to combat protectionism," Clement said.

Much of the money in Obama's US $787 billion stimulus package has gone to state and local officials, however, and Canadian manufacturers have been discovering in recent weeks that those regional governments aren't committed to the principles of the North American Free Trade Agreement.

A caveat added to the stimulus bill as it worked its way through Congress - one that stipulated the United States must not violate its international trade agreements in its enthusiasm to encourage citizens to Buy American - has apparently had no impact.

Ottawa has complained about the snubbing of Canadian companies by U.S. state and municipal governments on some water and sewage treatment projects that were on the receiving end of stimulus funds.

Clement also pointed to pending legislation in Congress that will expand the Buy American provisions to non-stimulus spending in areas that include waste-water management.

He warned that new provision will backfire on the American manufacturers who export about $6 billion in water and wastewater equipment and supplies to Canada.

"If this continues, it's going to be injurious to us, but it's also going to be injurious to them," he said.

The minister said he planned to raise his concerns in meetings with U.S. officials later in the day. Clement meets with Commerce Secretary Gary Locke on Thursday.

About 75 per cent of Canadian firms export their goods to the United States, meaning a looming trade war would spell disaster for many Canuck exporters.

Already there are tensions - Ottawa has complained to the World Trade Organization, for example, about the U.S. country-of-origin food labelling rules. The federal government says those regulations discriminate against Canadian meat producers.

On more than one occasion on Wednesday, Clement insisted that U.S. protectionism is more damaging to Americans than it is beneficial, though he couldn't explain why it's apparently spreading anyway.

But Ron Kirk, the top U.S. trade representative, said earlier this week that the economic meltdown is making it difficult to convince Americans that free trade is in their best interests.

"Trade is a really tough sell in this environment," Kirk told the U.S. Chamber of Commerce.

Nonetheless, he added, the United States is adopting a "new mentality" on trade that is "more coherent and more resonant" with Americans.

Trade policy must work "for America's working families and businesses," he said.

Rules issued last month by the United States to implement the Buy American provisions direct some state and local governments to buy goods from a group of countries that excludes Canada.

The Canadian Manufacturers and Exporters Association has urged Canadian officials to press U.S. officials about that policy. The organization also wants Canada to threaten retaliatory action.

Clement was lukewarm about the threat by some Canadian municipalities to stop buying American goods in a tit-for-tat, something that could spark a full-out trade skirmish.

"I just don't think we want to go down that road," he said.

Canada is not alone in its frustrations.

British companies are reporting dramatic decreases in U.S. business because of the Buy American provisions.

Some companies have been forced to withdraw from bidding because they cannot meet the state and local government requirements that projects should use only American-made products.

 
 
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