President Obama is in Canada today to meet with Canadian Prime Minister Stephen Harper on a range of issues – chief among those trade and protectionism.
Canada is the U.S.’s largest trading partner and the largest exporter of oil to the U.S., so trade talks are a critical issue, especially in the wake of the “Buy American” language in the stimulus bill. That provision stipulates that all of the iron, steel and manufactured goods used for any project funded by the act must be produced in the U.S. In response to harsh criticism of this protectionist provision, a vague caveat was added that applying that provision must be consistent with international agreements, such as that under the World Trade Organization.
The Canadians were offended by the “Buy American” section, as about 75 percent of its merchandise exports are to the U.S. Canada’s leaders are also still wary about candidate Obama’s promise to renegotiate the North America Free Trade Agreement – pushed by trade unions led by the AFL-CIO – though the President’s rhetoric has cooled since then.
With the current worldwide downturn, exports from every country are suffering, as manufacturers and consumers hold off on buying plans. However, trade protectionism could plunge the global markets into a worse tailspin. As Prime Minister Harper said in a recent CNN interview:
If there is one thing that could turn a recession into a depression, it is protectionist measures across the world.
Let’s hope he stresses that in his talks with President Obama.