Canada and the United States: Two Separate Countries, Part XVII

Think the “Beyond the Border” Canada-U.S. joint security arrangement will do anything to improve the two countries’ overall trade relationship, beyond the direct effects of the agreements’ provisions (provided they’re not overridden by Congress)? Think again:

Canada plans to fight the Buy American provisions in the new U.S. jobs package proposed by President Barack Obama and is surprised and frustrated that the issue has come up again, Canada’s trade minister said Wednesday.

Obama’s proposed $447 billion package includes a requirement that all “iron, steel, and manufactured goods” used in public buildings or works be supplied by American firms. The bill would allocate more than $100 billion toward the renovation of schools, the construction of roads and bridges and improving transit.

Some people, notably Chamber of Commerce President Perrin Beatty, are disappointed that the United States could propose such a protectionist plan:

The latest outbreak of protectionism from the United States government flies in the face of Ottawa’s much-touted effort to work with Washington to ease trade restrictions along the border, the Canadian Chamber of Commerce says.

“It’s of considerable concern to us,” Chamber president Perrin Beatty told the Toronto Star. “The timing is, of course, terrible in that it contaminates the discussions on how we can make the border function more effectively.

Speaking of the new border deal about to be announced by Prime Minister Stephen Harper and President Barack Obama, Beatty said, “The whole point of the exercise was to look at how we can enhance trade rather than putting impediments in the way.”

The fresh threat of trade war between the Harper government and the White House stems from the $447-billion (U.S.) jobs legislation announced by Obama last week. It includes Buy American provisions that could exclude Canadian companies from bidding on billions of dollars worth of economic stimulus projects south of the border.

The move, which caught the Canadian government off guard [emphasis mine], comes as Washington and Ottawa are in the final stages of negotiations over an historic bilateral pact meant to streamline border operations and enhance security and intelligence cooperation by the two governments. David Jacobson, the U.S. ambassador to Canada, says the deal may be announced by Harper and Obama in several weeks.

What I wrote last week (Sept. 10) about the “Beyond the Border” action plan:

An agreement where specific good rules outweighs the bad is a good agreement. I think that’s fair. But I’d be leery about balancing the bad in the agreement against a claim that it secures Canadian access to the U.S. market. As I noted back in February:

All the security-economic tradeoffs in the world can’t get around the fact that Congress and Parliament continue to make laws for their respective countries. And when push comes to shove, Congress will side with their constituents.

The Globe and Mail reports that the Buy American dustup hasn’t affected the border-security talks, although the article also notes:

In fact, the constant aggravation of Buy American clauses cropping up in U.S. legislation argues for a similar long-term approach to reaching a bilateral agreement on government procurement, Canadian officials believe.

Although that, too, could be problematic as the United States enters the protracted political season before choosing the next Congress and president in 2012.

To say the least. I’d be very, very curious to see what type of government procurement agreement Canadian officials believe they can get through Congress.

Let’s recap:

  1. Canada and the United States: Two separate countries, two separate political constituencies.
  2. Domestic U.S. politics trumps Canadian trade concerns.
  3. A bilateral agreement, especially for the United States, is about what’s in the agreement, nothing more and nothing less.

To expect anything else is madness.

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