President Barack Obama’s American Jobs Act has put Canada in the exasperating position of having to fight the same battle it fought over the Buy American clause in the U.S. stimulus package of 2009. Though it is likely that an exemption from the clause will be obtained as before, Canadian-American trade relations are complex enough that it is deplorable that Canada has to give its energies to repeating itself. The draft bill could easily have explicitly exempted Canada.
This step backward has taken place, moreover, in a harsher congressional environment. Many Democrats were already protectionists; since the 2010 election, the Tea Party faction has added to the nationalistic element among the Republicans.
The exemption from the stimulus package in Canada’s favour was linked to broader, longer-term questions. Canada managed to get its provinces to adhere to the World Trade Organization’s government procurement agreement (with some major exceptions), in return for access to U.S. states and municipalities (with exceptions there, too). There were supposed to be more Canada-U.S. procurement negotiations to follow this up; these have only barely materialized.
Meanwhile, Canada has offered the European Union a truly wide-ranging procurement agreement, with the additional benefit of giving a strong hint to the United States that much the same should be worked out closer to home. At the same time, a major revision to the WTO procurement agreement is well advanced.
So the Buy American cloud could have a silver lining. Robert Wolfe of the School of Policy Studies at Queen’s University speculates that the offending clause in Mr. Obama’s draft bill “may be a signal to trading partners that it would be worth their while to conclude the multilateral and bilateral negotiations.”
Though it seems more likely that parts of the 2009 bill have been cut-and-pasted into the 2011 bill, the Canadian government should indeed work hard to turn this problem into an opportunity for comprehensive agreements on governmental purchasing, with Europe, the U.S. and all WTO members.