The federal government has voiced significant concerns over the pernicious effects of the Buy American provisions embedded in the Obama administration's $800-billion stimulus program. Many Canadian companies maintain that they have been excluded from requests for proposals for contracts stemming from the program.
Although understandably irritated, should we be surprised?
Canada has struggled with the new rules of engagement since Sept. 11, 2001. The United States transformed national security into an obsession. We were half-expecting waivers from the stream of U.S. measures adopted, but instead experienced, among other things, lengthy border delays. Notwithstanding the North America free-trade agreement and decades of goodwill, it appeared that our goods were triaged just as any other country's. What had begun as a security concern was quickly transformed into a trade issue.
Despite all of Canada's efforts with the U.S. political class, we are constantly on watch for yet more protectionist initiatives in Washington. This tension multiplies tenfold during presidential or even congressional elections. Pundits have disparaged our reliance on the U.S. market for exports and want Canada to “diversify.”
One needs to caution against the hedging mirage. The hundreds of billions of dollars in annual exports to the U.S. are supported by a vast distribution and infrastructure network that can't be replicated. Granted, having options is always preferable, but the U.S. will always remain a priority for Canadian exporters, regardless of how many free-trade agreements Canada signs with foreign countries.
Any business owner whose turnover is significantly dependent on one client will share tales of anxious business planning sessions. The temptation to diversify and hedge risks is indeed strong, but until you can properly execute a diversification strategy, that one customer remains your meal ticket. In order to preserve the relationship, companies have little choice but to embrace wall-to-wall coverage of this vital client.
Using the business analogy, one could argue that Canada's coverage of the U.S. has focused primarily on one “wall,” namely Washington. Not that Canadian ministerial visits to Washington aren't fully justified; the country's executive branch needs to reach out to Congress and the White House.
We would be wise, however, to invest as much time with communities all over the U.S. that benefit from two-way trade with Canada. Those communities and their leaders could help deliver key messages to Washington.
According to recent data, more than 7.5 million Americans derive employment from free trade between the U.S. and Canada. Moreover, more than half of the U.S. states count Canada as their primary export market. Whether it is Oregon's $2-billion in exports, the 800,000 Californians whose jobs depend on free trade or the $1-billion that Canadian tourists spend annually in Florida, we have strong arguments to fight the perception that free trade benefits solely Canadians.
In order to cover the other “wall,” Canada should develop a program under which cabinet ministers would conduct yearly visits to key U.S. regions. Between meetings with governors, mayors, chief executive officers and other opinion leaders, we could build a coalition around a coherent message endorsing free trade with Canada. Better still, we could recruit more voices to fight creeping protectionism in the U.S., voices that have been alarmingly silent over the Buy American debate.
The trade offices that Canada operates in certain U.S. cities were not designed for this work and are staffed accordingly. The country's ambassador to the United States does travel the U.S., but his first priority is to build relationships with federal legislators and members of the executive and this requires significantly more than cameos in Washington.
For Canada's exporters and the millions of jobs they support domestically, it is as important that Canada's ministers visit Wyoming as Winnipeg, Oklahoma City as Oakville and Chicago as Chicoutimi. Should Canada be successful in adding U.S. allies to the periodic trade challenges it faces in Washington, its ability to stand down these challenges would improve.
For this program to succeed, Canada needs to be focused and disciplined and ensure these visits are well organized and treated as priorities by the public service and elected officials. We face many opponents across the border divide all too happy to erect more trade barriers. We need to beat them by enlisting their own people.
Michael Fortier, a former minister of international trade, is a partner at Ogilvy Renault and a senior adviser for Morgan Stanley.
