Obama underplays Buy American policy

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Barack Obama is playing down Buy American government procurement policies that exclude Canadian suppliers, suggesting it is an isolated problem and raising hopes that local U.S. governments might cut deals with provinces to expand cross-border bidding.

The always diplomatic U.S. president was telling Canadians, in other words, to stop overreacting.

"I do think it's important to keep this in perspective. This in no way has endangered the billions of dollars of trade taking place between our two countries," Mr. Obama said Monday as he wrapped up a brief North American Leaders' Summit in Guadalajara, Mexico.

Prime Minister Stephen Harper has been lobbying Mr. Obama for help in obtaining Canada an exemption from American measures that shut Canadian firms out of the bidding for U.S. state and municipal contracts funded by the President's stimulus package.

The Prime Minister failed to clinch any guarantees during the two-day summit, but Mr. Obama said he believes there could be ways of improving access for provinces to local government procurement in the United States.

"There may be mechanisms whereby states and local jurisdictions can work with the provinces to allow for cross-border procurement practices that expand the trading relationship."

Canadian municipal leaders who are fighting the Buy American provision were encouraged by the President's comments.

"This is the first time publicly that the President had acknowledged that there is an issue … he's willing to take a look at it, which we have to think is positive," said Rick Bonnette, Mayor of Halton Hills, Ont. The town of 55,000 spearheaded a Federation of Canadian Municipalities resolution two months ago calling for Canadian products to be included in U.S. stimulus spending. It was signed by about a dozen Canadian municipalities that are threatening to stop buying U.S.-made products.

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Canadian exporters say they're feeling the pinch. At Hayward Gordon, a Halton Hills company specializing in industrial water pumps, American business that once made up three-quarters of the firm's orders is drying up.

"It's millions of dollars in orders that are starting to pile up," said John Hayward, the company's second-generation president who believes the worst is yet to come.

"It's about to hit us like a tidal wave," he said. "I have to compete against American companies here [in Canada]and sometimes lose orders to them, and I can't turn around and compete in the U.S. And there's a hell of a lot wrong with that."

However, Mr. Obama - busy trying to push through controversial health care reforms, nurse the U.S. economy back to health and secure Afghanistan - made it clear that Buy American provisions are not something that greatly trouble him.

"I want to assure you your Prime Minister raises this with me every time we see each other," he said after the Three Amigos meetings with Mr. Harper and Mexican President Felipe Calderon. "[But]I think it's also important to keep it in perspective, that in fact we have not seen some sweeping steps toward protectionism," he said.

Canadian officials fear that Buy American is a creeping and persistent problem and that U.S. lawmakers may keep passing legislation, beyond the stimulus package, that bars Canadian firms from competing for work. But Mr. Obama gave little indication he considered the procurement barriers a long-term problem, saying while he's no fan of the Buy American provisions, they were simply a drawback of a hastily passed stimulus package.

"It's not a general provision but was it restricted to a very particular aspect of our recovery package," he said, noting the measure does not break World Trade Organization regulations.

"It was not something that I thought was necessary but it was introduced at a time when we had a very severe economic situation and it was important for us to act quickly and not get bogged down in debates around this particular provision."

At a mid-west gathering of the Council of State Governments, a policy and networking organization for politicians from across the U.S., several Canadian politicians were pressing more than 500 lawmakers to adopt a resolution opposing the Buy American provisions Monday.

"There was a lot of misunderstanding about these policies among politicians on the state level," said NDP MP Jim Malloway from the conference in Overland Park, Kansas. "They assumed that their allies in Canada would be excluded from the provisions and were shocked to hear that Canada might be harmed by this."

The draft resolution, which encourages "local, state and provincial governments to adopt open procurement policies within our regions and between our two countries", will go to a vote Tuesday morning. Judging by conversations with his U.S. counterparts, Mr. Malloway expects the motion to be adopted with little opposition.

Mr. Harper said he expects to discuss the matter "at greater length" with Mr. Obama in their upcoming meetings - a tête-à-tête at the White House in mid-September and a Group of 20 economic summit later that month.

Days before the meeting, Canada's premiers had signalled they're prepared to strike a new trade deal to open their procurement markets to the United States in return for exemptions from Buy American policies, and put their weight behind Mr. Harper. The Canadian Manufacturers and Exporters trade association has also called for an end to the Buy American clause. Mr. Bonnette believes the broad opposition will give Mr. Harper a strong mandate in negotiations.

"Hopefully it will all get ironed out," the mayor said. "Our companies base their business plans on an integrated market. It's pretty hard to separate one country from the other."

With a report from Patrick White in Winnipeg