Is Canada Protecting Itself From Protectionism?

The Toronto Star is reporting that Stockwell Day is essentially already claiming victory in the business of the nearly trillion dollar “Buy American” bill.

Speaking in Toronto this morning, he also said Ottawa must remain vigilant as the legislation moves forward.


"This shows the importance of and the power of diplomacy," Day told a Bay Street audience of about 100 people at the Toronto Board of Trade.


He emphasized that Ottawa's "full-court press" to counter growing protectionism in Washington is being successful. The minister said there has been "enormous pressure" on Ottawa to enact retaliatory legislation against U.S. business, but he and Prime Minister Stephen Harper resisted, preferring the diplomatic route.


"Prime Minister Harper was the first world leader to raise this issue and speak against it," he said.


Noting that Canadian firms ship $11 billion in steel to the U.S. annually, Day warned that a "Buy American" policy on Washington's stimulus spending projects would have severely hurt Canada.

If Minister Day and the Prime Minister really believe that a clause to the effect that the bill will be "applied in a manner consistent with U.S. obligations under international agreements” will make this issue go away, we could be in big trouble.

Canada got seriously outsmarted on IP negotiations (particularly on the pharmaceutical patent file) and many other issues with the Americans in the FTA and NAFTA, which set the stage for the WTO agreement and much that has happened since. Now, the Americans have their sights on copyright.

Besides, we don't want to have to start a NAFTA or WTO dispute to figure out what “in a manner consistent with U.S. obligations under international agreements” means on the basis of a particular case or potentially thousands of them. These cases take many years, cost a fortune to prosecute, and have uncertain outcomes. Moreover, when the Americans don't like the outcome, they basically ignore or even flout it.

If Canada and other major G-20 powers stick together, President Obama will have not only the basis but the necessity to play hardball with Congress and to veto a protectionist bill. If Canada runs off and declares victory on the basis of something as flimsy as this, we will have played right into the protectionists' hands.

And we may never know what was discussed in the corridors that led to The Star reporting that:

He [Day] emphasized that Ottawa's "full-court press" to counter growing protectionism in Washington is being successful.

Besides, we should be entitled to assume that American law will be applied "in a manner consistent with U.S. obligations under international agreements." What else have the past 2.5 decades of trade negotiations been about? That's hardly a concession.

In Canada, at least, there is a presumption that all statutes, both federal and provincial, do comply with international treaties and should be interpreted in such a way as to ensure compliance. Thus, the kind of language that Minister Day seems so happy about would add nothing to the meaning of a Canadian statute. I would be surprised if things are different in the USA.

The new wording is at best redundant and political. More likely, it is a smoke screen. Minister Day ought to be very careful about proclaiming what amounts to "Mission Accomplished" at this stage. Once again, "it ain't over 'till its over."

HK