The Commerce Times

Protectionist measures hurt everyone

At a time when international trade is experiencing radical changes and the world is recovering from one of the worst recessions in a life- time, every country is trying hard to come out of the recession on top. However, certain measures like the one introduced by President Barack obama in the Buy American policy are poised to hurt not just the Unit- ed States’ trade partners but, also the U.S. itself.

Prior to the introduction of the Buy American policy, obama had already pledged to the G20 na- tions that the U.S. would not adopt any protectionist policy in the face of the financial crisis. As a result, a clause was added to the policy that excluded any nation with whom the U.S. had a trade agreement from the terms and restrictions of the policy.

However, Canada wasn’t ex- empted from Buy American under NAF TA until access to U.S. economic stimulus funding was granted to Canadian companies in early February. Having refused to open their local procurements markets to American suppliers during the NAFTA and the WTO procurement code negotiations, the provinces weren’t eligible for exemption.

“The American States are legally obligated, if they take a nickel of this money, not to buy Canadian [provincially-sold goods],” said Michael Robinson, counsel to the national and international law firm of Fasken Martineau Dumoulin LLP, who was also an advisor to the Government of Canada on the Canada/ U.S. Free trade Agreement of 1989. Robinson spoke at a special topic workshop on international trade at the envision Conference 2010 at the University of Toronto.

Many local governments in Canada have also then taken to the buy Canadian notion, hoping to give the Americans a taste of their own medicine. But while this resolution could in fact provide the Canadians with some leverage and lead to new negotiations, it must be noted that we are more dependent on the United States than the other way around. We just have a lot more to lose.

But, as many trade experts note, that is not the right solution. Canada is the only country among the G7 nations that lacks a national securities regulator. The blame then falls upon both the provincial and federal governments of Canada.

The Constitution Act of 1867 continues to give the Federal Parliament the right to regulate trade and commerce, if its motive is to achieve something a provincial government couldn’t. As Lawrence Herman wrote in one of his recent articles titled ‘ourselves to Blame’ in the Financial Post, “That authority is exclusive and, where the national interest is involved, is not subject to provincial veto or even provincial concurrence.”

The threat our industries face today due to a protectionists trade war is “a problem that is largely of Canada’s own making. Rather than having our central governments in control of trade policy, including interprovincial trade, where it belongs, the vacuum has produced an odd patchwork of internal trade deals brokered among provinces like traders in an oriental bazaar,” Herman wrote.

This month’s breakthrough emphasizes that full reciprocity on all trade in goods and services is the need of the hour. The provinces and the federal U.S. government must understand that in the face of rapidly changing trade situations, isolating their markets and depending on protectionist measures for retail growth and development would only achieve the opposite.