Buy American - A Threat to Canada's Economic Recovery

President Barak Obama Presents Jobs Plan

http://www.thespec.com/opinion/editorial/article/594360--fighting-buy-american-policies-again

Above is a link to a very good editorial in the Hamilton Spectator that emphasizes the impact to both Canada and the US economic recovery.
The problem with this plan is just as true for the American economy as it is for the Canadian economy.
For example, an American company that makes a water pump for a sewage treatment plant may source some of its component parts from Canada. Perhaps these parts make up 5% of the cost of the pump. Under the proposed legislation, the American company that is producing a 95% American manufactured product is disqualified from federally funded infrastructure projects.
This is not an unusual scenario. During the last go round, American companies that were negatively affected got busy organizing their protests against the unintended consequences of disqualifying Canadian content. A long list of major manufacturing organizations wrote letters to President Obama indicating their displeasure and asking for changes in the legislation.
Unfortunately, during the last Buy American program the deal that exempted Canadian content was only reached at the very end of the legislation's life and so the beneficial effects were minimal.
It would seem that legislators in Washington are uninformed of the true nature of the trading relationship between the US and Canada. There is an integration that exists that is quite remarkable. A product made in the US may use Steel that began in the US, traveled to Hamilton  for processing and then went back to the US for assembly. Yes, the product was assembled in the US and was predominantly produced there but the brief journey across the border contaminated the total product and disqualified its use in federally funded infrastructure.
When the issue is jobs, anything that strangles the US-Canada trading relationship is counter productive for both economies. Kudos to Minister Edward Fast for jumping on this issue immediately.

"Buy American" Resurfaces with Obama Jobs Plan

It comes as quite a surprise to learn of President Obama's "American Jobs Act" which was unveiled this week since it contains the same "Buy American" provisions that Canada fought against 2 years ago.
Pictured above is the Canadian firm, Hayward Gordon, located in Halton Hills. It was John Hayward who raised the alarm when Buy American was first introduced that effectively barred Hayward Gordon from doing business in the United States. This was a huge blow to this manufacturer of pumps used in major waterworks installations.
In response to Mr. Hayward's plight, Halton Hills Mayor Rick Bonnette went on the offensive and introduced a counter-measure. Halton Hills Council amended its Purchasing By-Law to say that the Town would not buy any product from any company that was located in a country that had trade restrictions against Canada. In other words, as long as Buy American prevailed, Halton Hills would not purchase anything from the United States. We would buy from anywhere else but not the USA.
Of course this was a case of the "mouse that roared". But this small act of defiance was just the start of a bigger campaign to convince other Canadian municipalities to likewise strike back. There is a lot of buying potential when one considers all of the purchases that municipalities make across Canada. Collectively, they carry a big stick.
This pitch was made at the annual conference of the Federation of Canadian Municipalities where the delegates agreed to give 6 months for the issue to be resolved before FCM would encourage its members to follow the Halton Hills lead.
The net result was this threat became an effective tool in the toolkit of Stockwell Day who ultimately was able to win an exemption for Canada.
So here we go again. It is a big surprise because the last time around even the American Chamber of Commerce was writing the President to say how this was negatively impacting their members.
In the meantime, the Halton Hills Purchasing By-Law is still in effect, so watch out Obama!
See today's article by John Ibbitson of the Globe and Mail. http://www.theglobeandmail.com/news/politics/trade-minister-vows-to-fight-latest-buy-american-measures/article2165668/