TORONTO – Canada hopes U.S. officials will exempt the nation's top trading partner from "Buy American" provisions in the economic stimulus bill before Barack Obama arrives in Canada this month for his first foreign trip as president.
International Trade Minister Stockwell Day said Monday Canadian officials are in daily contact with U.S. officials. He reiterated that he is hopeful Canada will be exempted from provisions that call on major public works projects to favor U.S. iron, steel and manufactured goods over imports.
Canada and other U.S. trading partners warn that favoring U.S. companies would breach Washington's free trade commitments and could set off a retaliatory trade war.
Canada is waiting to see if the measure is included in the final economic-recovery package expected to emerge from the Senate. Democratic leaders have pledged to deliver it to the White House for Obama's signature by mid-February.
Obama is scheduled to be in Ottawa on Feb. 19.
"We would like to find a solution before the president visits Canada. We don't know if it's possible but that's where we're heading. It's our aim to find a solution before that time," Day told Parliament.
Day voiced strong objections when he met with interim U.S. trade representative Peter Allgeier at the World Economic Forum in Davos, Switzerland, this past weekend.
"We're warning them of the dangers of protectionist movements, and they say that they are concerned about this and are looking at what they can do to mitigate it," Day added.
Day said the president has certain abilities to waive parts of the legislation if they go against the obligations of the North American Free Trade Agreement -- which links the U.S., Canada and Mexico -- and other international pacts aimed at liberalizing world trade.
Asked about the "Buy American" provisions Friday, White House press secretary Robert Gibbs would say only that the administration is reviewing them.
The provisions are likely to find support among Americans outraged that money from a stimulus package likely to top $800 billion could go to foreign competitors of U.S. companies.
The U.S. House of Representatives passed an $819 billion stimulus bill on Wednesday that included provisions calling on major public works projects to favor U.S. steel and iron.
Day noted the Senate is considering expanding that measure to include manufactured goods. The proposed Senate provision states that none of the stimulus funds may be used in a project "unless all of the iron, steel and manufactured goods used are produced in the United States."
Day has said those provisions are similar to the U.S. Smoot-Hawley Act of 1930, a tariff law which he said exacerbated the Great Depression of the 1930s.
U.S. trade with Canada totaled about $560 billion in the first 11 months of last year, well ahead of trade with second-place China, which was about $379 billion in the January-November period.
Opposition Liberal leader Michael Ignatieff said thousands of Canadian jobs and billions of dollars of exports are at risk. Gordon Giffin, the U.S. ambassador to Canada from 1997 until May 2001, said the "Buy American" provisions could begin a vicious cycle of retaliatory actions.
"Canada is our biggest trading partner and closet friend," said Giffin, who represented the Clinton administration. "There will be other countries that will assert that they ought to be exempt as well. Where you draw that line I'm not sure. I think you ought to not have the policy, and therefore you don't have to start making distinctions."
Giffin said he hopes more reasonable heads will prevail.