‘Buy America’ provision won’t harm ‘strong’ U.S.-Canada relations

Postmedia News Oct 18, 2011 – 1:38 PM ET

By Mark Kennedy

OTTAWA — The Obama administration’s recent “Buy America” provision will not harm U.S.-Canada relations and was introduced as a political compromise to persuade Congress to pass a jobs bill that helps economies in both countries, says the American ambassador to Canada.

David Jacobson delivered the message Tuesday in a speech designed to correct some misconceptions on this and two other developing issues: suggestions the U.S. is considering a new levy on cargo entering the U.S. from British Columbia, and the impact on people with dual citizenship of a new U.S. plan to crack down on people who create tax havens.

“The relationship between our two countries is probably the strongest it has been in generations, perhaps ever,” said Mr. Jacobson, according to a written text of the remarks.

“I am here to tell you that the United States is unbelievably lucky to have Canada as our neighbour. But in the last few weeks three unrelated events have gotten a lot of attention. And some among us, on both sides of the border, have tried to draw the conclusion — sometimes without resort to the facts — that somehow there’s a funeral in our future.”

Mr. Jacobson went to great lengths to defend the “Buy American” initiative that U.S. President Barack Obama included in his administration’s jobs bill last month.

Here in Canada, Prime Minister Stephen Harper called it a “regrettable development” that would weigh down economic growth in North America, and International Trade Minister Ed Fast vowed to press Canada’s case in Washington against protectionist measures such as this.

Canada had won an exemption from Buy America provisions in a $900-billion stimulus bill in 2009, but did not get such treatment in Obama’s second round of stimulus this fall.

Jacobson said this is “making some folks see coffins among the flowers of the Canada/U.S. relationship”, adding there is more to the issue than meets the eye.

He said the latest Jobs Act is a $445-billion bill to help get the U.S. economy “back on track” and that most of the legislation consists of proposals for payroll tax cuts for the middle class, extensions of unemployment benefits, and education investment.

“A small part of the bill relates to repairs of infrastructure and rebuilding of schools. It was to these parts — and these parts alone — to which Buy America applied. And, of course, most of these expenditures on infrastructure and schools would be for things like land and labour which Canada couldn’t supply anyway.”

Mr. Jacobson said that, in fact, the “single most important” thing the U.S. can do to help the Canadian economy “is to get our own economy back on track.”

And that is the purpose of Mr. Obama’s jobs bill.

“And in case you haven’t noticed, it’s not so easy for him to get things through Congress. So he had to make a tough call. He had to introduce a bill that had some chance of passing. Hence the Buy America Provision.”

“If the bill doesn’t pass, the U.S. economy — and the Canadian economy with it — continue to suffer.”

Mr. Jacobson urged people to contrast the minimal consequences of the Buy American provision on Canadian commerce with the “vast benefits” to the Canadian economy if the bill is passed.
“With the benefits to the Canadian economy of the bill as a whole I suspect the vast majority of economists in Canada would say they’d take the bad with the good.”

Mr. Jacobson also noted that the provisions in the bill will be interpreted in accordance with international trade obligations, such as NAFTA and the World Trade Organization.

“No two countries on Earth have a better track record of working out our trade differences than the United States and Canada.”

Finally, he noted that the bill in question — “Buy American or no Buy America” — was rejected last week by the U.S. Senate as part of a Republican filibuster.

“The president has said he will try to get parts of the Jobs Bill through Congress as separate measures. And for the sake of the United States economy — and for the sake of the Canadian economy — we should all hope he is successful.”

Meanwhile, Mr. Jacobson flatly rejected reports the U.S. was considering a levy on U.S.-bound cargo from British Columbia.

The reports surfaced in the media several weeks ago after two U.S. senators asked the government to look into how a harbour maintenance fee in Seattle meant a lot of North-American-bound shipping was being diverted to Vancouver.

Mr. Jacobson said that led to a “hue and cry that the United States was contemplating imposing duties or taxes or some sort of fees on goods that were shipped through Canada and into the United States.”

He said that he personally inquired and was assured that all that is occurring is a study — nothing more.

“Among other reasons, the Federal Maritime Commission has no authority to impose duties, or taxes, or fees on goods entering the United States from Canada. So I’m here to give all of you — and all Canadians — comfort. We don’t plan to divert traffic to Seattle from Vancouver by imposing tariffs or taxes or fees on goods crossing into the United States from Canada.”..................................................................................................................................................................................
http://www.canada.com/business/America+provision+harm+strong+Canada+relations+Diplomat/5568105/story.html