‘Buy American’ Hurts Manufacturing

CME: Proposed protectionist legislature will damage economy on both sides of the border

July 1, 2009

Canadian Manufacturers & Exporters (CME), Canada’s largest trade and industry association, recently applauded Canada’s premiers for the support and concerted efforts they are demonstrating in fighting protectionism in the U.S. and Canada. The organization has also called on the White House to make state and local governments exempt from restrictive “Buy American” procurement requirements.

These requirements, a hot topic on both sides of the border, could include a rider that see all money allotments in the U.S. economic stimulus package go only to projects that do not use foreign-made iron, steel, textiles, and manufactured products.

“The commitment of the premiers to work with the Prime Minister to open procurement markets in Canada and the U.S. will help overcome the short-term challenges that many Canadian exporters are facing as a result of new Buy American restrictions,” said CME President and CEO Jayson Myers. “I hope it will lead to negotiations on a new agreement that will improve upon the NAFTA, create business opportunities, and save jobs in both countries.”

CME is taking the lead on fighting Buy American issues. In June Myers traveled to Washington, D.C., to participate in meetings with American business and congressional leaders in an effort to find a solution that will safeguard Canadian companies from the losses threatened by Buy American and prevent similar restrictions being imposed by Canadian municipalities resolved to adopt retaliatory actions if the issue is not resolved within 120 days.

“The protectionist clock is ticking,” said Myers. “Jobs are being lost on both sides of the border because of short-sighted protectionism.”

The CME represents more than 10,000 companies nationwide, with more than 85 percent of these companies being small and medium-sized enterprises.

“We are asking Prime Minister Harper and President Obama - the leaders of the two largest trading partners in the world - to avoid protectionist procurement policies that destroy jobs in an integrated economy such as ours,” said Myers. “If we cannot find a solution that keeps markets open between Canada and the U.S., then heaven help the world economy from falling into the slippery slope of retaliation.”

Manufacturing is a very important part of the Canadian economy. Despite ongoing announcements of layoffs and plant closures, manufacturing is still of the utmost importance in terms of the country’s economic viability both domestically and internationally.

In a letter sent in June to the White House Office of Management and Budget (OMB), CME noted that the unintended consequences of the Buy American provisions contained in the American Recovery and Reinvestment Act signed into law by President Obama in February “present adverse consequences that companies can ill afford in these times of economic turmoil. It should not go unnoticed that the interim guidelines have directly harmed U.S. suppliers of Canadian manufacturers when these latter companies are told they cannot participate in state and local projects funded by the U.S. federal government and therefore have canceled contracts for materials and components from U.S.-based suppliers. We are very concerned that a retaliatory backlash in Canada and other countries could inflict serious harm to American and Canadian manufacturers alike.”

Earlier this month Myers wrote to Prime Minister Stephen Harper urging the Canadian government to work with the provincial premiers to negotiate a more open procurement agreement with the U.S.

“If Canada and the U.S., the world’s two largest trading partners, cannot avoid imposing restrictions on our bilateral trade, then it is difficult to see how the global economy can avoid falling into a vicious circle of protectionism,” he wrote.

In a speech late last year to the Empire Club, one of the country’s oldest and largest speakers’ forums, Myers remained adamant in his defense of manufacturing as a vital part of the Canadian economy as a whole.

“Manufacturing remains the single largest business sector in Canada and Ontario,” he said. “It’s a $600 billion business across Canada. Companies that make things still account directly for 15 percent of Canada’s total economic output. Manufacturers still employ nearly 2 million Canadians in highly productive and high-paying jobs. They pay one-third of the taxes levied on Canadian business. Their contribution is critical for the wealth generation that sustains the standard of living of each and every Canadian.”

For more information, visit www.cme-mec.ca.