Deal on Buy American not close, says Trade Minister Stockwell Day

Trade Minister Stockwell Day will be making yet another pitch to settle the contentious Buy American dispute Monday when he meets with his U.S. counterpart during a rare summit of the NAFTA ministers.

OTTAWA — Trade Minister Stockwell Day will be making yet another pitch to settle the contentious Buy American dispute Monday when he meets with his U.S. counterpart during a rare summit of the NAFTA ministers.

Day said he will bring up the issue during a meeting with U.S. Trade Representative Ron Kirk on Monday afternoon, but admits there is no resolution on the horizon.

Despite reports last month that a deal was imminent, Day described any progress as incremental.

“I would say we have a way to go,” he said in a telephone interview from Dallas prior to beginning meetings with his U.S. and Mexican counterparts, the first in two years for the NAFTA ministers.

“We are dealing with multi-levels of government … it’s hard slogging. This is not a sprint, it’s a marathon.”

Day said he remains confident, but “I don’t mean overly optimistic.”

The issue has been at the top of Ottawa’s trade agenda with Washington since the fall of 2008, when the U.S. Congress began inserting clauses that exclude non-American suppliers and manufacturers from bidding on government stimulus projects.

A pledge by President Barack Obama to respect international treaties made little material difference since most of the federal dollars are spent by state and municipal governments, which are not subject to the North American Free Trade Agreement.

Canada-U.S. analyst Chris Sands says because it may take up to a year before Canada realizes any concrete progress in the talks, and only if provinces are willing to put long-cherished exclusions on the table.

“The question is, is Canada willing to concede everything we want?,” he said. “Ontario has been the biggest barrier . . . it isn’t willing to put university procurement, textbooks and health care procurement on to the table. For the U.S., it’s not just about roads.”

Another major impediment is political, says Sands, an analyst with the Washington-based Hudson Institute. Despite lobbying by big business in the U.S., Buy American is seen as a useful measure to protect domestic jobs at a time of soaring unemployment.

“You can imagine that giving more jobs to Canadians isn’t a top priority here,” noted Sands.

So far only a few Canadian companies have complained about being shut out of contracts, but the Canadian Manufacturers and Exporters says that’s only because many affiliates of American firms don’t want to go public.

The association estimates Canada is being excluded from competing on about US$290 billion of Obama’s stimulus package, most of which has yet to be allocated.

Day insisted the dispute does won’t detract from the summit, which will focus on reducing barriers to trade between the three countries, and speeding traffic at the borders.

But the minister concedes Canada needs to wean itself off its overwhelming reliance on the U.S. economy, which still swallows about three-quarters of Canadian exports.

Economists have noted that almost all of the contraction in the Canadian gross domestic product during the just-past recession was due to a collapse in exports, primarily those bound for the U.S.

Day said the government will continue to look for opportunities to sign free trade deals around the world, noting that after a lull in the early part of the decade, Ottawa has finalized a string of agreements, including with Colombia, Peru, Jordan, Panama, Iceland, Norway, and Switzerland.

It is now pursuing deals with India, Europe and the Caribbean countries.

“I tell my U.S. counterparts, ‘Listen, the NAFTA arrangement has tripled our trade since 2004, but we are also being very aggressive around the world because as much as we like NAFTA, we want Canadian workers and producers to have other choices as well,’ ” he said.

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