WASHINGTON — Canada’s ambassador to the United States has issued a stern warning to the most powerful congressional leaders on Capitol Hill over a protectionist piece of legislation that “will have a disproportionally negative impact on intertwined U.S.-Canada supply chains and on jobs in both our countries.”
In a letter obtained by The Canadian Press, Gary Doer also points out that the bill, called the Foreign Manufacturers Legal Accountability Act, violates World Trade Organization obligations and the North American Free Trade Agreement.
“As Congress considers this legislation, we trust that any legislation that moves forward would respect United States’ international trade obligations,” he recently wrote to Nancy Pelosi, speaker of the House of Representatives, and Harry Reid, Senate majority leader.
The act, which would ban imports from companies that don’t have an American agent with a U.S. address, is aimed at ensuring that foreign manufacturers of defective protects can be served with legal papers.
It could face a House vote soon although sources suggested Sunday that’s weeks away.
The proposed legislation is the result of the Chinese drywall fiasco that sickened some Americans; consequently, it enjoys broad bipartisan support and is not expected to face many hurdles in Congress.
But similar to the controversial Buy American provisions inserted last year into President Barack Obama’s economic stimulus package, the law will ensnare Canadian manufacturers in onerous and costly red tape even though they’re not the intended target.
“In our view, it will adversely interfere with the flow of trade across the border by adding yet another logistical and administrative requirement,” Doer wrote.
“This would be especially unfortunate in light of our ongoing joint efforts to restore our economies.”
Doer also points out that there is no need for any such U.S. agent for the thousands of Canadian manufacturers doing business in the United States because of the “strong affinity between the Canadian and American legal systems.”
“Injured American plaintiffs can sue a Canadian manufacturer just as easily as they could sue an American manufacturer,” he wrote.
“In these circumstances, service upon a person or a corporation in Canada can be made directly through a process server in Canada. More importantly, Canadian courts routinely enforce American court judgments where the American court has jurisdiction and due process is followed.”
The act is part of a “Make It In America” initiative by nervous Democrats with the potentially game-changing mid-term elections just a few weeks away.
They’re hoping it will help them hold onto seats in what’s known as the Rust Belt, a manufacturing-heavy region of the Midwest and northeastern United States where exasperation about the widening U.S. trade deficit is off the charts.
Doer wrote that “Canada is sympathetic to the goals of this bill” but is concerned about the unintended consequences on America’s biggest trading partner.
and on U.S. businesses dependent on Canadian products.
“The U.S.-Canada trading relationship, with our interlinked transportation system, shared land border, integrated supply chain and heavy dependence on goods carried via truck and rail, is in stark contrast to the finished, retail-ready products that characterize U.S.-Asian trade today,” he wrote.
Requiring the countless trucks that cross the Canada-U.S. border every two seconds to “identify the foreign agent for each of the numerous shipments on every single truck could delay shipments of component parts, thereby stalling U.S. assembly operations,” he added.
“The North American automotive industry, which is a major component in the economies of both countries, is especially dependent on the unimpaired movement of goods across the border.”
Doer ended his two-page letter urging Pelosi and Reid to consider exempting countries like Canada.
“Should measures still be considered, in light of the existing enforcement procedures available between U.S and Canadian courts, we would also ask that due consideration be given to alternative means to address trade with low-risk countries with open and transparent legal systems, such as Canada,” he wrote.
The European Union is also up in arms about the law, saying it will be costly and prohibitive for small businesses.
A number of U.S. business and manufacturing groups are also sounding alarm bells, including the National Association of Manufacturers and the National Foreign Trade Council, which counts several blue-chip corporations among its members.