Something that’s getting much play in the news in Canada is the “Buy American” provision in the latest stimulus package. Apparently, they are trying to push through a provision that materials used for stimulus spending must be American which flies in the face of global trading agreements that the US has already agreed to. In fact, as late as November 2008, the US agreed to a stipulation at the G-20 meetings that no new trading barriers would be established in 2009.
I’m no economist, but even I can see how bad this is long term for the US economy. It is extremely short sighted, but I have a feeling that the US will still pass the provision. It seems like the US is full of talk about global trading practices, but then do a 180 when the lobbyists start doing their thing. I’m starting to think that any agreement that the US signs on trading practices is not worth the paper it’s written on.
I believe that some sort of fiscal stimulus is the correct prescription for the situation we are currently in, my main concern is whether it will be big enough actually since it is beginning to get watered down with tax cuts (but that’s a different debate).
However, yes I will agree, short-sighted is the perfect description for this. I understand the rationale behind it, it just won’t play out well in the long run as other nations begin to take similar actions for retaliatory reasons.
I’ll tell you, I think this is oging to be an interesting conversation.
I understand what you are saying, but there are some that contend that the global trade agreements are exactly what has gotten the U.S. where we are. I’m not smart enough to know. I think that the Unions and the portectionists are the ones who are making this point. They also will cite that the U.S. often carries a trade deficit with the nations that it engages in free trade with. Again, I’m not smart enough to know.
There are those that say if the U.S. closes its doors, gets back its manufacturing base, charges tarrifs (kind of like it did for the first 150 years of its existence…during its rise as a global super power) then it will be better off in the long run. Of course, the rest of the world will then have pay to play with te U.S.
It seems like the US is full of talk about global trading practices, but then do a 180 when the lobbyists start doing their thing.
Don’t talk about my President like that. He had a primary to win.
“In the Depression, we had anti-trade policies that aggravated the global recession,” said Karl. “It’s not a good idea from an economic or stability view, but politically, many congressmen still see it as appealing.” (Kurt Karl is head of economic research at Swiss Re)
So, it made certainly things worse during the Depression in many people’s opinion.
I read it in the actual stimulus package, and for the most part interpret it as a “joke”, a “Mandate” with no teeth. Here is the wording.
(a) In General.–None of the funds appropriated or otherwise made
available by this Act may be used for a project for the construction,
alteration, maintenance, or repair of a public building or public work
unless all of the iron and steel used in the project is produced in the
United States.
(b) Exceptions.–Subsection (a) shall not apply in any case in
which the head of the Federal department or agency involved finds
that–
(1) applying subsection (a) would be inconsistent with the
public interest;
(2) iron and steel are not produced in the United States in
sufficient and reasonably available quantities and of a
satisfactory quality; or
(3) inclusion of iron and steel produced in the United
States will increase the cost of the overall project by more
than 25 percent.
Basically, buy American steel…unless you can find a reason that you don’t have to
One of the major problems we’ve had over the last couple years is availability of steel. It’s been less of a problem recently with
the downturn but prior for 2-3 years China was paying premium price for steel and it wasn’t available.
Right there allows any contractor to buy steel from someplace else.
Number three is also EXTREMELY likely as most of the cheap “Construction” grade steel isn’t made here.
I have a good idea… How about the Canadians start producing products worth importing and then we can trade more!!! I have a cervelo in the garage, but other than that I can think of a damn thing made up north that I want/need.
there are some that contend that the global trade agreements are exactly what has gotten the U.S. where we are
I don’t agree at all with that and I think anyone saying so is just twisting things to their own benefit. Are there any serious economists who would agree with this?
Don’t talk about my President like that. He had a primary to win.
Actually, the republicans have been as bad as anyone lately. Their treatment of NAFTA has been a joke. I was hoping that Obama’s team would be better. We shall see.
I don’t understand how you can be surprised by this. Obama ran specifically against NAFTA while his aide was in Canada doing the “wink wink”. Did the Canadians really believe the wink wink? Why are people now surprised that the hard left is pushing this agenda?
The Unions in America HATE NAFTA. Always have and always will.
I really don’t get the surprise to be honest. This is playing out EXACTLY as expected.
I have a good idea… How about the Canadians start producing products worth importing and then we can trade more!!! I have a cervelo in the garage, but other than that I can think of a damn thing made up north that I want/need.
you do realize that we do about $543 billion (US$) worth of trade annually and are trading places with china off and on as the US’ biggest partner, right?
not to mention we’re the biggest supplier of oil to the united states
at any rate, to address the question above me as to why canadians didn’t expect this -
to put it simply, canadians live in a cocoon of naiveté about the world. they choose to believe that if they could impose their moral superiority on the rest of the world, there would be world peace.
but other than that I can think of a damn thing made up north that I want/need
Do you drive a car? Canada is the #1 importer of crude oil for the US. Until recently, Canada was American’s #1 trading partner (recently edged out by China, I believe). The US imports lumber, construction materials, automobiles, auto parts, aluminum, plastics and telecommunications parts as well as a host of other items.
Those numbers might be skewed because we do import a bunch of natural gas and crude oil from up north. I just can’t think of a long list of products that the average consumer buys with a “made in canada” label on it. We can’t be drinking that much labatts!
I really don’t get the surprise to be honest. This is playing out EXACTLY as expected.
I’m not surprised at all. I knew this type of legislation was coming based on exactly what you stated. However, I believe that it’s not good for the US nor the other countries involved. I’m a big supporter of Obama, but I’m allowed to disagree with some of his policies and talk about them when I do.
If Americans stopped putting their head in the sand with this issue, they will see it’s really not to their benefit at all.
I have a good idea… How about the Canadians start producing products worth importing and then we can trade more!!! I have a cervelo in the garage, but other than that I can think of a damn thing made up north that I want/need.
Right there allows any contractor to buy steel from someplace else.
You’re right and that might be enough to offset any problems from this provision. However, I would argue that the fact that the item is in the legislation at all initiates a new trading barrier which is something the US promised not to do as late as November 2008.
I have a good idea… How about the Canadians start producing products worth importing and then we can trade more!!! I have a cervelo in the garage, but other than that I can think of a damn thing made up north that I want/need.
Right there allows any contractor to buy steel from someplace else.
You’re right and that might be enough to offset any problems from this provision. However, I would argue that the fact that the item is in the legislation at all initiates a new trading barrier which is something the US promised not to do as late as November 2008.
I think it’s more about having a feel-good talking point relative to the package…ear candy.
Rex is somewhat right, as what we mostly get from Canada is not “manufactured”; softwood and oil are biggies. Several good bike makers though.
