Trade Wars Brewing In Economic Malaise: Outrage in Canada as US Severs Ties

[Psephos]

Source: Washington Post

Is this what the first trade war of the global economic crisis looks like?

Ordered by Congress to "buy American" when spending money from the $787 billion stimulus package, the town of Peru, Ind., stunned its Canadian supplier by rejecting sewage pumps made outside of Toronto. After a Navy official spotted Canadian pipe fittings in a construction project at Camp Pendleton, Calif., they were hauled out of the ground and replaced with American versions. In recent weeks, other Canadian manufacturers doing business with U.S. state and local governments say they have been besieged with requests to sign affidavits pledging that they will only supply materials made in the USA.

Outrage spread in Canada, with the Toronto Star last week bemoaning "a plague of protectionist measures in the U.S." and Canadian companies openly fretting about having to shift jobs to the United States to meet made-in-the-USA requirements. This week, the Canadians fired back. A number of Ontario towns, with a collective population of nearly 500,000, retaliated with measures effectively barring U.S. companies from their municipal contracts -- the first shot in a larger campaign that could shut U.S. companies out of billions of dollars worth of Canadian projects.

This is not your father's trade war, a tit-for-tat over champagne or cheese. With countries worldwide desperately trying to keep and create jobs in the midst of a global recession, the spat between the United States and its normally friendly northern neighbor underscores what is emerging as the biggest threat to open commerce during the economic crisis.

Rather than merely raising taxes on imported goods -- acts that are subject to international treaties -- nations including the United States are finding creative ways to engage in protectionism through domestic policy decisions that are largely not governed by international law. Unlike a classic trade war, there is little chance of containment through, for example, arbitration at the World Trade Organization in Geneva. Additionally, such moves are more likely to have unintended consequences or even backfire on the stated desire to create domestic jobs.

<snip>

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2009/05/14/AR2009051404241.html?sub=AR

[DJ13]

1. Its not a trade war if its only stimulus funds that specify US product

The stimulus funds are intended to stimulate our economy, not Canada's, nor India's, nor China's.

Yes, if it works our country might end up with a reinvigorated manufacturing sector, but thems the breaks.

[w4rma]

2. I don't give a flip about trade with Canada. It's trade with the Asia that is the problem!

It's not hard to switch out a Canadian product for an American one since the prices are similar. It's switching out Chinese products for American ones that get the bean counters in an uproar.

[robinlynne]

5. true.

[Veruca Salt]

6. I agree

And it's also the quality. I'm sorry but after all the crap and poisoned products we've gotten from China I don't trust them anymore. Last time I checked, Canada makes quality product and pay their workers fairly.

On the other hand, I do understand that if it's stimulus money that is required to be spend on US product then it should be used as such.

Drat, I'm a bit conflicted here. :-(

[John Q. Citizen]

12. I'm thinking if China calls in our debt, you know, so they aren't financing a foriengn country,

that would make a lot of folks here very happy.

Very hungry, but happy.

Cause we know it chinas fault.

[Veruca Salt]

18. And i'd be one of those happy but hungry

Is it all China's fault though? Hell no. Our country and every other one in the world still buys their crappy products (and there are definitely some good things that come from there as well even if few and far between the junk). After all the recalls and warnings though, there is a distinct lack of trust (at least on my part) to buy anything from there.

[RC]

3. This is absolutely stupid. Why piss of an honest trading partner?

Canada and the U.S. can help each other economies, but not this way.

[JDPriestly]

9. Well, then, Canada needs to show that the U.S. has profitted from

trade with Canada. Face it, over all, since "free trade" started, the U.S. has bled jobs. Our economy is in severe decline. When things go well, a country can afford to generously create jobs in other countries by buying the other countries' products. But in times like this when China and Canada are expanding in terms of business jobs and the U.S. is losing out, the U.S. has to protect its economy.

As for the steel company, it could produce its entire product in the U.S. The point of the stimulus is to motivate companies like that to create jobs in the U.S. It seems to be working.

China is the worst offender in terms of creating a trade imbalance through currency manipulation and dumping its cheap, trashy (sometimes worthless) products in the U.S. American products and workmanship are much better than Chinese or Indian products or workmanship. Buy American as much as you can.

[John Q. Citizen]

11. I can see you are an economist. I hope Obama puts people like you who

know what they are talking about in charge.

When coffee goes up to 20 dollars a pound, we won't care.

When China calls in our loans, so what? we can eat shoe leather. Because we sure don't need china loaning us any money. It's not like them buying up T bills has kept food on the table or any thing like that.

You are an economist, right?


Or are you just an irate American who thinks other countries are the cause of our problems?

[JDPriestly]

16. Economics is the application of formulas to data. If the data

is false, the results of the applications of the formulas will be false.

The economics, data and formulas on which the decision to enter into the free trade agreements have been proved wrong. The proof is the disastrous decline in our domestic economy. China was an impoverished third world nation that could barely feed its people. Wealthy Americans shipped American factories, equipment and jobs to China, made China the creditor nation and the U.S. the debtor nation. Free trade has failed the American people. The only way we will regain our economic stature is by ending trade with countries like China. Let them sell their products to other third world countries. We need to be economically as independent as possible.

If free trade worked, no one would be complaining about it. Problem is that it did not. I am not an economist, but I have several degrees in other fields and have lived in a number of different countries and, most important, I have common sense. Free trade makes no sense if it results in high rates of unemployment and underemployment in the U.S. and the impoverishment of the American people.

[John Q. Citizen]

17. Why did you go to a foriegn country?

You are the problem you claim you are against.

You shipped yourself overseas. So you plan on never leaving our shores again, right? Except to Canada.

It's an us against them kind of world you crave. no more internet (except we could have a country wide lan)


And why did the great depression happen? Was that Chinas fault too? You know back in the good old days before free trade when we were prosperous? When people were starving and lined up in soup kitchens everywhere all the time?

I don't know what you hold degrees in, but your argument makes no sense to me.


I think so called free trade needs to be revamped for some environmental reasons, anf for some labor issues, but you obviously aren't rational here. Your assumption of American exceptionalism, for instance are faulty,

Well it should start with you. Go through your house and get rid of everything and anything that wasn't native mined, made, grown, or assembled.

Good luck with embracing and reviving Republican ideology from the first 2/3 of the 20th century.

[JDPriestly]

22. I went oveseas because my husband is from there and worked there.

Are you satisfied?

[ronnie624]

23. Interesting.

Post #9: China is the worst offender in terms of creating a trade imbalance through currency manipulation and dumping its cheap, trashy (sometimes worthless) products in the U.S.

Post #16: Wealthy Americans shipped American factories, equipment and jobs to China, made China the creditor nation and the U.S. the debtor nation.

So, is it China's fault, or America's?

[CHIMO]

26. Free Trade

With China has nothing to do with NAFTA.

Trade in value added products has nothing to do with natural resources.

Canada doesn't have to show anything.

If you want to trade, then trade. If you don't want to trade then don't!

[John Q. Citizen]

10. I agree.

[Sen. Walter Sobchak]

24. Canada\US trade has survived stupider than this

Some of the most absurd trade actions in modern economic history have been directed towards Canada by the US. The economic ties between Canada and the US are much too strong and the cross investment so great that any one or many issues don't really make a dent. There have been trade wars over wood, frozen pizza, pajamas, booze, telephone switches, generic drugs and virtually anything else you can think of.

The most important thing is that Obama appoint a good ambassador to Ottawa, while an extremely partisan Republican hack David Wilkins was an excellent ambassador who took the largely ceremonial position very seriously and took a high public profile and his position is still unfilled.

However in a time when many US corporations are throwing their Canadian holdings in the fire to raise liquidity there is a danger of decreasing US influence especially in oil and gas matters where the Chinese are on a spending spree.

[CHIMO]

27. I Agree

With you.

It may provide an opportunity for Canadian Nationalists to take a place again in politics. For much too long things have been following corporate interests.

[robinlynne]

4. why would it backfire? makes perfect sense to me.

[cartach]

7. Probably a good thing for Canada in the long run.

They are too dependant on exports to the U.S. and these kinds of actions will force Canadian manufacturers to look elsewhere to sell their goods. Of course if Canada becomes less dependant the more difficult and/or costlier it will be for the U.S. to obtain those same goods it now imports from Canada. And maybe Canada won't feel honor bound or otherwise to provide some of those essential goods such as oil to the U.S.. Who knows,China might become their most favored trading partner when it comes to exporting that scarce resouce. While the stimulus funds are a good thing for the U.S. they may not be such a good thing for their existing trading partners and there may well be a backlash from them and to hell with any international laws and/or agreements.

[John Q. Citizen]

13. yep, and Canada can divert the Columbia river to produce their oil sands

The US will hardly notice if the Columbia dries up. Why should Canada let all their water just flow south? What's in it for Canada?

[CHIMO]

8. Good

Any moneys from a government should have the stipulation that all sales come from within the country.

Wow. What a surprise. Now TARP has to conform.

No. That is not manufactured stuff.

[John Q. Citizen]

14. I'm thinking if China calls in our loans, then there won't be any tarp money or

stimulus money.

That will show them!

[Lasher]

15. Good, bring on the trade wars.

All this free trade has not been good for the US middle class.

Borrowing money from China to stimulate economies of other nations is incredibly stupid. If Canada wants stimulus money spent in their country, let them borrow it from China.

[Sen. Walter Sobchak]

25. the US has never won a trade war

and was significantly harmed by the Bush actions on steel imports. We lash out high visibility but generally irrelevant or non-existent threats while ignoring the real underlying issues that make the US non-competitive in many types of business such as health care costs, absurd intellectual property and patent laws, a casino legal system, poor infrastructure and dysfunctional cities.

[time_has_come]

19. The U.S. exports almost 100 B more to Canada than to any other country....not smart

..to prod Canada into restricting American goods with protectionist practices.

It would bring unintended negative results.

edit add link: http://dataweb.usitc.gov/scripts/cy_m3_run.asp

[anonymous171]

20. Good. Fuck international law.

Especially international trade law, which was written by the corporate elites for the benefit of the corporate elites.

[ohio2007]

21. Ordered by Congress

snip
Keeping Jobs at Home


A slew of legislative proposals is also aimed at keeping jobs at home. In recent weeks, the House attached additional buy American provisions to a $14 billion clean-water fund that provides loans to local communities and a $6 billion program to finance environmentally friendly school construction projects.


snip

Last month, Senate Majority Whip Richard J. Durbin (D-Ill.) introduced a measure with Sen. Charles E. Grassley (R-Iowa) to tighten rules governing the H-1B visa program for guest workers. Among its provisions: Companies seeking to import specialized workers from abroad first must make a good-faith effort to recruit U.S. citizens.

"The H-1B program was never meant to replace qualified American workers. It was meant to complement them because of a shortage of workers in specialized fields,"


snip

As a result, John Hayward, president of Hayward Gordon, a Canadian manufacturer of pumps used in water works projects, says U.S. towns, including Peru, Ind., have told him that they can no longer buy his Canadian-made products.

"We're not China. We're not even Mexico. We have the same relative cost of labor as you do," he said. "If we have a better price, you should buy from us. That's what competition is supposed to be about."

To stay in business, Hayward is considering moving some manufacturing operations to the United States, potentially creating jobs here. That, Peru Mayor Jim Walker notes, is what the stimulus was supposed to be about.

"You're trying to get America turned around, trying to put Americans back to work," Walker said. "And if American taxpayers are paying for this, well then, Americans deserve the benefits."

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/14/AR2009051404241_2.html?sub=AR

A rising tide will not lift a sinking ship ;)

[KakistocracyHater]

28. It's "protectionist" to demand safe dog & cat food & formula

for infants, so it seems. Those PhDs & MAs insisted that outsourcing jobs-leaving consumers unable to consume, what DO they teach at Ivy League schools:How to Become a Tin-Pot Dictator?

They(the multi-natn'l corps)are simply chasing the world's cheapest workers, they are doing it in Europe too, it's not just the U.S.; a shame they don't insist the wealthy buy more to make up the gap called the 'Middle Class' that somehow opened up. ((((((Apprenticeships))))))) Jobs that take underclass workers & teach while paying, why? because those Chinese peasants & children don't exactly have a higher education. The slowdown is causing huge consternation in China, & they curiously blame Americans for it all. They should blame the CEOs & Banksters instead.