America and Canada, eh?

Article:

http://online.wsj.com/article/SB10001424052748703894304575047282403176858.html?mod=WSJ_economy_LeftTopHighlights#articleTabs%3Darticle

Definitions:

• Procurement: Acquisition of goods (materials, parts, supplies, equipment) required to carry on an enterprise.
• World Trade Organization: the only global international organization dealing with the rules of trade between nations. For more information go to-http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm
•  Municipalities:  A political unit, such as a city, town, or village, incorporated for local self-government

 The United States and Canada are attempting to reach a deal on the "Buy American" provision in the U.S. Stimulus package. This deal could potentially allow for both the U.S. and Canada access to procurement contracts at local and state levels. The Stimulus package requires U.S. manufactured products to be the only products used in stimulus funded projects. The U.S. and Canada have agreed, in this deal, to give permanent reciprocal access to 37 U.S. states and Canadian provinces and territories. These are areas covered by the World Trade Organization's procurement agreement. These two countries would also have temporary access to other projects across the borders. The agreement is hoped to be signed on February 16, 2010 and the countries have plans of discussing in a year about making temporary procurement agreements permanent.

What is this "Buy American" provision in the stimulus package? They basically state that any project that is funded by the stimulus package must get all of its manufactured products from American manufacturers. They also gives the heads of federal departments the ability to waive this provision for multiple reasons. These reasons include whether the provision would not coincide with public interest or whether the manufactured goods made by American companies used in a project would increase the cost by more the 25%  or whether the goods manufactured in America were not sufficiently and reasonably produced. To read more about the provision go to http://www.forbes.com/2009/02/23/buy-american-stimulus-opinions-columnists_wto_trade.html. This provision has frustrated not only Canadian companies but also American companies. This deal will hopefully help the trade relationship between these two countries. Between 2008 and 2009 trade between Canada and the U.S. has dropped dramatically.


Will this deal help? Many say that this deal will help but that there will still be much to fix. A U.S. trade representative spokeswoman said that this deal would give companies in Canada access to 7 programs that have an estimated value of $18 billion which is minuscule in comparison to the $787 billion in the stimulus package spending. Personally, I think that this deal will most likely not help the U.S./Canada trade numbers. America's reaction to Canada is a clear example of how America is likely to act with other countries. This could be detrimental to President Obama's plan to double American exports within five years. How can we increase our exports without a good name in the trade game?