“Buy American” Means “Bye American Jobs,” says a new campaign by the US Chamber of Commerce that highlights the Faces of Trade® Harmed by “Buy American”. If you have trouble believing anything this large and powerful big business lobby says about what’s good for the average worker, they’ve included an anti-Buy American quote from the AFL-CIO. Too bad it’s from 1961, and that the American Federation of Labour fully endorses the local procurement conditions in current U.S. stimulus legislation.
The US Chamber of Commerce, like the Canadian Manufacturers and Exporters, is waging a concerted campaign against not just “Buy American” provisions, which they lambast as protectionist, but the ability of subnational governments (US states, Canadian provinces and North American cities) to put conditions on public spending on infrastructure and other projects that are designed to create jobs locally or boost the local economy.
The pressure is bilateral, with Canadian business lobbies leaning on their American friends with more influence in Congress — thus the “Faces of Trade” campaign by the US Chamber. In a letter to members of US Congress this June, the Chamber had this to say about the dangers of “Buy American” and possible Canadian retaliation:
Today, it appears ARRA (federal stimulus) funds are being disbursed at the federal level in a manner consistent with U.S. obligations under international agreements such as the World Trade Organization (WTO) Government Procurement Agreement. However, the Government Accountability Office estimates that state and local governments will administer about $280 billion in ARRA funds. Local governments are not bound by these international agreements, nor are many state governments.
As a result, the “Buy American” requirements are having a major impact on projects administered by state and local governments, resulting in declining trade and lost jobs for American workers. This is particularly damaging to the U.S. business relationship with Canada-America’s largest trading partner. In water and wastewater infrastructure, for example, Canadian firms are now being excluded from U.S. municipal contracts and retaliation by Canadian municipalities could result in $3 billion in lost business for U.S. water and wastewater equipment manufacturers.
I have yet to see more than anecdotal evidence about Canadian companies losing bids specifically because of new “Buy American” rules. Hard data would be nice — which companies, which contracts, how much money is being lost? Without it Prime Minister Harper’s pleas to the U.S. administration are just political posturing (with potentially dangerous consequences for local democracy if they produce their desired results).
Earlier this year, Thea Lee, international economist with the AFL-CIO, gave a good description on PBS of why Canadians and Americans alike should be supporting the type of protectionism that actually protects jobs in these precarious economic times:
… I think we have to make a distinction between protectionism in a sense of raising tariff barriers and — and stopping trade and government procurement decisions, where governments choose to spend their own tax dollars in a way which is targeted towards creation of good jobs at home. And it’s actually a rational step for governments to take in a time where we don’t have the coordination of fiscal stimulus.
The United States is spending a lot more money to stimulate its economy than most of our trading partners in the industrialized world. And to the extent that we’re doing that, American taxpayers are going into debt in order to do that.
They’re trying to stimulate the U.S. economy, not the global economy. They want to create good jobs at home in their own communities. They want their tax dollars spent that way. And other countries may not step up to the plate and do the appropriate level of fiscal stimulus, if they think they can free ride off of what the United States has done.
So I think it’s an entirely rational and appropriate within the limits of our international obligations. So long as we are observing our international obligations, there’s no reason for any other country to complain.
Try telling that to our Prime Minister, who’s so far completely beholden to the business lobbies (on both sides of the border) on “Buy American”.
