“Buy American” provisions in the U.S. stimulus package have become a hotly contested issue, perhaps nowhere more than here in Canada. Fears of protectionism have been sounded as “free-traders” prophesize dire consequences. Recall beggar-thy-neighbour, the Great Depression, World War Two: it will happen again, we are told. American protectionism will be the first step. This will be followed by retaliation. A trade war will be sparked and history will repeat itself. So what better time than Obama’s visit to Ottawa for our two leaders to deal with this impending doom. Indeed, solutions have been proposed: put the word “north” before the word “American”, scrap the phrase “buy American” altogether etc. But this is not a semantic debate. Or, if it is a semantic debate we are analyzing the wrong phrase.

Instead, we should be looking at the concept of “protectionism”. While protectionism is generally looked at purely in economic terms, we need to consider its broader meaning. In the abstract protectionism can refer to the overall protection of a state. While economics is certainly a major component of protectionism, it is not the whole story. Also, included are military protectionism, cultural protectionism, etc. Basically, these are means employed by the state to protect its self-interest.

That being said, the United States has used its power to imbed protectionism into every one of its trade pacts. By and large, trade pacts tend to be unequal relationships in which powerful states exert their power over weaker states. And while the geo-political landscape is definitely changing, the United States has been the most powerful state since the end of the Second World War. An example of this kind of trade pact is the North American Free Trade Agreement. While not having overt, classically defined protectionist policies, NAFTA nonetheless contains certain provisions aimed at protecting American interests at the expense of Canadian interests. As the Council of Canadians has argued, water located in Canada that is treated as a commodity and sold south of the border may lead to the depletion Canadian lakes, streams, ecosystems, etc. While critics may view this language as extreme, there is evidence to suggest that written into NAFTA is a condition mandating that once something begins to be sold as a commodity its sale cannot stop. This means that even if Canada did begin to run low on water—a situation that many experts agree is possible—our water would still have to be shipped to the U.S.

I am not writing this to explore the merits or lack thereof of NAFTA nor the future of water as a commodity. Instead I wish to point out that American protectionism did not start with (and is not limited to) the phrase “buy American” written into a stimulus plan and it will not end with the removal of that phrase. Rather, American protectionism thrives and has always thrived. Just because the type of protectionism employed by U.S. lawmakers does not fit a classical economic definition does not make it less potent or less real. Canadian politicians can scream and yell all they want during interviews with Don Newman, but removing a simple phrase from a congressional bill will not change the overall protectionist approach of the United States. Moreover, one could argue that Canadian politicians who lobby to have the phrase “buy American” removed from the stimulus package are themselves advocating Canadian protectionism.

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Tags: buy american, buy canadian, great depression, harper, obama, protectionism

This entry was posted on Sunday, March 1st, 2009 at 5:19 am and is filed under Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.