“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.
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It all started when Barack Obama included “Buy American” language in his economic stimulus plan coming out of congress. That built tension worldwide after an $825-billion stimulus plan was passed last week by the House of Representatives requiring the sole use of U.S. made iron and steel in public projects. The protectionist messages being relayed by the US are especially a concern for Canadians, given that the US is our largest trading partner.

In a panicked response, the governments of both the European Union and Canada sent letters to Congress urging that the provision must be dropped.

But Canadians nervous about a trade war with the US heard reassuring words from Obama after he realized the extent to which nations worldwide were panicking. “I think it would be a mistake … at a time when worldwide trade is declining for us to start sending a message that somehow we’re just looking after ourselves and not concerned with world trade,” Obama stated. He also assured the world he did not want to send a protectionist message.
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