Monday, August 24, 2009

U.S. Economic Stimulus Plan Harms Canadian Business

While the U.S is struggling to recover economically from the global recession, certain measures enacted by the American government to bolster the struggling U.S. economy may harm Canadians as part of the price.

Canadian leaders, including the provinces' premiers, are united in their opposition to the "Buy America" provision in the U.S. economic stimulus package. The "Buy America" provision in the landmark $787 billion stimulus package states that government contracts in the U.S must use only products made in America. For Canadian manufacturers of iron, steel, and other manufactured goods that would be used in public works and building projects funded under the U.S. stimulus package, this translates into almost $280 billion that cannot enter the Canadian economy.

While Canadian leaders are quick to embrace the spirit of recovery of the nation's largest neighbour, they are quick to point out that a large portion of Canada's manufacturing industry is based upon trade with the U.S. The provincial leaders are supporting the federal government's efforts to exempt Canada from this controversial clause in the U.S. economic package.

Some provincial leaders, as well as representatives of the industrial community, fear that the "Buy American" clause may force some Canadian industries to relocate to the U.S. in order to survive and continue manufacturing. In a sad irony, some Canadian manufacturers have recently seen a large increase in orders from the U.S., fueled by economic stimulus funds. However, while the increase in business is encouraging for the Canadian economy as well, the orders may have to be produced in the U.S. in order for the funds to flow to both the U.S. and Canadian companies.

Some Canadian companies have considered a boycott of American products in retaliation. However, a major shift in U.S. policy will only come to be at the national leadership level.

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