CANADA: U.S Senate softens 'Buy American,' gives Ottawa reason for hope

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Canadian Prime Minister Stephen Harper reads quotes from President Barack Obama as he answers a question during Question Period in the House of Commons on Parliament Hill in Ottawa Wednesday Feb.4, 2009. Harper said he's encouraged to hear President Obama speak out against protectionism. Canada and other nations are concerned about the "Buy American" provisions in the economic stimulus bill. Adrian Wyld

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February 5, 2009

By Jennifer Ditchburn The Press Republican Thu Feb 05, 2009, 08:23 AM EST

OTTAWA — The U.S. Senate has given the Canadian government reason for hope, voting Wednesday night to soften the "Buy American" provision in its massive stimulus package.

The vote to include a requirement that international trade agreements must not be violated came just two weeks before President Barack Obama is to visit Canada.

And it came just hours after Prime Minister Harper had been expressing optimism following Obama's warnings about the provision possibly sparking a trade war.

The U.S. president gave two nationally televised interviews Tuesday evening during which he cautioned Congress about protectionist policies.

Harper read some of those comments during question period in the House of Commons.

"We are encouraged, all Canadians are encouraged, by Mr. Obama's comments," Harper told MPs on Wednesday.

The Tories have been grasping for rays of hope in the public statements of key Washington players in the absence of a clear signal that bills before Congress will be watered down or altered.

American lawmakers are studying an $800-billion-plus stimulus package, which comes attached with rules that favour U.S. manufacturers and producers for public-works projects.

Such "Buy-American" provisions could deal a huge blow to Canada's industrial and manufacturing sectors.

International Trade Minister Stockwell Day warned that Obama's latest statements are still just talk, with the ball in Congress's court. Several U.S. politicians reacted to their president's comments Wednesday by re-emphasizing their support of the Buy-American measures.

"It doesn't mean we're necessarily out of the woods yet in terms of making sure we're going to be absolved of any negative effects of this legislation," Day said.

Obama told ABC and Fox News that protectionism is the wrong signal to send internationally in economic hard times.

"I think that would be a mistake right now. That is a potential source of trade wars that we can't afford at a time when trade is sinking all across the globe," Obama said.

"We need to make sure that any provisions that are in there are not going to trigger a trade war."

Day said Obama's comments, and those of other senior U.S. politicians in recent days, prove Canadian lobbying efforts are paying off.

"It shows clearly that at all levels we've been engaged it's having some positive effect.... We're going to keep working 24/7 at all these various levels to make sure that there are no negative effects as far as protectionism from this legislation."

As for Harper calling Obama directly to discuss the matter, Day suggested the next personal chat will be when Obama visits Ottawa on Feb.19. The opposition and at least one former ambassador to the United States have suggested Harper should be making personal intercessions with Obama.

"We're actually hoping, and I hope not unrealistically, to have this resolved before he gets here."

Quebec Premier Jean Charest added to Canada's diplomatic efforts during a trip to Brussels on Wednesday.

The Quebec leader told the Associated Press that both the European Union and Canada should push the Obama administration and U.S. lawmakers harder.

"We have to be active in the United States, we have to make sure that our voices are heard. There is reason to be worried," said Charest, in Europe to push for a Canada-EU trade pact.

"It would be in the midterm a big mistake for the United States and something that would be a hindrance for their economy."

In the meantime, business groups in Canada are mounting their own pressure campaign to try to turn the protectionist boat around.

Jayson Myers, president of the Canadian Manufacturers and Exporters Association, says his members have been getting their concerns out to American industry groups as well as U.S. suppliers. The Canadian Chamber of Commerce has taken a similar tack.

"I don't think the embassy and the consulates can do it all by themselves," Myers said.

"What's going to convince U.S. legislators is to have a company in their own district saying this is a problem for us. It's difficult for us to get that message across, so we have to work with U.S. companies to make sure they are telling their local legislators."