Embassy Row

CANADIAN WARNING

Canadian Ambassador Michael Wilson this week bluntly warned congressional leaders that they risk sparking a global trade war because of “buy America” provisions in the multibillion dollar spending bill that supporters insist will stimulate the U.S. economy.

Some Canadian experts also cautioned Washington that the bill would violate the North American Free Trade Act and World Trade Organization rules if President Obama signs it in its current form.

In a letter Monday to Senate Majority Leader Harry Reid, Nevada Democrat, and Minority Leader Mitch McConnell, Kentucky Republican, Mr. Wilson said the United States will sacrifice its “moral authority” in world trade circles if the final version of the bill contains provisions to protect the U.S. iron and steel industries and to require firms receiving government bailout money to buy American goods.

“If ‘buy-America’ becomes part of the stimulus legislation, the United States will lose its moral authority to pressure others not to introduce protectionist policies,” Mr. Wilson said in his letter.

“If either of our governments were to introduce new barriers or preferences at this time, we would load increased costs and burdens onto business, cause delay and disrupt and distort the way business have organized themselves in our two counties.”

The United States and Canada are each other’s largest trading partners, with more than $1.5 billion in commerce a day. Also more than 300,000 people cross the border daily on business or vacation, and more than 7 million U.S. jobs rely on trade with Canada.

In his letter, Mr. Wilson echoed other Canadian leaders who fear that U.S. protectionist policies will lead to a global depression like the one in the 1930s that was sparked by an earlier U.S. tariff bill.

“A rush of protectionist actions could create a downward spiral like the world experienced in the 1930s,” the ambassador said.

European diplomats in Washington are also worried about the stimulus bill.

“We regard this legislation as setting a very dangerous precedent at a time when the world is facing a global economic crisis,” European Union Ambassador John Bruton said in a letter to Washington leaders, including Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy Geithner.

“Open markets remain the essential pre-condition for a rapid recovery from the economic crisis, and history has shown us where measures taken contrary to this principle lead us.”

Canadian trade experts said the stimulus bill would violate WTO rules and the NAFTA agreement, which eliminated tariffs on U.S., Canadian and Mexican trade.

“It’s kind of black and white. It’s not that gray,” Debra Steger, a professor at Ottawa University and former head of the WTO Appellate Body, told Canada’s Globe and Mail newspaper.

DEATH OF A DIPLOMAT

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