Listening to China, the EU and most recently, Canada, grumble about the Buy America provisions in the stimulus bill, you would think that not only is the sky going to fall on Maple Leaf Chicken Little, but he will also be jobless and barred from selling Mrs. Chicken Little's eggs on the global market.
It's easy for our trading partners to fuss at us regarding the Buy America provisions in the recently passed stimulus bill. But when you look at actual numbers rather than reflexively opposing a nation's quest to stimulate its own economy, you can't come close to quantifying our trading partners' public panic.
Today President Obama is visiting Canada, which has given the Canadian press and Ottawa's Ministers a 24-hour complaint window about how our recently enacted Buy America provisions are going to harm the Canadian economy.
Canada and the U.S. have the largest co-dependent economic relationship in the world. In 2007, bilateral trade between the two countries reached $560B, with the U.S. serving as Canada's largest export destination, as we buy nearly 75% of all Canadian exports. In turn, our imports to Canada are greater than U.S. imports to all twenty-seven EU countries combined. Seventy percent of products going in and out of Canada go by truck, keeping U.S. and Canadian truckers very busy -- and bored at Customs checkpoints.
Most Americans would be surprised to know that Canada, not a Middle Eastern country, is our largest supplier of both petroleum and natural gas. We are Canada's largest purchaser of its agricultural and food products. Canadian hydroelectric power plants are the primary supplier of such clean energy to our northeastern and northern tier states. Thousand of U.S. businesses house their servers in Canadian IT companies.
American corporations are by far the largest investors in Canada, supplying our northern neighbor with 60% of its foreign investment capital in 2007.
Our auto industry also has a robust economic relationship with Canada as all U.S. automakers have operations in Canada and trade cars and car parts back and forth on a regular basis. Canada supplies the U.S. with $6 billion of steel and iron and about $9 billion of softwood lumber each year.
In other words, our trade relationship with Canada is cheerful, large, and comprises an incredibly wide and diverse array of products and services.
So what, you ask? What does this have to do with Buy America provisions? The answer to that is, in a nutshell, is nothing. Which is exactly the point.
The stimulus bill calls for $100 billion in infrastructure spending, only 40% of which is materials. The idea that the Buy America provision of this spending will "cripple" Canadian industry as some Canadian journalists have noted, is simply ridiculous.
To hear the Canadian government and its media complain, you'd think that stimulus spending is the only spending that anyone in the U.S. is going to do for the entire year. But the stimulus bill is not the only game in town, and there will still be plenty of American dollars to go around - or in this case - north.
It will not affect energy, the largest Canada-to-U.S. import at all. And there will still be a private sector market for Canada's goods as well as U.S. government purchasing outside of the stimulus bill to keep Canada's exports at levels expected considering the global recession we all are experiencing.
It becomes difficult to justify some of the complaints from our trading partners. Or why Americans should have to defend providing jobs to other Americans.
It can be reasonably assumed that our trading partners have access to calculators and trade data. Employing both, together, may set their minds at ease.
Lost in Canada's fussing today is the simple fact that the health of the Canadian economy is inextricably tied to ours. Increased employment here leads to increased consumer spending which leads to stabilized merchandise exports for our neighbor to the north.
Our friends in Canada - and they are indeed our friends - should feel free to pass their own infrastructure spending bill to put their citizens back to work. We promise not to object at all.
Kerri Houston Toloczko is a senior analyst at the Alliance for American Manufacturing (AAM), a labor-management partnership of several leading U.S. manufacturers and the United Steelworkers.
