Canada sees resistance to any U.S. protectionism

Sat Jan 31, 2009 12:52pm EST
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By Frank McGurty

TORONTO (Reuters) - Canadian Finance Minister Jim Flaherty said on Saturday any protectionist moves by the United States or other countries would meet resistance around the world but Canada would not erect trade barriers of its own.

"There is a clear consensus here that protectionism needs to be avoided, that protectionist is a direction we need not go," Flaherty said during a conference call after a meeting with other finance ministers in Davos, Switzerland.

When asked what reaction any moves by Washington toward protectionism might provoke globally, Flaherty said: "They will be met by resistance by the finance ministers. That's been a consistent message here."

The issue took center stage at the annual World Economic Forum meeting in the Swiss ski resort after the U.S. House of Representatives this week passed a $825 billion stimulus bill with so-called "Buy American" provisions.

The U.S. Senate is to begin debate on Monday on its version of the stimulus bill, including a measure that expands the House language of "Buy American."

The Obama administration said on Friday it was reviewing its position on "Buy American" after trading partners sounded the alarm that it could shut out foreign-made steel and iron used for projects funded by the stimulus package -- or an even broader range of manufactured goods under the Senate version.

Canada, the top trading partner of the United States, every year exports about C$6 billion ($5 billion) worth of steel and iron to its southern neighbor.

Canada and other nations fear "Buy American" barriers could trigger a cycle of retaliation that would strangle world trade and undermine efforts to end the global economic crisis.   Continued...

<p>Canada's Finance Minister Jim Flaherty delivers his post-budget speech at the Whitby Chamber of Commerce brunch in Whitby, January 28, 2009. REUTERS/Mike Cassese</p>