Canada's PM concerned about U.S. financial system

Mon Feb 23, 2009 9:51pm EST
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OTTAWA (Reuters) - Canadian Prime Minister Stephen Harper voiced deep concern about financial systems in the United States and other countries on Monday and called on governments to avoid protectionism in their rescue efforts.

Harper said Canada, the largest trading partner of the United States, had expressed its concerns about the "Buy American" provision in the $787 billion U.S. economic rescue package but was sure the White House was aware of the dangers.

"There are trade provisions that allow you to have preferences in government procurement," he told CNBC. "But we think it's very important that, if we're going to kick-start this global economy, that administrations around the world avoid turning stimulus packages into protectionism."

From his conversations with U.S. President Barack Obama, Harper said he was "quite convinced that he understands how serious it is to avoid a protectionist drift."

Canada is in recession, like the United States and many other developed economies, and is in the process of bringing in a second round of economic stimulus -- a two-year package worth C$40 billion ($32 billion).

But Canada's tightly regulated financial sector has not suffered as much from the losses and exposure to toxic assets as its U.S. and European counterparts.

"We're obviously all hugely worried about the American financial system and about the financial system of some other countries," Harper told Fox News.

"Until that problem gets fixed, it's hard for me to see how we're going to turn the corner on this recession."

Harper, visiting the United States after Obama made a one-day trip to Ottawa last week, noted a "fairly cautious culture" and compactness in Canada's financial system, with just six big banks and three major insurance companies.   Continued...

<p>Canada's Prime Minister Stephen Harper departs after meeting with United Nations Secretary General Ban Ki-moon at the U.N. Headquarters in New York February 23, 2009. REUTERS/Chip East</p>