19 February 2009

Oh ... Iowa!

The President stumbled a little when he said, "It's a great pleasure to be here in Iowa - Ottawa."

He then got down to business, saying "I love this country ..." However, Canada's current love of the President may be short-lived if he follows through on his interest in renegotiating NAFTA. The Guardian reported on ongoing tension between the US and Canada that began when the President was running for office. At that time, he made clear that his support for and by labor unions would necessitate a retreat from some of our trade obligations. Since winning the election however, he's backed away from some of his more hard-line statements, hinting that he would merely be interested in modifying some of the terms of NAFTA.

The president muddied his position on Nafta at the press conference by adding something positive. "Now is a time where we have to be very careful about any signals of protectionism," he said, adding a promise that the US will meet its international trade obligations.

Harper was equally anxious to avoid signs of a split. "I'm quite confident that the United States will respect those obligations and continue to be a leader on the need for globalised trade," he said, though he did not sound totally convinced.

As well as concern over Nafta, the Canadian government has been alarmed by other protectionist moves by Obama such as the "buy America" provisions in his $787bn economic stimulus package, which originally proposed only US steel be used for infrastructure projects. The "buy America" provisions have since been watered down, with Obama saying the US would not do anything that ran counter to existing trade agreements.

If the President is to continue our good relationships with our closest neighbors, as well as those in Europe and elsewhere, he is going to have to avoid falling into the trap of protectionism and retreat. Indeed, the recent issue of The Economist warns against just such a trap (February 7, 2009). In the cover article titled, "The return of economic nationalism," the journal argues that the 'spectre' of 'economic nationalism' will sink the world into depression if given free reign. This argument is all too correct. We must avoid the isolationist tendencies that damaged both the US and the globe following WWI and leading up to WWII. I just hope President Obama is listening. Sinking into this trap would be a far more serious stumble.

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