Obama Says Buy American Stimulus Rule Doesn’t Hurt Canada Trade

By Nicholas Johnston and Alexandre Deslongchamps

Aug. 11 (Bloomberg) -- “Buy American” rules that Congress included in the U.S. economic stimulus package don’t endanger free trade with Canada, President Barack Obama said after meeting with the leaders of Canada and Mexico.

“This has in no way endangered the billions of dollars of trade taking place between our two countries,” Obama said yesterday, noting that Canadian Prime Minister Stephen Harper raises the issue “every time I see him.”

The $787 billion stimulus measure approved in February stipulates that products purchased with the funds must be made in the U.S. That’s caused friction between the U.S. and Canada, its largest trading partner.

“It’s important to keep it in perspective,” Obama said during a news conference at the close of a two-day meeting with Harper and Mexican President Felipe Calderon in Guadalajara, Mexico. “We have not seen some sweeping steps toward protectionism.”

Along with trade issues, the leaders discussed flu-season preparations, Mexico’s battle against drug cartels, combating climate change and encouraging economic growth.

“We come here today, three nations, one continent, because of the challenges and opportunities that we will be facing together,” Obama said.

The “Buy American” provisions have prevented companies such as Ipex Inc., a Toronto-based pipe manufacturer, or Hayward Gordon Ltd., a pump and engineered-systems manufacturer in Halton Hills, Ontario, from taking part in infrastructure projects generated by the stimulus measure.

Working Collectively

“We did have a good discussion, as President Obama said,” Harper told reporters. “I’m very happy to see that our provinces and the federal government have recently come to an agreement to work collectively on this matter.”

Under the North American Free Trade Agreement, Canada’s provinces have the right to limit their government purchases to Canadian firms. The provinces have been working toward a proposal that would open up these procurements to foreign firms, with the hope that U.S. states and cities will do the same.

“There may be mechanisms where states and local jurisdictions can work with provinces to allow for cross-border procurement practices,” Obama said yesterday.

Harper said he anticipates the subject to come up when he meets with Obama again. Harper will visit Obama in Washington on Sept. 16.

Canada and the European Union led international efforts to get Congress to scale back a stimulus-bill provision saying that all the steel and manufactured goods bought with that money had to be made in America. Congress later agreed to soften that requirement, saying it would be applied in a way that complies with U.S. international obligations.

Seeking Growth

The three leaders agreed at the summit to “continue to take aggressive coordinated action” to restore economic growth in North America.

Obama also said the U.S. is a full partner with Mexico in the battle against drug cartels, and he praised Calderon’s “determination and courage” in fighting the illegal drug trade and resulting violence.

“I have great confidence in President Calderon’s administration applying the law-enforcement techniques that are necessary to curb the powers of cartels, but doing so in a way that is consistent with human rights,” Obama said.

Immigration

On his goal to overhaul U.S. immigration policies, Obama said he expects lawmakers to have completed a draft of legislation by the end of the year, setting the stage for congressional action in 2010.

“When we come back next year, we should be in a position to start acting,” said Obama, who as a U.S. senator from Illinois supported legislation to create a guest-worker program, tighten border security and set a path to legal status for millions of illegal immigrants. That bill failed.

Obama said the U.S., Mexico and Canada are united in supporting a return of democratic rule in Honduras after the ouster of President Manuel Zelaya.

Acting Honduran President Roberto Micheletti, backed by the Honduran Supreme Court, Congress and military, has refused to allow Zelaya to resume his term.

“For the sake of the Honduran people, democratic and constitutional order must be restored,” Obama said. “Our three nations stand united on this issue. President Zelaya remains the democratically elected president.”

To contact the reporters on this story: Nicholas Johnston in Guadalajara, Mexico, at njohnston3@bloomberg.net; Alexandre Deslongchamps in Guadalajara, Mexico, at 4801 or adeslongcham@bloomberg.net