Unions call for "Buy Canadian" policy

TORONTO (Reuters) - Unions representing around 500,000 Canadians called on Tuesday for Canada to adopt a “Buy Canadian” procurement policy, similar to the “Buy American” provision in U.S. stimulus legislation that recently sparked an international debate on protectionism.

The president of the Canadian Auto Workers union and the national director of the United Steelworkers issued a joint statement saying that such a policy would promote economic growth in Canada and “put us on a level playing field with our major trading partners”.

They said the United States, Japan, South Korea, Mexico, China, and most member states of the European Union have domestic purchasing policies and that these policies are consistent with international trade agreements.

Ken Lewenza, of the CAW, and Ken Neumann, of the USW, said the policy would be aimed at making sure Canadians “receive the lion’s share of economic benefits from government spending”.

The Canadian government recently outlined C$12 billion ($9.8 billion) of infrastructure stimulus funding in the federal budget in an attempt to revitalize the wilting economy.

Recent data showed that Canada lost 129,000 jobs in January, the biggest monthly jobs loss on record.

The U.S. Senate is expected to pass a defanged version of a Buy American provision in its new stimulus bill on Tuesday.

The original version of the provision in the Senate bill would have required all U.S. public works projects funded by the massive U.S. stimulus package to use only American-made steel, iron, or any other manufactured items.

That triggered a vocal backlash from Canada, the EU, Australia, Japan, and China and dire warnings that a new era of protectionism could plunge the global economy into a depression.

U.S. President Barack Obama urged the dropping of any language that could spark a trade war.

The CAW and the USW criticized Canada’s response to the U.S. provision on Tuesday, saying it ignored the fact that Buy American rules for federal purchases have existed since 1933 and that Buy American rules for state and local transport infrastructure have existed since 1982.

The watered down version of the current U.S. provision now in the Senate says it must be “applied in a manner consistent with U.S. obligations under international agreements”.

Canadian International Trade Minister Stockwell Day voiced cautious optimism over the new wording last week.

“Not bad progress, but we’re not 100 percent out of the woods yet,” he said in Vancouver on Friday.

Canada and the United States have the world’s biggest trading relationship, worth more than $1.5 billion a day.

Once the U.S. bill passes through the Senate it has to be reconciled with the U.S. House of Representatives’ bill.

($1=$1.23 Canadian)

Reporting by John McCrank; editing by Peter Galloway