Monday, February 9, 2009

The Protectionist Virus: Editorial

(National Post)

Protectionism is one of those bad ideas that never seems to go away, no matter how many economists remind us just how discredited it truly is. Whenever there is any sort of downturn, you will always find some populist faction or other willing to peddle the idea as the solution to a nation’s ills.

In the United States, this intellectual bottom-feeding has taken expression in the proposed “Buy America” provisions of the stimulus bill slowly taking form on Capitol Hill, which would require that any steel and iron (and, possibly, other materials) used in stimulus-funded projects be purchased from domestic suppliers. To his great credit, President Barack Obama opposes this restriction. But the Buy America bill has significant support in Congress, as well as among the trade unions on which the Democrats rely for support.

Here in Canada, on the other hand, the two major federal parties have shown a refreshing reluctance to engage in protectionist sabre-rattling. As Allan Gotlieb and Milos Barutciski noted in Saturday’s National Post, provincial governments, too, generally have refrained from talk of trade barriers. The current crisis, the two authors note, gives Canada the opportunity to “reclaim our historic role as one of the world’s greatest trading nations.”

Unfortunately, not all Canadian politicians are similarly farsighted. Somewhat predictably, NDP leader Jack Layton is arguing that Canada should adopt a “Buy Canadian” strategy.

“The United States has had a ‘Buy American’ act for 76 years,” Mr. Layton declared last week.

“It’s perfectly legal under the World Trade Organization, and, in fact, under NAFTA, governments are allowed to buy at home in order to use taxpayers’ money to create jobs for workers and to support communities and their industries ... Mexico, China, Japan, South Korea, they all have national procurement policies, and it would be a good idea for Canada. Can the prime minister tell us what’s wrong with a ‘Buy Canadian’ policy as permitted under continental and global trade rules?”

One cannot be struck at how the far left, which casts itself as all in favour of peaceful internationalism in just about every other context, always lines up with the economic Luddites when it comes to trade. Read more here.