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The New Economy

Obama: 'Buy American' hasn't hurt trade

By / August 10, 2009

Canada's Prime Minister Stephen Harper (left), Mexico's President Felipe Calderón, and US President Obama held a three-nation summit Monday in Guadalajara, Mexico. The economy was one of three items on their agenda.

Eliana Aponte/Reuters

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Job losses. Bankruptcies. Business failures. They've all been part of the world's great recession, just as they were part of all previous downturns.

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But one effect has largely gone missing: protectionism.

So when President Obama and his counterparts in Canada and Mexico each emphasized their nations' rejection of protectionist measures in Monday's three-nation summit in Guadalajara, Mexico, they could afford to make pro forma statements rather than special pleading for global restraint.

That is no small accomplishment for the world's global trading system. Despite a plunge in exports and imports in many nations around the world, governments have mostly avoided tit-for-tat moves against imports. In the 1930s, a rapid slide toward protectionism among large nations lengthened and worsened the Great Depression.

That's not to say that current protectionist measures haven't edged up. Nations' initiations of antidumping duties – a tax on imports – rose 28 percent from 2007 to 2008, the World Trade Organization (WTO) said in its annual report (.pdf) late last month.

The US itself has come under fire for a "buy American" provision in the Obama administration's stimulus plan, which forces companies receiving stimulus money to buy American raw materials and equipment.

But when asked about it at a post-summit news conference, Canadian Prime Minister Stephen Harper only said the issue would probably crop up again. Mr. Obama tried to put it "in perspective."

"We have not seen some sweeping steps toward protectionism," Obama said. The provision "was introduced at a time when we had a very severe economic situation, and it was important for us to act quickly.... [But] this in no way has endangered the billions of dollars of trade taking place between our two countries."

That same general tenor – examples of protectionism but not a radical outbreak – seems to be holding, so far, for the rest of the world, according to the WTO's recent report. "Evidence to date suggests some increase in the use of measures that restrict trade, but so far against a background of general restraint."
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