As the "Buy American" plan in US economic stimulus legislation draws increasing criticism, Canadian municipal leaders threaten to retaliate against the movement, which it deems contrary to free trade.
The Federation of Canadian Municipalities, in an effort to get the "Buy American" restrictions removed, took a step to support communities which refuse to trade with countries that put business restrictions on products and services from Canada.
The move came in response to a stimulus package passed by US Congress in February which requires projects funded with stimulus money to use only US-made steel, iron and manufactured goods.
The "Buy American Act" is designed to create jobs - or rather prevent more job losses - in the United States in a bid to revive the country's recession-hit economy.
"This US protectionist policy is hurting Canadian firms, costing Canadian jobs and damaging Canadian efforts to grow our economy in the midst of a worldwide recession," said Sherbrooke, Quebec, Mayor Jean Perrault, also president of the federation that represents cities and towns across Canada.
"Leaders in the United States have to understand this could have unintended consequences," said Clark Somerville, acting mayor of Halton Hills, one of the sponsors of the retaliatory measure.
The municipal officials endorsed the measure despite Canadian trade officials' disgruntlement with the proposal who cite fears that any retaliation effort could have unintended consequences of its own for Canada.
Canada has agreed to give trade officials and US critics of the "Buy American" more time to work on the issue by suspending implementation for 120 days.
Following tougher security measures along the US-Canada borders and “Buy American” restrictions, relations between the two neighbors seem to be experiencing difficulties.
Citing that more than 250 Canadian companies have lost contracts -- and subsequently jobs -- due to the act Jayson Myers, president of the Canadian Manufacturers and Exporters, said that the two sides could "get into some retaliatory trade war around procurement."
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