nation brands
Posted by Reneé Alexander on September 17, 2009 10:12 AM
When is a free trade agreement not a free trade agreement? In the wake of “Buy American” provisions contained in Washington’s $787 billion stimulus plan, some companies on both sides of the 49th parallel are wondering.
Designed to give U.S. firms a leg up on foreign competitors, as the country struggles to recover from the biggest downturn since the Great Depression, the provisions are accused of seriously denting the biggest trade relationship both countries have, and of defying the 1988 Free Trade Agreement. Canadian critics warn that unilaterally breaking a treaty damages the core U.S. brand, since international trade depends on relationships and trust.
Some Canadian communities are responding in kind. About a dozen towns, including Halton Hills, near Toronto, are changing their purchasing rules to freeze out American goods. Yet an all-out trade war between close allies who exchange $2 billion worth of goods daily seems odd. If the problem isn't contained, it might complicate FTA renegotiations and both countries' coordinated response to fresh competition from China and India.
Reliability and trust are critical to the image of both the U.S. and Canada. It would be smart for policymakers from both countries to restore order on the trade front and rise above petty retaliation. Then both brands can stop taking a beating.
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