OTTAWA - Retaliating against U.S. states and cities for adopting Buy American measures is like throwing a grenade in a confined space, says Trade Minister Stockwell Day.
"Everyone gets hurt," Day told a Canadian Chamber of Commerce luncheon Wednesday.
Day said he was concerned to hear a group of Canadian municipalities want to bar companies in protectionist countries from bidding on procurement contracts in Canada.
Stories are emerging from across the country about Canadian businesses shut out of contracts because of local or state-level protectionist policies -- and frustration is rising about the government's reaction to the problem.
The resolution is coming before the annual general meeting of the Federation of Canadian Municipalities this week.
In Quebec City, Prime Minister Stephen Harper said he wants governments to look at avoiding "creeping protectionism" when it comes to national purchasing policies.
"In a time where we're trying to keep borders open internationally I do think that the proliferation of domestic preferences in some national government procurement is really problematic," he said at a news conference.
"It is part of creeping protectionism, not just in the United States but elsewhere that we must avoid to ensure a global recovery."
The prime minister mentioned the Buy American policy of U.S. President Barack Obama's government but did not single out the United States.
Day, meanwhile, said he would prefer to continue exerting pressure on different levels of the U.S. government.
Although Obama has spoken out against protectionism, and had a pro-free-trade clause inserted into the stimulus package earlier this year, Buy American measures are still being adopted throughout the United States.
"We would certainly be encouraged if he would take some practical means to enforce that at the congressional level," Day said.
"And I'm hoping that our colleagues at the congressional level will understand that if they really want to protect their workers and their jobs, the way to do that is to open up doors of opportunity, not close them."
But there are indications that raising the stick of retaliation is already making waves.
The New York Times ran an editorial Wednesday specifically noting that some Canadian municipalities were threatening action.
It also criticized Obama for not taking more decisive action against protectionist measures that keep popping up.
The Mexican government captured the Obama administration's attention when it slapped staggering tariffs on certain goods after Mexican trucks were restricted from transporting goods deep into the United States.
Canada's major business groups, such as the chamber and Canadian Manufacturers and Exporters, are pushing the idea of a new free-trade deal with the United States specifically on procurement.
Day would not directly endorse the idea, but noted that the provinces are at the table as Canada looks at a free-trade deal with the European Union, which would include procurement issues.
"The provinces and most of our municipalities, to their credit ... have allowed free trading and cross-border bidding. We want to see that continue, and we are involved at the provincial level in terms of what possibilities there might be there."
The House of Commons passed a bill Wednesday approving a free-trade deal with Peru. Another proposed deal with Colombia is facing more opposition, and taking longer to get through the parliamentary process.
The government released its annual trade and investment update Wednesday, reporting that exports of goods and services increased by 5.2 per cent in 2008. Of that, 73 per cent went to the United States -- a number that is shrinking over time as Canada tries to expand trade with other regions.
Foreign direct investment grew by a meagre 2.8 per cent last year.
