TORONTO - A softening of protectionist trade language in the American economic stimulus package is good news for Canadian and global business, but the fight for free trade doesn't end there, International Trade Minister Stockwell Day said Thursday.
Day credits the "power of diplomacy" for the package that now includes a requirement that international trade agreements such as NAFTA must not be violated.
While Prime Minister Stephen Harper's instructions to ministry officials are: "Free trade deals are us," Canada must still protect its own interests, Day said.
"We try and stay away from retaliatory trade practice and building trade walls, but we do have mechanisms in place if we feel that Canadian product is facing an unfair or subsidized disadvantage," Day said, adding Canada is currently using some of those mechanisms with China.
"We are free traders, but we believe in referees."
Day, who had warned of the spectre of Depression-era trade wars, told the Toronto Board of Trade that free trade is the key to surviving the economic downturn.
"If you really want to protect your workers, you really want to protect an industry, you open up the doors of opportunity," he said.
"You increase their chances to market their products. You don't slam those doors."
Prime Minister Stephen Harper and Mexican President Felipe Calderon spoke over the phone Wednesday about the "Buy American" clause and agreed to work together to fend off American protectionism.
The softening of the provision came late Wednesday night, just 24 hours after President Barack Obama warned senators about the dangers of protectionism in the face of a global economic meltdown.
Canada, the European Union and several prominent U.S. corporations had complained bitterly about the provision, saying it risked violating world trade agreements and could spark a litany of global trade skirmishes.
But European Union steelmakers were not happy with the changes and threatened Thursday to take the issue to the Geneva-based World Trade Organization.
Gordon Moffat, the head of EUROFER, the steel makers' association, said the bill "goes directly against the political engagement of the G-20 to refrain from raising new barriers to trade."
"It is a protectionist measure. It sends the wrong message to the world exactly at the time that everyone should be working to keep markets open," Moffat said.
Canada was more comforted by the amendment passed by the U.S. Senate this week than some other countries since the protection it offered targeted countries that belong to the North American Free Trade Agreement and the World Trade Organization.
The "Buy American" bill must still go back for reconciliation between the U.S. Senate and U.S. House of Representatives, where its version of the bill contained the requirement that all steel and iron used in the package's infrastructure projects are American-made.
Day said officials had been pressing Canada's interests "non-stop, 24/7, full-court press" and will continue to work diplomatic channels to ensure protectionist measures don't creep into the bill during that process.
"We feel very good about the progress," he said. "I'm not saying it's over."
Senator John McCain had attempted to kill the provision outright, which Day said "would have been nice" to see.
