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The week (so far) in review: Buy Canadian, Canada on track

It’s only Tuesday, but it’s already been a busy week on the political front. In case you missed it, here’s a quick rundown on what’s happened so far.
June 6: On Saturday, 189 of Canada’s mayors passed a non-binding resolution that would forbid Americans to bid on municipal contracts. That’s in response to the States’ Buy American clause that prevents certain businesses outside the U.S. from participating in the country’s infrastructure projects.
Will it work? Unlikely. Nearly as many mayors who were in support of the resolution were against it, with 175 voting no. One person who’s opposed to the idea is Toronto mayor David Miller, who said it made no sense. If Canada’s biggest city isn’t behind this, then it doesn’t carry much weight. As well, the mayors said they’ll wait 120 days before acting on the resolution to give the Americans time to change their policies. Even if nothing happens, four months is plenty of time for this made-in-Canada protectionist policy to fall by the wayside.
June 8: Finance Minister Jim Flaherty gets chatty at the 15th International Economic Forum of the Americas in Montreal. He says two important things. He told his audience that the budget will now be “slightly more” than $50 billion. It’s likely no one gasped when he said that, since by now we all know that deficit projections, at least the Federal government’s, are somewhat meaningless. As well TD Economics recently reported that Canada’s debt will balloon to $630 billion over the next five years, with 2009-2010 coming in at $51 billion. TD actually had previously pegged this year’s deficit at $40 billion, so it seems as though no one knows what they’re talking about when it comes to this country’s debt.
At the same conference Flaherty remarked that Canada is leading developing nations on the economic recovery front. “What I see in the Canadian economy is some indications of stabilization and some positive indications about people being willing to spend again. And as the recovery takes hold Canada will lead the way in a stronger position than ever.”
That comment coincides with a report, released Monday, by the Organization for Economic Co-operation and Development, which revealed that Canada is one of four countries that may have hit bottom. (France, Italy and Britain are the others.) Effectively, Canada will be one of the first to come out of the recession, said secretary-general Angel Gurria at the Montreal conference.
Is Flaherty right? Probably. Canada fell into a recession slower than the States and without the bank closures and sub-prime mess our southern neighbours got themselves into, we’re a little less sickly than other countries. On Monday, Stats Can revealed that housing starts in May were up 9.2%, a good sign, but that bright light at the end of the tunnel isn’t shining just yet. The increase was over April’s 13-year low, so things are still looking mighty bleak compared to other years. And really, it’s not the short-term that people need to worry about, it’s the long-term. The economy might turn around soon, but how long will it take for the markets to get back where they were before the bust and for enough jobs to be created to employ all the Canucks who’ve been laid off this year?
June 9: Maybe the mayors were onto something? The point of the Buy Canadian resolution was, likely, not to actually refuse U.S. business, but to put pressure on Canadian politicians to do something about America’s protectionist policies. Already International Trade Minister Stockwell Day has called on Barack Obama to reassure Canada that business won’t be affected between the two countries and Canada’s U.S. ambassador, speaking at that Montreal conference, said that progress is being made on the Buy American front.
So kudos to the mayors for putting the issue back in the news, even though their resolution will ultimately be forgotten.
The conference is still on for two more days, so expect plenty more juicy economic news as the week unfolds.