U.S. President Barack Obama recently stoked fears of protectionism among Canadian businesses and politicians with the Buy American provisions in the country’s stimulus legislation. But even if the ultimate package contained no protectionist measures, domestic companies could still face a tough environment in the U.S., according to a web poll of Canadian CEOs conducted by COMPAS Inc.
“Established business relationships will fare well, but establishing new business in this climate will be a hard row to hoe,” wrote one respondent. “Whether Obama uses his executive powers to modify the legislation or not will not change the fact that the legislation reflects the sentiment of Americans at this moment in time.”
More than half of the 133 respondents said Canadian firms would be disfavoured by the U.S. public sector compared to American suppliers even if no protectionist measures were in place. Another 35% of the CEOs said Canadian companies would be on equal footing.
But the respondents believe Canadian exporters would still have an easier time selling to the U.S. government than would western European firms. They also believe it is more difficult for non-Quebec firms to do business with that province’s government than it is to deal with the U.S. government.
Even though Obama has since softened the language of the Buy American provisions, the very notion of protectionism riled a few of the CEOs. “During difficult economic times, there is usually a resurgence of protectionist sentiment in the U.S. We must also be prepared to play hardball with them in the form of some type of reciprocating measure if they don’t back down,” wrote one respondent.
Some CEOs appeared more willing to co-operate: “The best solution would be for the USA and Canada to integrate to a much higher degree. Each would need to make concessions in all aspects of our relationship to make it work.”