When Barack Obama says "Buy American," countries that want to sell to America freak out. This week, between Obama signing his $787 billion (US) stimulus plan into law and his trip to Canada, media in our country have talked of little else besides how Buy American provisions of the stimulus might hurt us. But as a shopper who goes out of his way to choose a Nova Scotia apple over imports at the local grocery store, I hear only common sense in Obama's rallying cry. If he wants to spend a wajillion American taxpayers' dollars to help the American economy, the best way to do it is surely by buying American things from Americans. I don't have a problem with that. Should I?
"I have a problem that you don't have a problem with that," says Gilbert Winham, a political scientist who teaches international trade law at Dalhousie's law school.
Winham explains the highlights of the last hundred years of international trade. In the early 1900s, it was relatively easy for people, money and goods to go from one country to another. Two world wars later, the open relationship was understandably frayed. And between the wars was the Great Depression, when American politicians increased duties or tariffs on imported goods, causing other countries to respond in kind. High tariffs are an effective wall, making it too expensive for goods to get into a country, but when every country has walls there is no world market. "That's why the depression became so godawful bad," says Winham. "Trade simply broke down because of the tariff policies."
Since WWII, of course, countries have worked diligently to encourage the world's market. The World Trade Organization and deals like the North American Free Trade Agreement aim to keep business running smoothly and openly. "The world market is bigger than all other markets put together, if the world market is non-discriminatory," says Winham. The fear is that protectionism spread by Obama could be contagious, dragging the world's troubled economic system down even more. In that case, the stimulus plan would be a $787 billion brake.
Which brings me back to my apple. If Obama's common-sense inclination to buy American could drive the world to depression, does my well-meaning choice to shop local have unintended global consequences? "A pure economic model allows for the exercise of taste," says Winham. "As a consumer making a choice not to eat foreign apples, you are still dealing with the liberal system." However, if Canada slaps a $2 tariff on every apple at the border, that's the sort of protectionism that imperils the world market.
But there are layers of shoppers between individual consumers and heads of nations. An encouraging trend I'm seeing is municipal governments giving preference to local suppliers. A city can put out a call for playground equipment (or paving, or apples), and an allowance is made so that if a local's bid costs slightly more than an outsider's, the local could still get the contract. In Chicago, locals can be two percent more expensive: in San Francisco, five percent.
"If a $100,000 bid from a non-local firm leads to $1,000 in extra tax revenue, and a $102,000 bid from a local firm leads to $5,000 in tax revenue, which one is more sensible?" asks Bangor city counsellor Geoff Gratwick in a Maine magazine. More to the point, does making that choice constitute consumer taste, or government protectionism? Winham mulls this over before getting all lawyerly: "A tariff is a straightforward mechanism discriminating on one product and not another," he says, deciding that the case of a percent allowance in a bidding process is not protectionism.
If the local shopping cause can't have Obama, the world's mayors and councillors are a good consolation. Halifax has an ethical spending policy in the works. When I ask if city hall is considering ways to give locals preference in bidding, city spokesperson Deborah Story says they're bound by trade agreements to give everyone equal footing. Sounds like they need to speak to a lawyer.
Correction: Last issue's cover photograph of Jenn Grant was taken by Ivan Otis.
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