Saturday, May 16, 2009

The importance of free trade

Many people voted for Obama because they were distressed at the way relations between the United States and other countries deteriorated under Bush. So, how is Obama doing? I'll give you a hint: the place to watch is not the Muslim world, but Canada.

It turns out that many U.S. state and local governments have Buy-America provisions that apply to investment projects funded by the stimulus package. This has meant that businesses have cut off their Canadian suppliers, sometimes severing longstanding ties.

The Canadians aren't taking it lying down. They're doing the only thing you can do to get the other guy's attention: they're cutting off U.S. exports to Canada. This is called a trade war, and no trade war has ever benefited consumers or businesses overall, improved atmospherics between the two countries, or helped right a recession or depression.

Can anyone explain to me why it is in the U.S. interest to pick a fight with Canada? I don't know precisely what the White House or the U.S. Trade Reprsentative should do to fix this problem, but that's what they have lawyers for. Let's hope those lawyers are beavering away on a solution. (Thanks to Investor's Business Daily.)

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