This article was originally published in Business Day (South Africa) on 7 July, 2009.

 By Alec van Gelder

 A SWEET-talking US President Barack Obama played down fears about the “Buy American” clause in his stimulus package but it has started a trade war not just with traditional opponent China but with close ally and biggest economic partner Canada. The rot is spreading around the world.

 After denouncing Buy American as “protectionist poison” when it was originally launched in February, China’s own 586bn stimulus package includes Buy Chinese rules. Similar ideas have been promoted in the Philippines and Australia. Tariffs have risen in other countries, such as Russia and Ecuador. Some foreign products have simply been banned in India and new, even higher, dairy subsidies in the European Union threaten thousands of producers around the world.

 Obama’s Buy American provision in the American Recovery and Reconstruction Act covers all public works receiving federal money: at the last minute he said the US would not let that infringe on any trade pacts, but this ruling has little effect on spending at state level.

 Similarly, 70 years ago the Smoot-Hawley Tariff Act of 1930 kicked off a tit-for-tat among the US’s main trading partners and triggered a wave of economic nationalism that helped cause the Second World War.

 Protectionism made no sense then and it makes even less sense now. Today’s global economy is much more integrated and we are all much better off because of reduced trade barriers — especially the poorest countries.

 African countries that have opened up trade in the past decade have prospered while their neighbours have stagnated. Mauritius, SA and, recently, Mozambique show the way: since 2001 Mozambique has cut tariffs across the board, trade has more than doubled and record growth has boosted gross domestic product and cut poverty.

 The reverse is easily achieved. For all the hand-wringing about China, Canada is the US’s biggest partner, forming two of the world’s most integrated economies — 1,5bn in goods and more than 300000 people travel both ways across the massive border every day. The value of trade crossing between Windsor, in Ontario, and Detroit, in Michigan, is equal to all of Japan’s exports to the US. Canada is a bigger market for US goods than all 27 countries of the European community combined.

 And what does “American” mean in a globalised economy? Four thousand shipments of ingredients for Campbell Soup products crossed from the US into Canada each day and 3500 came from Canada into the US, CEO Doug Conant said recently. Some of the vegetables cross the border twice, when ingredients from processing plants in both countries are mixed, packaged and distributed to retailers across the globe.

 In Pennsylvania, Duferco Farrell, a Russian- Swiss partnership, took over a bankrupt steel plant in the 1990s and employed 600 people. Its biggest client, a steel-pipe maker 2km down the road, recently told Duferco it was cancelling orders in favour of firms with 100% US production, to comply with the American Recovery and Reconstruction Act. Duferco has laid off 80% of its workforce. Executive vice-president Bob Miller said: “I’ve got 600 United Steel Workers out there who are going to lose their jobs because of this. And you tell me this is good for America?”

Buy American threatens the 350% rise in trade with Canada since 1985 that came from lowering barriers and creating the North American Free Trade Agreement. Any countries anywhere can reap that kind of benefit.

 Predictably, the backlash against Buy American has already spawned a wave of self- mutilating protectionism elsewhere, including Canada’s “Do Not Buy American” campaign.

 It is frightening that open borders can be shut down by one misguided law, especially when wreathed in pious statements condemning protectionism. But free trade can quickly be restored or introduced and it is the quickest way out of recession: don’t strangle it.

 - van Gelder is project director at the International Policy Network and co-ordinator of the Freedom to Trade campaign.