The Canadian behind 'Buy American'

BARRIE McKENNA AND GREG KEENAN

Wednesday, February 04, 2009

WASHINGTON, TORONTO — Leo Gerard is the quintessential Canadian.

The 61-year-old son of a Northern Ontario rock miner, Mr. Gerard went to work at the Inco nickel smelter in Sudbury at age 18. At ease in both French and English, the burly and outspoken Mr. Gerard quickly found his voice as a labour leader.

Those same skills eventually powered him into the job of international head of the 850,000-member United Steelworkers union, based in Pittsburgh - the first Canadian to hold the post.

Now, Mr. Gerard is the driving force behind a contentious Buy American clause in the monster U.S. economic stimulus package, a measure that Ottawa asserts is blatantly protectionist and anti-Canadian.

"It's time for economic patriots to stand up in our country," Mr. Gerard said last week in Pittsburgh, sounding distinctly un-Canadian as he argued that U.S. tax dollars should be used exclusively to put Americans back to work.

But in an interview yesterday, Mr. Gerard insisted that China, not Canada, is the main target of the Buy American rules. He added that he supports an exemption for Canadian steel and will make the case to key U.S. lawmakers at a meeting of the congressional steel caucus today in Washington.

"There is a lot of hypocrisy at work here," Mr. Gerard said, pointing out that Ottawa has done nothing in recent years to protect the Canadian steel industry from a flood of cheap Chinese imports. "Right now, we're here defending Canadian industry, and Canada isn't defending the Canadian industry at home."

The Steelworkers union, which represents thousands of Canadians, is at the centre of a triumvirate of unions, steel makers and politicians pushing to ban the use of all foreign goods and equipment in the $820-billion (U.S.) stimulus bill.

The Alliance for American Manufacturing is a key player in the lobbying campaign. The Washington-based group, which is funded by the steel industry and run by a former union lobbyist, advocates tough protections for U.S. steel, including strict enforcement of trade agreements. Among its "partners" are Mr. Gerard and John Surma, chairman and chief executive of U.S. Steel Corp., based in Pittsburgh.

The Buy American lobby also has powerful friends in Congress.

Indiana Congressman Peter Visclosky, chairman of the steel caucus in the House of Representatives, introduced the clause passed last week mandating that only U.S. iron and steel be used in stimulus projects.

Mr. Visclosky is a long-time ally of organized labour and recipient of millions of dollars worth of union donations over the years.

On the Senate side, the champion is North Dakota Senator Byron Dorgan, who has a long history of opposing free-trade agreements and railing against the dangers of foreign imports. Mr. Dorgan is also well known north of the border as a staunch supporter of restrictions on wheat, cattle and beef, as well as country-of-origin labelling and stepped-up border security on the 49th parallel.

The Senate version of the bill, which Mr. Dorgan drafted, goes even further than the House by mandating that all goods used in stimulus-funded projects be made in the United States - everything from toilet paper to computer software.

The Buy American push initially came from the steel industry and its workers, said Maryscott Greenwood, executive director of the Canadian-American Business Council. But with the economy in shambles, it's gaining much broader appeal, she added.

"The real anxiety of what's happening in the economy is causing people to insist that the next big-ticket government package had better create American jobs," she said. "There's a momentum to it."

The irony of a Canadian-born union leader promoting a policy that could run against the interests of his Canadian members isn't lost on Armando Plastino, president of Essar Algoma Steel Inc. of Sault Ste. Marie, Ont.

Two years ago, Mr. Plastino had a visit from Pentagon officials "who were pleading for increased shipments of ballistic armoured plate," he said yesterday. The U.S. military buys Algoma plate to help bolster armoured personnel carriers used in Iraq and other war zones.

The military is so happy with Algoma's steel that Pentagon officials asked to speak to the employees and thank them personally for their efforts, he said.

"It seems a little ironic," he said, that the Canadian steel is able to protect U.S. soldiers, but now gets affected by protectionist sentiment among U.S. politicians.

"I don't know if American steel buyers and American steel sellers will be able to discern the difference," he said.

"We have a variety of customers in the U.S. which we have been serving for a very long time," Mr. Plastino said, adding that 40 per cent to 50 per cent of Algoma's sales are in the United States.