Canada: U.S. Import Bill 'Unnecessary'

Bill would force non-American manufacturers to have agents in an office 'in a state with a substantial connection to the importation, distribution, or sale of the products.'

WASHINGTON (CP) -- John Hayward, president of an Ontario industrial pump-maker, discovered just how closely the Canadian and U.S. legal systems are linked when his company was erroneously named in an American lawsuit.

Earlier this year, his Halton Hills-based company, Hayward Gordon, was cited in an asbestos-related suit in the Chicago area.

"When I called our lawyer in Toronto and told them they had the wrong company and asked if we could just ignore it, they said: 'No way,'" Hayward recalled in an interview on Tuesday.

"If you ignore it, they told me, the Chicago judge can enforce any judgment issued against us as though the judgment was in Ontario. We have an integration of our legal systems in the U.S. and Canada when it comes to manufacturing."

That's why Hayward, like countless other Canadian manufacturers and government officials, is puzzled about a bill currently making its way through U.S. Congress that would require every foreign manufacturer selling goods in the United States -- including those from Canada -- to have an American agent with an American address.

The Foreign Manufacturers Legal Accountability Act would mandate that every non-American manufacturer set up an agent in an office "in a state with a substantial connection to the importation, distribution, or sale of the products." The U.S. Secretary of Commerce would establish, maintain and make public a registry of the agents.

The agent requirement would enable the U.S. to serve papers to any foreign company selling defective products stateside. Its target is the Chinese, who have sold everything from toxic drywall to lead-infused paint and tainted pet food to Americans in recent years.

The bill is the brainchild of Democrats from the so-called Rust Belt, a heavy manufacturing area of the Midwest and northeastern United States that's been hard hit by the recession and the growing U.S. trade deficit. Democrats are facing tough re-election battles in the region in the upcoming mid-term elections.

Hayward lamented that Canadian manufacturers are once again becoming ensnared in a U.S. protectionist net that was not intended for them. China, too, was the main target of Buy American provisions in last year's economic stimulus package, legislation that resulted in protracted Canada-U.S. trade tensions.

"We can't hide behind the border as Canadian manufacturers," Hayward said.

"We had to hire a Chicago-based lawyer to go and defend this thing and get us taken out of the suit, but we had to do that, we couldn't just say: 'This is crazy and we're going to ignore it.' And that's huge. It renders this whole legislation, with respect to Canada, completely redundant. All it's going to do is add costs and bureaucratic hassles to all Canadian exporters."

Indeed, Gary Doer, Canada's ambassador to the U.S., is pointing out to congressional leaders this week that the act is attempting to solve a problem that does not exist between the United States and its largest trading partner. Instead, Doer has argued, it will add yet another layer of bureaucracy to a relationship crucial to the economic health of both countries and further hinder trade.

International Trade Minister Peter Van Loan says he hopes Canada will ultimately exempted from the legislation, which is expected to pass Congress without much difficulty in the weeks to come.

"We're always collateral damage in a battle with China or Mexico," Van Loan said in Toronto on Tuesday.

Canada isn't the only country nervous about the bill. The European Union has also complained to Nancy Pelosi, speak of the U.S. House of Representatives, about the legislation currently before her chamber of Congress.

Numerous business and industrial groups in the U.S. have raised alarms about the bill, and Japanese automaker Mazda has hired a powerful lobbyist to point out to Congress that such measures would violate World Trade Organization guidelines.

Hayward said he wishes the government would be more forceful in its battles with the U.S.

"In the United States, when times get tough, they look inward, and we're continuing to get hammered with these motherhood issues. The Canadian government has to get tougher about these things now. We need to tell them: 'OK, if you're doing that to us, we'll do it right back to you,' and see how that goes over."

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