OTTAWA - A new paper argues that Buy America provisions will bite Canadian suppliers so hard next year that the economy in general will underachieve expectations.
The paper by the Canadian Imperial Bank of Commerce predicts the Canadian economy will rebound to two per cent next year, a full point below the Bank of Canada's outlook.
And the main reason, says the bank's chief economist, is that the central bank has built in a stronger rebound for exports than the CIBC.
That won't happen, says the CIBC's Avery Shenfeld, because Canada is being shut out of the benefits from the U.S. turn-around that is being fuelled by almost $1 trillion in government stimulus. Ottawa and Washington have begun negotiations on the Buy America issue, but Shenfeld says even if successful, it will likely come too late to avoid most of the pain the provisions will inflict next year.