Ontario's Premier Dalton McGuinty says the province's economy has "hit the wall" -- and the threat of protectionism in the United States isn't helping.
"I don't think there's any doubt that if given effect, those buy-American provisions will cause harm to the Ontario economy," he told reporters Friday in Ottawa.
"They will lead to further job reductions and more pain and anxiety for Ontario families."
About 80 per cent of Ontario's exports go to the United States.
The U.S. House of Representatives has appended a "Buy America" clause onto U.S. President Barack Obama's US$819-billion economic stimulus plan. Fore example, stimulus projects that require the purchasing of steel would be made to buy that steel from U.S. suppliers.
The Canadian steel industry, which is mainly centred in Ontario, exports about $7 billion worth of steel every year, with the U.S. being the primary customer.
On Thursday, Prime Minister Stephen Harper told the House of Commons that he would be asking the United States to be respecting its obligations under trade treaties such as the North American Free Trade Agreement (NAFTA).
The minority Conservative government just tabled a budget with a deficit of $34 billion for this year in an attempt to provide stimulus and blunt the effect of the growing recession.
Trade barriers in the U.S. to Canadian exports would make recovery much more difficult.
Ontario will be delivering its provincial budget in the coming months. CTV Toronto's Paul Bliss speculated that McGuinty could be trying to prepare Ontarians for some very bad news.
On Thursday, Finance Minister Dwight Duncan told reporters he expects a deficit greater than the current $500-million shortfall.
The Toronto Star suggested the figure could be between $5 billion and $10 billion. Proportional to overall provincial spending, such a deficit -- at its maximum -- would be about 23 per cent smaller than the projected $34-billion federal deficit.
NDP Leader Howard Hampton said he has no doubt things will be much worse for Ontarians in the aftermath of this downturn.
"Important industries, whole sectors of the provincial economy, have been disappearing under the McGuinty government. Which means those paper mills, those sawmill, those steel mills, some of those auto plants aren't going to be there if and when the economy should improve," he said.
Hampton suggested the McGuinty government hasn't been dealing with the building economic troubles.
Progressive Conservative Leader John Tory said Friday that McGuinty is the "last leader in the free world" to recognize that high taxes and spending chase away jobs.
However, some economic analysts have said that Ontario's manufacturing troubles, as one example, began when the Canadian commodities boom that started in 2002 began pushing up the loonie's value. This made Ontario exports less price-competitive. Ontario has shed at least 200,000 manufacturing jobs since 2002.
Bliss said McGuinty told the news conference that while his government had previously focused on shoring up education and health, it is now time to focus on fixing the provincial economy.
With a report from CTV Toronto's Paul Bliss and files from The Canadian Press
