Groundhog Day for U.S. access
Like a B-movie beast that’s never quite dead, Buy American initiatives are a recurring nightmare that Canadian governments and businesses seemingly must confront again and again.
A change in White House residents is often the catalyst for a new round of angst-ridden negotiations to protect access for Canadian manufacturers, suppliers and contractors to lucrative U.S. government procurement opportunities.
How lucrative? Overall, government procurement deals are worth an estimated $600 billion annually.
In 2015, Canadian businesses gained U.S. government contracts worth about $647 million.
A shadow fell across that economic activity on Monday, when new U.S. President Joe Biden imposed tough new Buy American rules on government spending.
That included making exemption waivers — which Canadian companies have relied on for years to do business under such restrictions — much more difficult to obtain.
Under Biden’s executive orders, exceptions can only be made in “very limited circumstances,” including national security, humanitarian and emergency needs.
Needless to say, that’s also chilling news for Atlantic Canadian businesses that seek U.S. government procurement deals.
The federal Liberals have already begun talking to their American counterparts. On Friday, Prime Minister Justin Trudeau — knowing stricter Buy American rules were in the offing — made the case for continuing Canadian exemptions in a phone call with Biden.
The new president was reportedly receptive to working with Canada on the issue, but it’s still too early to know exactly what that will mean in concrete terms.
Canada and the U.S. have such interconnected economies, including deeply integrated supply chains, that the two countries usually, eventually, come to a mutual understanding that exempting Canadian firms from stringent Buy American rules benefits workers on both sides of the border.
In the interim, however, these initiatives create that most chilling of conditions — uncertainty — for Canadian businesses, which can dampen investment and hurt employment.
Politicians and business leaders here will once again have to make their well-worn case to a new American administration, explaining Canada represents the United States’ largest export market and the biggest customer for more than 30 states.
Hopefully, Biden, vice-president when former president Barack Obama granted Canada exempt status under his Buy American push in 2010, will be familiar with the rationale.
The United States-Mexico-Canada trade agreement signed under former president Trump does not include specific provisions for government procurement.
Federal officials in Ottawa seem confident they can negotiate exemptions for Canadian companies, and that there’s time before the new made-in-America rules begin to bite.
But until there are firm agreements, Canadian firms — including those across the Atlantic region — will be watching how, and how quickly, the new rules get implemented.