Engaging with U.S. states can hold back protectionist tide

Never mind Donald Trump, the Republican builder of border walls.

Beware kindred spirits — Democratic politicians — who might seem like soulmates, but remain protectionists in progressive clothing.

Ontario has just dodged a bullet — friendly fire, but no less menacing — from New York Gov. Andrew Cuomo.

Taking a page from Trump’s protectionist playbook (and harbouring presidential ambitions of his own), Cuomo inserted a “buy American” provision into his latest budget plan. By preventing Ontario companies from bidding on government contracts above $100,000 (U.S.), New York could have set a dangerous precedent for other states — falling dominoes setting the stage for cascading defeats.

Facing a double-barrelled threat from both Trump and Cuomo, Queen’s Park could feel the heat. With its export-driven economy now the fastest-growing in Canada, Ontario has more at stake than any jurisdiction north of Mexico.

Premier Kathleen Wynne has been riding the free trade train since Trump’s victory. In recent weeks, she has been on a whirlwind tour of U.S. state capitals, warning governors that they would reap the whirlwind of any protectionist measures they sow.

Notwithstanding Wynne’s plummeting popularity at home, she remains a persuasive interlocutor on the road. The premier has drawn on her close ties with Michigan Gov. Rick Snyder, with whom she shares a reliance on the auto industry and its interconnected supply chain.

She has also reached out to Ohio’s John Kasich, and the governors of Vermont, Indiana, Wisconsin, Colorado, Mississippi, Arkansas and Tennessee. On Monday, she was in Chicago comparing notes with Illinois Gov. Bruce Rauner, extolling the mutual benefits of unencumbered trade.

All well and good, but that’s not where the bad news emanates from. New York was ground zero for the buy-American juggernaut, and Wynne couldn’t get a hearing with Cuomo.

No face time, nor telephone time — thanks to the governor’s renowned reluctance to take calls from foreign dignitaries below the rank of Dalai Lama. Wynne’s talking points were persuasive, but first she needed an audience to explain that two-way trade with New York exceeds $22 billion a year, leaving U.S. firms no less exposed.

Frozen out, Ontario hired a wellconnected firm in Albany to lobby the governor’s office and state lawmakers. As Ontario gained traction, Quebec joined in, offering to split the lobbying costs.

Two Ontario cabinet ministers crossed the border to cajole their New York counterparts, reminding them of the province’s $160-billion infrastructure program that would be off limits to New York firms. David MacNaughton, Canada’s ambassador to Washington (and a former top aide at Queen’s Park) visited Albany.

The clear message, conveyed publicly and privately, was that any action from the governor would generate an equal reaction by the premier. Hostility begets reciprocity, which gives rise to an escalating trade war with no winners — though Ontario would surely be the bigger loser if the protectionist virus spread to neighbouring states.

The words were backed up by war drums. Wynne’s cabinet met last week to approve retaliatory legislation, to be announced and introduced this week, mirroring the buy-American provisions so that New York-based companies would be penalized in any provincial procurement.

But at the 11th hour last Friday — literally — the buy-American provision suddenly vanished from the New York state budget as it was passed into law. At 5 a.m. Saturday, Ontario officials got printed confirmation that the province would be spared.

Ultimately, Cuomo didn’t get the buy-in he needed for his plan. Now, after warning that “New York’s political leaders need to understand the risk . . . and consider what that might do to our modern partner- ship,” Wynne is reaching out again.

She wants to lure Cuomo out of his protective, protectionist shell by proposing a three-way summit with Quebec Premier Philippe Couillard. And she is trumpeting an internal free trade deal among recalcitrant Canadian provinces, belatedly cobbling together the kind of agreements already negotiated with the U.S., Mexico and now Europe.

These are small victories, but they forestall potentially greater defeats. By fostering close working relationships with American states, Wynne and her fellow premiers may help inoculate Canada against the unpredictably protectionist impulses of the White House.

After all, a former Indiana governor named Mike Pence — whom Wynne cultivated on his 2014 visit to Toronto — is now Trump’s vicepresident. If he still has a soft spot for subnational ties between states and provinces, Ontario’s efforts might be rewarded again. Martin Regg Cohn’s political column appears Tuesday, Thursday and Saturday. mcohn@thestar.ca, Twitter: @reggcohn