Rebuilding Canada-U.S. ties in Buy American era
In his virtual meeting with Justin Trudeau this week, Joe Biden’s plans for a renewed Canada-U.S. partnership ruled out harm to Canada by the new U.S. administration’s feared tightening of Buy American policies.
No, U.S. President Biden did not backtrack on stiffening the U.S.’s 88-year-old Buy American measures. Nor did he exempt Canada from Buy America with waivers that former president Barack Obama granted, and which Prime Minister Trudeau will be seeking in coming months.
What Biden did was enlist Canada as a partner in about half a dozen of his young administration’s highest priorities.
They include joint action on the COVID-19 pandemic; the most ambitious fight against climate crisis yet attempted; and a robust North American economy recovery that recognizes the unequal suffering that the pandemic recession has caused.
There’s more.
Biden wants Canada and the U.S. to act in unison on rebuilding international institutions and alliances like the World Health Organization and the Paris climate agreement.
And Biden seeks closer co-operation between Canada and the U.S. in confronting China’s trade and humanrights abuses.
“Canada and the United States are going to work in lock-step to display the
seriousness of our commitment both at home and abroad,” Biden declared on Tuesday, as he and Trudeau unveiled their U.S.-Canada Partnership Roadmap.
“Lock-step” is what the American president expects of Canada and U.S. across a range of pressing issues.
That is an audacious proposition, especially after four years of anti-Canada belligerence from our southern neighbour.
But Biden knows who he’s dealing with.
On Jan. 22, Trudeau said of Biden, “We now have a president who is much more aligned with not only my own values as prime minister, but also with the values of Canadians.”
Ottawa does support the initiatives on Biden’s to-do list of top priorities. It’s also true that few of Biden’s goals can be achieved, at least not to the fullest of the new president’s ambitions, without Canada.
On climate crisis, for instance, a U.S. newly determined to reduce GHG emissions is counting on the growing electric-vehicle output of the Southern Ontario auto sector. Most of its products are exported to the U.S.
And on China, Biden can’t readily expect support from the European Union (EU). At least for now, the EU is inclined to accept China as it is, and not risk lucrative trade ties with the world’s second-largest economy.
So, the first step in creating a global common front on China, climate crisis and inclusive economic recovery is to ensure that Canada is enthusiastically on board.
Needing Canada’s joint leadership as much as Biden says he does rules out deliberate U.S. economic injury to its biggest trading partner.
Besides, sweeping trade actions against Canada make no sense. In 2020, Canada’s trade surplus with the U.S. in goods was a minuscule $15 billion (U.S.).
America’s trade deficit in goods with China last year was a worrisome $310.8 billion.
The steep tariffs against Canadian steel and aluminum imposed by Biden’s predecessor were far more injurious than the most extreme iteration of Buy American one could imagine.
In January, Biden threw a scare into Corporate Canada, never a tough thing to do, by urging U.S. government agencies to do a better job of finding American suppliers for the close to $600 billion worth of goods and services they buy each year.
But Buy American applies only to U.S. federal contracts. Contrary to a widely held mistaken belief, Buy American does not apply to government procurement by U.S. states and
municipalities, the biggest U.S. government importers of Canadian products.
And the Buy American provisions were already so strict that Biden was hard-pressed to find ways to further tighten them.
That explains why sales of Canadian goods and services to Uncle Sam account for less than 0.1 per cent of Canadian GDP.
Of far greater potential impact on Canada is the $1.9trillion economic stimulus package for which Biden’s team is trying to secure approval from Capitol Hill.
Much of that colossal sum is committed to infrastructure, which will consume huge amounts of Canadian steel, aluminum, and other construction materials.
While that stimulus money originates in Washington, it will be dispersed to state and local governments. They are free to purchase from the most reliable, low-cost bidder.
And that often will be Canada.
The above is not meant to describe a perfectly ideal relationship between Canada and the U.S.
Chronic trade disputes between the two countries over lumber, milk and other commodities are likely to continue.
And the U.S. is currently engaged in “vaccine nationalism.” With one phone call, Biden could release to Canada the U.S.-made vaccines that we ordered and that should have been here by now.
Finally, the lengthy Chinese incarceration of Canadians Michael Kovrig and Michael Spavor traces to a U.S. arrest warrant for a Chinese national on Canadian soil. Canada has suffered mightily for acting on that U.S. warrant.
Biden said Tuesday of Kovrig and Spavor that “We’re going to work together until we get their safe return.”
It’s difficult to imagine the release of Kovrig and Spavor except that the U.S. first rescinds that arrest warrant. So, make that two phone calls. That would greatly speed the creation of the unprecedented Canada-U.S. partnership Biden seeks.
The first step in creating a global common front on China, climate crisis and inclusive economic recovery is to ensure that Canada is enthusiastically on board