Liberals prepare Buy American retaliation
The Liberal cabinet is set to consider retaliation against the Trump administration if it expands “Buy American” policies that threaten Canadian jobs.
A memorandum to cabinet obtained by the National Post notes there have been an increasing number of proposals in the U.S. to introduce new or expand existing buy local policies that provide incentives for companies to move manufacturing from Canada to the U.S.
“Such policies could result in the loss of hundreds or thousands of Canadian jobs,” says the document, which explains the issue and seeks cabinet approval.
One potential response could be to apply restrictions to the use of U.S. goods like iron and steel used in infrastructure projects in Canada that include federal funding, the memorandum says.
A Global Affairs spokesman declined to comment on the document.
President Donald Trump signed an executive order Friday demanding within 90 days a study of all the ways other countries use unfair anti-competitive practises against the U.S., and Canada is named as one of the 16 nations to be examined.
Canada has the smallest trade surplus of any of the countries being examined — much of it attributable to oil exports — and Wilbur Ross, the U.S. commerce secretary, said it is likely no action will be taken against some of the countries under examination.
“The United States regularly assesses what its partners are doing and what’s going on with the trade relationship between any two countries in the world,” Prime Minister Justin Trudeau said Friday. “The relationship between Canada and the United States is unlike the relationship between any two countries in the world.”
In public, Trudeau continues to emphasize the special relationship between the two countries that relies on the smooth flow of commerce across the border.
Nonetheless, the document indicates the Canadian government will consider its response in the event the U.S. takes action considered discriminatory.
“It is proposed that, in response to new or expanded U.S. measures that discriminate against Canadian goods or suppliers, officials may consider the possibility of imposing conditions on the origin of certain goods used in certain infrastructure projects, as a condition for receiving federal funding and in co-operation with recipient governments,” the memorandum says.
The document says due consideration would be given to the potential for increases in costs or delays in funding, as well as ensuring consistency with Canada’s obligations under its trade agreements.
Cabinet approval would be required to implement any specific measures that restrict the use of goods based on their origin, the document concludes.
Industry has long called on government to introduce “Buy Canadian” policies in response to U.S. protectionism, but Stephen Harper’s Conservative government resisted such calls. The Liberals, with plans to spend more than $180 billion over the next 12 years, appear more willing to act.
Global Affairs Minister Chrystia Freeland has already warned the Trump administration that Ottawa will retaliate if Buy American policies discriminate against Canadian producers. After sitting down in February with Donald Trump’s Secretary of State, Rex Tillerson, she told reporters that protectionist measures would be mutually harmful to both countries but that “Canada would respond appropriately” if Canadian jobs were threatened.
That is precisely the case in Western Canada, where Trump’s executive order that new oil and gas pipelines be built using U.S.-made steel could impact Russian-owned Evraz in Regina, which employs more than 1,000 people and is a supplier of largediameter steel pipe to TransCanada and Enbridge. Trump has given the green light to the Keystone XL pipeline but instructed the U.S. Commerce Department that new and expanded pipelines within the U.S. “use materials and equipments produced in the United States.” Evraz also owns mills in the U.S. and there are fears it may simply shift production south of the border.
The Buy American controversy precedes Trump’s presidency. In 2014, Congress approved the Grow America Act, which increased from 60 per cent to 100 per cent the U.S. content requirement on billions of dollars of federal transit projects.
Canada’s then-ambassador to Washington, Gary Doer, raised the prospect of retaliation against Buy American provisions included in new spending bills, warning the chairs of the Senate and House committees on appropriations that were considering restrictions that blocked Canadian companies from multi-billion-dollar clean water infrastructure projects.
However, the Harper government balked at the retaliatory Buy Canadian policies now being considered by the Liberal cabinet, arguing that economic growth is spurred by lowering trade barriers, not creating new ones.