New chair, no excuses for infrastructure bank

Catherine Mckenna’s reboot of the Canada Infrastructure Bank (CIB) is almost complete and she has recruited a heavyweight chair to replace Michael Sabia, who gave up oversight of the star-crossed institution when he was named deputy minister of finance in December.

Tamara Vrooman, chief executive of the Vancouver Airport Authority, has agreed to lead CIB’S 10-member board of directors, ensuring that leadership will no longer be an excuse for failure going forward. Mckenna, who took over as infrastructure minister at the end of 2019, is scheduled to make the official announcement on Thursday.

The appointment is a coup for Mckenna. Vrooman, who led British Columbia’s finance ministry in the mid-2000s when the province achieved a AAA credit rating, was on several shortlists for federal appointments.

during his campaign for president, Biden had promised to protect u.s. manufacturing jobs and in a press release on Monday, he said his order means “that when the federal government spends taxpayer dollars they are spent on American-made goods by American workers and with American-made component parts.”

The order also creates a new agency to review all waivers of the Buy American requirement, and which will publicly report the details of any waivers.

Waivers should only be “used in very limited circumstances — for example, when there’s an overwhelming national security, humanitarian or emergency need,” Biden said.

While that appears to draw a clear line in the sand, which would restrict Canada from any fiscal stimulus measures, there’s always a chance it may not.

Conservative MP Tracy Gray, the party’s international trade critic, has pointed out that a decade ago, Stephen harper’s government won waivers for Canada from the Buy American Act. She urged Prime Minister Justin Trudeau’s Liberal government to push for a similar exemption.

“Canada and u.s. trade are closely tied — but this Buy American plan puts our mutual economic recovery at risk,” she said in a statement.

Trudeau said Tuesday that the federal government was able to negotiate the u.s.-mexico-canada Agreement, former u.s. President donald Trump’s steel and aluminum tariffs and can manage the latest protectionist move by the u.s.

“Over the past four years, we faced an American administration that was both unpredictable and extremely protectionist, and we were able every step of the way to stand up for Canadian interests,” Trudeau told reporters.

But how much money is at stake for Canada?

Mark Agnew, senior director of international policy at the Canadian Chamber of Commerce, acknowledged it was likely a small amount.

The most recent data he could find was a 2019 u.s. government report that showed in 2015 Canadian businesses won about us$674 million in federal procurement contracts.

That amounted to 0.04 per cent of Canada’s gross domestic product in 2015, which clocked in at us$1.56 trillion, according to the World Bank.

“It wasn’t gobs of money that was going outside the u.s.,” Agnew said, “because the rules were already so strict.”

Still, he tied the issue into a broader question about the North American regional economy. Some of Canada’s most important industries are already integrated with the u.s. economy, and if Canada is lumped in with every other foreign country, that could erode some of the ties.

So far, there is still hope that the Biden Administration will be open to strengthening ties with Canada.

having endured two rounds of the Trump Administration’s aluminum tariffs, Jean Simard, president and chief executive of the Aluminum Association of Canada, said he doesn’t foresee any impact from the new Buy American policy on his industry.

More than 85 per cent of the aluminum produced in Canada flows into the u.s. The military purchases some aluminum, but in small volumes, and usually with proprietary shapes and alloys, which would make it exempt, he said.

Porter, the BMO economist, agreed that ‘Buy American’ is concerning in part because it ties into trade protectionist tendencies that have historically dominated the u.s. democratic Party.

But he said Canada’s economy is already so integrated with the u.s. that regardless of any effects of the Buy American policy, it is poised to benefit, directly or indirectly, if the Biden Administration pushes an aggressive fiscal stimulus package.

“To me the most important thing for the Canadian economy is the extent to which the u.s. economy recovers over the next year,” said Porter.

On the bright side, he said the Biden Administration appears more open to cooperation than the Trump Administration, which he said was characterized by unpredictability and squabbling with Canada.