National Post (National Edition)
BYE, AMERICA?
CONCERNS GROW CANADA COULD BE SHUT OUT OF BIDEN'S US$2T INFRASTRUCTURE SPENDING.
OTTAWA • The federal government's chief trade negotiator is concerned that Canada could be shut out of U.S. President Joe Biden's trillion-dollar infrastructure spending plans, the latest sign of continued anxieties over America's protectionist trade policies.
Congress last week approved Biden's massive $1.9-trillion COVID-19 relief package, composed in part of infrastructure spending measures aimed at rebuilding U.S. roads and bridges and expanding zero-emission public transit and electric-car infrastructure.
Steve Verheul, chief trade negotiator for Canada's foreign affairs department, said Canada is largely exempt from so-called “Buy American” provisions introduced by Biden through an executive order last month. But Canadian officials are concerned the U.S. will extend protections under the plans to include infrastructure projects headed by lower levels of government, which would dramatically constrain the ability for Canadian companies to make bids.
“What we're more concerned about is the upcoming infrastructure bill that the administration is working on, which could include up to $2-trillion worth of infrastructure spending, much of which would go down to state governments and municipal governments,” Verheul told a House of Commons committee on Tuesday. “Unless we get this right, or unless we get some kinds of special considerations or exemptions or waivers, we would lose the opportunity to be able to compete on projects under that infrastructure bill, which obviously is quite large.”
His concerns underscore the way in which the U.S. has stuck to a decidedly protectionist trade policy under the current administration, extending the America-first policies adhered to by former president Donald Trump.
Prime Minister Justin Trudeau has struck an optimistic tone with the Biden administration over its first months in office, avoiding entirely the bellicose posture assumed by Trump that dominated Canada-U.S. relations. But that has only put more polish on a situation that has raised concerns among some of Canada's largest construction and engineering firms like PCL Construction or SNC-Lavalin.
“Everyone thought it would be better under Biden,” said one industry source who spoke on the condition of anonymity. “So far it hasn't been better.”
Lawrence Herman, trade lawyer at Herman & Associates and a former diplomat, said the cordial public remarks
made by Trudeau and Biden in some ways gloss over the trade irritants that still persist between the two countries.
“Even if the tone changes, the policies in some ways are more protectionist than Republican policies,” he said. “In fact, the Democrats have been traditionally a protectionist party much more than the Republicans.”
Herman said it remains unclear whether Canadian companies would be restricted from bidding on U.S. projects, and that the economic effects of such a restriction is therefore hard to determine.
For example, the Biden administration could simply funnel the new money through programs that already exempt Canadian exporters from applying, which would have a limited effect, he said. The relief package is expected to undergo amendments before passing the U.S. Senate.
“I'm assuming that there's a considerable impact, but we don't know how great that impact is,” he said.
U.S. officials, for their part, have sought to calm concerns in Canada over protectionist trade policies.
Jon Piechowski, a deputy assistant secretary in the Department of State, said in a press briefing on Wednesday that U.S. officials would “work with our partners in Canada” on issues of market access and procurement, saying supply chains between the two countries would “continue to be robust.”
Some observers point out that Buy American provisions have been a mainstay in the U.S. for years, and that negotiators have often found ways to find exemptions for Canadian suppliers.
Canada had similar concerns over the American Recovery and Reinvestment Act (ARRA) introduced during the 2008-09 economic recession, under which Canada was eventually granted exemptions from “America-first” procurement policies.
But U.S. protections have nonetheless created tensions. Trevor Kennedy, director of trade and international policy at the Business Council of Canada, said some Canadian companies have gone as far as to open U.S. offices or headquarter their operations in the U.S. in an effort to ensure their ability to apply for American procurements.
“From a competitiveness standpoint, this has been a challenge for us, not only for Canadian-based companies, but for European multinational companies, for example, deciding whether or not they will set up shop in Canada or the United States,” he said.
Observers agree that Canada will be shut out from some portion of U.S. federal procurements, including some of the $2-trillion infrastructure and COVID-19 relief plans. The remaining question is rather a matter of degree.
“The prospects of us getting a complete exemption from the Buy America provisions is something that's not likely to be politically possible in the U.S.,” Verheul told the House committee.
EVERYONE THOUGHT IT WOULD BE BETTER UNDER BIDEN.