Should we fear ‘Buy American’?
What Biden’s executive order means, and doesn’t mean, for Canadian business. Keenan,
WASHINGTON—Monday, Joe Biden stood in front of a backdrop reading “Made in America” to sign an order called “Ensuring the future is made in all of America by all of America’s workers,” and spoke of keeping “American taxpayer dollars” from being directed to “foreign companies and foreign workers.”
Canadians might well wonder what that means for Canadians.
After all, U.S. federal procurement — the specific subject of Biden’s announcement — is a $600 billion-per-year market, of which something over $600 million has recently gone to Canadian-based companies. Especially after the Keystone XL announcement last week on the first day of Biden’s presidency, many might see the made-in-America order as a rocky kickoff to Canada’s relationship with the new president.
For example: “Today’s announcement represents another unhelpful step to make it more difficult for Canadian businesses to secure contracts in the U.S.,” the Canadian Chamber of Commerce said in a statement after Biden’s announcement.
But veteran trade lawyer Daniel Ujczo, senior counsel at Thompson Hine in Ohio, had a message for those seeing it as a catastrophe for Canada. “It’s really not about you, Canada, at this moment. This is about us in the United States.”
By which he means this measure isn’t aimed at Canada, to be read as an indicator of the relationship between the two countries. “There’s no question that the target is outside of North America here.”
There are specific ways in which key measures in this announcement really aren’t about Canada: Canadian companies are specifically exempt from many existing “Buy American” procurement rules under trade agreements, so measures Biden is taking to make those rules stricter likely won’t apply to Canada.
Which doesn’t mean there isn’t a lot of work to do for the Canadian government and Canadian companies in the weeks and months ahead. Biden’s order is in many ways a starting point, not an ending. It establishes an office in the White House to police waivers that allow exceptions to such rules. And it sets in motion a process of establishing made-in-America provisions that apply to infrastructure spending Biden will unveil in the coming months. Those are areas where Canadians will need to make their case to ensure trade lines remain open to them.
As Deputy Prime Minister Chrystia Freeland said in addressing the topic Monday afternoon, “On these measures, the devil is very often in the details.” Canada, she said, would be emphasizing the twoway, mutually beneficial nature of the relationship in navigating those details, as it has successfully done in the past.
Ujczo said the task is to ensure “Canada doesn’t end up getting caught in the jet wash,” of rules not intended to target it. “The last thing we want is the United States closing loopholes that Canada has spent a significant amount of resources creating for Canada-U.S. supply chains,” Ujczo said.
Particularly as these rules apply to new and potentially large industries such as clean-energy infrastructure and electric vehicles, Ujczo said, there are opportunities for Canadians to not just maintain the trading relationship but to see it grow. But neither is automatic.
“I just want to emphasize this is going to take work over the coming weeks, months, and perhaps a significant part of this administration, to stay on top of this. Because otherwise, there’s always the danger that Canada is going to get lumped in with everybody else,” Ujczo said.
Part of the job is simply emphasizing to the new administration how deeply entwined the supply chains between the two countries are — how materials and parts go back and forth across the border, often multiple times, in the manufacturing process. It’s a case the Canadian government has gotten used to presenting to former presidents Obama and Trump, and one Prime Minister Justin Trudeau and Biden discussed in their phone call on Friday.
Maryscott Greenwood, CEO of the Canadian American Business Council, says some of Canada’s strongest advocates will be American companies. “We go through it pretty regularly, where you have American businesses talking to the American government, to say, ‘Let us explain our supply chain, let us explain, how reliant we are on Canada for certain things,’ ” she said.
Greenwood is optimistic this line of argument will resonate because it serves the Biden administration’s larger goals. “It’s not just about restoring American jobs, but it’s also about helping the economy rebound. And you literally can’t help the economy rebound if you’re tying one arm behind the back of manufacturers by saying the government is going to tell you exactly what your supply chain needs to look like.”
In her remarks on this, Freeland said part of Canada’s job is to remind the U.S. that the Canada-U.S. relationship “is particular, it is special.”
Greenwood says she thinks that re-establishing the special status of that relationship is the task ahead — on this issue and others.
“The Trudeau government has its work cut out for it, to restore Canada to the most- favourite-friend status after what we’ve experienced over the last four years. It’s not automatic. It’s not overnight. And it’s going to take a concerted effort to make the case across all different topics for why Canada should be treated differently than any other foreign partner,” Greenwood said.
“I believe Canada is different. I believe the facts will bear that out. But you can’t just assume because decorum has returned, that the special nature of the relationship, which has been eroded profoundly over the last four years, will immediately bounce back. It’s gonna take work.”