Look out, Canada, Joe Biden has a little bit of Donald Trump in him

Look out, Canada, Joe Biden has a little bit of Donald Trump in him
WASHINGTON—When U.S. President Joe Biden stood in a truck factory in Pennsylvania Wednesday, he had a message for foreign companies used to securing American government contracts. “They’ve got a new sheriff in town,” Biden said.

He was increasing the American-made requirements for government procurement under the Buy American policy to 75 per cent from 55 per cent, and creating an accountability office to make sure the policy is being followed, and to publicly report exceptions.

Hearing from the new sheriff, plenty of Canadians used to serving as loyal deputies might wonder if Biden was about to handcuff them.

Especially after Biden’s earlier high-profile decisions cancelling the Keystone Pipeline, and keeping land borders closed to Canadian travellers even after fully vaccinated Americans start being allowed to visit Canada. Half a year into a new presidential administration widely expected to be friendlier to Canada than the last one, the trend of announcements might be chillier than anticipated.

“We’re not seeing Canadian interests factored into the White House’s decision-making, certainly,” says Mark Agnew of the Canadian Chamber of Commerce, noting he’s not necessarily surprised that’s the case. “We’re not hearing the same sort of bombastic rhetoric that we heard under Donald Trump, but it’s still ‘America First’ with a different coat of paint on all the cans. The underlying political drivers and motivations are still there.”

The good news for Canadian industry is that Biden’s specific proposal doesn’t seem likely to directly impact Canadian companies. A Canadian government official said on background that Biden’s policy proposal appears to apply to the “American First” policy from which Canada is exempted by trade deals (rather than the confusingly similarly named “America First” policy which could impact Canada). Biden’s proposal is also subject to a 60-day period of discussion during which Canada’s government and its international companies can plead their cases.

Dan Ujczo, a trade lawyer with Thompson Hine in Ohio, says the deeper immediate concern for Canadian companies isn’t in the text of the proposal. “The problem usually isn’t policy or practice. It’s the perception. So I’ve had many circumstances over the years, particularly with Canadian companies, where they meet all of the requirements, but the perception of the procurement officer is ‘It’s Canadian, I can’t accept it,” Ujczo says.

And in a context where the U.S. government is openly discouraging foreign procurement — and Biden is instituting name-and-shame reporting requirements — Agnew of the Chamber of Commerce worries of a possible a chill on Canadian suppliers that goes beyond any specific prohibitions. “If people start seeing in your disclosures that you’re having foreign companies supply a component to your finished product, then I don’t think in the current political climate that’s the type of attention that American companies are going to want.”

Also of concern is that this rhetorical and policy trend toward protectionism continued from Trump’s administration could influence requirements in forthcoming massive infrastructure and green energy spending programs working their way through Congress.

Flavio Volpe, president of the Automotive Parts Manufacturers Association, says that what’s notable about Biden is that he’s taking a fine-grained interest in industrial policy, that is seemingly devoted to implementing protectionist measures.

Volpe says that at a time when new industries are being set up for the next generation of auto manufacturing, Canadian companies and governments need to target areas where they can contribute and lobby hard to be included inside any trade wall Biden sets up. “Don’t treat it like it’s this year’s political question to answer. Because, at least in our space, in the transportation space, the shift to zero emissions vehicles is as big a shift as from horse to car. It’s the biggest opening for new players, and it’s also the largest chasm to jump over — you better have your jumping shoes on.”

The Canadian government says it’s at the table making the case. “Canada is actively working with the United States, at all levels of government to strengthen our trade relationship and deeply integrated supply chains, for the benefit of our shared environment and people in both countries,” says Alice Hansen, a spokesperson for International Trade Minister Mary Ng. “We have always taken a Team Canada approach, working with Canadian businesses, governments, and labour, to stand up for Canadian interests, and will continue to do so.”

From his perspective, Ujczo says he sees evidence in the text of Biden’s specific proposal and on other key trade files, that the work of the Canadian government is paying off. “I think the Canadian government has actually — as well as the provincial governments — have done a really good job of engagement in the first half year of the Biden administration,” he says. “We are seeing progress between the United States and Canada on what are more foundational issues for the future.”

And he says that right now is the window of opportunity for a “teachable moment” to ensure that Canada remains a member of the new sheriff’s posse. Recognizing that Biden makes policy primarily for his domestic audience, Ujczo says. “This is a great time in the process, over the next month, for Canadian companies, in particular, to demonstrate — and even better yet U.S. companies — to demonstrate the integrated nature of Canada-U.S. supply chains,” Ucjzo says.
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