A delegation of premiers will be in Washington this weekend to buttress cross-border business ties with their American counterparts, hedging their bets at the dawn of a new and uncertain era of managed North American trade.
Saskatchewan Premier Scott Moe, this year’s chairman of the Council of the Federation, will lead a group of provincial leaders that includes Ontario Premier Doug Ford, Alberta Premier Jason Kenney, Quebec’s Francois Legault and Blaine Higgs, the premier of New Brunswick.
The premiers are taking part in the winter meeting of the National Governors Association, a three-day gathering beginning Friday where Maryland Gov. Larry Hogan, chairman of the association this year, is billing his ongoing “Infrastructure: Foundation for Success” initiative as a centrepiece. Deputy Prime Minister Chrystia Freeland will also be there for meetings with U.S. officials on the margins of the conference.
Part of the group’s mission is to extend Canada’s gratitude for the U.S.-Mexico-Canada Agreement, the new North American trade pact that President Donald Trump signed into law last week that is awaiting ratification in the House of Commons.
But the other part will be a pre-emptive effort against a cyclical trade barrier that’s threatening a comeback in the age of the USMCA: Buy American, the protectionist element last resurrected by Barack Obama in a 2009 stimulus package designed to help the country dig out from the Great Recession.
“We can’t afford to stand back and wait,” Ford told an audience of business leaders last week in Toronto as he teased the Ontario government’s plans for a new trade agreement with Ohio aimed at improving access to markets and contracts.
Ohio alone represents about $2.5 billion in procurement opportunities, he added.
“We’re taking action because Buy American policies are hurting Ontario businesses and workers. We’ve been working with the federal government to ensure Canada is exempt from Buy American provisions at the federal level. Now we’re working on a made-in-Ontario solution that enables us to stand up for Ontario workers and businesses.”
Bloomberg News reported Tuesday that the White House is kicking the tires on a plan to pull out of a $1.7-trillion procurement agreement with members of the World Trade Organization, including Canada. The so-called Agreement on Government Procurement, like the old NAFTA, gives would-be Canadian bidders preferential access to government contracts. Those provisions were excluded from USMCA.
Buy American has been an ever-present problem for companies in Canada even with the World Trade Organization agreement, said Dan Ujczo, an international trade lawyer with Dickinson Wright in Columbus, Ohio. In other cases, such as defence contracts, there are self-standing agreements that remain intact, he added.
“However, the key is to have U.S. companies that rely on Canadian products in their supply chains to advocate,” Ujczo said.
“We did this during the Obama stimulus. It’s deja vu all over again.”
Mark Agnew, director of international affairs for the Canadian Chamber of Commerce, said a U.S. pullout from the agreement would be “problematic,” given the fact that procurement is not covered by the USMCA. Whether or not Trump is serious remains an open question, but “given he has followed through on some threats, our view is to not dismiss it out of hand.”
New trade agreements notwithstanding, protectionist sentiment remains on the rise, Moe acknowledged Wednesday, making it critical to continue to engage with key trading partners on issues both within and outside the USMCA, such as the ever-present softwood lumber dispute.
“This is all the more reason for us — as the province of Saskatchewan and, I would say, as a nation of Canada — that we need to continue to engage with our markets,” he said.
“For Saskatchewan, that’s over 150 countries around the world; 55 per cent of our product does go to the U.S. All the more reason for us to be on the ground in those particular areas of interest.