Canada can deal with Biden's embrace of Buy American, says Freeland

·5 min read

As U.S. President Joe Biden signs an executive order to strengthen Buy American provisions, Deputy Prime Minister Chrystia Freeland insisted today the federal government knows "how to deal with" American protectionism.

Freeland was asked by CBC News if she or the Canadian government had been promised a policy exemption by Biden — one that would allow Canadian companies to retain access to the $600 billion the U.S. government spends on contracting each year.

"The prime minister … raised it with President Biden.They committed to talking about it, working closely on the issue," Freeland told CBC News Network's Power & Politics in an interview airing today.

"When it comes to buy America, and protectionism from the U.S. overall, this is not a new thing for any Canadian government and I can tell you it is not a new thing for our government. It is something we know how to deal with, we know how to push back on."

A 2019 U.S. government report stated that of the $290 billion in contracts the U.S. government issued in 2015, Canadian firms got about $674 million.

Today's executive order "directs agencies to close loopholes in how made-in-America products are measured, so that we can close loopholes and increase the amount of a product that must be made in the U.S. for it to qualify under Buy American law," White House press secretary Jen Psaki told a media briefing.

Biden is also setting up a "Made in America" office under the White House Office of Management and Budget and will appoint a senior official to ensure the rules are "actually enforced," Psaki said.

The plan increases the amount of U.S. content a project needs in order to qualify as having been made in America. It also applies more stringent standards to the sort of hard-won exceptions Canada secured to similar rules imposed in 2009 by President Barack Obama.

Watch: 'Buy America' polices are nothing new to Canada, says Freeland:

"The previous administration didn't take it seriously enough," Biden said Monday. "Federal agencies waived the Buy American requirement without much pushback at all.

"The result: tens of billions of American taxpayers' dollars support foreign jobs and foreign industries. Under the previous administration, the federal government contracts awarded to foreign companies went up 30 per cent. That is going to change on our watch."

U.S. values Canada: Freeland

Biden's plan establishes a "central review of agency waivers of Buy American requirements," fulfilling his campaign promise to "crack down on unnecessary waivers."

Such exceptions will be subject to public scrutiny on a website established by the General Services Administration.

The strengthened Buy American provisions come just days after Biden scrapped the Keystone XL pipeline permit, effectively killing the $8 billion plan to pipe Canadian oilsands bitumen to the U.S. Gulf Coast.

During an emergency debate in the House of Commons Monday evening, Conservative Leader Erin O'Toole decried the job losses that would occur in Alberta and Saskatchewan following the death of the Keystone project.

"We need the federal government particularly now, Madame Speaker, in a crisis, to stand up for workers in every corner of this country," said O'Toole. "Jobs for Canadians — that's the only way we will secure our future and rebuild our economy."

WATCH | House holds emergency debate on Keystone XL

Freeland told reporters in Ottawa Monday that the U.S. values Canada as a trading partner and ally, pointing to Biden's decision to make Trudeau the first world leader he called after taking office.

The deputy prime minister and finance minister also said that her government has a track record of being able to sit down with Americans and explain how trade restrictions and protectionism hurt the U.S. as much as they do Canada.

"Once we show to our American neighbours and trading partners the extent to which every trading relationship with Canada is not a simple one-way trade, but is about a set of mutually dependent, really, really complicated manufacturing and trading relationships, we find that we are very often able to explain to our American partners that trade is in the mutual interest of Canadians and of Americans," she said.

Canada to have time to lobby U.S.

Freeland said that she has yet to speak to the newly-confirmed U.S. treasury secretary, Janet Yellen, or to U.S. Vice President Kamala Harris about the Buy American provisions. She also said that U.S. officials are not speaking to their Canadian counterparts until their new jobs have gone through the confirmation process.

"Having said that, our government has a rich network of relationships with the U.S. in general ... including with this incoming administration and we definitely are in touch," she told host Vassy Kapelos.

Watch: Freeland discusses how Canada will fight the Biden Buy American plan:

A source told CBC News that federal officials will take the same approach Canada took during the NAFTA negotiations by targeting influential members of the Biden team and making fact-based arguments.

The source also said that while Canada is concerned about the Buy American provisions, officials expect to have weeks, if not months, to lobby against any harmful changes.

The U.S.-Mexico-Canada Agreement, the replacement trade deal for NAFTA negotiated under Donald Trump, does not include specific government procurement provisions between the U.S. and Canada.

The deal envisioned relying instead on the terms of the World Trade Organization's general procurement agreement, which both Canada and the U.S. signed.

Biden "remains committed to working with partners and allies to modernize international trade rules — including those related to government procurement," the White House said.

The Canadian Chamber of Commerce issued a statement after Biden signed the order, saying it will have a chilling effect on business that will hit harder in Canada.

"Buy American restrictions remain a perennial problem for Canadian businesses seeking to access government contracts with our largest trading partner," said Mark Agnew, the chamber's senior director of international policy.

"The rules have progressively tightened over the years, and today's announcement represents another unhelpful step to make it more difficult for Canadian businesses to secure contracts in the U.S."

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