Buy American : Friends, Neighbours, Trading Partners

"That [talking about imposing 'buy American' strictures on U.S.business, but not implementing it] is going to change on our watch."

"I'm directing the Office of Management and Budget to review waivers to make sure they are only used in very limited circumstances -- for example, when there's an overwhelming national security, humanitarian or emergency need here in America."

"I don't buy for one second that the vitality of American manufacturing is a thing of the past. American manufacturing was the arsenal of democracy in World War Two, and it must be part of the engine of American prosperity now."

U.S. President Joe Biden

President Joe Biden prepares to sign a pile of executive orders on his first day in office, one of which will authorize the cancellation of the Keystone XL pipeline. Photo by Chip Somodevilla/Getty Images

"Buy American restrictions remain a perennial problem for Canadian businesses seeking to access government contracts with our largest trading partner."

"Although the rules have progressively tightened over the years [Monday's] announcement represents another unhelpful step to make it more difficult for Canadian businesses to secure contracts in the U.S."

"Although the full impact of [Monday's] announcement will take time to cascade to different parts of the U.S. government, its chilling effect on business will be acutely felt north of the border."

Mark Agnew, director, international policy, Canadian Chamber of Commerce

The United States, with its third-largest national population globally of around 330-million people is not hugely dependent on external trade. What it produces is largely absorbed internally. Canada, by contrast, has a population of about 38-million, and its economy is hugely dependent on trade. Moreover, the U.S. is now and always has been Canada's most important trading partner. Canada imports from the United States and exports to the United States. And between the two neighbours there are interlinking production and manufacturing agreements; separating them would be difficult. 

"Canada has a network of agreements with the U.S. to address Buy American programs, but the nuance often is lost on procurement officers that do not want to risk using non-U.S. products."

"If Canadian companies can use this new Made in America office at OMB [Office of Management and Budget] to emphasize Canada's 'exemptionalism', it could prove worthwhile." 

"Make no mistake: Canadian companies, supported by federal and provincial governments, will need to remain vigilant and aggressive on this file."

"There is a risk that Canada gets lumped in with everybody else."

Dan Ujczo, Canada-U.S. trade lawyer, senior counsel, Thompson Hine LLP, U.S.

Former President Donald Trump exhibited the attitude that trade agreements always failed to benefit the United States, that it was always other countries that gained through free trade agreements with the U.S. so it was his intention to re-negotiate all such trade agreements to re-align benefits favouring the U.S. Among other trade agreements he saw fit to scrap NAFTA, the free trade agreement between Mexico, the United States and Canada, scalping as much of the agreed points benefiting the two other nations in North America to their detriment and America's profit.

 

That's what it's like living beside a giant whose whims and preferences can make all the difference in reminding the countries of lesser clout that they're at its mercy. Now that a new American administration is in the White House, trade negotiations are once again under consideration. For all the flourishing of things being 'different' under the Democrats, they're really just a continuation of the Republican presidency. America's new president has set a new record in signing executive orders 'changing' rules and regulations on issues his predecessor saw fit to champion by merely going a little further. In so doing he has already dealt Canada a double blow.

A lot has changed since the Keystone XL pipeline project was first proposed in 2005. For one thing, the U.S. has increased its own oil production and has become far less dependent on imports. (TC Energy/The Associated Press)

 

With over a million miles of pipelines transporting crude oil to refineries across the United States, President Biden as his very first executive order, cancelled the long-in-the-tooth, in-the-process pipeline known as Keystone XL which was meant to transport oil from Alberta's oil sands, with its third-largest reserve in the world, to West Coast refineries in the United States. A piffling amount of oil in comparison to what the U.S. is already piping, but an assurance with its completion that Canada would be selling its oil full price. That longed-for option is now dead, signed out of existence after the Trump administration had given it a green light.

 

 

Now another executive order has hit Canadian aspirational hopes for the future with a Democratic government and president in the Oval Office. A man reputed to be 'friendly' to Canada, but signing off on an executive order that is anything but friendly to a neighbour. On the other hand, any country's administrator in governance's first obligation is to ensure full employment in their own baileywick as well as favouring products produced at home. 

The new policy was adopted to make certain that American manufacturers, the country's workforce and suppliers remain primary beneficiaries of U.S. government concerns. In this instance, an estimated $600 billion yearly in procurement contracts. Besides which the signing reflects one of Mr. Biden's election campaign promises to lure blue-collar workers' votes from their original choice of Donald Trump. Henceforth a new "Made in America" office is to be attached to the Office of Management and Budget at the White House.

Waivers representing exemptions permitting Canadian contractors, manufacturers and suppliers to have access to government lucrative business deals are no longer the order of the day. The amount of American-produced materials or components required for a project or product to qualify as being identified as American-made would also increase, easing the way for small- and medium-sized businesses to have access to procurement opportunities. 

 

Government agencies will be required to provide twice-annual progress reports on the outcomes of the new rules and voicing support for a law requiring goods being shipped between domestic ports to be delivered on U.S.flagged vessels built, owned and operated by Americans or by U.S. permanent residents. Specific government procurement provisions between the U.S. and Canada are not included in the U.S.-Mexico-Canada agreement that took the place of NAFTA, negotiated by the Trump administration.

The terms of the World Trade Organization general procurement agreement held sway in that trade deal, signed into practise by all concerned, the three North American neighbours. Yet according to the White House, President Biden "remains committed to working with partners and allies to modernize international trade rules -- including those related to government procurement". So far, then, with the new president in office, relations between the U.S. and its allies appear to be as befuddled as previously.

Buy American

In 2019, Canada GDP was an estimated $1.7 trillion (current market exchange rates); real GDP was up by an estimated 1.6%; and the population was 37 million. (Source: IMF)

U.S. goods and services trade with Canada totaled an estimated $718.4 billion in 2019. Exports were $360.4 billion; imports were $358.0 billion. The U.S. goods and services trade surplus with Canada was $2.4 billion in 2019.

Canada is currently our 2nd largest goods trading partner with $612.1 billion in total (two way) goods trade during 2019. Goods exports totaled $292.6 billion; goods imports totaled $319.4 billion. The U.S. goods trade deficit with Canada was $26.8 billion in 2019.

Trade in services with Canada (exports and imports) totaled an estimated $106.3 billion in 2019. Services exports were $67.7 billion; services imports were $38.6 billion. The U.S. services trade surplus with Canada was $29.2 billion in 2019.

Office of the United States Trade Representative