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[LINK] “What Donald Trump and ‘buy American’ means for Canada”

At MacLean’s, John Geddes writes about the implications for Canada of “Buy American” provisions under Donald Trump. There are grounds for very serious concern, along with grounds for complete uncertainty as to what Trump might want to do.

First came the jolt—not unexpected, yet still jarring—of the bluntly protectionist rhetoric of Donald Trump’s inauguration speech. “We will follow two simple rules,” the newly sworn-in president vowed. “Buy American and hire American.” But then, outside this week’s special meeting of Prime Minister Justin Trudeau’s cabinet in Calgary, came soothing words from a visiting Trump adviser, Stephen Schwarzman, head of the mighty Blackstone Group investment company. “There may be some modifications,” Schwarzman said of the Canada-U.S. economic relationship, “but basically, things should go well for Canada.”

Against the backdrop of those apparently contrasting messages—America-first stridency from Trump, America’s friendly reassurance from Schwarzman—it’s hard to be sure what sort of threat Canada faces. Still, Maclean’s talked to three trade experts to gain insights into what’s possible. All three, quite understandably, stressed the unknowns. But they were able to point to why Trump might feel constrained, and how past friction between Ottawa and Washington offers clues about what might be in store.

There are two closely related policy fronts to watch. The first is traditional buy-America policies designed to limit the ability of Canadian companies, and other foreign firms, to compete for a piece of the massive U.S. infrastructure spending projects Trump has pledged to finance. It’s happened before. The American Recovery and Reinvestment Act of 2009, championed by then-president Barack Obama’s administration, required U.S. steel and iron to be used in public works projects.

Ottawa fought for Canadian steel to be allowed in some of those U.S. infrastructure projects, and won a partial deal in early 2010. But Scott Sinclair, director of the Canadian Centre for Policy Alternatives’ trade and investment research project, says that was a modest victory. “The exemptions that Canada got in the end were pretty paltry,” Sinclair said, adding that, with Trump in power, “Canada is almost certain to face buy-America provisions on U.S. infrastructure spending.”

There are, however, some limits on how much government procurement Trump can put out of bounds for non-American firms. The U.S. is part of the World Trade Organization’s Agreement on Government Procurement, which applies in 37 U.S. states with a wide array different rules. It’s not easy to sort out, but Andrea Bjorklund, a McGill University law professor and expert on trade law, said what is clear is that the stakes are high for powerful American private-sector players.


Written by Randy McDonald

January 25, 2017 at 10:15 pm

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