Canadian companies that respond to US government tenders could be excluded from the procurement process if Joe Biden follows his protectionist “Buy American” plan after taking office as President of the United States on Wednesday, experts say business and commerce.
Manufacturers and exporters in Canada supply a wide variety of equipment to public works projects on American soil, from school buildings to wastewater treatment facilities.
But Mr. Biden’s promise to prioritize U.S. suppliers and U.S.-made products could hurt Canadian businesses by preventing them from bidding, especially when he unveils his infrastructure plan next month.
The move could disrupt the Canada-U.S. Supply chain and lead to significant trade tensions, experts say.
Yet the companies hardest hit will be those directly involved in U.S. government contracts, they say.
“If you are in the business of government procurement projects like municipal infrastructure, these are the most at risk businesses,” said Dennis Darby, President and CEO of Canadian Manufacturers and Exporters.
Stricter U.S. rules for federal purchases could hurt manufacturing on both sides of the border, he predicted.
“Manufacturers are so integrated all over North America,” added Darby, noting that Canadian companies largely manufacture the “parts” that enter the continental supply chain.
“When American manufacturers are successful, so are Canadian manufacturers. We are all part of the same supply chain. “
Experts say the biggest losers in an era of greater protectionism in the United States will likely be a large cross section of Canadian companies that supply products to American municipalities.
Companies that supply pumping equipment for municipal waterworks, pipes for new sewer lines or structures for new play areas could all suffer, they believe.
Canada and the United States already have “national buy” provisions drawn from existing trade agreements. Military purchases, for example, exclude foreign suppliers.
Donald Trump has his own American purchasing policy in place, but it is unclear to what extent Mr. Biden will be able to expand those provisions without facing a legal challenge, trade expert Lawrence Herman said.
“The question will be whether the expansion of the Buy American provision is permitted under the (World Trade Organization) agreement,” said Herman, international trade lawyer at Herman & Associates. .
But the impact of a Buy American program on Canadian businesses could be widespread, he noted.
“There are many Canadian companies that supply products to US municipalities,” Herman said. “They could all be affected.”
Come up with solutions
Colin Robertson, one of the original Canada-U.S. Free Trade Agreement and North American Free Trade Agreement negotiators, said Canada will need to come to the table with solutions .
“If Mr. Biden is successful, you will hear Canadian companies say they feel left out of US projects,” predicted Robertson, vice president and researcher at the Canadian Institute of Global Affairs.
“It would be almost better to deal with it piecemeal,” added the former Canadian diplomat. “If the guy who builds playsets in Ontario can’t bid on a new playground, what you want to do is try to convince the province and the state to come up with a solution together.”
If Mr Biden’s massive stimulus package is approved, demand for building materials – especially steel and aluminum – could be huge, Mr Robertson noted.
But if the Buy American plan is accelerated and begins to impact materials from Canada, he believes negotiators will need to point out that at the end of the day, they will get better value by including materials produced in Canada.
“If you want maximum value for those dollars, you better open the auction,” Mr. Robertson said. “The challenge with these types of ‘Buy American’ programs is that it can create cartels in a locality that will drive up the prices.”
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