By Randall White
In late January, voters north of the Great Lakes were reading headlines like “Ontario slams Joe Biden government’s Buy American executive order” and “Ontario opposes new U.S. executive order on ‘Buy American’.”
Some local thoughts on this subject were raised again just a week or so ago, in early March, by an article in the U.S. progressive insider magazine Washington Monthly.
As reporter Anne Kim explained, the Biden administration’s “embrace of Buy American is politically smart.” But it “won’t save the nation’s economy or rescue its manufacturing.” Ultimately it “may do more harm than good,” or almost nothing at all.
Wherever it is practiced, “buy here” economic nationalism often attracts politicians and the media, without doing most economic actors much real good. “Buy At Home,” many economists would argue, is better public relations than public policy.
At the same time, it is worth remembering that President Biden’s new Buy American executive order is not addressed to American consumers at large.
It is just about rules for purchases made directly by U.S. government organizations — so-called federal procurement expenditures.
Buy American policies in this sense, whatever else, do not involve any substantial or even minor but important chunk of the Canadian economy.
A senior policy director at the Canadian Chamber of Commerce recently estimated the annual value of U.S. federal procurement contracts won by Canadian businesses at some 0.04 % of Canada’s gross domestic product.
As Anne Kim at the Washington Monthly also explains, in the complex real world of American government, Biden’s executive order “merely adds a layer of bureaucracy to federal purchasing requirements, some of which date back to 1933” (in the Great Depression.)
According to the U.S. Chamber of Commerce, 97% of U.S. federal procurement already goes to U.S. companies. In Canada we scramble with others for the remaining crumbs on the table.
Anne Kim similarly reminds her American readers that over-aggressively expanding “Buy National” policies beyond the Biden executive order — as in China’s increasing reliance on “local content requirements” — will only invite retaliation from other places.
In Ontario we have our own reasons to remember this. Back in mid-November, when the news broke that “Joe Biden has embraced ‘America first’,” the Toronto Star pointed out how “Doug Ford can play that game too.”
As evidence of Premier Ford’s game, late in October it was announced that “Online directory of Ontario-made products will make it easier to buy local: province.” Back in July it had been reported: “Doug Ford urging people to buy ‘made in Ontario’ products.”
(And this was addressed to Ontario consumers at large, persuasively or otherwise. It was not just about rules for purchases made directly by the Queen’s Park bureaucracy.)
In the end it is not the government of Canada’s most populous province that will do whatever needs to be done about Canadian policy on the Joe Biden Buy American executive order. It is of course the government of Canada in Ottawa that looks after international relations.
Prime Minister Trudeau has already raised the issue in a phone conversation with Vice President (and former Montrealer) Kamala Harris.
According to the Prime Minister’s Office, Trudeau and Harris have discussed “avoiding the unintended consequences” of President Biden’s Buy American order.
The Conservative Opposition has urged that Canada should secure a waiver from the order — as the Harper government finally did with a somewhat similar Obama-Biden order of 2009.
But it took Canada more than a year to negotiate a Buy American waiver back then.
Under the Biden-Harris 2021 order a new “Made in America” office attached to the White House will grant waiver applications only in exceptional circumstances. As President Biden has stressed, this “hasn’t happened before” but “will happen now.”
The question begs to be asked. The issue apparently bears some potent political symbolism. Yet how much expenditure of scarce Canadian diplomatic capital does it deserve, considering its limited real impact on the Canadian economy?
There certainly are broader possible concerns about protectionist U.S. trade policies under the new administration. But as International Trade Minister Mary Ng has pointed out, “Canada is the No. 1 customer for more than 32 states.”
There is also a new trade agreement meant to restrain protectionist impulses inside North America. And there are as yet no signs that the new president will also indulge in tariff warfare even with such an agreement.
As has been noted elsewhere, if Canada can survive four years of Donald Trump, it can navigate the somewhat enhanced Buy American procurement policies of Joseph Biden.