OTTAWA — Canada-US relations are once again at a critical inflection point as a large Canadian political and trade delegation left Capitol Hill on Friday with nothing in hand.
No withdrawal from a proposed electric vehicle tax rebate that would deeply harm Canada’s auto industry.
No movement on plans to double US tariffs on Canadian lumber.
No synchronization of border measures against COVID-19 variants.
No change in a new dispute over the safety of Canadian potato exports in the eyes of US regulators.
The United States under President Joe Biden plans to rebuild better. He just plans to do it without any help or favor from Canada, thank you.
Biden’s new Ambassador to Canada, David Cohen, arrived in Ottawa this week after nearly two years the post was effectively vacant after Donald Trump’s envoy was chosen to decamp for the UN.
But aside from the embassy’s jokes on Sussex Drive, Cohen has declined interviews to discuss the state of Canada-U.S. Relations.
It is probably as well. Do we really need to hear him say that things are silly when they clearly are not?
Biden insists he is a friend of Canada, makes much of his first wife’s Canadian origins, is grateful for Justin Trudeau’s courtesy state dinner as the former vice president left office with Barack Obama in 2016. But now that he’s President of the United States, he can’t afford to be distracted by all this friendship stuff.
Biden faces congressional midterm elections next year, economic uncertainty amid the ongoing COVID-19 pandemic, the same inflationary pressures that challenge Canada, and the possibility of it losing the game. control of political levers to get its program adopted.
The Trudeau government is optimistic about the strength of cross-border relations.
Public Safety Minister Marco Mendicino said in an interview that he returned from the trilateral summit in Washington two weeks ago convinced that “this is a long and lasting relationship which I think is growing. important given the different geopolitical dynamics at play in the world “.
“The problem is, Canada is an afterthought for an administration that is focused on huge challenges at home,” said Roland Paris, professor at the University of Ottawa, former foreign policy adviser to Trudeau.
Of all the current irritants, according to Paris, the most alarming is the electric vehicle tax credit and growing protectionist sentiment in American political and public opinion.
The softwood lumber dispute is “a smoldering bushfire that started almost 40 years ago, it flares up periodically and it needs to be dealt with,” he said. “But electric vehicle credits are something quite different. They have the potential to do more harm to the Canadian economy than anything Trump did while in office. “
Senior government officials agree.
On the risk to the Canadian auto industry and this country’s climate change aspirations, in the words of an official who spoke to The Star to provide background information: “It doesn’t does not get bigger than that for us. “
The official said: “The Prime Minister was pretty clear when he was in Washington that ‘this is a big deal for Canada and me’ because it really threatens the future of our auto industry. If we can’t sell electric vehicles in the United States, we won’t get any future investment, ”the senior official said.
Suddenly, there is not much time left in Canada to persuade US lawmakers to extend or abandon preferential treatment for US-made, union-built electric vehicles, which could dash Canada’s hopes. to attract investment here for the nascent industry.
The tax credits come from two measures in the Democrats’ Reconstruction Bill, which would offer rebates of up to $ 12,500 to buyers of electric vehicles built on American soil, at unionized factories – two small items in one massive legislative package that Democrats want to put to a potential vote as early as December 13 before everyone comes home for Christmas.
It all comes down to a $ 1.75 trillion (US) bill that will spend heavily to boost climate action programs and extend the social safety net, with billions for home care, learning preschool, child care, health care reform, housing initiatives and a host of other priorities for Biden Democrats.
Conservative MP Randy Hoback, who is part of the delegation of Ng’s business leaders, opposition MPs and Canadian consuls general that bombed U.S. lawmakers this week, said the challenge for Canada was to “Domestic politics” in the United States.
It is that simple and as complicated as that.
Hoback said Democrats were determined to pass the bill as is.
“They say… ‘yes, we understand that there is a problem here with Canada. But we don’t want to stop the momentum we have on this bill to fix it because it’s so important that we get this bill through in its entirety. “
Republican senators are signaling that they will vote against the bill, says Hoback, but “not because they fundamentally see the idea that this is potentially a violation of NAFTA, or that it potentially will. against their legacy of free trade. It’s more, they just don’t go. It is domestic politics.
As he fought the same fight overseas alongside Ng, Hoback said he would not criticize the effort.
In an interview with The Star, Ng said, “They can hear us, but there is definitely more work to be done. It will not happen overnight.
Ng hinted at a hardening approach.
So far, Canada has not outright threatened to challenge the measure of electric vehicles under the renegotiated NAFTA (or the Canada-United States-Mexico Agreement) or to retaliate in any way. Either way, but Ng said he made it clear that the United States is breaking trust and that the Government of Canada will “defend” Canadian interests.
“What I told them is that this is a very important issue for Canada. It is a very important part of the Canadian economy. And that… we will… defend our national interests here, and that this goes against the obligations of CUSMA.
Behind closed doors there are also other messages.
The senior government official said Canada had said “we would prefer to cooperate with them on things like critical minerals, which will be extremely difficult to deal with if we are excluded from the US auto market.”
There was still little progress to report at the end of the week. Ottawa expects “science-based” talks with US regulators to allay concerns about PEI potatoes soon.
Meanwhile, Canada’s advocacy over the electric vehicle dispute will continue in earnest over the coming weeks.
Flavio Volpe, head of the Auto Parts Manufacturers Association of Canada, said in an interview as he left Washington late Friday that part of the challenge for Canada’s diplomatic advocacy is that Republicans don’t had no final copy of the bill, and Democrats “would not share the details of a bill they are currently considering in a high-pressure environment.
However, Volpe said Americans now have “no doubts as to how important this is to us … and how bad it is for the US auto industry as well.”
Volpe attended several meetings with Ng as Hoback and others deployed to meet with various senators. They highlighted not only how integrated Canada-U.S. Auto supply chains are and how an incentive that ends investment in Canada will impact U.S. producers who sell in Canada, but also how it will do nothing to stop unorganized production or cheap imports. .
On the contrary, automakers can migrate production to non-union states, pay cheaper labor costs, and absorb the 2.5% tariffs on cheap steel and other parts. from China in order to compete on price with vehicles benefiting from an electric vehicle tax credit. made by unionized Michigan workers. This only gives China a “head start”, Volpe said.
“What we made them understand is that we are all competing against China,” he added.
For Paris, Trudeau’s former foreign policy adviser, none of this comes as a surprise.
“This is the world we face, and Canada needs to manage its relationship with a more protectionist United States. ”
JOIN THE CONVERSATION