OTTAWA – Relations between Canada and the United States are once again at a critical turning point as a major Canadian political and trade delegation left Capitol Hill on Friday with nothing in hand.
No withdrawal of a proposed tax rebate for electric vehicles that would deeply hurt Canada’s auto industry.
No move on plans to double US tariffs on Canadian softwood.
No synchronization of border measures against COVID-19 variants.
No change in a new dispute over whether Canada’s potato exports are safe in the eyes of US authorities.
The United States under President Joe Biden plans to build back better. It’s just planning to do it without help or favors to Canada, thank you.
Biden’s newly appointed ambassador to Canada, David Cohen, arrived in Ottawa this week after nearly two years when the place was virtually vacant after Donald Trump’s envoy was elected to co – camp for the UN.
But aside from comforts issued by the embassy on Sussex Drive, Cohen declined interviews to talk about the state of relations between Canada and the United States.
That’s probably just as good. Do we really need to hear him say things are tickety-boo 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 polite state dinner when the former vice president left office with Barack Obama in 2016. But now that he’s American president, he can I can not afford to let all that with friendship distract him.
Biden faces next year’s midterm congressional elections, economic uncertainty amid the ongoing COVID-19 pandemic, the same inflationary pressures challenging Canada, and the possibility that he may lose control of the political leverage to get his agenda adopted.
There are optimists in the Trudeau government that the cross-border relationship remains strong.
Secretary of Public Safety Marco Mendicino said in an interview that he came away from the trilateral summit in Washington two weeks ago convinced that “it is a long and lasting relationship that I believe is increasingly important given the different geopolitical dynamics at play around the world. “
“The problem is that Canada is an afterthought for an administration focused on enormous challenges in the home,” said University of Ottawa professor Roland Paris, a former foreign policy adviser to Trudeau.
Of all the current annoyances, Paris says, the most alarming tax deduction for electric vehicles and the growing protectionist mood is in U.S. political and public opinion.
The softwood lumber is “a smoldering brush fire that started almost 40 years ago, it flares up at regular intervals and it needs to be dealt with,” he said. “But electric car credits are something completely different. They have the potential to do more damage to the Canadian economy than anything Trump did while in office.”
Senior officials agree.
When it comes to the risk to Canada’s auto industry and this country’s climate change, in the words of an official who spoke to Star to provide background: “It’s not going to be bigger than that for us.”
The official said: “The Prime Minister was quite clear when he was in Washington that ‘this is a big problem for Canada and me’ because it really threatens the future of our car industry. If we can not sell electric vehicles to the US, we will not get any future investment, ”said the senior official.
Suddenly, there is not much time left for Canada to persuade U.S. lawmakers to expand or drop the planned preferential treatment for U.S.-made, union-built electric vehicles that could collapse Canada’s hopes of luring investment to start-up industries.
The tax deductions come via two measures in the Democrats’ Build Back Better Act that would give up to $ 12,500 in discounts to buyers of electric cars built on American soil, in unionized factories – two small line items in a massive legislative package that Democrats want to put to a potential vote already on December 13, before everyone goes home for Christmas.
It all boils down to a $ 1.75 trillion bill (US) that will spend big bucks pushing for climate action programs and expanding the social safety net by billions for home care, preschool education, child care, health care reform, housing initiatives and a host of other priorities for Biden’s Democrats.
Conservative MP Randy Hoback, part of NG’s delegation of business leaders, opposition MPs and Canadian consuls general blowing up U.S. lawmakers this week, said the challenge for Canada is “domestic politics” in the United States
It’s as simple and as complicated as that.
Hoback said Democrats are determined to push the bill through, as it is.
“They say …” yes, we understand that there is a problem here with Canada. But we do not want to stop the momentum we have on this bill to solve it, because it is so important that we get this whole bill through. ‘
Republican senators are signaling that they will vote against the bill, Hoback says, but “not because they fundamentally see the idea that it is potentially a violation of NAFTA, or that it is potentially going against their kind of free trade heritage. just not. It’s domestic politics. “
While fighting the same battle abroad with Ng, Hoback said he would not criticize the effort.
In an interview with Star, Ng said: “They hear us, but there is definitely more work to be done. This is not going to happen overnight.”
Of suggested a hardening approach.
So far, Canada has not directly threatened to challenge the EV measure under the renegotiated NAFTA (or CUSMA, Canada-US-Mexico agreement) or retaliate in any way, but Ng said she made it clear that the US is breaking trust , and the Government of Canada will “defend” Canadian interests.
“What I said to them was that this is a really important issue for Canada. It’s a really important part of Canada’s economy. And that … we’re going to … defend our national interests here, and that this is contrary to CUSMA’s obligations. “
Behind closed doors, there are other messages as well.
The senior official said Canada has said, “We would rather work with them on things like critical minerals, which will be extremely difficult to deal with if we are shut out of the US car market.”
There was still little progress to report at the end of the week. Ottawa expects talks with U.S. regulators based on “science” will soon allay concerns about PEI potatoes, and negotiations or lawsuits could resolve the latest round of needlework, as in the past.
Meanwhile, Canada’s advocacy business in the EV dispute will continue in earnest for the next few weeks.
Flavio Volpe, head of the Automotive 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 did not have a final copy of the bill, and Democrats “would not share details about a bill they are currently considering in a high-pressure environment.”
But Volpe said the Americans are now “zero in doubt about how important this is to us … and how bad it is for the American car industry as well.”
Volpe attended several meetings with Ng as Hoback and others exhaled to meet various senators. They stressed not only how integrated the car supply chains between Canada and the US are and how an incentive to stop investing in Canada will affect US manufacturers selling to Canada, but also how it will do nothing to stop non-union production. or cheap import. .
If anything, automakers can migrate production to non-union states, pay cheaper labor costs, and eat 2.5 percent import tariffs on cheap steel and other parts from China to compete on price against the EV tax-credit-enhanced vehicles made by unionized labor in Michigan. It only gives a “lead” to China, 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 is a surprise.
“This is the world we face, and Canada needs to steer its relationship with a more protectionist United States.”
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