Morneau raises Buy America demands with his U.S. counterpart

Morneau raises Buy America demands with his U.S. counterpart

OTTAWA—Federal Finance Minister Bill Morneau has taken up the premiers’ concerns about new Buy America demands with his U.S. counterpart, and he is turning to some familiar tactics.

Morneau met with Treasury Secretary Steven Mnuchin on Wednesday morning on the sidelines of the G7 finance ministers’ meeting in Chantilly, France — two days after U.S. President Donald Trump signed an executive order increasing the American content requirements for anything labelled “Made in America.”

In a phone interview from France, Morneau said he made the case that stiffening the Buy America provisions will hurt American companies as much as it hurts foreign firms — echoing arguments Canada made to fight Washington on aluminum and steel tariffs that were just lifted two months ago.

“My job is to bring these issues up at every turn. Standing up for workers and standing up for Canadian businesses pays dividends. The dividends that we got in terms of getting those steel and aluminum tariffs off, those were the result of months of repeated discussions around why those tariffs were not making sense for Canadians or Americans,” Morneau said.

“Similarly, we don’t think that Buy America — obviously (it) doesn’t help Canadian companies — but we don’t think it helps Americans either because it leads to escalations in challenges between countries.”

The United States is bound by World Trade Organization rules that allow Canadians to bid on procurement contracts worth more than $180,000 (U.S.) for goods and more than $6.9 million (U.S.) for construction.

Pressure on the federal government to make sure Canadian suppliers maintain their access has been mounting.

Canada’s premiers met last week for their annual Council of the Federation get-together and emerged to ask the federal government to seek an exemption to Buy America.

Bombardier Inc. pointed to the Buy America Act last week as one of the reasons why it needed to cut half its workforce — 550 employees — in its plant in Thunder Bay, Ont.

Canada has some time to lobby on the issue. Trump’s executive order won’t come into effect for another six months, after officials hold consultations and prepare a report.

The order would apply to U.S. federal government procurement, stiffening requirements that everything the government buys be sourced from the United States. Iron and steel products will need to be 95 per cent American, up from the current 50 per cent. All other products will need to be 75 per cent American, up from 55 per cent.

All told, it could be another blow to Canada’s steel industry, which has had to contend with stiff tariffs for a full year. But since most U.S. procurement already excludes most Canadian products, the material effect on Canadian suppliers may turn out to be minimal, Canadian officials said.

Regardless, Ottawa intends to push back, Morneau said.

“We don’t expect to have a solution in the same moment you have a discussion, but the approach is to make sure that they know this is on our radar screen, it’s really important to us, and we’re trying to work together.”

Heather Scoffield is an economics columnist based in Ottawa. Follow her on Twitter: @hscoffield

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