ROBERT FIFE | STEVEN CHASE
Jan. 19, 2021
Prime Minister Justin Trudeau and his top advisers are optimistic that relations with the more like-minded Biden administration will be effortless enough to collaborate on matters such as fighting climate change, building a new green economy and pushing for a North America First policy. No one is under the illusion, however, that a newly Democratic White House will spare Canada from trouble when it comes to energy pipelines, trade disputes or protectionist policies.
“If we think we are going to get an easy ride with these guys, think again,” said David MacNaughton, Canada’s former ambassador to Washington who played a central role in renegotiating NAFTA, now known as the United States-Mexico-Canada Agreement (USMCA).
Mr. Trudeau gets along well with president-elect Joe Biden. Many members of the incoming U.S. administration have long-standing relations with Mr. Trudeau’s cabinet ministers from the Obama years. It helps that the Prime Minister’s chief of staff, Katie Telford, is a close friend of Biden campaign manager and White House deputy chief of staff Jen O’Malley Dillon.
“It will be easier [for them] because you can move right into discussions without having to build some kind of a relationship first,” Mr. MacNaughton said.
However, Ottawa can’t simply bring the White House a list of demands, Mr. MacNaughton said.
While the Trudeau government is happy to turn the page on the Donald Trump era, the incoming administration’s “Buy America” policy is worrying because it threatens to shut out Canadian suppliers that have long sold goods and services to government buyers in the United States.
Mr. Biden has proposed spending US$700-billion on infrastructure and R&D – with contracts only going to U.S. companies using U.S.-made goods – to jump-start domestic manufacturing and help the economy recover from the pandemic. He has a bold plan to reclaim domestic supply chains – a protectionism that closely aligns with what the Trump administration had been doing.
Canada needs to point out that U.S. companies have a 9-per-cent share of the Canadian government procurement market while Canadian firms supply about 0.15 per cent of the purchasing of U.S. government buyers, Mr. MacNaughton said.
If that fails to win over Mr. Biden, expect Canada to retaliate as it did when the Trump administration slapped tariffs on Canadian steel and aluminum, he said. “If they try to exclude us, we don’t have any choice but do the same thing to them.”
It’s not just protectionist sentiment in the White House that Canada has to worry about. Soon-to-be Senate majority leader Chuck Schumer is a hawk when it comes to Canada’s heavily protected dairy, egg and poultry markets – particularly dairy. Democratic Senator Ron Wyden of Oregon is a powerful champion for the U.S. lumber industry in its long-running campaign against what it considers Canada’s subsidized softwood industry.
Mr. MacNaughton said the challenge for Mr. Trudeau is to convince Mr. Biden to adopt a “North America first” policy.
To win him over, Canada should negotiate a defence and security package that includes a commitment to boost NATO and NORAD spending, collaborate on green technology and take a much tougher approach to China.
“The Americans are going to expect us to play a larger role in defence and security than we have in the past. We should expect that, and they are going to press on China … and we can’t say, ‘Sorry we will talk to you about that later,’” Mr. MacNaughton said.
Canada already has a strategy in place with the U.S. to reduce both countries’ reliance on China for rare-earth minerals, which are critical to clean energy, high-tech and military products. Washington and Ottawa have also taken steps to reject takeovers of domestic companies by Chinese state-owned enterprises on national security grounds.
Mr. MacNaughton said to expect a more united Canada-U.S. approach to China, including more “collaboration and information sharing” on how to deal with China’s activities in North America.
Ottawa has not banned or restricted China’s Huawei Technologies Co. Ltd from supplying equipment to Canadian 5G networks, as the U.S. and other allies have done. But this is of less concern to Washington now that all of Canada’s major wireless providers – BCE, Telus and Rogers – have announced they will not use Huawei gear in their 5G networks.
This is one area where the two countries can link hands. Mr. Biden has vowed to reverse Mr. Trump’s withdrawal from the Paris Agreement, restore Obama-era environmental standards and roll back the opening of U.S. Arctic territory to oil and gas drilling.
Environment Minister Jonathan Wilkinson has talked about setting a timetable with the U.S. for a ban on the sale of new gasoline- and diesel-powered vehicles. Ottawa is also optimistic about a North American supply chain for the production of electric vehicles, utilizing Canadian minerals for batteries. There is also room for both countries to further reduce auto emissions and co-operate on developing clean technologies.
“It is not just about climate change. It is also about transforming the economy, and right now the Chinese are eating our lunch,” Mr. MacNaughton said.
The two governments, with their like-minded approaches to fighting climate change, could find benefit in agreeing to common standards or targets for the next United Nations Climate Change Conference in Glasgow this November.
“Both countries have identified a number of energy priorities that will be critical to a low-carbon economy: hydrogen, carbon capture and storage, small modular reactors, electric vehicles, batteries and related vehicle-charging infrastructure,” said Goldy Hyder, president of the Business Council of Canada.
The Biden era appears set to begin with a big loss for Canada. Transition documents indicate one of Mr. Biden’s first acts in office will be to rescind the permit for the Keystone XL pipeline expansion granted by the Trump administration to Canadian operator TC Energy.
Mr. Hyder said Ottawa should still try to save the project – perhaps by demonstrating that Keystone will be accompanied by new investments in clean technology.
“[The] fact is the KXL proposal is one of the best pipelines in the world in terms of net-zero commitment, using renewable energy, Indigenous ownership and union jobs,” he said.
Former Canadian diplomat Roy Norton, whose career included four postings in the U.S., said he doubts Mr. Biden will reconsider his opposition to the project.
“It would require his reversing an explicit commitment he made to an important constituency of his party for whom it became a litmus test,” Mr. Norton said.
Another major irritant is Michigan’s looming shutdown this May of an Enbridge Inc. pipeline that passes through Great Lakes states but ultimately supplies a significant amount of Ontario’s and Quebec’s crude oil. Last November, Governor Gretchen Whitmer, who was a co-chair of Mr. Biden’s 2020 campaign, ordered the rescinding of a 1953 permit that allows the Line 5 pipeline to cross a waterway in her state, citing the risk of a spill. Enbridge has challenged this in federal court. Without this pipeline, Enbridge says, Ontario will be about 45-per-cent short of the crude oil it requires for, among other things, 100 per cent of the jet fuel used at Toronto Pearson International Airport.
The disruption would mean higher prices and more transport of oil by rail. Enbridge has a plan to replace the waterway crossing with a tunnel.
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