Premier's move backed by federal Liberals, panned by trade analysts.
TORONTO — Ontario’s plan to introduce legislation allowing retaliation against states that adopt Buy American policies is coming under fire from the Opposition, who says it’s nothing but a “last-ditch election ploy” from the governing Liberals.
Vic Fedeli, the Progressive Conservatives’ interim leader, says the Liberals are responsible for the province losing its competitive advantage and their latest plan is just an attempt to deflect the blame.
He says it’s a reckless move, particularly at a critical time in the negotiations for the North American Free Trade Agreement.
Ontario Premier Kathleen Wynne announced Feb. 7 that her cabinet would table a bill that would reduce procurement opportunities for states that adopt Buy American provisions by allowing provincial officials to write regulations targeting individual states.
Wynne, who was in Washington, said the size of each punishment will be proportional to the size of the Buy American exclusion to avoid setting off escalating reprisals.
She said the move was inspired by a recent infrastructure bill from the state of New York.
The Trudeau Liberals are giving tacit support to Ontario Premier Kathleen Wynne’s plan to introduce legislation that would allow retaliation against US states that adopt Buy American policies.
Trade analysts on both sides of the 49th parallel said Wynne’s plan would only escalate the growing anger towards Canada that seems to be taking hold in the Trump administration as the seventh round of NAFTA talks approaches at month’s end.
They said it undercuts the charm offensive that the federal Liberals have been mounting for months on US lawmakers in Congress, state governors, local officials and business leaders to sell the economic merits of NAFTA, a deal President Donald Trump has repeatedly threatened to tear up.
International Trade Minister Francois-Philippe Champagne said in an interview that Wynne’s decision underscores the need to reduce barriers to trade and make the Canada-US border “as thin as possible.”
“Since the beginning we have been making sure people understand south of the border that a decision on one side would have an impact on both sides of the border,” Champagne said after testifying before the Senate trade committee on Canada’s decision to join a reconstituted Trans-Pacific Partnership – minus the US.
“So I think any initiatives that reinforce the point that a decision on one side of the border would have consequences on both sides is sending a message that we need to work this out together.”
A spokesman for Foreign Affairs Minister Chrystia Freeland, the minister overseeing NAFTA, demurred when asked whether the government found Wynne’s decision helpful, instead reiterating Canada’s criticism of Buy America provisions.
“The US-Canada economic partnership is grounded in shared security and prosperity, is balanced and fair, and supports good-paying jobs in both countries. Expansion of Buy America provisions puts these mutual benefits at risk,” said spokesman John Babcock.
“Local content requirements negatively affect our cross-border supply chains, put jobs in Canada and the US at risk, distort investment, and result in higher prices and fewer funded projects.”
Wynne’s decision was panned by Canadian and American trade experts.
Whoever is advising the government to take a tough stand with the US is making a big mistake by underestimating the Trump administration, said Dan Ujczo, a trade lawyer at Dickinson Wright who has worked with both the Canadian and American governments.
“At the federal and provincial levels, it’s great Canadian politics to take on President Trump, but I don’t think it’s necessarily constructive or the type of creative solution that we need right now,” said Ujczo.
The Buy America problem could be solved at the state and provincial level with an agreement to open up each other’s markets for reciprocal access. Such a deal could unite Ontario, Quebec and the eight US Great Lakes states, he said.
“It would be a much better use of Premier Wynne’s time to be setting up those reciprocal relationships with states and provinces as opposed to finger-wagging for electoral politics.”
Cyndee Todgham Cherniak, trade lawyer at LexSage in Toronto, said Wynne’s move is ill-conceived because Ontario is far more protectionist than New York State on procurement. She said Canada should pursue the issue in the World Trade Organization.
”Why not criticize them there – as opposed to starting a trade war Canada can’t win?”
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