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On heels of protectionist state of the union, Biden rolls out Buy American revamp

March 7, 2022   by James McCarten (CP)

WASHINGTON (CP) – President Joe Biden briefly shouted out America’s allies and trading partners Friday even as he rolled out new details of his administration’s long-promised plan to more stringently enforce the country’s Buy American rules.

That plan includes increasing to 75 per cent the threshold at which a product is deemed to contain “substantially all” domestic content in order to qualify for federal infrastructure projects, a threshold that currently sits at just 55 per cent.

“To me, 55 per cent isn’t ‘substantially all,’ it’s slightly over half,” the president said during a virtual event at the White House that included corporate leaders and Celeste Drake, director of his newly established Made in America office.

“‘Substantially all’ is going to start meaning substantially all.”

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The plan, which Biden billed as the single most significant change to Buy American laws in the U.S. in 70 years, also includes a new framework that would allow the use of “enhanced price preferences” in certain circumstances.

Such a scheme would, in essence, give the federal government the leeway to pay a higher price for U.S.-made products that are critical to national security, health or resilience, even when the same products could be had for less from outside the U.S.

Friday’s announcement also hinted at something that hasn’t featured much at all in Biden’s past efforts to promote his protectionist strategy for revitalizing the U.S. manufacturing industry: a nod to foreign trading partners like Canada.

“Yes, we’re going to keep trading with our allies and friends. And we’re going to work with them to ensure every single country (can’t) create global choke points for critical goods,” he said.

“But we also need a resilient supply chains of our own, so that we’re never at the mercy of other countries for critical goods ever again.”

It was a subtle nod to the fact those allies and friends have been paying closer attention to the growing bipartisan prevalence of protectionist rhetoric in the U.S., and the second time this week that the White House has appeared to temper its tone.

In Tuesday’s state of the union speech, Biden made brief mention of plans for a suite of tax credits that would encourage more Americans to buy an electric vehicle _ but did not say those credits would be stacked in favour of U.S.-made cars and trucks.

The original plan, which was part of Biden’s all-but-dead $2-trillion Build Back Better package of climate and social spending measures, saved the sweetest $12,500 incentive for vehicles assembled in the U.S. with union labour.

“We’re obviously pleased that the protectionist approach that the United States had proposed is not going forward,” Prime Minister Justin Trudeau said Friday, an apparent reference to Build Back Better.

“But we’re going to continue to work with our American friends and partners to make sure that we are building electric cars together and creating opportunities for both cleaner air and growing economies and jobs into the future.”

Trudeau did not directly answer a question about whether the exemption Canada negotiated with the U.S. in 2009, the last time Buy American was striking fear in Canadian hearts, would continue to be valid under Biden’s revamped framework.

Instead, he repeated a message International Trade Minister Mary Ng initially delivered Monday in Washington, D.C., after her meetings with U.S. counterparts and lawmakers.

The protests last month that temporarily closed the Ambassador Bridge in Windsor, Ont., the single busiest commercial crossing along the Canada-U.S. border, provided a compelling endorsement of the federal government’s case, Trudeau said.

“Americans suddenly realize that, ‘Oh my gosh, we are extremely integrated,’ like we’ve always been saying, because shutdowns on the Canadian side had a direct and immediate impact on the American economy,” he said.

“We are going to continue to work together and will continue to make sure that they understand that protectionist policies against Canada end up hurting American jobs and American workers just as much.”

Mark Agnew, senior vice-president of policy and government relations at the Canadian Chamber of Commerce, said the persistent drip of protectionism in the U.S. is what represents the biggest danger.

Friday’s announcement “is just another bolting on of Buy American provisions that nip away at market share by incentivizing dropping Canadian businesses from U.S. company supply chains that sell into procurement markets,” Agnew said.

“It continues the trend and makes clear to me where the direction of travel is going.”

Biden also announced Friday that industrial manufacturing titan Siemens USA is planning a $54-million project to increase U.S. production of critical electrical infrastructure _ more evidence, he said, that the plan is working.

“We’re seeing more jobs, more hope, and we’re also seeing something else ? the rebirth of pride that comes from stamping products ‘Made in America,”’ he said.

“Today, companies are choosing to build new factories, when just few years ago they would have built them overseas. They’re investing right here in America.”