Ontario to push for Canadian exemption to New York state Buy American policy

Two Ontario cabinet ministers were in New York state to urge legislators to exempt Canada from a Buy American policy it plans to introduce, warning that it could lead to trouble on both sides of the border. (Photo: Brad Duguid/Twitter)

TORONTO—Two Ontario cabinet ministers were in New York state to urge legislators to exempt Canada from a Buy American policy it plans to introduce, warning that it could lead to trouble on both sides of the border.

Economic Development Minister Brad Duguid and International Trade Minister Michael Chan met with officials in Albany, N.Y., on Tuesday. Before the meeting, they said they would focus not on the potential impacts to Canada’s economy, to the tune of hundreds of millions of dollars, but on New York’s “self interest.”

“The message we’ll be bringing to our friends to the south will be: there are a lot of American jobs dependent on an unfettered trading relationship and open procurement between New York state and Ontario that will be at risk if there is not an exemption in place for Canada,” Duguid said in an interview.

Ontario trading accounts for about 80 per cent of the goods New York state exports to Canada, or about $10 billion, with $12 billion flowing the other way. With the Ontario Liberal government planning to spend $160 billion on infrastructure over 12 years, Ontario is a market that New York will want to preserve access to, Duguid said — access he suggested may be jeopardized if Ontario and Canada are shut out with a Buy American policy.

The policy is set to pass March 31, and if Duguid is not successful, he said, Ontario would look at a bilateral deal that could have the effect of getting around the Buy American clause, or “other options.

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“Obviously we would look at all of our options with regard to access,” Duguid said. “If a jurisdiction is going to discriminate against Ontario companies we need to look at our options in terms of the alternative.”

New York Governor Andrew Cuomo’s plan would require all state entities to give preference to American-made goods and products in any new procurements worth more than $100,000. In January he said it would be the United States’ “strongest” state procurement law.

It would have a “significant” impact on Ontario companies working in infrastructure, such as those in the information and communication technologies sector, service companies, manufacturers and construction companies, Duguid said.

The Ontario-led pushback against the New York policy comes amid a national effort to make a case against protectionism.

Canada’s ambassador to Washington sent a letter last week to lawmakers who have urged U.S. President Donald Trump to restrict foreign suppliers, including on the Keystone XL oil pipeline.

A big U.S. infrastructure bill is coming with a potential US$1 trillion in contracts and procurement could be an issue in NAFTA negotiations.

This isn’t the first time Ontario has sought to remind the U.S. of the importance of the province’s trading relationship with them.

Ontario Premier Kathleen Wynne met last week with Michigan Governor Rick Snyder and has appointed herself the head of a new committee on Ontario-U.S. economic and trade relations.

Cabinet ministers have been armed with a sheet of talking points to promote Ontario trade when speaking to their colleagues in the U.S. and Wynne sent letters to the governors of the 27 American states for whom Ontario is the top or second top export destination.

“As you know, Ontario and New York are also closely linked through mutually beneficial trade,” Wynne wrote to Cuomo in February.

“In 2015, we exchanged goods worth almost $24.8 billion, of which gold, aluminum and auto parts were at the top of the list.

The latter industry relies, in particular, on just-in-time deliveries across an efficient and safe border through deeply integrated supply chains.”

Trade expert and Carleton University professor emeritus Michael Hart predicted Duguid had little chance of success, even with the “self interest” appeal.

“It’s a very tried and true argument but it really doesn’t play much,” he said. “Put this down to largely grandstanding.”

Duguid admitted an exemption wouldn’t come easily.

“The fact is there is a lot of momentum in the U.S. right now for Buy America kinds of approaches,” he said. “That’s what we’re up against. So it will be a challenge for us to get an exemption. We recognize that. But it’s something we’ll certainly be doing our very best to try to achieve.”