U.S. President Biden’s Made in America Directive, a move that strengthened the already stringent Buy America bill, is aimed at China, Canada’s manufacturing sector may bear the brunt of this economic protectionism.
The order directs federal government procurement to focus on American made goods by American workers and with American-made component parts. It effectively closes loopholes and exemptions that Canadian companies have used to supply their American customers.
While the move was expected, it has been decried across Canada’s industrial and political landscape as clumsy and poorly considered.
Canadian Manufacturers and Exporters (CME) says the Canadian and U.S. governments should instead adopt a “Buy North American” plan, given the complex supply chain linkages between the two countries and Mexico.
“Canada, Mexico, and the United States don’t trade with each other anymore—we build things together. Excluding each other from our respective government procurement markets could seriously hurt our precarious economic recovery,” says Dennis Darby, president & CEO of CME.
“We believe our federal government has to push this right away with the new Biden administration,” said Darby, who recalls that it took Canada nearly a year to negotiate exemptions in 2010, when the Obama administration enacted Buy American provisions.
“The key will be to reinforce the historically strong diplomatic relations between Canada and the United States in order to maintain open market access,” says Darby. “But the work our federal government can do at home is also very important. Given the global rise in protectionism and the drop in demand due to COVID-19, it is imperative for Canada to remain competitive and enact fiscal policy that will attract investment and grow our manufacturing sector.”
Before this order, U.S. laws required government agencies to give preferences to American firms, however, these preferences have not always been implemented consistently. The new executive order establishes goals and standards necessary to use federal purchasing to proactively invest in American industry. The order specifically governs federal procurement, federal grants, and other forms of federal assistance.
Vic Fedeli, Ontario’s Minister of Economic Development, Job Creation and Trade is concerned that the directive could have a major impact on workers and businesses that rely on the strong trade relationship.
“The Ontario government is disappointed that the U.S. Administration has chosen to move ahead with a new Executive Order on Buy American which would restrict access to the U.S. government procurement,” said Fedeli in a press release.
“This is a critically important trading relationship that supports millions of jobs on both sides of the border and is worth approximately $400 billion annually. If Ontario were a country, we would be the United States’ third largest trading partner. Ensuring strong trade ties is vital to the businesses and communities these trade relationships support, particularly as our economies recover from the COVID-19 pandemic.”
Made in America Details
- The order directs agencies to close current loopholes in how domestic content is measured and increase domestic content requirements. Currently, the U.S. has a domestic content threshold – the amount of a product that must be made in the U.S. The update increases content percentage required as well as the acceptable amount of increased cost compared to overseas goods.
- It also updates how government decides if a product was sufficiently made in America, building a stronger foundation for the enforcement of Buy American laws.
- The order also creates a new government position: Director of Made-in-America at the Office of Management and Budget (OMB).
- Agencies must use the Manufacturing Extension Partnership — a network in all 50 states and Puerto Rico that supports small and medium-size manufacturers — to help agencies connect with new domestic suppliers.
