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Canada has a problem with his older brother


The election of the new US president promises a more predictable and cordial bilateral relationship, but trade friction remains

US President Joe Biden and Canadian Prime Minister Justin Trudeau in a video conference this week.JONATHAN ERNST / REUTERS

In December 2016, when he was Vice President of the United States, Joe Biden defined relations between the United States and Canada during a speech in Ottawa as follows: “I know that sometimes [Americans] are like the big brother, heavy and authoritarian.

I mean it sincerely and I understand it.

But we are more than allies.

We are like a family ”.

That family, during Donald Trump's years in power, lived through particularly tense years.

It is enough to recall the renegotiation of the North American trade framework, Trump's tirades towards Canadian farmers and the steel and aluminum levies set by Washington.

Trade with the United States is a vital issue for Canada.

In 2019, 75% of its exports (for about 350,000 million US dollars) traveled to the neighboring country, while 51% of its imports came from that nation (about 238,000 million dollars, which at the current exchange rate is equivalent to 196,700 millions of euros).

On Tuesday 23, Joe Biden and Justin Trudeau, Canadian Prime Minister, held a virtual meeting.

At the meeting, the leaders discussed covid-19, the fight against climate change and cooperation with other countries and institutions;

also the economic recovery, although without going into details.

Although Canadians know that the channels of communication with their southern neighbor will be less rugged and uncertain with Biden, trade disputes continue.

Biden signed several decrees the same day he assumed the presidency.

One was the termination of permits for the construction and operation of the Keystone XL pipeline, designed to send crude from the Canadian province of Alberta to US refineries.

Valued at around $ 8 billion, this project has been accompanied by protests from environmentalists and indigenous groups.

Barack Obama stopped it in 2015, but Trump reauthorized it in 2017.

Keystone XL would transport about 830,000 barrels a day.

Justin Trudeau, the Canadian prime minister, hailed Biden's commitment against climate change, but said he was disappointed by the pipeline decision.

For his part, Jason Kenney, premier of Alberta, called the decision "a punch."

Alberta invested 1,000 million in this work by TC Energy.

It doesn't seem easy for Trudeau to unsheathe the sword for Keystone XL as he recalls the accusations he received for the nationalization and announcement of TransMountain's expansion.

“The annulment of Keystone XL was an electoral promise from Biden.

It was not a surprise in Canada.

The reestablishment of a more predictable dialogue with Washington and the different issues to be discussed in the relationship are more valued ”, comments Christophe Cloutier-Roy, researcher at the Observatory on the United States of the University of Quebec in Montreal.

Biden signed a decree on January 25 to boost US manufacturing, thus initiating a process to strengthen the federal government's “Buy American” rules.

The order will change the way national content is measured and defined for qualifying products.

In turn, there will be greater oversight of exemptions in public procurement rules.

A day later, Trudeau said that Canada was able to defend its interests during the Trump years, so it will follow the same route with the new US Administration.

“President Biden has many priorities similar to those of Canadians.

And these are issues in which we can work closely with our closest friend and ally, "he said.

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Chrystia Freeland, Minister of Finance, recalled that same day the two-way importance of exchanges, underlining especially the framework of the pandemic.

Freeland said it will be an issue that will be discussed at the highest level with Washington, thanking Biden for the openness to dialogue.

Regarding the modification of rules that could have an impact on Canadian products, the minister commented: "In these measures, the devil is often in the details."

Dennis Darby, president of Canadian Manufacturers and Exporters, believes Trudeau and Biden should consider the complex supply chain links between the two countries, as well as with Mexico.

"Excluding each other from our respective public procurement markets could seriously damage our precarious economic recovery."

The Canada-United States Business Council, for its part, recalls that many American firms will come out to defend their Canadian counterparts for aspects such as the price and quality of the products, as well as for the years of working together.

Edward Keenan recalled in

The Toronto Star

that Canadian companies have long been exempted - by virtue of different agreements - from many procurement rules in the United States, so that several of Biden's measures could have a slight impact on Canada.

“This does not mean there is little work to be done for the Canadian government and business in the coming weeks or months.

Biden's order is in many ways a starting point, not an end, ”he wrote.

Cloutier-Roy claims that Joe Biden's move was not orchestrated to hit Canada.

“In the United States, relocation to other countries is fundamentally disturbing.

The affected workers were in the electoral crosshairs of the Democrats;

also from Trump, ”he explains.

Expected return

Another issue is Biden's promise that the United States will rejoin the Trans-Pacific Economic Cooperation Agreement (TPP), abandoned by Trump in 2017. For Alex Kotsopoulos, from the consultancy RSM Canada, this return “could have a greater impact on the recovery. in the long term of Canada, given its historical dependence on trade and due to the integration of its economy with the United States ”.

However, dairy farmers in Ontario and Quebec are less optimistic.

They note that Canada made concessions on the TPP (a 3.1% domestic market opening) precisely because the US had withdrawn from this agreement.

Another product is wood for industrial use.

In November, the US Department of Commerce announced a reduction in levies on Canadian timber (from 20% to 9%), following a report from the World Trade Organization.

74% of Canada's industrial lumber exports go to the US Canadian producers do not want Biden to dig up this conflict.

Thank you for stepping up efforts to combat climate change.

We have really missed America's leadership in recent years, ”Trudeau told Biden at Tuesday's virtual meeting.

Keystone XL and the US reincorporation to the Paris Agreement show the considerable space that the environment occupies on Biden's agenda, as well as the reinstatement of 163 environmental measures canceled by Trump.

The US president will present a colossal green energy investment plan to Congress.

For Steven Globerman of the Fraser Institute, Canadian companies in the industry with subsidiaries across the border can reap significant benefits from this injection.

“You also have to look at the dynamics between states and provinces.

An example is the electricity that Hydro-Québec sells in the northeastern United States, but it cannot be ruled out that some US companies are exerting pressure to limit entry into this market, ”says Cloutier-Roy.

Source: elparis

All business articles on 2021-02-28

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