U.S. president to sign executive orders enacting stringent new Buy American regimen

'Buy American' incoming

Less than a week after the economic gut punch of Keystone XL, Canada was bracing Monday for more bad news from the White House.

President Joe Biden was expected to enact his promised new Buy American regime, designed to better ensure U.S. workers and companies are the primary beneficiaries of the $600 billion the government spends on contracting each year.

Monday's executive order "directs agencies to close loopholes in how made-in-America products are measured, so that we can close loopholes and increase the amount of a product that must be made in the U.S. for it to qualify under Buy American law," White House press secretary Jen Psaki told a media briefing.

Biden is also setting up a "Made in America" office under the White House Office of Management and Budget, and naming a senior official whose job will be to ensure the rules are "actually enforced," Psaki said.

The order "will also tighten and make public the waiver process, so that American workers and manufacturers can see how federal dollars are spent and where they're going."

That waiver process is the one Canadian contractors and suppliers, many of whom are heavily dependent on U.S. government business, will have to navigate in order to continue to ply their trade south of the border.

The plan would increase the amount of U.S. content a project would need to qualify as made in America, and to apply more stringent standards to the sort of hard-won exceptions Canada secured to similar rules imposed in 2009 by President Barack Obama.

It would also establish a "central review of agency waivers of Buy American requirements," fulfilling Biden's campaign promise to "crack down on unnecessary waivers."

Such exceptions will be subject to public scrutiny on a website established by the General Services Administration.

A more stringent and orderly system of approving and enforcing waivers might ultimately prove a "silver lining" for Canada, said Dan Ujczo, a Canada-U. S. trade lawyer based in Columbus, Ohio.

The enforcement of procurement rules can sometimes be haphazard, particularly when they are confusing and poorly understood, said Ujczo, senior counsel with the U.S. firm Thompson Hine LLP.

"Canada has a network of agreements with the U.S. to address Buy American programs, but the nuance often is lost on procurement officers that do not want to risk using non-U. S. products," he said.

"If Canadian companies can use this new Made in America office at OMB to emphasize Canada’s 'exemptionalism,' it could prove worthwhile."

The U.S.-Mexico-Canada Agreement, the replacement trade deal for NAFTA negotiated under Donald Trump, does not include specific government procurement provisions between the U.S. and Canada.

The deal envisioned relying instead on the terms of the World Trade Organization's general procurement agreement, to which both Canada and the U.S. are signatories.

Biden "remains committed to working with partners and allies to modernize international trade rules — including those related to government procurement," the White House says.

Even so, Canadian suppliers and contractors will need to remain on guard, Ujczo added.

"Make no mistake: Canadian companies, supported by federal and provincial governments, will need to remain vigilant and aggressive on this file. There is a risk that Canada gets lumped in with everybody else. "

The latest order comes just five days after Biden "disappointed" the Canadian government and enraged Alberta Premier Jason Kenney by rescinding a presidential permit for the Keystone XL pipeline expansion.

Kenney, whose government has invested US$1.1 billion in the project and secured US$4.2 billion in loan guarantees, has threatened legal action against the U.S. in order to get some of that money back, and urged Prime Minister Justin Trudeau to join the effort.

Critics of Trudeau say they fear Biden's Keystone XL decision, which effectively killed the US$8-billion plan to export Canadian oilsands bitumen to the U.S. Gulf Coast, may be just the beginning.

Conservative Leader Erin O'Toole said Canada missed a golden opportunity to more closely align itself with the U.S. by taking a harder line on Huawei, the Chinese tech giant that American lawmakers see as an ever-present threat to national security.

Canada is the only member of the "Five Eyes" intelligence bloc that has not banned the company's equipment from its next-generation 5G mobile telecom network.

That could be making it more difficult for the U.S. to treat Canada as a trusted ally, O'Toole said Friday in an interview with The Canadian Press.

"In the United States, you never have a conversation about trade without a conversation on security," he said.

"We have to have a much smarter approach. I think there's more opportunity with a Biden administration. But there needs to be a far more serious and strategic approach from the government."

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