Ideas to ensure Canadian integration into U.S. supply chains and access to markets

On April 22, the Canadian Chamber’s Vice President, Policy and International, Mark Agnew, appeared at the House Special Committee on the Economic Relationship between Canada and the United States. In support of the Our Trading Future campaign, Agnew highlighted key issues concerning the Canada-U.S. relationship on behalf of Canadian business.

Mark Agnew’s opening statement:

Check against delivery.

Mr. Chair and honourable members, thank you for the opportunity to meet with the Committee again. Since my last appearance, the Canadian Chamber has launched our Canada-U.S. relations initiative covering five critical areas:

• the border;
• environment and natural resource issues, including critical minerals;
• regulatory cooperation;
• Buy American; and
• defence and security supply chain issues.

We look forward to engaging with committee members on all the above, but the latter areas are the most germane to today’s committee focus.

I don’t need to belabor to this Committee the Canadian business community’s concern with procurement practices that risk shutting Canadian companies out of the U.S. market. 

Rather, I want to highlight six forward-looking ideas to ensure our integration into American supply chains and access to U.S. procurement markets. We hope the committee will highlight these in their report to the government.

First, look comprehensively at the importance of goods and services. There is a risk that we myopically focus on goods and forget high-value services. Just last week the U.S. subsidiary of a Canadian company was awarded a Joint Venture contract worth up to $2 billion for design and services related to work for the U.S. air force. This demonstrates the potential of the value of services, particularly if you’re talking about support contracts that can last years instead of a one-and-done goods delivery.

Second, we need to know what we’re bringing to the table. In the 2008/09 we had a bilateral negotiation with the Americans, but given COVID and just finishing USMCA, no one wants another bruising negotiation. We need to think about how we can be a serious partner. This includes CUSMA implementation, supporting North American supply chain resiliency, leveraging critical minerals, and even our own procurement practices to Buy North American, including in defence given our continental interests. There is tremendous potential to partner and work with U.S. firms and to provide Canadian world class expertise in the clean energy sector. For example, there is potential to partner in the rehabilitation of hydroelectric facilities or in the development of small modular reactors.

Third is the unique nature of our shared defence and security industrial base. The DPSA and other arrangements are critical tools for Canada to maintain access. The Committee should explore in its recommendations how these arrangements could be codified to provide further certainty for Canadian companies. The continental industrial base is critical to continental defence.

Fourth is engaging on emerging buy clean initiatives. The recently introduce CLEAN Future Act would establish a Buy Clean Program that sets performance targets for projects that receive federal funding. It was introduced with an explicit goal to bolster U.S. manufacturing competitiveness and we need to ensure standards used and its implementation do not shut out Canada. Our approach should seek to address climate challenges while generating economic opportunity in environmentally sustainable technologies, goods and services. This also means positioning Canada positively with our lower-carbon footprint products.

Fifth, industry-government collaboration is critical. The Canadian Chamber and our members worked closely with the government during the CUSMA negotiations. Another example is when the government and Chamber members collaborated last year to ensure the U.S. 2021 defence appropriations legislation did not pass with the inclusion of provisions that would have been detrimental to Canadian exporters. The Biden Administration’s supply chain Executive Order thankfully recognizes the importance of consultation with allies. We are calling on the government to engage in those reviews and collaborate with industry to ensure a Canadian view is well represented.

Sixth, we need better data. Buy American and Buy America are hideously complex when combined with WTO GPA commitments, waivers, and sub-national programs. There is not really solid data in the public domain about Canadian access to procurement markets. Canadian businesses – and myself personally – want to get a better handle on the scope of the problem. Companies likewise want to know where to invest future business development efforts.

I said in a recent media interview that few wake up in the morning in Washington thinking about how to do Canadian businesses a favour. There are a multiplicity of interests inside Washington. Our Embassy led by Ambassador Kirsten Hillman does a fantastic job, but we are at a critical moment in the relationship and need to really drive home the point of why it is in the U.S. self-interest to work with us.

The Canadian Chamber looks forward to continuing its work with this committee and I would be glad to answer any questions.