Canada wants urgent changes to trade rules for the auto industry. The U.S. may not even care

Canada has begun to hint, in public and in private, at something Mexico explicitly threatened Thursday: trade actions against the U.S. if the country’s Congress proceeds with Buy American-style provisions they fear will devastate the Canadian auto sector.

The challenge for these out-of-towners is getting American lawmakers to take notice as they grapple with a succession of headaches.

What’s already on the to-do list for the Democratic-controlled Congress in coming days:

• Avert a government shutdown, as federal funding runs out.
• Prevent the U.S. from defaulting on its national debt and causing the global economic meltdown that would likely ensue if the U.S. failed to extend its so-called debt ceiling.
• Prevent Pentagon funding from running out as the annual National Defence Authorization Act is stuck in the omnipresent sludge of toxic partisanship.
• And pass the biggest social-spending legislation in generations, the so-called Build Back Better (BBB) bill for child care, pre-K, lower health costs, and a clean-energy overhaul.

In the backdrop is the one pervasive fear driving Democrats’ sense of urgency to pass BBB: that they risk achieving little with their time in power, get wiped out in next year’s congressional midterms, and watch Donald Trump mount his comeback.

Now Canada is here to tell people it’s very unhappy with Pages 1870, Clause B (4), and 1873, Clause G of the bill, which would use tax credits to steer next-generation vehicle production to union plants in Michigan.

Three potential paths to relief for Canada

Canadian officials including International Trade Minister Mary Ng are making the country’s case in about 50 meetings with members of the U.S. Senate, House of Representatives, administration and businesses.

The goal: get the Senate to amend or kill bits of the bill, already passed by the House of Representatives, which they fear could have a detrimental long-term impact on Canadian manufacturing.

After her meetings Thursday, Ng was asked a few times in an interview with CBC News whether she’d heard anything that gave her hope. She did not divulge specifics of the meetings.

Asked what the path is for Canada to knock down this provision, Ng replied: “This bill is before the Senate. The U.S. Senate. I am here,” she said.

“And I am meeting with many senators. My colleagues are meeting with many senators.… We are going to keep up this advocacy.”

WATCH | Canadians hit Capitol Hill to urge changes in electric car provision:

Canada pleads with U.S. lawmakers to change or scrap electric car bill

Canada’s trade minister is on a mission in Washington, urging U.S. lawmakers to change or scrap a proposed electric car bill that could kill thousands of Canadian manufacturing jobs. There are no signs anything will change in Canada’s favour, with the Democrats hoping to pass the bill before the Christmas break. 2:04

Some people who attended meetings this week said they didn’t get any commitments but did hear ideas, primarily from the Republican side, about how these provisions could change.

As previously reported, there’s the hope of an amendment: two West Virginia Senators, one a Democrat, the other a Republican, have expressed displeasure, as the tax credits are designed to help northern union plants and hurt their right-to-work state.

The Republican, Shelley Moore Capito, is close to the Democrat, Joe Manchin, and she’s talked about forcing a vote on an amendment to nuke the provision giving tax incentives for U.S.-assembled electric vehicles.

Another possible path involves Senate procedure. In a complex process known as the Byrd Bath, the Senate parliamentarian must decide whether items belong in budget legislation, and it’s still unclear whether all aspects of the BBB bill will pass muster.

A final way this provision could change is by executive action. After the bill passes Congress, President Joe Biden must write instructions to federal departments on how to implement it and he could, in theory, use lenient language.

A meeting in LBJ’s shadow

Ng’s first meeting, with a Republican senator, took place in a symbolically fitting setting as she arrived at the Capitol: right in front of the former senate office of Lyndon B. Johnson.

It so happens that Johnson was the president who signed the Auto Pact with Canada, launching 55 years of Canada-U.S. integration.

And Ng happened to be there trying to save the spirit of his pact, across the hall in the office of Tennessee Republican Bill Hagerty.

Hagerty needed no convincing.

He hates the legislation and wants it gone, as do all 50 Republicans in the Senate. Hagerty later said the Canadians did a good job identifying some of the problems with the bill.

Asked whether that means he’d like to see that vehicle provision gone, Hagerty replied: “I support getting rid of this bill in its entirety.” 

Well, that’s not likely to happen.

What the Canadians opposing those provisions need is to convince one Democrat — just one, any one — to side with Republicans and force an amendment.

The issue is with the Democrats

Democrats, however, are being discreet.

Neither of the two Georgia Democrats Ng met with, Raphael Warnock and Jon Ossoff, spoke to reporters about the meeting. 

According to someone familiar with the discussions, one of them promised to talk about the issue with his Michigan colleagues, who are the people who’ve pushed these provisions.

One thing several of the Canadians there agreed upon was that some Democrats have been surprised by just how annoyed their visitors sounded, with their hints this could cause a trade dispute.

Susan Harper, Canada’s consul to Miami, said the Americans she’s heard from appreciate knowing about the collateral damage this could do to Canada.

“The response that we’re getting initially is, ‘Thank you for bringing this to our attention,'” she said.

Canada began ramping up its awareness campaign during Prime Minister Justin Trudeau’s recent visit, on the week the bill passed the House.

Another Canadian diplomat based in the U.S. South, Louise Blais, set up several meetings this week with lawmakers from her region who might be Canada’s potential allies on this issue.

“We made progress today,” said Blais, Canada’s consul general in Atlanta.

A Conservative MP in the delegation said that when the issue comes up American lawmakers say they never intended to hurt Canada. 

“They take a step back and say, ‘Well, we didn’t expect that. We didn’t intend that,'” said Saskatchewan MP Randy Hoback. “But I don’t know if there’s enough time to fix it.”

It is indeed getting late. Democrats say they want this bill passed by the Christmas break.

‘No option off the table’ 

One business leader in Washington this week said this whole episode should be a wake-up call about the new reality in Canada-U.S. relations.

Goldy Hyder said the U.S. faces tremendous challenges at home and abroad, and the onetime confident superpower is turning to protectionism to rebuild its manufacturing base.

He related one conversation with an American driver he chatted with this week, when Hyder asked how things are going.

“[He told me], ‘We’re stuck,'” said Hyder, president of the Business Council of Canada.

“[Now] we [Canadians] are stuck because they’re stuck.”

He said the new American realities require new strategies on Canada’s part: One is to constantly engage with as many elements of U.S. society as possible.

Another? Threaten trade action, so that Americans think twice in the future about whether the policies they’re designing hurt the neighbour.

“No option [should be] off the table. Everything needs to be considered,” said Hyder, president of the Business Council of Canada.

“This moment is not just about winning today’s battle. It’s about making sure that you’re not going to lose future ones.” 

He said it’s clear Canadian concerns don’t register given recent actions: on electric vehicles, softwood lumber duties, and threats to shut down Canada’s Line 5 pipeline.

“I had several conversations where [Americans] said to me, ‘I had no idea you feel this way. And I said, ‘Well, that’s a real problem, isn’t it?'” Hyder said. 

“When you take action, after action, after action, after action, and it’s done without any thought to, ‘Does this have any consequence on our relationship, on our friendships,’ you know, that tells you everything.”

-With files from Katie Simpson