It set the tone: as Justin Trudeau and his entourage landed in Washington on Wednesday in preparation for the North American Leaders’ Summit, President Joe Biden was giving a protectionist speech at a General Motors plant in Detroit under a huge poster claiming A future Made in America.
And that future is green industries, starting with these electric vehicle factories that will replace the current production of petroleum-consuming vehicles. This subsidy of US $ 12,500 will also be paid on the purchase of an electric vehicle manufactured in the United States. Two economic stimulus bills currently in Congress contain protectionist measures, including this subsidy.
Certainly, Justin Trudeau did not find himself in front of an unpredictable and ignorant president like Donald Trump who threatens to withdraw from the North American Free Trade Agreement or to impose special tariffs on Canadian imports. But Joe Biden, who is above all worried about his low popularity and the dismal electoral prospects which are emerging for the Democrats concerning the midterm elections scheduled for next fall, relies on a protectionist speech where the leitmotif Buy America is brandished high. The adage associated with Bill Clinton and formulated by one of his advisers – It’s the economy, stupid! – is extremely topical. Americans are increasingly dissatisfied with the performance of their economy, and polls show that voting intentions for Republican congressional candidates are on the rise.
In this context, one can understand that the relations between the United States and its neighbors, Canada and Mexico, are not the first concern of Joe Biden. On the contrary, any insistence on this North American economic partnership risks harming the president: free trade is not popular with him. No wonder that unlike the eight previous US – Canada – Mexico summits, which have been held since 2005, there has not been a press conference bringing together the three leaders.
During his bilateral meeting with the US President, Justin Trudeau, according to his entourage, raised the issue of the subsidy for electric vehicles, a point on which the future of the automotive industry in Canada depends. During a photoshoot, Joe Biden, responding to a question from a reporter on the matter, said he did not know “what will be in front of us”. We can talk about it again once the law is adopted, he added. He therefore does not intend to lift a finger.
Canada may be concerned about the type of rhetoric employed by the US president. He sees international trade as a race that must necessarily be won, as if countries were in competition with each other as businesses compete with each other. “For most of the XXIe century, we have led the world by a considerable margin because we have invested in our people, in ourselves, ”Joe Biden said Wednesday in front of an audience of autoworkers. “We risk losing our advantage as a nation. China and the rest of the world are catching up with us. This is a simplistic view of international trade, as if the emergence of Japan in the 1970s and then that of China since the 1990s were necessarily to impoverish the United States. It’s reassuring in a sense: Canada is a negligible amount in the equation, and even Mexico, since the adversary targeted by the United States is China.
Clearly, if the US government were to provide a subsidy only for vehicles built in the United States, it would violate the new NAFTA, the Canada – United States – Mexico Agreement (CUSMA). It would also violate the rules of the World Trade Organization. But for the White House, such considerations have not weighed heavily in the past. Disputes can take years, while many flashy factories are built south of our border. It would also be illusory for Canada to consider any retaliatory measures.
The only way to go is to adopt the same “sprawling” strategy, as we wrote in The duty, which was deployed during the renegotiation of NAFTA, that is to say to multiply representations to the White House, but above all, under the circumstances, to influential members of the Senate. We must reiterate to them that it is in the interest of the United States not to sabotage the industry, not American but North American, of the automobile, which draws its strength from deep integration. While keeping in mind that, for them, only their interests count.