What America’s Buy Clean plan might mean for Canadian cleantech

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When truckers and their supporters blocked border crossings this month, some U.S. political figures took the opportunity to amplify a protectionist message that’s lingered since before the Trump era: The United States should reduce trade, even with long-time allies, because domestic industry gets punished. And it’s made worse when supply chains are fragile.

One of former U.S. president Donald Trump’s first orders of business was to demand a rewrite of the North American free-trade agreement. He got it. Since then, China has been the more frequent source of U.S. trade friction. But ragtag hordes of Canadian protesters clogging up main thoroughfares have only rekindled the “Buy American” message that U.S. President Joe Biden has adopted.

Now, there’s a risk that trade disputes could enter the climate-change realm, and that will be something to keep an eye on as tens of billions of dollars are poured into green technology and products. Mr. Biden is looking to put his government’s financial might behind the U.S. cleantech sector.

This could have ominous undertones if protectionist voices get louder. It is a sector that a blue-ribbon Canadian Industry Strategy Council held up as being key to recovery from the pandemic. Industry and the federal and provincial governments are currently devising ways to scale up technology and bolster exports, and the U.S. is always a key target market.

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This week, the White House announced a series of “pro-climate, pro-worker” measures to help the U.S. with its own green recovery by buying building materials with lower-lifecycle carbon emissions. On the surface, they are laudable ideas, but some of the language suggests it could mean new barriers to Canadian manufacturers now seeking to build back credibility after the blockades.

The administration’s actions include establishing a “buy-clean task force” that will seek to direct some of the U.S. government’s US$650-billion of annual spending to domestic makers of low-carbon steel and aluminum, which are used in electric vehicles, solar panels, wind turbines and other gear.

So far, the language has not been exclusionary. In fact, the administration previously agreed with the European Union to hammer out a trade deal for steel and aluminum that takes emissions into account. An agreement is targeted for 2024.

But the overall concept is using government procurement might to “reward clean American-made materials.”

Protectionism has already crept into green technology. Canada was embroiled in a four-year flap with the U.S. over solar panels and only this week won its case before a dispute-settlement panel that was set up under the new Canada-United States-Mexico agreement.

The U.S., under Mr. Trump, imposed safeguard tariffs on imported solar products in January, 2018, including those made in Canada. According to Global Affairs Canada, exports of such equipment to the U.S. have dwindled by 82 per cent since then.

The Biden administration extended the tariffs for another four years, but the panel sided with Canada in its contention that the lack of exemptions for our country’s products violated the terms of the trade agreement. Now, the U.S. has a month and a half to come to an agreement with Canada, the panel ruled.

Mary Ng, Minister of International Trade, Export Promotion, Small Business and Economic Development, said in a statement that cross-border trade and supply chains are critical to economic recovery on both sides of the border, fighting climate change and ensuring competitiveness. The Canadian government can only hope its U.S. counterparts see it that way.

Canada’s cleantech sector has set a target to generate $20-billion in export revenue by 2025, and that’s a very tall order. Based on $9.4-billion in exports in 2020, those revenues will have to increase by more than 20 per cent a year to make the goal.

It suggests the industry should be looking further afield, rather than having an overreliance on the U.S. as a green trade partner. But the U.S. is still by far the biggest and closest market. It has to be confident that Canada is a trusted partner in an industry that will only keep expanding as demand for its products grows over the next several decades.

Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. E-mail him at jeffjones@globeandmail.com.

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