Provisions in ‘Build Back Better’ bill could hurt Canada’s auto sector, says trade minister
Canada’s Trade Minister Mary Ng made a diplomatic push in Washington last week, meeting with U.S. senators ahead of their vote on a piece of legislation that is dividing Americans and could considerably impact Canada’s auto sector.
The delegation of opposition MPs, Canadian consuls from across the United States, and business and labour representatives conducted over 50 meetings with U.S. officials and stakeholders between Dec. 1 and Dec. 3.
Ng said the meetings with senators were crucial at a time when the U.S. Senate is debating the Build Back Better bill (BBB), which if passed, could directly impact Canada’s auto sector.
“This advocacy is absolutely important, particularly at this time when this is in front of the Senate,” Ng told CBC News on Dec. 3, the last day of the visit.
The bill has passed in the House and could be submitted to a vote in the Senate in the next few weeks.
While for some Americans the controversial bill signifies ushering in a progressive era of social and climate justice, for others it represents a costly initiative that would stoke inflation and steer the country toward socialism.
Canada’s Liberal government is aligned ideologically with the nature of the bill, but says one of its provisions would prove devastating for the auto industry and kill tens of thousands of jobs: the proposed tax credit for electric vehicles (EVs).
The credit would provide up to $12,500 in incentives for the purchase of EVs made in the United States with unionized labour, in a bid to shore up parts of the country’s manufacturing sector and the green economy.
Ottawa, the auto industry, and its associated sectors are worried about the impact this would have on the Canadian economy and are seeking to convince U.S. stakeholders that American workers would also be adversely impacted due to the highly integrated supply chain between the two countries.
There were no details about what transpired during Ng’s meetings with U.S. senators, and the trade minister did not return with any commitments from them. Ng’s office did not reply to a request for additional details.
“What all of the senators have said to me is that they appreciated the close relationship between Canada and the U.S.,” Ng told CBC.
“They want to be in a position where they are standing by the USMCA,” she said, referring to the North American free trade deal.
BBB Plan Polarizing
The US$1.75 trillion BBB is touted by the Biden administration as a plan that will “create millions of good-paying jobs, enable more Americans to join and remain in the labour force, spur long-term growth, reduce price pressures and set the United States on course to meet its clean energy ambitions.”
It includes funding for universal preschool for all 3- and 4-year-olds, expanded child tax credits, clean energy tax credits, investments in affordable housing, and a host of other similar initiatives.
Detractors of the bill say the massive spending will increase the already skyrocketing national debt, further drive up inflation, alter market dynamics by picking winners and losers in the economy, and destroy the middle class.
The bill is likely to be opposed by most Republicans, and with the Senate being evenly split 50-50, much is weighing on Democratic Sen. Joe Manchin from West Virginia, who hasn’t been going along easily with the Biden administration’s progressive push. So much so that Manchin quipped recently that he “doesn’t know where in the hell [he] belong[s],” during an interview at the Economic Club of Washington on Oct. 26.
Manchin already said he opposes the part of the EV tax credit which applies to union-made vehicles, as he sees this as going against the spirit of free-market capitalism and it would also affect non-unionized auto workers in his home state.
The senator has also been non-committal on other parts of the legislation, such as the child tax credit.
Manchin’s West Virginia colleague, Republican Sen. Shelley Moore Capito, called the bill “the most radical left-wing legislation in American history.”
Moore Capito said in November she would be “especially aggressive in fighting against” three provisions of the bill, notably the EV tax credit which would have “tremendously negative and direct impacts” on jobs in West Virginia.
During her trip, Ng met with a handful of senators also from states with sizeable automotive industries.
Ng also met with the two Democratic senators from Georgia, Jon Ossoff and Raphael Warnock.
On the passing of the bill in the House on Nov. 19, Warnock tweeted “I’m pushing as hard as I can to get this done in the Senate,” which does not bode well for his alignment with Canadian concerns.
Ng also met with Republican senators Todd Young, Bill Hagerty, and Marsha Blackburn, all of whom are likely to oppose much, if not all, of the bill’s content.
In a post on Twitter last month Blackburn said, “The Build Back Better plan is just another step towards turning the American dream into a socialist nightmare.”