Ontario is set to introduce a bill allowing it to retaliate against any US state that adopts Buy American provisions into its procurement policy.
The Canadian province said it would also start a national conversation with other provinces about measures to punish new cases of procurement protection.
During her visit to Washington, Ontario premier Kathleen Wynne announced that her cabinet had examined legislation to be tabled when the legislature reconvenes later this month.
Wynne said the bill would reduce public procurement opportunities for US states that adopt Buy American provisions by allowing Ontario officials to write regulations targeting them.
She added that the size of each “punishment” would be proportional to the size of the Buy American exclusion but no more, to avoid triggering an escalating tit-for-tat, which could damage the economy.
“I don’t want a trade war,” she said.
“But we do have to stand up for Ontario businesses and Ontario workers, and do that in a proportional way. We are not going to roll over.”
Wynne said the move came off the back of a recent infrastructure bill from New York state.
The New York Buy American Act – a bipartisan bill signed last year by governor Andrew Cuomo – received near unanimous support from state lawmakers. The law is scheduled to go into effect at the beginning of April and will require certain infrastructure and capital projects to use US-made iron and steel products.
“I have no choice but to respond by introducing legislation of our own – our US partners need to know that if they choose protectionism, they will pay a price,” she said.
“My hope is that New York state will grasp what is at stake here and work with us to continue tearing down trade barriers and creating good jobs.”
Wynne added that the Canadian federal government is aware of her plans and she also intends to discuss the idea with other Canadian premiers at their upcoming conference.
“I’ll certainly be raising it,” she said.
However, Mark Warner, Canada-US trade expert at law firm MAAW Law, told CBC News that the move might not be as dramatic as it sounds because Ontario procurement already has numerous limits to competition and is far more protectionist than advertised by its politicians.
“Offence sometimes can be good defence but in this case, Ontario government procurement markets may not be as open now as this suggests,” he said.
“At the end of the day, state and procurement preferences in a revised NAFTA [North American Free Trade Agreement] will have to be negotiated as we [Canada] did in response to the 2009 stimulus bill and partially in the Canadian-European trade agreement.”
Wynne said during her visit to Washington she met with American lawmakers, business leaders and chief US NAFTA negotiator John Melle, who all had a positive attitude about finding common ground in the NAFTA negotiations.
Talks to update the 1994 treaty have slowed amid frequent threats by US president Donald Trump to walk away unless Canada and Mexico agree to major changes.
Wynne added that despite the procurement threat, she leaves Washington more optimistic about the state of trade between the US and Canada.
“Nobody said there’s no path for a solution here,” she said.
“Generally I’m feeling better than I was in November – I feel very encouraged. People are engaged and they think there’s a reason to stay engaged.”
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