Navdeep Bains is the vice-chair of global investment banking at CIBC. He was one of the longest serving federal ministers of innovation, science and industry.
U.S. President Joe Biden’s visit to Canada this week, his first since becoming President in 2020, is a reaffirmation of the warmth and friendship that has long existed between our two countries.
I witnessed that friendship firsthand when I attended the state dinner hosted by president Barack Obama in 2016. After dinner, the conversation turned to basketball and how the Toronto Raptors could win the NBA championship. An avid sports fan, the president could not deny the Canadian team looked set to make history. And after a few years they did, winning the 2019 NBA Finals in a blaze of glory. Score one for Canada in the friendly cross-border rivalry.
But as with all long-term relationships, there is always more work to be done. Mr. Biden’s visit is an opportunity for Canadians to consider how to make sure our own decisions and advocacy can reinforce Canada’s place within a strong North American partnership.
The Inflation Reduction Act is a great starting point. The act was introduced by Mr. Biden last year and while it is to be applauded for its wide-ranging measures in support of the energy transition, its aggressive subsidies also demand a meaningful Canadian response.
The measures in the act add up to billions of dollars of support for the U.S. manufacturing and energy sectors over the next few years. There is real concern it could trigger capital flight to the U.S. and leave Canada’s energy and clean tech sectors reeling. “The U.S. has turned on a shop vacuum to suck up incentives and we’re standing here with the Dustbuster,” Matt Poirer of the Canadian Manufacturers & Exporters Association told Parliament’s international trade committee in November.
Indeed, the protectionist measures in the Inflation Reduction Act have alarmed policy makers across the world, with the EU scrambling to find measures, and words, to match their concern. Domestically, all eyes will be on the March 28 federal budget for competitive measures that can support Canadian companies in this space.
Meanwhile, Prime Minister Justin Trudeau has shown himself to be shrewd and strong when it comes to navigating the international stage, and the U.S. relationship in particular. The President’s visit should be a time to underline our close relationship, highlight our key strengths and, crucially, to stand up for Canadian interests. The core message? We are stronger when we are working together.
As others, such as Flavio Volpe of the Automotive Parts and Manufacturers Association have stated, the President should be urged to move away from “Buy American” to “Buy North American” in order to supercharge the energy transition and give a clear message that we are allies and partners.
Canadian policy makers simply cannot match directly the quantum of money being injected into the U.S. market. Canada will need to be creative and focus on leveraging our natural advantages to make sure we remain competitive.
Isolating Canadian companies from competing in the energy and clean tech sectors is not only bad for business but limits the number of people we have working on these important issues for our climate. Instead, Canada can offer peerless talent and resources to support the energy transition and the competitiveness of the Canadian economy.
A good example of this ‘friend-shoring’ is the race for critical minerals to power the global energy transition and electric vehicle revolution. Critical minerals supply chains underpin the electrification of the economy. The World Bank, International Energy Agency and others have now laid clear the supply-demand dynamics and the resulting critical metals and minerals showdown to come.
Canada needs to make it clear to the U.S. administration that a cohesive continental strategy around critical minerals is the best hedge to growing Chinese control in this sphere, and a strategic pivot that will help redraw the global energy map.
Canada’s natural resource wealth, scientific excellence and manufacturing skills are best in class. We are home to almost half of the world’s publicly listed mining and exploration companies with a combined market capitalization of $520-billion. Potential avenues to explore for mutual benefit could include giving the U.S. preferential access to key materials for major U.S. industrial producers that no longer have sources in conflict zones. For that to happen effectively, Canada needs to be in the tent, not pushed out by protectionist measures.
In an increasingly fractured world, we need to be clear about who our friends are, and clearer still about how we can work together to advance our shared ideals. There is much work to be done on the energy transition, and the fight against climate change requires a global effort. There is no doubt that the U.S. is our closest and most important neighbour, friend and partner.
To paraphrase Mr. Biden, we must Build Back Better Together. Welcome to Canada, Mr. President.