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Ontario Premier Kathleen Wynne waits for Governor-General Julie Payette outside the Ontario Legislature in Toronto on Tuesday, Feb. 20, 2018.Chris Young/The Canadian Press

Ontario is retaliating in a trade spat with New York State.

The provincial government introduced a regulation on Sunday pushing back against a new Buy American law that took effect in New York State on the same day. The measure is based on New York’s move and is aimed at structural iron used in large infrastructure projects, restricting Ontario’s public sector from purchasing iron manufactured in the state.

“When Ontario workers and businesses are threatened by protectionist U.S. actions, I have no choice but to respond. I will not let New York or any other state, tilt the field in their favour without taking appropriate action,” Ontario Premier Kathleen Wynne said in a statement.

Ontario’s move, announced on Monday, uses a new law that allows the provincial government to mirror so-called Buy American legislation introduced by any U.S. state. The regulation has no impact on purchases from the other 49 states.

While we shouldn’t expect a full-blown trade war between Canada’s largest province and New York, according to a trade lawyer, it’s the latest move in a trading relationship that has been increasingly strained in recent years by protectionist sentiments in the United States.

Mark Warner, a trade lawyer based in Ontario and New York, says there’s a lot of domestic politics involved in both New York and Ontario’s recent moves. Prior to its announcement on Monday morning, Ontario already had rules on preferential government purchases, he said.

“Every time people talk about Buy American the Ontario government gets nervous. Once New York did what it did, some response from Ontario was expected,” said Mr. Warner, who once worked as the legal director for Ontario’s trade ministry. “Neither New York or Ontario has ever promised to completely open up government procurement, so there’s a bunch of kabuki theatre going on.”

Nearly a year ago, Ms. Wynne’s cabinet quietly adopted a Buy Canadian-style policy to turn the tables on any U.S. state that adopted protectionist measures. At the time, New York Governor Andrew Cuomo had proposed a far-reaching New York Buy American Act which would have required state entities to restrict all purchases of more than US$100,000 to American products.

The legislation that came into effect on Sunday was far narrower in scope. The Ontario government had previously claimed victory from New York’s move to reduce the scope of its protectionist law after a long and aggressive lobbying campaign. However the province didn’t win an exemption from the final law.

Over the past year Ontario has sent a number of lobbyists to states flirting with Buy American measures, going beyond New York and including Texas and Illinois. The province’s leaders, including the Premier and senior ministers, have made a number of trips to the United States over growing concerns about the restrictive rules and the uncertainty surrounding the North American free-trade agreement.

Rules around government procurement remain one of the flashpoints in NAFTA talks and Ontario’s move will be flagged at the negotiating table, Mr. Warner said. However, an official with the federal government said they weren’t alarmed by Ontario’s response to New York, which was an action that had been expected.

Last month, Ontario’s Liberal government shepherded the Fairness in Procurement Act through the legislature at Queen’s Park to prepare for this showdown. Sunday’s move was made through the law.

New York State is Ontario’s third-largest trading partner in the United States. The province exported nearly $14-billion to the state in 2017 and imported $14.2-billion, according to the Ontario government. Just over $205-million in iron and steel was imported from the state in 2017.

The Buy American bill signed by Mr. Cuomo in December has initially been limited to structural iron, however, the legislation created a working group to explore expanding the bill to cover concrete, cement and aluminum.

“I have consistently supported open and competitive procurement because it helps create good jobs on both sides of the border, but it has to be a two-way street,” Ms. Wynne said.

Ontario Premier Kathleen Wynne says her government will increase hospital funding by $822-million in 2018-2019, the third major funding promise the Liberals have made in as many days ahead of the province’s June election.

The Canadian Press

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