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Canada Wynne readies Buy Canadian-style policy to turn tables on U.S.

Ontario’s cabinet met on Wednesday and a possible renegotiation of NAFTA dominated the discussion for the first time.

MARK BLINCH/REUTERS

Ontario Premier Kathleen Wynne's cabinet is prepared to unleash a Buy Canadian-style policy to turn the tables on any U.S. state that adopts Buy American provisions despite the province's aggressive lobbying.

The policy was adopted a month ago as the province lobbied Governor Andrew Cuomo to drop his proposed New York Buy American Act, which would have required state entities to buy from U.S. companies on all purchases more than $100,000 (U.S.). Mr. Cuomo abandoned the legislation in early April, however, Ontario's cabinet had already approved a policy to be used to retaliate if the law passed by forbidding bids from companies based in New York. Companies in the other 49 states would still be free to bid on public tenders. With mounting uncertainty over the future of the North American free-trade agreement and more states eyeing possible Buy American rules, Ontario is keeping the policy ready in case it is needed, a senior government official told The Globe and Mail. The official can't be named because he isn't authorized to discuss decisions made by cabinet.

"It would permit Ontario to retaliate against any jurisdiction that undertook prejudicial actions against Ontario's economy. We were fully prepared to deploy that in response to New York but we didn't, thankfully. We didn't want to use it. But it's sitting ready," the official told The Globe.

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In recent weeks, U.S. President Donald Trump has declared that Canada has been unfair as a trading partner with the United States, leaving Ontario in a difficult position. The province is Canada's largest economy and has a number of deep trading relationships with U.S. states – it's either the first or second trading partner for 28 of them. While Ms. Wynne's government has committed itself to avoiding protectionist measures, it would be forced to adopt proportional measures if Ontario companies were banned from a certain jurisdiction, the official said.

While the policy is designed to be used at the state level, it could be made broader if expected negotiations to revisit NAFTA fail and the United States adopts widespread Buy American rules. Ms. Wynne's cabinet would need to revise the policy before that could happen.

With Texas currently eyeing Buy American policies, the province is preparing to repeat the lobbying effort that was ultimately successful in New York. While the province's economy isn't as closely linked to Texas, Ms. Wynne's office fears that a major state adopting Buy American rules could encourage others to follow suit.

According to political strategist Charles Bird, Ontario's trade lobbying could mirror how the province engaged New York: Start with the charm offensive but send a second message that the province is prepared to respond if necessary. Mr. Bird is a principal with the Earnscliffe Strategy Group who has experience advising the federal government.

"There's been a stated willingness from Ontario and the federal government to get tough and that's essential," he said. "At the end of the day, if actions are taken by one side, it's completely appropriate for the other side to take counter-actions. It's important for that to be understood by all decision makers."

Ontario's cabinet met on Wednesday and a possible renegotiation of NAFTA dominated the discussion for the first time. With Ontario's economy depending on trade in everything from automotive parts and dairy products to aerospace, the cabinet adopted a more aggressive strategy to increase talks with state leaders. They decided that "the best defence is a good offence," the official said.

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Ms. Wynne has spoken with 12 governors over the past three months, including face-to-face meetings with her counterparts in Michigan, Illinois and Vermont. Her cabinet has endorsed her undertaking more meetings, more often, in the next few months.

"Everyone around that table understood the need for Ontario as a province to get out as soon as possible and articulate our interest in defence of Ontario workers, Ontario businesses and Ontario's economy," the senior official said.

"It's unusual for a province to get this engaged," the official added.

The province is also considering adding more resources to its trade office in Washington and moving personnel to lobby any states eyeing protectionist rules. The date of the next cabinet meeting has also been moved up to discuss NAFTA again.

In February, Ms. Wynne created a committee that meets monthly and helps guide the province's evolving trade policy.

Her personal lobbying comes as the federal government has asked all premiers to help on the trade file by speaking about the importance of Canadian trade with U.S. leaders. Conservative, Liberal and New Democrat governments have responded to the call.

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In February, while appearing with Canada's ambassador to the United States, David MacNaughton, Ms. Wynne said provincial leaders bring a different view to trade talks.

"It's going to be very important and the Prime Minister understands this, that the premiers are involved in those conversations. And that's exactly the way he wants it to happen because we'll bring […] slightly different priorities, if not perspectives to add to that discussion," she said.

Other provinces have toyed with protectionist responses to U.S. trade moves. BC Liberal Leader Christy Clark pledged to put a carbon levy on thermal-coal shipments, which would include those from the United States. The move was seen as retaliation for new U.S. softwood lumber tariffs.

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