Why America should ‘Buy American’ — from Canada

Yung Wu is the CEO of MaRS Discovery District, based in Toronto.

As America builds back better after the tribulations of COVID-19, President Joe Biden wants federal government procurement to "Buy American" to stimulate U.S. clean manufacturing capacity. But he's also set dramatic new targets for reducing emissions and shifting to clean technology. It can't get there alone.

The task of building up America's domestic cleantech industry would be enormous even without accounting for Buy American, which instructs government agencies to raise the level of U.S.-made content in products they procure. American manufacturing has long relied on offshore suppliers and lags behind the global leaders in wind, solar and energy storage innovation. But less than a decade remains to prevent irreversible climate change — a very short window to accomplish both goals. "The costs of delay are too great," the White House itself acknowledges. Even the oil-centric International Energy Agency has warned that there is no time left to fool around.

Revamping America's power grids, transportation links and industrial ecosystems while still buying domestic is a problem the Biden administration absolutely needs to solve. America can't reach net zero by 2050 without adopting a wide range of innovative technologies, including some from outside its borders.

To square that circle, the administration should employ some geographic sleight of hand: Canada.

It's not the 51st state, but our two countries do already share deeply integrated supply chains that treat many Canadian technologies, parts and resources as American for the purposes of trade. Meanwhile, Canada is one of the top cleantech innovators in the world. There are several startup ventures here that are already helping to clean up America's energy sector; companies like Nova Scotia-based CarbonCure, which recently won the global Carbon XPRIZE.

Americans and Canadians breathe the same air, drink the same water and experience the same climate insecurity caused by a warming planet. Our economies are already inextricably linked by culture, geography and trade. And U.S. governments have previously found it extremely useful to carve out Canadian exemptions to protectionist procurement rules.

That's because this isn't the first time U.S. administrations have rolled out the Buy American playbook; in fact, it's almost a staple in difficult economic times. The previous effort came under the Obama administration, which announced similar measures in 2009 following the global financial crisis. Today's policies are rooted in provisions dating back to the 1930s. And national-scale efforts go back to the republic's tenuous founding nearly 250 years ago.

The fact that multiple administrations keep warming over the same measures in troubled times shows their political effectiveness, not their economic sense. America has always thrived precisely because it imports the world's best people, ideas and technologies. This is why protectionism tends to erode over time, and I hope and suspect that will happen again as the rapid shift to clean energy technology ramps up.

Again, the history is instructive. The U.S. has always found it useful to draw its domestic boundaries just a little wider by carving out exemptions or waivers for its continental neighbor to the north:

• The Buy American Act of 1933 compelled government agencies to buy American-made goods, but Canadian suppliers were later exempted from those requirements under the North American Free Trade Agreement.
• In 2009, the Obama administration's American Recovery and Reinvestment Act required "all iron, steel and manufactured goods" used in public works projects to be produced in the United States. Within a year, Canada had negotiated not just an exemption but a commitment to deepening procurement ties. By 2015, Canadian companies were receiving nearly $700 million a year in U.S. federal procurement funds.

Today's new rules will put new roadblocks in place. But the odds are good that America will once more find it useful to make Canadian companies honorary Americans. Our two countries are simply too connected through geography, trade and supply chains to have it any other way.

Start with commodities. Biden is already strategizing to have Canada (which is already fully integrated into the U.S. automotive supply chain) supply many of the raw minerals needed to build up the U.S. electric vehicle industry. Canadian steel will prove useful as it's generally cleaner than its U.S. equivalent.

Meanwhile, American customers and investors are already buying into Canadian solutions like CarbonCure, Carbon Engineering, NRStor, Hydrostor, Opus One Solutions, Effenco and Pantonium to help mitigate and draw down GHG emissions in several key sectors.

If U.S. utilities, state and local governments, and partner suppliers already believe these made-in-Canada technologies are the best way to cut emissions, why would the federal government want to stand in their way when time is of the essence? This is a case where history ought to repeat itself.