U.S. President Joe Biden came to Ottawa this week and brought with him a message of increased strategic cooperation and economic coordination.
He joked about hockey and underlined the fact that both his Cabinet and Prime Minister Trudeau’s are gender balanced. Biden and his delegation of high-level officials focused on supply chains, critical minerals, green technology, as well as support for NORAD and the Great Lakes.
Politically, an agreement to close the border crossing at Roxham Road in Quebec dominated the discourse. Practically, the official joint statement from the two partners contained good news for key Canadian businesses — from the auto sector to natural resources to clean-technology to defense-related industries.
Here’s what you need to know about Biden’s visit and what it means for Canadian business.
Not quite Buy North American
While concerns linger over the President’s recent “Buy American” actions, including the America-first provisions in the U.S. Inflation Reduction Act (IRA), the general theme of this visit was one of cooperation, respect and the importance of the Canada-U.S. relationship. Biden maintained a conciliatory tone, underscoring partnership and opportunity. There are areas where, as detailed below, it’s clear the U.S. will open up certain funds to strategic Canadian companies, notably for green energy technology, semiconductor production and the critical minerals required to build both. The President stopped short, however, from promising North America-wide access to the IRA.
Energy Transformation Task Force
Biden and Trudeau committed to launching a one-year Energy Transformation Task Force, chaired by a representative from the White House and Deputy Prime Minister Chrystia Freeland. The task force will focus on pivoting towards a clean energy future for both countries, with an emphasis on secure supply chains for critical minerals and electric vehicle and semiconductor supply chains to forge greener economic growth.
What’s next: Canadian companies looking to shape the future of cross-border energy policy will surely be scrambling for a seat at this bilateral table.
Cross-border Semiconductor Manufacturing
Both sides committed to developing a cross-border semiconductor manufacturing corridor. This followed the news yesterday that IBM will expand its semiconductor production in Canada. Expanded production of semiconductors in the U.S. is a long-standing priority for Biden. This agreement, combined with the Government of Canada’s $250 million investment in this sector, should allow Canada to play a greater role in this space — and create supply chain alternatives to China and Taiwan. As Biden noted in his speech, IBM’s plant in Bromont, Quebec, is already the largest semiconductor packaging plant in North America. The two leaders agreed to work to further accelerate continental capacity.
Critical Minerals
Critical minerals, a crucial component in the production of semiconductors, electric vehicles and other green technology, was also top of the agenda. Biden affirmed that funding available under the Defense Production Act will incentivize Canadian and American companies to responsibly mine critical minerals within the two countries, rather than relying on what Biden called “just in time supply chains” that he decried as unreliable. The President argued that Canada and the U.S. have all that they need to satisfy their critical mineral needs. The joint statement from the meeting also emphasized: “The Canadian Critical Minerals Infrastructure Fund will make CAD $1.5 billion available to support clean energy and transportation infrastructure projects necessary to accelerate critical minerals production and an additional CAD $1.5 billion through the Strategic Innovation Fund to support advanced manufacturing, processing, and recycling.”
What’s next: Critical mineral companies will be looking to next week’s budget for details on accessing the funds announced today, and would be wise to begin preparing their post-budget engagement plans.
Immigration
Biden and Trudeau agreed to expand the Safe Third Country Agreement. Under a key new provision, foreign nationals crossing the Canada-U.S. border will not be allowed to make an asylum claim without an STCA exception. The two sides have also agreed to close Roxham Road in a deal that will see Canada accept 15,000 migrants. Biden committed to encouraging legal migration, while emphasizing that both sides should work to discourage irregular migration.
International Affairs and NORAD
Biden provided a strong commitment to the global alliance forged after Russia’s invasion of Ukraine, further condemning Russia and commending Canada for its support of the Kiev government. In the midst of increasing global uncertainty, Canada and the U.S. are also committed on working together to modernize NORAD.
The backgrounder on today’s announcement detailed what the two leaders committed to: “The Defence of Canada Fighter Infrastructure (DCFI) project, announced by the Prime Minister today, will deliver a range of infrastructure elements to support Canada’s new fleet of F-35 fighter jets and Canada’s NORAD contributions. Through the DCFI project, National Defence will invest $7.3 billion to modernize, recapitalize, and build new infrastructure to support the arrival of our F-35 fighter jets and bolster Canada’s ability to project air power in defense of North America for the coming decades.”
Opioid and Fentanyl Crisis
Canada and the U.S. will expand multi-agency cooperation to better utilize intelligence gathering in an effort to better counter cross-border opioid and fentanyl movement. In recognition of the health and economic impacts of drug usage, Canada and the U.S. committed to developing an international coalition dedicated to tackling the synthetic drug crisis.
Geopolitical Cooperation
On numerous cross-border and international issues, the President and the Prime Minister agreed to continue to work in close coordination. On Haiti, Canada committed $100 million in support. On Ukraine, the two countries reiterated their mutual condemnation of Russia’s actions and their ongoing support for Ukraine’s fight. They shared concerns about China, commitments to an increased Pacific focus and a shared responsibility for the Arctic. They also promised $420 million to protect the Great Lakes and other border-related waterways.
Cyber Security
Cyber attacks threaten critical infrastructure in both Canada and the U.S, and both leaders committed to work together to combat this threat. In particular, Canada and the U.S. will bolster collaboration between law enforcement officials and policy makers required to protect against ransomware attacks and other cyber incursions. This move furthers the Government of Canada’s goals outlined in Bill C-26: An Act Respecting Cyber Security, which designates authorities to protect critical infrastructure in key sectors such as telecommunications, finance, and transportation.
For more on how you get your organization’s cross-border issues at the top of the agenda, contact us at info@mcmillanvantage.com.
