February 18, 2021

Biden’s early executive orders cause concern for Canadians


There is no doubt that Joe Biden’s victory over Donald Trump in November’s presidential election was welcomed by the vast majority of Canadians. After all, in a poll held during the last month of the campaign in which Canadians were hypothetically asked how they would vote, 84 percent of decided respondents picked Mr. Biden. But two executive orders Mr. Biden signed right after his inauguration have caused considerable concern.
One of these is the “Buy American” policy setting up rules for U.S. government spending, which added a caveat that exceptions to those rules will be allowed only under “very limited circumstances.” The objective is to ensure that American manufacturers, workers and suppliers are the primary beneficiaries of U.S. government largesse, including an estimated $600 billion a year in procurement contracts. Manufacturers and exporters in Canada supply a vast range of equipment to public works projects in the U.S. from school buildings to wastewater treatment facilities.

Where a lot of the difficulties are likely to emerge is in determining what percentage of the goods must be produced in the United States to constitute an “American” product. Supply chains are very closely integrated between our two countries, with Canada supplying many of the parts which end up in products manufactured in the U. S. and vice versa. Too stringent a definition could negatively impact manufacturing on both sides of the border.

During a January 23 phone call, both Mr. Biden and Canadian Prime Minister Justin Trudeau agreed to continue discussing Canada’s concerns on that issue. But that was not the case with Mr. Biden’s executive order rescinding the permit for the Keystone XL Pipeline, which would have carried 830,000 barrels per day (bpd) from Hardisty, Alberta, to Nebraska, then on to refineries in Texas. On that one, however, Mr. Biden stood firm, even though it would have created thousands of jobs on both sides of the border.

Mr. Biden’s decision was based on an election promise he made to reinstate President Barak Obama’s cancellation of the project, which was overturned by President Donald Trump. It was also intended to mollify the left wing of the Democratic Party which considers Alberta oil sands to be “dirty oil,” causing environment damage through carbon emissions. But for Americans to call Canadian oil “dirty” is a classic case of the pot calling the kettle black. Or even worse.

Canadian oil sands producers have been working hard to correct environmental issues. Between 2011 and 2018, carbon emissions from the oil sands have declined by 22 percent. What’s more, the Government of Alberta has committed $1.24 billion through 2025 to two commercial-scale carbon capture and storage projects. These will help reduce the carbon emissions from the oil sands by the yearly emissions of 600,000 vehicles.

The United States, on the other hand, has become the world’s largest producer of oil and gas through a much more environmentally harmful extraction process called hydraulic fracturing, or fracking, for short. In fact, fracked oil has increased from two percent of total U.S. oil production in 2000 to over 50 percent in 2019.

Fracking involves injection of a fluid at high pressure into an underground rock formation in order to open fissures and allow trapped gas or crude oil to flow through a pipe to a wellhead at the surface. What makes it most harmful is that this process consumes large quantities of fresh water which returns in a highly polluted state. Recovered fracturing fluid contains not only the original additives (some of which are carcinogenic if consumed in raised quantities over time) but also salty subsurface brines as well as minerals brought up from the formation that may include toxic elements such as barium and radium. Fracking can also cause earthquakes.

In addition to calling for the cancellation of the Keystone project, the left wing of the Democratic Party also urged a national ban on fracking. At least they’ve been consistent. Mr. Biden, on the other hand, took the position that the United States should gradually move away from fossil fuels but continue fracking as a “transition.” It should be pointed out that fracking is a major industry in Mr. Biden’s birth state of Pennsylvania, which also was one of the key battleground states Mr. Biden had to carry in order to win the election. So, political expediency has taken over environmental concerns in this particular case.

Regardless of the motivation, the decision has been made and Canadians have to live with it. Nevertheless, the Biden Administration has to take Canadian concerns very seriously as the economies of both countries are very closely intertwined. While protectionism may be a policy that’s politically popular among some segments of the U.S. population, it is also fraught with economic pitfalls.