Simmering Canada-U.S. trade dispute erupts into the open

An emerging trade irritant between Canada and the United States that had been quietly simmering for months has now bubbled into the open.

The Canadian government sent a letter to nearly a dozen senior U.S. officials Friday expressing dismay over an idea being considered in a key American budget bill.

As reported last week by CBC News, Canadian officials have been concerned about a Buy American-type proposal they fear might disrupt the auto sector.

Now Ottawa has put those views in writing to the congressional leadership from both parties, other key members of Congress and two cabinet-level officials.

The letter from Canada's International Trade Minister Mary Ng expressed several worries — of a historic decline in Canada-U.S. auto co-operation; tens of thousands of lost Canadian jobs; and collateral damage to those U.S. auto workers involved in the cross-border auto trade.

"I am writing to convey Canada's very serious concerns," said Ng in the letter.

"This proposal would undermine decades of United States-Canada co-operation to foster a mutually beneficial integrated automotive production and supply chain. …

"If passed into law, these credits would have a major adverse impact on the future of [electric vehicle] and automotive production in Canada, resulting in the risk of severe economic harm and tens of thousands of job losses in one of Canada's largest manufacturing sectors. U.S. companies and workers would not be isolated from these impacts."

At issue is the massive budget bill that forms the heart of U.S. President Joe Biden's domestic agenda.

Democrats are hoping to hammer out a deal among themselves to pass a bill with around $2 trillion in initiatives on climate change, child care, parental leave and health care.

They want an agreement soon — before Biden heads to the Glasgow climate summit that's set to start on Oct. 31 — and they want to have legislative progress they can show voters before a batch of state-level elections on Nov. 2.

One of the major climate provisions being contemplated involves incentives for the purchase of electric vehicles.

Under different proposals in the House of Representatives and the Senate, the Democrats would offer $12,500 in tax credits for people who buy an electric vehicle.

What has irked Ottawa and Canada's auto sector are provisions that would reserve parts of that credit strictly for vehicles assembled in the U.S.