Why US – Canada Trade Must Prevail Amid The Coronavirus Pandemic
The United States-Canada border has been closed to cross-border tourism and other non-essential travel for more than three months.
Despite these restrictions, trucks and trains have continued crossing the border in droves, since commerce is considered an essential activity. Every week, Canada and the United States exchange billions of dollars of goods and services.
For both countries, this trade is a lifeline — literally. Americans are sourcing many of the raw materials for masks and medicines from Canada. And Canadians are purchasing medical supplies from U.S. companies to fight COVID-19.
Yet some influential voices in Washington, D.C., want to restrict this commerce. That would be a grave mistake. Both countries are stronger when they cooperate and trade freely.
White House trade adviser Peter Navarro is putting together a “Buy American” executive order, which would require federal agencies to purchase U.S.-made medicines and medical supplies. The goal is to boost demand for domestically manufactured drugs, masks, and equipment — and thus spur companies to locate more of their manufacturing facilities in the United States.
Virtually everyone, on both sides of the border, shares Navarro’s goal of ensuring that medical supply chains can withstand future pandemics. But robust trade between the United States and Canada doesn’t hinder that goal — it furthers it. The U.S. Federal Emergency Management Agency’s Temporary Final Rule regarding procurement of personal protective equipment and supplies wisely exempted Canada and Mexico from Buy American provisions.
Canada has been one of the United States’ three biggest trading partners for generations. Approximately 75 percent of Canada’s exports head south of the border to the United States, and Canada, despite its relatively small population, is the United States’ largest export market for goods. Our economies are joined at the hip — to the benefit of both countries.
In this environment, introducing new “Buy American” requirements, or tightening existing ones, would only harm both of our economies.
For instance, the United States is currently leading the race to develop vaccines and treatments for COVID-19. But to manufacture these therapies, U.S. companies will likely import certain compounds from abroad. According to the FDA, the United States imports 72 percent of the “active pharmaceutical ingredients” used to make medicines.
Canada is a key supplier of these APIs. If the U.S. government stops purchasing from existing suppliers, it will snarl the supply chain and lead to disruptions, delays, and shortages. It certainly won’t accelerate the race for treatments and vaccines.
Requiring all APIs to be produced domestically simply isn’t feasible — at least not on the timeline required to defeat COVID-19. Building new pharmaceutical plants that meet FDA regulations can take 10 years and cost billions.
And Navarro’s order wouldn’t just jeopardize the supply of active pharmaceutical ingredients. Some American mask manufacturers rely on medical-grade pulp and other raw materials from Canada. The world’s largest manufacturer of respirator masks, Minnesota-based 3M, has already warned that if America cut off mask exports to Canada, it could incite retaliation and leave the United States without key materials to combat the coronavirus.
Canada can’t fight this pandemic alone either. It imports most of its medicines, syringes, and X-ray films from the United States. Without trade with the United States, Canadian patients would experience massive shortages.
The United States and Canada have the longest unmilitarized border in the world because the relationship between our countries is built on trust and mutual respect. In the midst of this pandemic, the worst thing we could do is undermine that partnership by restricting trade. That’s why we launched the North American Rebound campaign to encourage the U.S. and Canada to face our challenges together. And that’s why over 100 organizations including the U.S. Chamber of Commerce and the National Association of Manufacturers have joined in the effort. We are in this together.
Maryscott Greenwood is the CEO of the Canadian American Business Council.
