WASHINGTON—You may have heard this year that Sen. Joe Manchin of West Virginia is, strangely, the most powerful man in Washington. From voting rights to infrastructure funding, the senate filibuster and the president’s economic agenda, he is the one person whose thumbs-up or thumbs-down can decide what becomes law and what doesn’t, as a result of him being the least reliable Democratic vote in a one-vote Senate majority.
What you might not have heard is that right now, that also makes him the last, best hope to save Canada’s auto industry from near-total destruction.
That may sound overwrought — as I’ll get to, Canada has longer-term contingency plans. But that’s the upshot of what I heard speaking to some Canadians who were involved in a full-court press in Washington, D.C. this week, trying to head off protectionist electric car measures one senior Canadian official told me are “existential” for the entire national industry.
You may have heard about this issue. It was the focus of Prime Minister Justin Trudeau’s recent visit to Washington. My colleagues in Ottawa have written about it. But if you’re just catching up, the upshot is this: Joe Biden’s massive economic package, the Build Back Better reconciliation bill, which has already passed the House of Representatives, contains a $12,500 subsidy for electric cars that is meant to ramp up production of them quickly. The problem for Canada is that it only applies to cars that are American made using union labour.
The “American made” part is the big problem for Canada. Stretching back to the auto pact in the 1960s, Canada has no domestic car industry, and neither really does the United States. By virtue of successive free trade agreements, we are participants in a North America-wide auto industry dominated by American companies which run factories and rely on parts supply chains that criss-cross our borders.
Now, at a time when both Canada and the U.S. are legislating that a majority of cars will be electric by the middle of the next decade (or sooner), and when auto companies are ramping up and building the infrastructure for a new all-electric car future, the U.S. is turning its back on that history of co-operation to ensure the assembly lines and parts manufacturers of the future don’t use Canadian or Mexican labour.
The measure is being negotiated in the Senate right now, and may pass before Christmas. Biden needs every Democrat in the Senate to vote for his economic package if it is going to pass. And right now, the only Democrat saying he’s uncomfortable with the electric vehicle subsidy is Manchin.
This was after an all-hands-on-deck, full-court press in D.C. by the Canadian government this week. Trade Minister Mary Ng came to town, bringing with her members of all the federal opposition parties, along with every Canadian consul-general from across the U.S., and Canadian industry leaders. They conducted more than 50 meetings in three days, I’m told, with U.S. legislators and decision-makers.
Those I spoke with after all that didn’t express a lot of optimism. The best they could offer was that everyone expects the Build Back Better bill to look a lot different when it comes up for a vote in the Senate than it did when it passed the House. In the meantime, all the Canadians involved are insisting they’ll keep up their lobbying efforts in the weeks ahead.
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Canada is joined by the governments — and major automakers — of Mexico, Germany and Japan, at least, in its opposition. Republican senators in Tennessee and West Virginia seem agitated about it (though they’re going to vote against Biden’s plan no matter what it looks like). But Biden himself was banging the Buy America drum at an EV plant in Michigan even while Trudeau was in town, and dismissed Canadian questions about it as if they were an afterthought.
So in the short term, it seems, this is in Manchin’s hands.
“Joe Manchin is in a historically unique position, in that he essentially has a line-item veto on what goes in the Senate bill,” Flavio Volpe, president of the Automotive Parts Manufacturer’s Association, said after sitting in six meetings with U.S. legislators this week. Was Volpe hopeful Manchin would come through for Canada? “Let me give you a baseball analogy. We’re in a pennant race here. And, I’m not really sure how the last week of the season is gonna play out. We can end up in first, we can end up in third. And the only thing that you can do is just keep playing for that top position.”
Manchin’s reasons for opposing the measure are different from Canada’s. He’s generally skeptical of environmental laws. He doesn’t like the government “picking winners” in dispensing economic assistance. Perhaps most importantly, his state is home to a non-unionized Toyota plant that would be left out of the subsidy.
Canada’s progressive government may be used to having allies with different priorities.
But if Manchin doesn’t come through, Canada’s hopes may rest on an even more unlikely partner. Those Republicans. “It also struck me that, you know, we may be looking at a Republican Senate and House next year,” after the midterm elections, Volpe said.
Failing that, the Canadians and Mexicans would certainly challenge the provision through the World Trade Organization and the dispute resolution mechanisms of the new agreement that recently replaced NAFTA. The Canadian and Mexican governments believe such a case would be a slam-dunk victory. Eventually.
The hope is it won’t come to that. The hope would be that decades of co-operation with our closest ally would be the basis for resolving this. The hope would be that having the prime minister and the trade minister come down to make the case face-to-face with the president and legislators would impress on them how important this is to Canada.
It seems to be an increasingly faint hope. One that more and more, for better or for worse, rests on Joe Manchin.
Edward Keenan is the Star’s Washington Bureau chief. He covers U.S. politics and current affairs. Reach him via email: [email protected]
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