Canada's new foreign affairs minister meets in D.C. with U.S. counterpart Blinken

'Canada will retaliate' for U.S. EV credit Finance Minister Chrystia Freeland discusses the ongoing trade dispute with the U.S. over a proposed electric vehicle tax credit.

WASHINGTON — Canada won't shy away from defending its national interests when North America's three leaders sit down together next week, Melanie Joly said Friday as she wrapped up her first stateside visit as the new foreign affairs minister.

Joly said that was part of the message she delivered earlier in the day when she sat down with her U.S. counterpart, Secretary of State Antony Blinken.

The meeting came one week before Prime Minister Justin Trudeau is to meet with President Joe Biden and Mexican President Andres Manuel Lopez Obrador at the White House, ostensibly to talk about how to reinforce continental supply chains.

Canada and Mexico, however, are both deeply worried about the Biden administration's proposed tax credit for electric vehicles, which foreign automakers, suppliers and industry leaders say is overly friendly towards union-friendly U.S. companies.

"We know that we have a strong economy because of this integrated supply chain and because of this friendship, but at the same time, Canadians know that we have to defend our interests, and we can never take anything for granted," Joly said after the meeting.

"That's my job -- to defend Canadians' interests, while making sure that we have a very strong friendship."

The strategy, as it often is for Canadian emissaries in U.S. political circles, will be to emphasize that given the integrated nature of the North American auto industry, any policy that's bad for Canada will be bad for Americans as well.

"Canada is the biggest exporter of U.S.-made cars, and also the biggest exporter of U.S.-made auto parts," Joly said.

"In that sense, thousands of jobs on both sides of the border are dependent on this supply chain being integrated. We will continue to make sure that this is well known throughout the administration but also throughout Congress as well."

The tax credit, which if passed would be worth up to $12,500 on certain electric vehicles, is part of Biden's $1.75-trillion centrepiece Build Back Better bill, which includes a raft of social spending and climate-change initiatives.

The credit has powerful opponents on both sides of the political aisle, most notably West Virginia Sen. Joe Manchin, a moderate Democrat and a critical vote for the White House to get the bill through an evenly divided Senate.

Earlier this week, Manchin reportedly denounced the idea of encouraging the purchase of vehicles made with union labour as "wrong" and "not American" because it involves using tax dollars to pick winners and losers.

The proposal is only the latest example of U.S. policy measures in Biden's domestic agenda that have taken a decidedly protectionist turn, alarming political and economic observers north of the border.

Biden has imposed rigid new standards for using American-made, union-friendly components and materials in U.S. infrastructure projects, and Canadian contractors and suppliers fear a trickle-down effect from his emphatic rhetoric.

His Day 1 decision to cancel a presidential permit for the Keystone XL pipeline expansion has Alberta's energy sector nervous about two existing cross-border energy conduits: the Enbridge-owned Line 3 and Line 5, both of which are the targets of protesters and legal challenges.

And the months-long imbalance at the land border -- Canada began allowing fully vaccinated U.S. visitors back in August, while the U.S. waited until just this week -- has also contributed to the hard feelings.

Joly deflected questions about the fact Canada continues to require anyone entering the country to submit the results of a PCR test for COVID-19, a costly proposition that can run anywhere from $150-$300 a swab.

She pointed to the fact that Dr. Theresa Tam, Canada's chief public health officer, has already indicated the policy is under review.

"We'll always take our advice from our health experts," Joly said.

Tam said Friday the policy is still being "actively reviewed" but did not indicate when a decision will be made.

This report by The Canadian Press was first published Nov. 12, 2021.