On the Horizon 2021 | Canada

Border Restrictions and COVID-19

On March 20, 2020, the United States and Canada restricted cross-border travel to “essential” traffic only for 30 days to slow the spread of COVID-19. Nine months later, these restrictions remain in effect with no strategy in place for phasing them out. Most commercial trucking and rail traffic is unaffected, but the impact on border state economies and quality of life has grown. Each nation’s privacy protections (especially for personal health information) have made the technical challenge of screening border crossings by land, sea, and air more complex. While Canada’s pandemic response has resulted in a rate of confirmed COVID-19 cases and deaths per million people that is nearly a third of the comparable U.S. rates at the end of 2020, Canada’s limited domestic vaccine production capacity has put the country into a global competition for access. If conditions worsen, Ottawa may seek help from Washington in 2021.

North American Rebound and the USMCA

When the pandemic eases, restoring economic growth will be the top priority for Canada and the United States. President Biden supports the new United States Mexico Canada Agreement (USMCA) and is expected to proceed with its implementation, including the work of new USMCA committees to promote competitiveness and regulatory cooperation, and to facilitate small and medium sized businesses engaging in regional trade. All of this activity will contribute to economic recovery. When the 117th Congress takes up stimulus legislation, Canadian businesses will be watching closely to see if “Buy American” provisions are included in infrastructure and government procurement. Eligibility for Canadian participation in stimulus would permit U.S. firms reciprocal access to Canadian stimulus—and provide better value for taxpayers in both countries.

Energizing Climate Policy

Canadian Prime Minister Justin Trudeau has committed Canada to meeting the goal of net-zero emissions by 2050. The Biden administration will rejoin the Paris Agreement. Thus, the United States and Canada will be in alignment again on climate policy. COVID-19 forced the postponement of the 26th UN Climate Change Conference of the Parties until November 2021, but this summit will be an important opportunity for President Biden to reassert U.S. leadership. At the same time, Canada and the United States are major energy exporters, and there is significant bilateral energy trade. Canadian oil and gas exports could reach global markets through the U.S. if the Keystone XL pipeline is completed, but Biden has threatened to revoke the presidential permit for the project. Canadian hydroelectricity and small modular nuclear reactor technology could help the United States to reach emissions targets ahead of schedule. The possibility that Canada would impose Border Adjustment fees on imports that pay a lower carbon price than Canada’s—allowed under the terms of the new USMCA—could spark trade tensions.