The new Trump administration in the United States has made formal and informal announcements that indicate coming changes likely to affect Canadian businesses. If your Ontario water sector company is currently doing (or planning to do) business in the United States, we recommend watching for developments in the following areas.
President Trump has signed two Executive Orders that aim to nullify regulations. Executive Orders are written orders issued by the President to the federal government and while they allow the President to bypass congressional approval, they must work within the confines of existing law.
The Presidential Order on Reducing Regulation and Controlling Regulatory Costs states that for every new federal regulation issued, at least two prior regulations be identified for elimination. The Presidential Order on Enforcing the Regulatory Reform Agenda appoints Regulatory Reform Officers (RROs) in each federal agency that are responsible for reporting regularly on progress related to the identification of regulations for repeal, replacement, or modification. Since the Environmental Protection Agency (EPA) is subject to these Orders, the regulatory landscape may soon change for water and the environment.
Environmental Protection Agency
Scott Pruitt has been appointed as the new Administrator of the EPA. In his February 21 speech to EPA staff, Pruitt highlighted the importance of federalism. This approach may lead to less centralized regulation by the EPA in many instances. Pruitt’s federalist approach is similar to Canada’s, wherein the provinces and territories are responsible for developing and enforcing their own water regulations, with some exception. The 2018 budget proposal is reported to feature a 25% decrease in the EPA’s budget with a 20% reduction in staff, reinforcing a leaner, decentralized approach to environmental regulation.
Depending on how Pruitt proceeds, this could make things either more or less difficult for Ontario water technology companies looking to implement their technologies in the United States. On one hand, with less staff, less regulatory pressure may come from the EPA; on the other, states may choose to fill this gap, leading to patchy regulatory requirements across the country and an increased regulatory burden on companies working in multiple states. Due to this uncertain outcome, a best practice will be to pay close attention to the evolution of the EPA as Pruitt sets his plan in motion, the budget is solidified, and regulatory reform comes into play.
According to the Buy American Act, 1933, all goods purchased by U.S. federal government agencies over a specified threshold must be produced in the United States, and manufactured items must be manufactured in the United States from American materials. Since the Act’s implementation, many states have adopted the requirement in their purchasing policies, although many have also made exceptions for Canadian goods.
The proposed $1-trillion infrastructure plan stresses the Buy American policy. This approach is not unique to the Trump administration. The American Recovery and Reinvestment Act, 2009 provided infrastructure stimulus and required funded public works projects to use U.S. steel and iron. After its enactment, Canada negotiated with the United States, which agreed to certain exceptions in the Canada-U.S. Agreement on Government Procurement.
Trump may be stressing Buy American in the new infrastructure plan, but he will have to consider trade deals, such as the World Trade Organization (WTO) Agreement on Government Procurement (GPA) and the North American Free Trade Agreement (NAFTA). The United States, Canada, and Mexico are gearing up for a renegotiation of NAFTA, while Trump’s Trade Policy Agenda mentions some WTO limitations in enforcing American compliance. Water technology companies should pay close attention to legislation related to the proposed U.S. infrastructure plan and Canadian trade developments with the United States, especially in the context of the WTO and NAFTA.
It pays to stay informed
To sum it up, there may be a great deal of change on the horizon for your Ontario company. Some of these changes may be advantageous, while others may require mitigation strategies. In any case, it pays to stay informed so that you can be prepared. WaterTAP will continue to update the sector on the U.S. policy, program, and regulatory landscape.
WaterTAP will provide water sector-specific feedback to the Province on U.S. trade issues. We are interested hearing from companies about their experiences and concerns. Please contact us if you would like to provide your insight.
The Buy American Act and Buy America Provisions The Canadian Trade Commissioner Service