Canada’s chem industry hopeful about US Biden presidency, controlling pandemic will be key

Author: Stefan Baumgarten

2020/11/10

TORONTO (ICIS)--Canada’s chemical industry expects to benefit from the coronavirus (Covid-19) measures and other policy changes US President-elect Joe Biden will be pursuing, the CEO of trade group Chemistry Industry Association of Canada (CIAC) told ICIS in an interview on Tuesday.

The US market is critical to the Canadian chemical industry. About 80% of Canada’s chemical production is exported, and about 80% of those exports go to the US, Bob Masterson said.

As such, Biden's stated priority to quickly control the pandemic, which hit the US hard, and thus avert further damage to the economy, will be very important, Masterson said.

Simply put, “if the American economy is strong, the Canadian chemical industry will be well”, Masterson said.

“We would hope that the Biden presidency can quickly put in place the measures that will help the US turn the corner on Covid-19, because if they don’t get it under control, the US economy will be threatened. It already is, to a certain degree,” he said.

TRADE AND CHINA
The Biden administration’s approach, not just to the pandemic but to trade and other issues, will likely be much more predictable, stable and balanced than that of outgoing President Donald Trump, Masterson said.

Canada’s chemical industry executives, for their part, will be happy to be spared “the random acts of violence” Trump would suddenly create, for example on trade and trade wars, particularly with China, he said.

While the trade tensions did not affect Canada’s chemicals directly all that much, they did affect the sectors the industry sells to, he said, noting Canada’s steel and aluminium industry as just one example.

The fortunes of the global economy hinge on strong relations between China and the western world – requiring engagement, rather than permanent conflict, he said.

“One would hope that the Biden administration can find a way to engage China  in a productive manner” as otherwise the US-China relationship could become “one of open hostility, and the end outcome of that would be bad for everybody,” Masterson said.

ENVIRONMENT
Canada’s chemical industry should also benefit from Biden's proposed environmental and energy policies, Masterson said.

Generally, if the US puts more emphasis on energy efficiency and on climate change, chemical producers will benefit because they help provide the products and solutions to address those challenges, he said.

Furthermore, tougher US environmental policies would create a “more level playing field” for Canada-based chemical producers, who are currently facing costs from Canadian federal and provincial environmental regulations and programmes - costs their US-based competitors do not face, he said.

He noted in particular the competitive disadvantage from the pricing of carbon emissions.

“If you are in Canada and your competition is in Texas, Louisiana or Pennsylvania, and you are paying C$25/tonne, going to C$50/tonne, for your emissions, and your American counterparts don’t pay anything, that’s an un-level playing field”, he said.

However, he added that it was unclear to what extent Biden will be able to advance on his environmental programme, given that the US Congress will likely continue to be divided, with the Republicans holding on to their majority in the Senate. Two Senate races in Georgia are going into runoff elections.

AN IRRITANT: BUY AMERICAN
One worry for Canada-based chemical producers is the Democrats' “Buy American” approach – which is “an irritant” given the integration of the Canadian and the US economies, Masterson said.

“They don’t always do it, but the Democrats like to talk a strong game on ‘Buy American’, and that’s not good for Canada or for anybody,” he said.

Please also visit the ICIS topic page on coronavirus impacts and the oil price crash.