Under the new agreement, the Gordie Howe International Bridge is now expected to open on July 27.Dax Melmer/The Globe and Mail
Canada’s agreement to split the net profits from the Gordie Howe International Bridge with the United States is drawing criticism from taxpayer advocates and federal Conservatives, but business groups and trade experts say the concession is outweighed by the economic value of the new crossing along one of North America’s busiest trade corridors.
Housing, Infrastructure and Communities Canada said Friday it had reached a deal with the U.S. under which Canada will share some proceeds through a 15-year economic development fund.
The deal appeared to end an impasse over the bridge’s near-term future that began when President Donald Trump threatened in February to block its opening and said the U.S. should own “at least one half” of the asset.
Mr. Trump’s threat came shortly after Matthew Moroun, chairman of the company that owns the competing Ambassador Bridge, donated US$1-million to a pro-Trump campaign group and reportedly met with U.S. Commerce Secretary Howard Lutnick.
Under the new agreement, the U.S. will receive 50 per cent of net profits from toll revenue and must agree to any toll hikes greater than 10 per cent, Infrastructure Minister Gregor Robertson’s office confirmed Sunday.
A source said the deal also includes a provision requiring U.S. approval to lower tolls below a regional average. The Globe agreed not to name the source because they were not authorized to confirm the details publicly.
The Canadian government agreed in 2012 to pay the full $6.4-billion price tag for the bridge connecting Windsor and Detroit after the Michigan legislature refused to chip in. Ottawa planned to collect tolls for both Canada-bound and U.S.-bound traffic on the Canadian side of the crossing until it recouped the costs, after which profits would be split with Michigan. The bridge is jointly owned by the governments of Canada and Michigan.
Mr. Robertson called the new agreement a win for both countries and their shared economy.
Gordie Howe bridge to open July 27 after Canada, U.S. reach deal
“It’s a good deal for businesses and workers on both sides of the border, creating an incentive for both countries to increase traffic and get the bridge towards profitability: the more trade the bridge facilitates, the greater the profit on both sides of the border,” he said in a statement issued Sunday.
The bridge was supposed to open June 12 but its planned ribbon-cutting was postponed. Under the new agreement, it is now expected to open on July 27.
Franco Terrazzano, national director of the Canadian Taxpayers Federation, called the situation “deeply frustrating” for taxpayers.
“On the one hand, we need trade across the border. On the other, taxpayers paid to build the bridge, and now it seems like we’re losing out on some of the profit,” he said.
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Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said exporters on both sides of the border have been looking forward to the opening of the new bridge. The new crossing is two lanes wider than the existing Ambassador Bridge, and has automated tolling and direct highway access, which make for a big operational improvement, he said.
Mr. Volpe said the details of the agreement matter little to an auto sector that “builds cars together in a way that is not repeated anywhere else in the world.” A single car part can cross the border seven or eight times before being installed in a vehicle.
“Having this asset functioning is a big bonus,” Mr. Volpe said, calling the deal “another indication of the emerging détente between the two countries.”
Stephen Laskowski, president and CEO of the Canadian Trucking Alliance, similarly said his industry had long been advocating for a modern second crossing at Windsor-Detroit.
“The opening of the Gordie Howe International Bridge strengthens North America’s integrated supply chain and reinforces the economic partnership between Canada and the U.S.,” he said in a statement.
Fen Osler Hampson, chancellor’s professor at Carleton University and co-chair of the Expert Group on Canada-U.S. Relations, said Prime Minister Mark Carney could not have let the bridge remain a “stranded asset.”
The bridge was an irritant in Canada’s relationship with the U.S. at a time when the country is involved in serious trade negotiations, he said, referring to the United States-Mexico-Canada Agreement review. Though the bridge will take longer to recover its construction cost under the new deal, the important thing is that it will be in service facilitating the movement of goods and people for both countries’ benefit, he said.
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“Some will say we caved, some will say this isn’t a fair deal, we paid for it, but ... there’s a greater good,” Prof. Hampson said. “Let’s put it this way: Problem solved. Let’s move on.”
Shuv Majumdar, Conservative critic for Canada-U.S. relations, said the agreement represents a strategic failure on the part of Mr. Carney. He said the Prime Minister is giving away the bridge as part of a piecemeal approach to trade talks with the U.S., as opposed to getting one comprehensive Canada-U.S. trade deal.
“He pursued a strategy of wait-and-see for the last 15 months that created a vulnerability in the Canadian negotiating position, allowing the United States to cherry pick critical issues like the Gordie Howe bridge,” Mr. Majumdar said in an interview with The Globe and Mail on Sunday.
The Conservative critic sent an open letter to Intergovernmental Affairs Minister Dominic LeBlanc demanding the release of the full agreement, with an accounting of costs, before the bridge opens.
Mr. LeBlanc did not immediately return a request for comment Sunday.
Michigan Governor Gretchen Whitmer said the bridge is a testament to the enduring partnership between her state and Canada.
“Thousands of Michigan workers built this critical bridge, which will speed up auto production, lower costs, ease traffic, strengthen agriculture and give people on both sides of the border better-paying jobs and brighter futures,” she said in a statement.
The Ambassador Bridge moves roughly $400-million in commercial goods each day – more than a quarter of total trade between Canada and the U.S. It recently lost its title as the busiest trade crossing to Blue Water Bridge in Sarnia, with high toll rates primarily to blame.
With a report from Stephanie Levitz