In a move that has sent shockwaves through the global trade community, representatives of Canada, Mexico, and the United States are set to meet virtually on Wednesday to discuss the fate of the Canada-U.S.-Mexico Agreement (CUSMA), also known as the new North American Free Trade Agreement. As the deadline for an extension looms, all signs point to a Trump administration that is unlikely to sign on for a 16-year renewal.
While the U.S. may choose to blow past the deadline without renewing the deal, the trade pact will remain in place and subject to annual rolling reviews for up to a decade, effectively allowing it to expire if an extension isn't agreed upon within the next ten years.
In an email interview, Carlo Dade, director of international policy at the University of Calgary's School of Public Policy, emphasized that the blown deadline doesn't necessarily spell doom for CUSMA. "As long as there is constructive work and dialogue occurring," he noted, "the market is adjusting to a new normal of uncertainty with the U.S." However, Dade also cautioned that awareness of this reality can lead to greater awareness of the costs associated with it.
CUSMA was negotiated during the first Trump administration to replace the North American Free Trade Agreement (NAFTA), which served as an early test of Ottawa's approach to the Trump administration. Despite the sometimes tumultuous negotiations, all three countries hailed the agreement as a success. However, U.S. President Donald Trump has continued to cast doubt on CUSMA's future, calling it "irrelevant" and suggesting that it may have served its purpose.
The fate of CUSMA is not set in stone, however. Canada and Mexico have both indicated their desire to keep the deal in place, while trade negotiations between Mexico and the United States have already launched. Ottawa and Washington have yet to start official talks on the matter.
Prime Minister Mark Carney has expressed his optimism that this week's meeting will be drama-free. In a statement, he noted that "we don't expect any drama" during the discussions. Meanwhile, Andrew Hale, a fellow at Advancing American Freedom, a conservative advocacy group founded by former U.S. Vice President Mike Pence, credits former United States Trade Representative Robert Lighthizer for being a tough negotiator who followed the law.
Hale also pointed out that Trump's trade actions are sowing "chaos" and that many people in the administration do not understand Canada or its motivations. He warned that this uncertainty can discourage long-term investment and diminish North America's global competitiveness if negotiations continue for too long.
The annual consultations could also lead to increased trade frictions, as Hale noted that they "are never usually harmonious with the Trump administration." They push people right to the edge of the cliff every time they have these negotiations," he said.
Dade offered a more measured assessment of the situation. While some members of the Trump administration have indicated that the U.S. still values CUSMA, others have been much more critical. "Trump is negotiating in public, so we have to discount heavily what he says and view it through the lens of his seeking leverage," he noted.
Dade also agreed that dragging out the review process could become problematic for the Trump administration if it stifles investment. He pointed out that polling shows sustained public support for CUSMA on both sides of the border, with 77 percent of Canadians viewing the U.S. as an economic challenge and 56 percent of Americans supporting bilateral economic cooperation.
Recent polling by Ipsos Public Affairs and Nanos Research found that just eight percent of Americans described Canada as a major economic challenge. The same poll also revealed that majorities on both sides of the border support bilateral economic cooperation, with 88 percent of Canadians and 56 percent of Americans backing the trilateral free trade agreement.
In conclusion, while the future of CUSMA remains uncertain, it is clear that the fate of this crucial trade pact will have far-reaching implications for Canada, Mexico, and the United States. As the representatives of these three nations meet virtually to discuss the matter, one thing is certain: the world will be watching with bated breath as they navigate the complex web of international trade negotiations.
Written by: Chad Mirage | The Citizen Edition
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