For Canada, it’s a new North American free-trade deal with a lot of old North American trade issues.
High on the list for analysts: the Canada-United States-Mexico Agreement (CUSMA) adds up to another mediocre deal for Canada and more North American trade advantages for the United States.
Consider the C.D. Howe Institute’s Quantifying CUSMA: The Economic Consequences of the New North American Trade Regime. The recently released analysis from the policy research organization examines CUSMA’s impact on Canada’s business outlook. Long-range forecast: dark clouds on the horizon.
Among CUSMA’s challenges for Canada and Mexico are tighter rules of origin for manufactured products required to qualify for duty-free market access to the trade deal’s other members. These favour the United States, especially when it comes to the lucrative automobile sector. The C.D. Howe analysis also lists key areas in which CUSMA has eroded Canada’s appeal as a long-term destination for foreign investment.
The Conference Board of Canada, meanwhile, has noted that CUSMA, which has yet to be ratified in the United States, is more about trying to protect trade provisions Canada negotiated under the North American Free Trade Agreement than about securing any significant gains.
Results from other trade agreements are also mixed for Canada.
Its free-trade deal with the European Union has yet to yield any significance gains, especially for B.C., and while the Comprehensive and Progressive Agreement for Trans-Pacific Partnership has helped Canadian farmers with sales of pork and other products in Asia, the lesson that Canada needs to learn here is simple: continue to diversify export markets beyond the protectionist United States and, with ongoing tensions between Canada and China, beyond China, too.
Both countries will remain significant markets for Canada. But heavy reliance on either erodes any leverage Canada has in free-trade negotiations, be they with the United States, China or any other country.
