¶¶ÒùÊÓƵ

Minister of Export Promotion, International Trade and Economic Development appearance before the Standing Committee on International Trade (CIIT) on the 2026 CUSMA Review

June 13, 2024
Published: September 26, 2024

Table of contents

• Overview material
  1. Scenario Note
  2. Opening Remarks
  3. Standing Committee on International Trade – Members Biographies
• Tab A – CUSMA
  4. CUSMA Implementation
  5. 2026 CUSMA Review
  6. Inclusive Trade under CUSMA and SMEs
  7. Labour including the Rapid Response Labour Mechanism
  8. Environment
  9. Auto Rules of Origin
  10. Electric Vehicles
  11. North American Competitiveness
  12. Canada – Mexico Trade Irritants
  13. Canada – U.S. Trade Irritants
  14. Steel and Aluminum
• Tab B – Other Trade Related Issues
  15. Canada - U.S. Energy Security (and Line 5)
  16. ISDS Mechanism
  17. Carbon Border Adjustment
  18. Recent U.S. announcements on Section 301 tariffs on imports from China
• Tab C – Supplementary Material
  19. Team Canada Report Card
  20. U.S. Commercial Brief
  21. Mexico Commercial Brief
  22. Canada – U.S. Trade Snapshot
  23. Canada – Mexico Trade Snapshot
  24. Canada-U.S.-Mexico Trade Snapshot
  25. Quarterly Economic & Trade Report Q4
  26. Foreign Investment in North America
  27. Partial Visa re-imposition on Mexico
  28. Potential labour actions at CBSA and CN Rail (and supply chain impacts)
  29. The IRA, Clean Tech and Environmental Investments
  30. “P” and “O” visa fees for performing artists in the United States

Meeting scenario

• You are appearing as part of the Committee’s study on the pending 2026 CUSMA Review.
• Prior to your appearance, the committee will have had four other meetings on this study, between May 30 and June 11, 2024.
• Your appearance will last for 1 hour from 3:30 to 4:30 PM.
• The following officials are accompanying you in-person during the appearance and may be called upon to respond to questions. They will remain for the second hour from 4:30 to 5:30 PM:
  • ¶¶ÒùÊÓƵ
    • Rob Stewart, Deputy Minister of International Trade
    • Aaron Fowler, Associate Assistant Deputy Minister, Trade Policy, and Negotiations
    • Mary-Catherine Speirs, Director General, North American Trade Policy and Negotiations Bureau
    • Mark Allen, Director General, North America
  • Agriculture and Agri-Food Canada
    • Matthew Smith, Chief Agriculture Negotiator

Committee context

• After your opening remarks of 5 minutes, the committee will move to rounds of questions.
  • First Round
    • Conservative (6 minutes)
    • Liberal (6 minutes)
    • Bloc Québécois (6 minutes)
    • NDP (6 minutes)
  • Second Round
    • Conservative (5 minutes)
    • Liberal (5 minutes)
    • Bloc Québécois (two and a half (2.5) minutes)
    • NDP (two and a half (2.5) minutes)
    • Conservative (5 minutes)
    • Liberal (5 minutes)
• Subsequent rounds of questioning would follow the order and timing of the second round.

Relevant motion

On Tuesday, October 17, 2023, it was agreed, “That, pursuant to Standing Order 108(2), the committee undertake a study on the pending CUSMA review that will take place in 2026 in order to help identify any trade irritants that currently exist between Canada, the US and Mexico that could potentially create issues in advance of the review process if not addressed before it takes place, and possible solutions to such irritants; that the committee invite the Minister of International Trade and any other Government officials and experts the committee deems relevant; that the committee hold a minimum of 5 meetings; and that the committee report its findings and recommendations to the House.”

Committee membership & interests

Most recently, in 2023-2024, the committee has been concerned with the following topics of study:

• 2026 CUSMA Review
• Effects of American and European seafood import policies on the fishing industry in Canada
• The CBSA Assessment and Revenue Management System (CARM)
• Free Trade Negotiations Between Canada and Ecuador
• The 2023 Strike at the Port of Vancouver: Selected Impacts, Responses and Port-related Innovation
• Canada’s Proposed Biocides Regulations: Trade Impacts for Certain Canadian Sectors
• Non-Tariff Barriers in Canada’s Existing and Potential International Trade Agreements
• Bill C-57, An Act to implement the 2023 Free Trade Agreement between Canada and Ukraine
• U.S. Countervailing and Antidumping Duties on Canadian Exports of Certain Softwood Lumber Products
• Environmental and Human Rights Considerations Regarding Canadian Mining Firms Abroad
• Potential Trade Impacts of the United States Inflation Reduction Act of 2022 on Certain Firms and Workers in Canada
• Bill C-282, An Act to amend the Department of Foreign Affairs, Trade and Development Act (supply management)
• Potential Trade Implications of Transporting Goods in Railway Containers
• Prohibiting the Importation of Goods Linked to the Use of Forced Labour and Developing a Related Strategy

Committee members' questions during previous committee meetings have focused on the following issues:

• Conservative Members– importation of goods related to forced labour; the inclusion of carbon tax and carbon pricing provisions in Canada’s free trade agreements; updates on the status of the softwood lumber disputes at the WTO; support for Canadian supply chains and a supply chain strategy; investments into Canada’s infrastructure (rail, road, marine, etc.); securing Canadian supply of critical minerals and supporting battery manufacturing in Canada; sanitary and phytosanitary matters with the EU and the U.K.; auto rule of origin; protecting foreign investments; support for the dairy industry; Canada – U.S. cooperation on supply chains; attracting foreign investment; Taiwan’s admission to the CPTPP; opportunities for the aluminum sector.
• Liberal Members – Canada – U.S. economic relationship; programs and services that support various Canadian sectors; dispute resolution mechanisms; market diversification; impacts of supply chain disruptions and mitigation strategies; foreign direct investment; gender provisions in Canada’s free trade agreements; global leadership on climate change and net-zero government initiatives; the impact of Canada’s trade agreements and small and medium-sized enterprises; opportunities for the steel industry; electric vehicles and reaching net-zero emissions in Canada; Canadian mining firms abroad; softwood lumber; opportunities for the Canadian clean- tech and renewables sector; export diversification and growing trade in Africa; Indo- Pacific Strategy; the agriculture and agri-food office in Manila, Philippines; and government investments into infrastructure to support trade.
• Bloc Quebecois Member – support for the forestry industry; updates on the status of the softwood lumber disputes at the WTO; softwood lumber countervailing and anti- dumping duties; Taiwan’s entry into the CPTPP; Canadian supply chains; accessing international supply chains; dispute settlement mechanisms; the aerospace industry; human rights and environmental standards in Canada’s free trade agreements; and due-diligence measures to address the behaviour of mining companies abroad.
• NDP Member – Canada – U.S. relations; maintaining Canadian competitiveness in the auto industry (electric vehicles) while addressing climate change; the protection of human and environmental rights, particularly in mining abroad; the protection of Canadian businesses as well as foreign investment; and critical minerals, battery production and the recycling of batteries.

MINT opening remarks for CIIT Study on 2026 CUSMA Review (5 minutes)

Introduction

Thank you, Madam Chair. Good afternoon to you, the vice-chairs and all members of the committee.

I want to start by acknowledging that I’m speaking to you from the traditional and unceded territory of the Algonquin Anishinaabe people.

Thank you to the Standing Committee on International Trade for inviting me to provide an update to you and to Canadians on the government’s work regarding the Canada-United States-Mexico Agreement – CUSMA.

As Minister of Export Promotion, International Trade and Economic Development, I work to increase Canada’s access to markets around the world, from Europe, to the Americas to the Indo-Pacific region and beyond. However, no relationship is more important than the one we share with our neighbours, the United States and Mexico.

Longstanding Canada-U.S. trade relations

Canada and the United States share deep economic ties as part of a multifaceted and longstanding relationship.

Since 1988, when we signed the historic Canada-U.S. Free Trade Agreement, trade and investment grounded in predictable and enforceable rules between our countries has supported millions of jobs and helped ensure the secure flow of goods and people across the border. This relationship is vital to both countries’ economic competitiveness and prosperity.

This is why the government deployed the Team Canada engagement strategy this year – and we’ve been speaking with business here in Canada, and in the United States, to reinforce the value that our trade Agreement brings to them.

Deepening North American trade relations

After Mexico joined our trading partnership and the North American Free Trade Agreement came into effect in 1994, we've focused on increasing trade, integrating our supply chains, and bolstering commercial competitiveness in our continent.

Today, CUSMA, which in 2020 modernized and replaced the NAFTA, continues to safeguard Canada’s preferential access to the United States and Mexico and drive theintegration of our North American market – which represents 506 million consumers and a combined GDP of $42 trillion!

And CUSMA brings significant economic benefit to all three countries. In 2023, the total value of trilateral merchandise trade between Canada, the United States, and Mexico was almost $2 trillion [$1.93 trillion] – an increase from the year before [increase of 3.5% from 2022]!

CUSMA also provides certainty for business and investment in North America – which is becoming increasingly important in the face of global uncertainty and emerging threats to our region’s economic growth and prosperity.

CUSMA is a high-standard agreement and should remain so

On May 22, I joined U.S. Trade Representative, Katherine Tai, and Mexican Secretary of Economy, Raquel Buenrostro, in Phoenix Arizona, for the fourth CUSMA Free Trade Commission meeting.

We agreed CUSMA is a high-standard, high-ambition agreement that promotes the rights of our workers, advances our environmental priorities, and creates new opportunities for our producers.

And it was clear that implementation of the Agreement is proceeding well, especially where trilateral cooperation is strong. We took stock of the work being done by the CUSMA committees, and we provided them with guidance towards fully implementing CUSMA.

We acknowledged the need to ensure CUSMA remains up-to-date and able to adapt to the changing economic landscape, following global challenges posed by the COVID-19

pandemic, Russia’s invasion of Ukraine and other threats to North America’s economic growth. To address emerging challenges, we agreed to jointly expand our collaboration on issues related to non-market policies and practices of other countries that undermine CUSMA, including in the automotive and other sectors.

We also agreed to continue to strengthen trilateral cooperation, including by promoting the integration of SMEs into regional and global supply chains, bolstering North American competitiveness and increasing opportunities for North American workers.

Looking forward, we reinforced the need for high environmental and labour standards, and to prioritize inclusive approaches in pursuit of trade and environmental objectives and to cooperate to combat forced labour and other forms of labour exploitation. We also agreed to strengthen preparedness to address emergency situations.

CUSMA going forward and Canada’s approach

To ensure that CUSMA remains a gold-standard agreement well suited to the demands of supporting North American competitiveness in a challenging world, the Agreement contains a requirement to regularly review its operation. The first joint review, scheduled to begin in 2026, affords the Parties the opportunity to take stock of CUSMA’s operation to ensure the Agreement remains current.

Canada will continue to advocate for a joint review process that is not a renegotiation but rather a focused checkpoint to ensure CUSMA remains relevant and continues to strengthen our region’s competitiveness and resilience – while continuing to serve Canada’s best interests.

We fully recognize that our partners may want to revisit some areas of CUSMA, including to address concerns about the non-market practices of other countries. We also understand that there may be frustrations on the part of the United States or Mexico with dispute settlement findings that were not in their favour. But this is how impartial dispute settlement is meant to operate.

Canada fought hard to retain the dispute settlement provisions when CUSMA was negotiated. Dispute settlement is an integral part of CUSMA. Only six dispute settlement cases have been initiated and three have been effectively resolved already, demonstrating that CUSMA is robust and functions as intended. It is also a key tool in our longstanding legal challenges with the United States on softwood lumber.

We will continue safeguarding Canada’s best interests in the coming years, and we will be prepared to defend the negotiated outcomes in CUSMA that work in Canada’s favour. We will also remain open to strategic discussions with our partners about addressing emerging issues and to ensure the Agreement continues to meet the needs of Canadians going forward.

In 2025, Canada will chair the fifth meeting of the CUSMA Free Trade Commission, which oversees the ongoing implementation and functioning of the Agreement. In 2025, this work will also include reviews of the Environment and Labour chapters and will set the stage for the joint review in 2026.

To prepare for these discussions, ¶¶ÒùÊÓƵ is working to launch public consultations this summer. We are interested in hearing Canadians’ views and experiences on key areas in CUSMA that are working well and potential areas for improvement. Feedback we receive will inform Canada’s priorities for 2025 and our preparations for the joint review in 2026.

Conclusion

Thank you. I'm happy to take questions, Madam Chair.

Standing Committee on International Trade (CIIT)

Mandate:

The House of Commons Standing Committee on International Trade studies and reports on matters referred to it by the House of Commons. The Committee can also initiate studies of subjects falling within its mandate. As a permanent committee established by the House of Commons Standing Orders, the Committee may be asked to comment on legislation, departmental activities and spending, and other matters under its jurisdiction. The Compendium of the House of Commons Procedure contains additional information on the mandate and powers of standing committees.

The general subject area of the Committee includes the following:

• International trade policy, including trade and investment liberalization, as well as Canada’s economic relationship with other countries;
• Canadian international competitiveness, as well as the effects of global competition on Canadian firms and the Canadian economy; and
• The global trade and investment environment, including the World Trade Organization, international markets, and regional trade blocs.

The federal departments and agencies under the Committee’s direct scrutiny are:

• ¶¶ÒùÊÓƵ (international trade component)
• Export Development Canada
• Canadian Commercial Corporation
• Invest in Canada

Hon. Judy A. Sgro

Chair
(LPC — Humber River-Black Creek, ON)

Election to the house of commons

First elected: 1999
Re-elected: 2000, 2004, 2006, 2008, 2011, 2015, 2019, and 2021

Professional background

Municipal politics: north york city council (1987 – 1994); toronto city council (1994 –1999); at the municipal level, sgro focused on poverty and crime reduction.

Political and parliamentary roles

• Minister: minister of citizenship and immigration (2003 – 2005)
• Parliamentary secretary: parliamentary secretary to the minister of public works and government services (2003)
• Parliamentary association vice-chair: canada-italy interparliamentary group (2019 – 2020); canada-united states inter-parliamentary group (2016 – 2018)
• Parliamentary association member: canadian branch of the commonwealth parliamentary association (2006 – present); canada-europe parliamentary association (2006 – present); canada-israel interparliamentary group (2005 – present); canada-italy interparliamentary group (2005 – present); canada-japan inter-parliamentary group (2006 – present); canadian nato parliamentary association

Committee membership

• Chair: standing committee on international trade (2020 – present); liaison committee (2016 – present); standing committee on transport, infrastructure and communities (2016 – 2019); standing committee on transport, infrastructure and communities (2016 – 2019); standing committee on the status of women (2006 – 2007)
• Vice-chair: standing committee on industry, science and technology (2013 – 2015); standing committee on the status of women (2011 – 2012); standing committee on veterans affairs (2009 – 2010)
• Member: special committee on the covid-19 pandemic (2020); standing committee on human resources, social development and the status of persons with disabilities (2007 – 2008); standing committee on health (2001-2003); standing committee on justice and human rights (2000 – 2001)

Recent points of interest to GAC

Canada-U.S. relationship:

• Sgro has emphasized the importance of canada and the united states’ economic relationship and supports Economic measures to strengthen this relationship.

Ukraine:

• On march 20^th, 2024, a take-note debate on canada-ukraine relations was held. During this debate, mp sgro supported ukraine’s integration into the european union and nato and praised the work done to achieve royal assent for the modernized canada-ukraine free trade agreement (cufta).

Taiwan:

• Sgro, who is the chair of the canada-taiwan friendship group, has shown an interest in the taipei economic and cultural office in canada, the importance of the exploratory discussions on the canada-taiwan foreign investment promotion and protection arrangements, and the opportunities in the green economy, agricultural markets, the semiconductor industry, education, and science.

Human rights: Iran, Russia

• In february 2023, Sgro spoke on freedom of religion in the house of commons. She brought attention to the human rights violations against the ahmadiyya muslim community around the globe.
• In a statement to the house in september 2022, Sgro indicated support for the people of iran, who took to the streets to protest the government following the arrest and murder of a woman by the iranian morality police.

Kyle Seeback

Critic for international trade
(CPC – Dufferin – Caledon, ON)

Election to the house of commons

First elected: 2011
Re-elected: 2019 and 2021

Professional background

Studies: bachelor of laws degree
Law background: associate lawyer at speigel nichols fox llp (2000-2022); associate lawyer at simmons da silva & sinton llp (2001-2012); seeback mediation (2019)

Political and parliamentary roles

• Parliamentary association member: canada-italy interparliamentary group (2013); canada-africa parliamentary association (2011-2012); canada-china legislative association (2011-2012); canada-europe parliamentary association2011-2012; canada-france inter-parliamentary association (2011-2012); canada- japan inter-parliamentary group (2011-2012); canadian nato parliamentary association (2011-2012); canadian branch of the commonwealth parliamentary association (2011-2012); canada-united states inter- parliamentary group (2011-2012); canada-united kingdom inter-parliamentary group (2011-2012); and canadian delegation to the organization for security and co-operation in europe parliamentary assembly (2011- 2012).

Committee membership

• Vice-chair: standing committee on international trade (2022 – present); standing committee on citizenship and immigration (2021 – 2022)
• Member: special committee on the canada-people’s republic of china relationship (2022-2024); standing committee on environment and sustainable development (2022); standing committee on citizenship and immigration (2020 – 2022); standing committee on veterans affairs (2020 – 2021); special committee on covid-19 pandemic (2020); standing committee on aboriginal affairs and northern development (2011 – 2015); standing committee on justice and human rights (2011 – 2015)

Points related to CUSMA

Article 23.6: forced or compulsory labour

• At ciit meetings, most recently on february 8, 2024, mp seeback often raises article 23.6 of cusma, which states that each party shall prohibit the importation of goods into its territory from other sources produced in whole or in part by forced or compulsory labour.
• Mp seeback was critical of the few goods seized at canada’s borders related to forced labour. His questions focused on comparing canada’s chosen method of enforcement versus the united He stated that in 2022, U.S. trade representative ms. Tai had discussions with canada, the main topic of which was the elimination of forced labour from canadian supply chains, and she apparently faulted canada for failing to act on the matter.

Carbon tax and carbon pricing (energy security):

• On november 7th, 2023, the minister of international trade appeared at ciit to discuss bill c-57, an act to implement the 2023 free trade agreement between canada and During this meeting, mp seeback repeatedly pressed the minister on the inclusion of a carbon price or carbon tax section in canada's trade agreements, notably cptpp, ceta, and cusma.

Softwood lumber:

• On april 8, 2024, a take-note debate was held on softwood lumber. During this debate, mp seeback stated that the issue surrounding the softwood lumber dispute would only be resolved through direct head of government negotiation. He criticized the government`s team canada approach for what he perceives as a mismanagement of canada`s relationship with the u.s.

Recent points of interest to GAC

Bill c-282, an act to amend the department of foreign affairs, trade and development act (supply management):

• During the debate on the bill in the house on may 15th, 2023, mp seeback showed support for supply management but also raised concern that the bill would harm agriculture sectors outside of supply management, citing suspicions that it would limit their opportunities to export their products globally.

Canada-Ecuador FTA:

During a ciit meeting on february 29th, 2024, mp seeback was critical of pursuing a free trade agreement with ecuador, stating that it would not benefit canada`s gdp. He suggested that the government should instead use its trade resources to resolve long-standing issues with sanitary and phytosanitary matters with the european union and the united kingdom.

Canada's businesses in supply chains and global markets:

• During a ciit meeting on february 1st, 2024, mp seeback was critical of the government`s supply chain report as it appeared to him that canada`s infrastructure was on a decline, and he expressed concern that canada`s infrastructure would not be able to support new trade deals to increase canadian exports.

Simon-Pierre Savard-Tremblay

Critic for international trade; international trade, aerospace and cars
(BQ — Saint-Hyacinthe-Bagot, QC)

Election to the house of commons

First elected: 2019
Re-elected: 2021

Professional background

Studies: bachelor’s degree in political sciences, a master’s degree in sociology, and a phd in sociology and development
Columnist: columnist at radio vm (2015 – 2019); columnist at le mag (2017 – 2019); columnist at cogéco 106,9 fm mauricie (2016 – 2019); columnist at la vie agricole (2017 – 2019)
Blogger: blogger at le journal de montréal (2016 – 2019)

Political and parliamentary roles

• Parliamentary association vice-chair: canada-united states inter-parliamentary group (2021 – present)
• Parliamentary association member: canada-united states inter-parliamentary group (2019 – present); canada-africa parliamentary association (2020 – present); canada-china legislative association (2019 – present); canada-germany interparliamentary group (2020 – present); canada-europe parliamentary association (2020 – present); canada-france inter-parliamentary association (2019 – present); canada-ireland interparliamentary group (2020 – present); canada-israel interparliamentary group (2020 – present); canada- italy interparliamentary group (2020 – present); canada-japan inter-parliamentary group (2020 – present); canadian nato parliamentary association (2020 – present); canadian branch of the assemblée parlementaire de la francophonie (2020 – present); canadian branch of the commonwealth parliamentary association; canadian section of parlamericas; canada-united kingdom inter-parliamentary association (2020 – present); canadian delegation to the organization for security and co-operation in europe parliamentary assembly (2020 – present);

Committee membership

• Vice-chair: standing committee on international trade (2020 – present); special committee on the economic relationship between canada and the united states (2021)
• Member: special committee on covid-19 pandemic (2020)

Points related to CUSMA

Softwood lumber:

• On april 8, 2024, during a take-note debate on softwood lumber, mp savard-tremblay criticized the minister of international trade for not taking advantage and prioritizing softwood lumber at the world trade organization`s ministerial conference in abu dhabi on march 2, 2024. He criticized the government`s minimal support for the forestry industry compared to its continued support and provision of funds for the canadian oil industry.
• Mp savard-tremblay has spoken often about softwood lumber and the increased countervailing and anti-dumping duties that the united states has placed on canadian softwood lumber.

Recent points of interest to GAC

Cptpp: Taiwan

• On april 11, 2024, mp savard-tremblay made a statement during routine proceedings expressing support for taiwan`s entry into the comprehensive and progressive agreement for trans-pacific partnership (cptpp), noting that taiwan would be an invaluable asset in the global supply However, he also stated that he continues to have reservations about the trade deal.

Investor-state dispute settlement (ISDS):

• Mp savard-tremblay often discourages the inclusion of isds provisions in agreements and will take the opportunity at ciit meetings to pose questions to witnesses to gauge public opinion on dispute settlement mechanisms. Most recently, on february 13th, 2024, he asked witnesses if the elimination of isds from cusma has discouraged investors.

Aerospace industry:

• Mp savard-tremblay is a strong supporter of the aerospace industry, often promoting the industry's interest at ciit meetings and in the house, citing montreal as one of the world's top five largest aerospace hubs. During a statement by members in the house on february 8th, 2024, he advocated for an aerospace strategy to be developed in consultation with stakeholders based on public procurement policies and support for projects and smes to access the international supply chain.

Mining abroad:

• Since the study at ciit on environmental and human rights considerations regarding canadian mining firms abroad, which began in february 2023, mp savard-tremblay has raised concerns surrounding canadian businesses operating abroad that may contribute to human rights abuses.
• Most recently, during a ciit meeting on february 15th, 2024, on the topic of free trade negotiations between canada and ecuador, mp savard-tremblay raised concerns about the behaviour of mining companies in ecuador and focused his questions on ensuring effective due-diligence measures being put in place in canadian trade

Chandra Arya

(LPC — Nepean, ON)

Election to the house of commons

First elected: 2015
Re-elected: 2019 and 2021

Professional background

Studies: bachelor’s degree in engineering and a master’s in business administration. Technology: was an executive in the high-technology sector before entering politics. Business: served on the board of invest ottawa and as chair of the indo-canada ottawa business chamber.

Non-profit: served on the unity non-profit housing corporation ottawa board and as vice president of the ottawa community immigrants services organization.

Political and parliamentary roles

• Parliamentary association vice-chair: canada-africa parliamentary association (2017)
• Parliamentary association member: canada-africa parliamentary association (2016 – present); canada-china legislative association (2015 – present); canada-germany interparliamentary group; canada-europe parliamentary association (2016 – present); canada-france inter-parliamentary association (2019 – present); canada-ireland interparliamentary (2018 – present); canada-israel interparliamentary group (2018 – present); canada-italy interparliamentary group (2018 – present); canada-japan inter-parliamentary group (2016 – present); nato parliamentary association (2016 – present); canadian branch of the assemblée parlementaire de la francophonie (2019 – present); canadian branch of the commonwealth parliamentary association (2016 – present); canada-united states inter-parliamentary group (2016 – present); canadian section of parlamericas; canada-united kingdom inter-parliamentary association (2016 – present); canadian delegation to the organization for security and co-operation in europe parliamentary assembly (2016 – present); canadian group of the inter-parliamentary union (2016 – 2019)

Committee membership

• Member: standing committee on international trade (2020 – present); special committee on covid-19 pandemic (2020); standing committee on public accounts (2016 – 2019); standing committee on industry, science and technology (2016 – 2017)

Points related to CUSMA:

Bill c-282, an act to amend the department of foreign affairs, trade and development act (supply management):

• During a ciit meeting on may 15th, 2023, the same day the bill was being debated in the house, mp arya stated his opinion that the bill was "bad legislation for canada as a country that promotes free " he was interested in hearing witnesses' opinions regarding dispute resolution mechanisms in cusma.
• During a meeting on march 23rd, 2023, he asked witnesses how the bill would affect renegotiations for cusma in three years, mainly as it is one of the biggest markets for canadian canola.
• He is curious about canada's position in renegotiating cusma if the bill

Recent points of interest to GAC

Canada-Ecuador FTA:

• On february 29^th, 2024, mp arya spoke about his support for an fta between canada and ecuador. He has shared that no matter the market size, entering an fta wherever possible is always beneficial for canadian

Canadian businesses in supply chains and global markets

• During a ciit meeting on february 6th, 2024, mp arya spoke about the importance of global supply chains and canada's dependency on He expressed excitement around canada's increase in foreign direct investments (fdis) but showed continued concern about the impacts of the pandemic due to supply chain disruptions. His questions focused on actions being taken by the government to mitigate problems related to global supply chain disruptions.

Tony Baldinelli

Critic for tourism
(CPC — Niagara Falls, ON)

Election to the house of commons

First elected: 2019
Re-elected: 2021

Professional background

Consultant: senior consultant at hill & knowlton (1997 – 2001)
Communication: communications manager at the niagara parks commission (2001 – 2019)

Political and parliamentary roles

• Parliamentary association member: canada-italy interparliamentary group (2020 – present); canadian nato parliamentary association (2020 – present); canada-united states inter-parliamentary group (2020 – present)

Committee membership

• Member: standing committee on international trade (2022 – present); standing committee on science and research (2021 – 2022); standing committee on industry, science and technology (2021); standing committee on transport, infrastructure and communities (2020); special committee on covid-19 pandemic (2020); standing committee on public accounts (2016 – 2019)

Points related to CUSMA:

Bill c-282, an act to amend the department of foreign affairs, trade and development act (supply management):

• During meetings on may 4th and 8th, 2023, on the study of non-tariff barriers in canada’s existing and potential international trade agreements, mp baldinelli was curious about the impact of the bill on cusma renegotiations in the future, sharing concerns that this bill could be seen as a trade irritant.

Auto rules of origin:

• During a ciit meeting on may 1st, 2023, mp baldinelli raised the issue of canadian competitiveness due to the 70% north american content requirement that extends to steel but not to aluminum and noted that mexico is able to use china-based ingots to circumvent the provision.

Recent points of interest to GAC:

Canada-ecuador FTA:

• During a ciit meeting on february 29th, 2024, mp baldinelli was critical of the government's proposal to add a carbon tax to a trade agreement with a country like ecuador with stability He noted an example of the riots that occurred in 2019 when the government of ecuador reduced fuel subsidies.
• On february 15th, 2025, his questions focused on whether ecuador had policies about protecting crude oil exports to canada.

Carbon tax provisions:

• During a ciit meeting on november 7th, 2023 (where the minister of international trade appeared) and on november 23rd, 2023, on the subject matter of bill c-57, an act to implement the 2023 free trade agreement between canada and ukraine, mp baldinelli sought justification for including carbon pricing and carbon tax provisions in cufta when they aren't found in other ftas for canada, including cusma, cptpp, and ceta

Richard Cannings

Critic for emergency preparedness (climate change resilience); small business and tourism; international trade
(NDP — South Okanagan-West Kootenay, BC)

Deputy critic: innovation, science, and industry; natural resources

Election to the house of commons

First elected: 2015
Re-elected: 2019 and 2021

Professional background

Studies: master`s degree in zoology from memorial university of newfoundland

Biologist: 17 years as a professor at the university of british columbia, consulting biologist including work for the non-profit bird studies canada, 8 years as co-chair on the committee on the status of endangered wildlife in canada as, 11 years on b.c. environmental appeal board and five on the b.c. forest appeals commission, from 2006 to 2015 he was a board member of the nature conservancy of canada, and authored or contribute to numerous books.

Political and parliamentary roles

• Parliamentary association member: canadian branch of the commonwealth parliamentary association (2015 – present); canada-africa parliamentary association (2023 – present); canadian branch of the commonwealth parliamentary association (2015 – present); canada-united states inter-parliamentary group (2020 – present); canadian section of parlamericas (2015 – present)

Committee membership

• Vice-chair: standing committee on natural resources (2020)
• Member: standing committee on international trade (2023 – present); standing committee on science and research (2021 – present); committee on natural resources (2016 – 2021); special committee on covid-19 pandemic (2020)

Recent points of interest to GAC

Canada-US relations:

• Mp cannings often shows interest at ciit in canada's trade position with the united states, asking witnesses to expand on how canada can maintain its trade position with the united states in terms of fighting climate change and remaining competitive in the realm of electric vehicles.

Investor-state dispute resolution (ISDS):

• During a ciit meeting on february 29th, 2024, concerning free trade negotiations between canada and ecuador, mp cannings expressed confusion around canada's priorities to protect human rights and environmental rights while protecting canadian businesses through isds, particularly mining, abroad. He has expressed concerns around allegations of violence on the part of canadian mining companies operating in ecuador; he has raised similar concerns about mining operations in the philippines.
• During a ciit meeting on november 21st, 2023, m.p. cannings raised concerns about removing isds from cufta and how it would impact the foreign investment protection agreement (fipa) with ukraine.

Bill c-57: an act to implement the 2023 free trade agreement between canada and ukraine

• On february 5th, 2024, mp cannings spoke in the house regarding bill c-57, expressing his and the ndp`s support for the fta. He criticized the conservative party`s tactics to delay passing the bill.

Critical minerals and the ecosystem:

• During a ciit meeting in november 2022, mp cannings showed interest in critical minerals and the need for a vertical ecosystem, from exploration to mining—graphite, lithium, cobalt, rare earth metals, —to the production of battery parts, the production and recycling of batteries, and the manufacture of cars.

Mona Fortier

(LPC — Ottawa - Vanier, ON)</p<

Election to the house of commons

First elected: 2017
Re-elected: 2019 and 2021

Professional background

Studies: bachelor's degree in sociology and a master’s degree in business administration management/business: senior director, communications and market development at college la cité (2011 - 2015); senior director, strategic marketing at college la cité (2008 – 2011); executive director at equinox inc. (2005 - 2008)
Public affairs: vice-president at solugik public affairs (2002 - 2005); project manager nba communications (1993 - 2002)

Political and parliamentary roles

• Minister: president of treasury board (2021 – 2023); minister of middle class prosperity (2019 – 2021); associate minister of finance (2019 – 2021)
• Deputy: deputy government whip (2024 – present)
• Member: joint interparliamentary council (2024 – present); board of internal economy (2024 – present)
• Parliamentary association member: canada-france inter-parliamentary association (2017 – present); canada-africa parliamentary association (2018 – present); canada-europe parliamentary association (2017 – present); canada-ireland interparliamentary group (2023 – present); canada-italy interparliamentary group (2024 – present); canada-japan inter-parliamentary group (2023 – present); canadian nato parliamentary association (2018 – present); canadian branch of the assemblée parlementaire de la francophonie (2017 – present); canadian branch of the commonwealth parliamentary association (2018 – present); canada-united states inter-parliamentary group (2024 – present); canadian section of parlamericas (2017 – present); canada- united kingdom inter-parliamentary association (2023 – present); canadian delegation to the organization for security and co-operation in europe parliamentary assembly (2017 – present)

Committee membership

• Vice-chair: standing committee on access to information, privacy and ethics (2023 – 2024)
• Member: standing committee on international trade (2023 – present); standing committee on procedure and house affairs (2024 – present); special committee on covid-19 pandemic (2020); standing committee on official languages (2018 – 2019); standing committee on access to information, privacy and ethics (2017 – 2019); standing committee on human resources, skills and social development and the status of persons with disabilities (2017 – 2018)

Recent points of interest to GAC

Climate change:

In response to a question during a question period in february 2023, mona fortier, who was president of the treasury board at the time, reiterated that canada was demonstrating global leadership on climate change by joining the net-zero government initiative and committing to achieve net-zero emissions from government operations by 2050.

Ukraine: military support, financial assistance to ukrainians in Canada

• In march 2022, mona fortier, who was president of the treasury board at the time, participated in an oggo committee meeting to seek approval for funds to support priorities in the supplementary estimates, including ongoing military support to ukraine and financial assistance to ukrainians who have come to canada to escape the conflict.

Matt Jeneroux

(CPC — Cypress Hills-Grassands, SK) critic for supply chain issues

Election to the house of commons

First elected: 2015
Re-elected: 2019 and 2021 

Professional background

Studies: bachelor of arts from the university of alberta
Provincial politics: mp of the progressive conservative party at the legislative assembly of alberta (2012 – 2015)
Public service: advisor, strategic policy and planning at health canada (2008 – 2012) mental health: founder of the hi dad foundation to raise awareness for the importance of men’s mental health for families (2022 – present)

Political and parliamentary roles

• Parliamentary association member: canada-germany interparliamentary group (2016 – present); canada- ireland interparliamentary group (2016 – present); canada-israel interparliamentary group (2016 – present); canada-italy interparliamentary group (2020 – present); canada-africa parliamentary association (2017 – present); canada-china legislative association (2015 – present); canada-europe parliamentary association (2015 – present); canada-france inter-parliamentary association (2016 – present); canada-japan inter- parliamentary group (2018 – present); canadian branch of the commonwealth parliamentary association (2015 – present); canada-united states inter-parliamentary group (2015 – present); canadian section of parlamericas (2015 – present); canadian delegation to the organization for security and co-operation in europe parliamentary assembly (2015 – present); canadian group of the inter-parliamentary union (2015 – present)

Committee membership

• Vice-chair: standing committee on health (2020); standing committee on industry, science and technology (2018 – 2019)
• Member: standing committee on international trade (2023 – present); standing committee on health (2020 – 2023); standing committee on human resources, skills and social development and the status of persons with disabilities (2021 – 2022); standing committee on environment and sustainable development (2020 – 2021); special committee on covid-19 pandemic (2020); standing committee on industry, science and technology (2017 – 2019); standing committee on transport, infrastructure and communities (2018 – 2019); standing committee on access to information, privacy and ethics (2016 – 2017); standing committee on public accounts (2017)

Recent points of interest to GAC

Supply chains:

• During a ciit meeting on february 8, 2024, mp jeneroux was skeptical of transport canada’s plan to complete a supply chain and data strategy and initiate regulatory and legislative reform by october 2024. He was keen to hear about this progress by october 2024.

Asia-pacific region: humanitarian projects

• In september 2023, mp jeneroux asked through an opq for detailed information on all human rights or humanitarian projects funded by gac in the asia-pacific region since 2016, including location, funding recipient, project description, overseeing organization, amount of funding, start date, and end date.

Support for ukrainians in Canada:

• In december 2022, mp jeneroux tabled a petition calling for the federal government to create a program for temporarily sheltering ukrainian children in canada and to provide them with access to medical services, education, scholarships, and financial support for their host families.

Richard Martel

(CPC — Chicoutimi-Le Fjord, QC) critic for sport;

Economic development agency of Canada for the regions of Quebec

Election to the house of commons

First elected: 2018
Re-elected: 2019 and 2021

Professional background

Hockey: served as head coach in the quebec major junior hockey league (qmjhl) (1993 – 2017)

Political and parliamentary roles

• Parliamentary association member: canadian branch of the assemblée parlementaire de la francophonie (2019 - 2021); canada-germany interparliamentary group (2019 – 2020); canada-europe parliamentary Association (2019 - 2020); canada-israel interparliamentary group (2019 – 2020); canadian nato parliamentary association (2019 – 2021); canadian branch of the commonwealth parliamentary association (2019 – 2020); canada-united states inter-parliamentary group (2019 – 2020); canadian delegation to the organization for security and co-operation in europe parliamentary assembly (2019 – 2020)

Committee membership

• Member: standing committee on international trade (2021 – present); committee on national defence (2018 – 2020)

Points related to CUSMA:

Softwood lumber:

• Mp martel is an advocate for the softwood lumber industry. At ciit, he regularly criticizes what he perceives as the government's lack of protection of this industry in its free trade agreements such as cusma and will take the opportunity to seek updates regarding the status of softwood lumber disputes with the s. at the wto, including most recently during a ciit meeting on may 8th, 2023.

Recent points of interest to GAC

Canada – U.S. trade relations:

• During a meeting at ciit on february 6th, 2024, mp martel enquired about canada-u.s. cooperation regarding supply chains.

Dairy industry:

• Mp martel’s region's dairy industry is very developed, and mp martel regularly promotes its interests in the committee. Most recently, on june 19th, 2023, during a debate in the house regarding bill c-282, an act to amend the department of foreign affairs, trade and development act (supply management), mp martel supported the bill and its protection of supply management, particularly for the dairy industry.

Taiwan:

• At a ciit meeting in june 2022, mp martel showed interest in taiwan's admission to the cptpp and asked the witnesses what role canada could play.

Foreign direct investment:

• During a ciit meeting in may 2022, mp martel stated that if canada wants to attract more foreign investment, it must offer winning conditions to businesses, such as fewer regulations, a better tax environment, and reduced delays and costs for new projects.

Critical metals:

• At a ciit meeting in may 2022, mp martel stated, "canada absolutely has to secure canadian supply of critical metals to limit china's and russia's hold over this market."

Aluminum:

• Mp martel comes from an aluminum-producing region, so he is very interested in the opportunities and impacts of canada's trade agreements on the aluminum sector.

Wilson Miao

(LPC — Richmond Centre, BC)

Election to the house of commons

First elected: 2021

Professional background

Studies: bachelor’s degree in business administration and international business business: closing sales coordinator at polygon homes ltd. (2014 – 2016); director of communications & marketing at richmond sentinel (2018 – 2021); investment advisor hoovest financial inc. (2021 – present)
Health: opulence global partner lifestyle advisor at opulence global (2011 – present)

Committee membership

• Member: standing committee on international trade (2021 – present); standing committee on veterans affairs (2021 – present)

Points related to CUSMA:

Softwood lumber:

• During a take-note debate on april 8th, 2024, mp miao was interested in updates on the softwood lumber Industry and canada’s actions to resolve the disputes.

Recent points of interest to GAC

Trade diversification:

• Mp miao tends to engage on the importance of trade diversification with witnesses at ciit meetings. Most recently, on february 29th, 2024, he asked about the importance of trade diversification for canada's pulse

Small and medium businesses:

• During ciit meetings, mp miao advocates for the interests of small and medium-sized He regularly asks questions about the impact of trade agreements on the activities of canadian small and medium-sized enterprises.

Investments to achieve net zero:

• At ciit meetings in november and december 2022, mp miao stated that to reach the goal of net-zero emissions by 2050, canada’s clean energy resources would require transformational investments to modernize its electricity grid. He showed particular interest in wireless technologies and low-carbon concrete exports.

Philippines:

• At a ciit meeting in june 2022, mp miao underscored that the philippines is a significant trading partner and a key economic player in the indo-pacific region.

Asean FTA:

• During ciit meetings between may and june 2022, mp miao asked the witnesses how canada can best diversify its pork exports, specifically within the asean region, and what sort of impact a diversified market would have on the canadian pork industry. He also asked how an fta would impact canadian agri-food

Terry Sheehan

(LPC — Sault Ste. Marie, ON)

Election to the house of commons

First elected: 2015
Re-elected: 2019 and 2021

Professional background

Private & public sectors: prior to entering politics, mp sheehan had a career in the private and public sectors in business, community, and economic development.

Consultant: his last position prior to being elected as a member of parliament was as an employment and training consultant for the ontario ministry of training, colleges, and universities

Political and parliamentary roles

• Parliamentary secretary: labour (employment and social development) (2021 – present); economic development and official languages (fednor) (2019 – 2021)
• Co-chair: canada-japan inter-parliamentary group (2016 – present)
• Member: canada-japan inter-parliamentary group (2016 – present); canada-china legislative association (2016 – present); canada-africa parliamentary association (2023 – 2024); canada-europe parliamentary association (2016 – 2024); canada-france inter-parliamentary association (2023 – 2024); canada-italy

Interparliamentary group (2017 – 2020); canada-ireland interparliamentary group (2016 – 2020); canada- israel interparliamentary group (2016)

Committee membership

• Member: standing committee on international trade (2021 – present); standing committee on veterans affairs (2021 – present)

Recent points of interest to GAC

Steel industry:

• As a co-chair of the all-party steel caucus and having several steel companies in his riding, mp sheehan pays particular attention to this industry. At ciit meetings, most recently on may 13th, 2023, he asked questions regarding opportunities for steel exports to the u.s. and any impact that u.s. bills, for example, the inflation reduction act, would have on this industry. Also, at a ciit meeting in february 2022, he asked several questions about environmental practices related to the use of coal in the steel industry in the united states and

Electric vehicles:

• Mp sheehan sees the electric vehicle industry as reducing canada's carbon At ciit meetings, he promotes greater collaboration between canada and its trading partners in this industry.

Clean tech:

• At a ciit meeting in june 2022, mp sheehan recognized the issues related to climate change for the asean countries. He asked the witnesses about opportunities for the canadian clean technology industry in these

Environment & gender equality:

• During a ciit meeting in may 2022, Sheehan stated that canada could elevate the environmental and gender equality situation in particular areas, such as the asean region, through trade agreements.

Softwood lumber: US duty rate

• At a ciit meeting in march 2022, Sheehan stated that the united states’ duty rate on softwood lumber is "unjust and unfair," asking how this reality affects canadian exporters, their workers, and the relevant communities.

Maninder Sidhu

parliamentary secretary to the minister of International trade, export promotion, small business and economic development 
(LPC — Parkdale-High park, ON)

Election to the house of commons

First elected: 2019
Re-elected: 2021

Professional background

International trade: international trade specialist, independent (2007 - 2019)

Political and parliamentary roles

• Parliamentary secretary: minister of international trade (2023 – present); minister of foreign affairs (2021- 2023); minister of international development (2021)
• Parliamentary association member: canada-africa parliamentary association (2020 – present); canada- europe parliamentary association (2020 – present); canada-france inter-parliamentary association (2020 – present); canada-japan inter-parliamentary group (2020 – present); canadian nato parliamentary association (2020 – present); canadian branch of the commonwealth parliamentary association (2020 – present); canada-united states inter-parliamentary group (2020 – present); canadian section of parlamericas (2020 – present); canada-united kingdom inter-parliamentary association (2020 – present); canadian delegation to the organization for security and co-operation in europe parliamentary assembly (2020 – present); canadian group of the inter-parliamentary union (2020 – present)

Committee membership

• Member: standing committee on international trade (2023 – present); standing committee on public accounts (2022); special committee on afghanistan (2021 – 2023); standing committee on citizenship and immigration (2021); standing committee on natural resources (2020 – 2021); standing committee on transport, infrastructure and communities (2020 – 2021); standing committee on environment and sustainable development (2020 – 2021)

Recent points of interest to GAC

Softwood lumber:

During a take-note debate on april 8th, 2024, mp sidhu spoke about impartial international arbitrators consistently finding canada to be a fair and reliable trading partner in previous rounds of the softwood lumber dispute. He voiced his support for the federal government's approach to the softwood lumber dispute.

Canada-Africa trade relations:

During question period on march 22nd, 2024, mp sidhu updated the house on his attendance at the canada- africa business conference. He reaffirmed the value of export diversification and growing trade across africa for canadian businesses.

Canada-Ecuador free trade agreement:

• During a ciit meeting on february 13th, 2024, mp sidhu was keen to learn how an fta would help industries (clean tech and renewables sector in particular) achieve growth and trade diversity through markets worldwide, including ecuador.

Indo-Pacific:

• During a ciit meeting on february 8th, 2024, mp sidhu wanted to know more about the emerging markets in the indo-pacific. He discussed the indo-pacific strategy and how the new agriculture and agri-food office in manila, philippines, would help canadian businesses access worldwide export markets.

Trade infrastructure:

• During a ciit meeting on february 1st, 2024, mp sidhu discussed the government's critical investments in infrastructure, such as the gordie howe bridge, which he stated was an important corridor that supports trade growth, particularly with the u.s. as canada's largest trading partner.

India:

• In a september 2023 debate on the potential link between agents of the government of india and the killing of a canadian citizen, mp sidhu condemned foreign interference in canada and emphasized the importance of canadian values, such as multiculturalism and the rule of law, while calling for unity among canadians and their political representatives in the face of challenges to their sovereignty and security.

Afghanistan: humanitarian crisis

• In a june 2023 faae meeting, mp sidhu addressed the humanitarian crisis in afghanistan and the lack of educational opportunities for women under the taliban regime and asked for thoughts on what canada can do to assist in the situation.

Women and girls global rights: canada's feminist foreign policy

• In a november 2022 sdir meeting, mp sidhu asked for insights on how the international community can enhance the participation of women in conflict resolution and post-conflict rebuilding, in line with canada's feminist foreign He also sought information on promoting and protecting women and girls' human rights, gender equality, and empowerment in fragile, conflict, and post-conflict situations.

CUSMA implementation

• Canada is committed to CUSMA implementation and to ensuring the Agreement works as it should – to the benefit of all Canadians.
• CUSMA also includes important commitments to protect the environment, to uphold the rights of workers and to help develop more economic opportunities for more communities.
• I just participated in the 4th CUSMA Free Trade Commission, where I met with my U.S. and Mexican counterparts to discuss our shared trade priorities, progress made in CUSMA implementation and how the agreement can be adapted to address future challenges.

Supplementary messages

• Canada’s interests are that the Parties continue to actively implement the Agreement, particularly as the CUSMA 2026 joint review comes into focus.
• The Agreement includes a robust institutional and governance structure, including twenty-five committees and working groups, to support implementation and provide a forum to discuss issues that may arise.
• When necessary, Parties have resorted to CUSMA’s dispute resolution mechanisms to seek to resolve their disagreements.
• Only six dispute settlement cases have been initiated and three have been effectively resolved already, demonstrating that CUSMA is robust and functions as intended.
• Priority areas of focus for the three countries are North American competitiveness, labour, environment and inclusive trade.

Update

You just participated in the fourth Free Trade Commission (FTC) in Arizona and met with USTR Katherine Tai, and Mexican Secretary for the Economy Raquel Buenrostro. In addition to the bilateral discussions and reviewing the ongoing work of CUSMA committees, you engaged in in-depth discussions on North American Competitiveness, inclusive trade and the environment, CUSMA labour obligations and forced labour, and met with labour stakeholders and local Indigenous Peoples. You and your counterparts also signed an addendum to FTC Decision No. 5 to adopt Procedures developed by the Competitiveness Sub-Committee on trade flows in emergency situations.

Supporting facts

• In 2023, the total value of trilateral merchandise trade between Canada, the United States, and Mexico was $1.93 trillion, upfrom $1.86 trillion from 2022.
• More than 60 meetings have taken place at the committee level since entry into force.
• Over 195 delegates from the three CUSMA countries recently participated in the third SME Dialogue in Montreal; over 80% were SMEs and SME stakeholders.

Background

Since CUSMA entered into force on July 1, 2020, the Parties have focused on the implementation of the Agreement. Canada is on track to meet all of its commitments in the agreed-upon timelines, and, along with the U.S., continues to encourage Mexico to do the same, particularly on the new obligations it has taken with regards to labour.

There have been six state-to-state dispute settlement cases initiated under the CUSMA, three of which remain in progress: the U.S.’ interpretation of the rules of origin for core parts in the automotive sector (panel decisions adopted but has yet to be implemented by the U.S.); Mexico’s measures concerning genetically engineered products; and Mexico’s measures in the electricity sector. The closed cases are on solar products and dairy tariff rate quotas (2 cases). There are also various softwood lumber related cases that Canada is advancing through the binational panel process under both Chapter 10 (Trade Remedies) of the CUSMA and Chapter 19 (Review and Dispute Settlement in Antidumping/Countervailing Duty Matters) of the NAFTA. The CUSMA FTC is the main Ministerial body responsible for overseeing the implementation and overall operation of the Agreement, including the CUSMA Secretariat and the 25 trilateral subsidiary bodies.

CUSMA 2026 joint review

• CUSMA is working well – Canada had its highest level of total trade ever (goods and services) with both the United States and Mexico last year.
• Important to note that the review in 2026 does not require a re- negotiation – It is an opportunity to take stock and discuss how to ensure the Agreement remains relevant in the future.
• The Government is preparing for a range of possible scenarios for the review and will be ready to advance and defend Canada’s interests.

Supplementary messages

• CUSMA must remain relevant in the face of global trade challenges and the changing economic landscape. The upcoming review is an opportunity to achieve this, to look ahead and ensure that CUSMA continues to serve Canada’s interests.
• Our preference is to keep the review as narrow and targeted as possible. Our priority is to ensure that market access is preserved, and to provide a stable and predictable trading environment for Canadian businesses and investors.
• The Government will be launching public consultations shortly to solicit feedback from Canadians to inform Canada’s interests and approach to CUSMA going forward.

Responsive

• We can anticipate that the United States (regardless of the election outcome) may seek to revisit certain provisions in the Agreement, for example where the outcomes of dispute settlement panels have not found in its favour.

Supporting facts and figures

• In 2023, the total value of bilateral merchandise trade between Canada and the United States was $942.4 billion, an increase of 0.9% from 2022.
• Equivalent value was $57.9 billion between Canada and Mexico, an 8.7% increase from 2022.
• At the end of 2023, the stock of direct investment in Canada from the United States and Mexico stood at $700 billion, while Canada had invested a total of C$1.1 trillion in our two North American partners.

Background

Article 34.7 (Review and Term Extension) is designed to ensure that the CUSMA Parties have an opportunity, starting in 2026, to review the operation of the Agreement, review recommendations submitted by a Party, and trilaterally decide on any appropriate actions. Parties are also given the opportunity to confirm whether they wish to extend the term of the Agreement for a new 16-year period.

While the obligation is to review – and not necessarily renegotiate – the Agreement, Canada should not assume that either the United States or Mexico will agree to extend CUSMA in 2026 and is closely watching discussions on CUSMA during the ongoing 2024 election campaign in the United States.

USTR officials have, in recent public statements, set out a broad perspective on the review – noting that it could cover issues such as the challenges posed by China, including related to autos and electric vehicles, as well as their concerns with the dispute settlement functions of the CUSMA.

Mexico’s starting position regarding the review appears to be well aligned with Canada’s in seeking to keep the review as narrow and targeted as possible, though they have expressed openness to taking on new issues, such as rules for zero- emission vehicles, that were not prominent when the CUSMA was first negotiated.

Canada’s preferred scenario would be to extend the term of the Agreement as soon as possible in order to demonstrate the Parties’ commitment and provide greater certainty and predictability to businesses and the investment community. Canada can also use the review to seek to advance our shared interests in furthering North American economic integration.

Canadian officials are preparing for a range of potential scenarios for the 2026 joint review. As part of these preparatory efforts, officials are informally consulting domestic partners (e.g. provincial and territorial trade representatives) and targeted stakeholders (e.g. businesses and business associations) to seek their input in advance of broader formal consultations to be launched in summer 2024. These

consultations will inform the development of Canada’s position and help to ensure that Canada is able to advance proposals with respect to both its offensive and defensive interests, as needed.

Inclusive Trade under CUSMA and SMEs

• Canada’s inclusive approach to trade seeks to ensure that the benefits of trade are more widely shared with underrepresented groups, including SMEs, women, and Indigenous Peoples.
• CUSMA includes a stand-alone SME chapter and inclusive trade provisions that promote the Parties’ shared goal of advancing inclusive trade by supporting underrepresented groups in accessing and benefitting from the Agreement.
• CUSMA has had a positive impact on SMEs participation in trade. From 2020 to 2023, the number of Canadian SMEs exporting to the United States and Mexico, increased respectively by roughly 14%, and 8%.

Supplementary messages

• The 2026 review is an opportunity to take stock and discuss how to ensure a greater economic inclusion for Canadians and Canadian businesses of all sizes.
• On May 16, Canada hosted the 3rd CUSMA SME Dialogue in Montreal, uniting 200 SMEs from Canada, the U.S., and Mexico. The event explored matters that seek to increase the competitiveness of SMEs under CUSMA, and allowed SMEs to provide views on issues affecting them, including implementation.
• CUSMA’s SME Committee created a mentoring network of nearly 100 SME counsellors from the three CUSMA countries, with mandates to support SMEs operating in the North American market. Nearly half of Canada’s SME counsellors directly serve underrepresented groups.

Update

• On May 22, 2024, at the 4th CUSMA Free Trade Commission meeting (Phoenix, AZ), CUSMA trade ministers acknowledged the work of the SME Committee and encouraged continued work to support SMEs, including those owned by women and Indigenous Peoples, in North American trade.
• In March 2024, GAC’s Director General for North America participated in a panel on CUSMA and Indigenous SMEs at the 2024 RES Native Economic Summit, North America’s largest gathering of Indigenous businesspeople. The panel provided an opportunity to identify challenges facing Indigenous SMEs doing business under CUSMA.
• On March 31, 2023, Canada hosted an inclusive trade session with the United States and Mexico to exchange views on how best to consider underrepresented groups in trade and exchange views on best practices. Canada presented on its approach to conducting GBA Plus of FTAs during negotiations and in the FTA implementation phase.

Supporting facts and figures

• In Canada, the U.S., and Mexico, SMEs account for over 95% of all companies.
• In 2023, total trilateral merchandise trade, amounted to $1.9 trillion. Canadian firms received a total tariff savings of approximately $8.4 billion on imports from the U.S. and $6.6 billion on exports to the U.S.

Background

CUSMA includes gender-responsive provisions in the preamble as well as in the labour, investment, and SME chapters, including provisions promoting women-led SMEs, removing barriers to the full participation of women in the workforce, and aimed at ensuring that women benefit from the opportunities and benefits created by the Agreement.

The Parties agreed to provisions which were designed to increase Indigenous Peoples’ participation and access to opportunities created by the Agreement, in chapters such as SMEs. CUSMA was the first FTA for Canada to incorporate a general exception that confirms that the government can adopt or maintain measures it deems necessary to fulfill its legal obligations to Indigenous Peoples. The provision also specifically references Aboriginal rights as recognized and affirmed by section 35 of the Constitution Act, as well as those set out in self-government agreements.

CUSMA’s stand-alone SME chapter is designed to foster cooperation amongst the Parties to increase trade and investment opportunities for SMEs. The Chapter’s provisions ensure that information is available to SMEs. The Chapter establishes an SME Committee to organize inclusive trade-related initiatives and to convene an annual trilateral SME Dialogue to engage private sector stakeholders on issues of relevance to SMEs. Canada has 30 SME Counsellors representing 17 organizations, of which 8 specifically serve women, Indigenous Peoples, or other minority groups.

Canada’s SME Counsellors include the Canadian Council for Aboriginal Business, the Organization of Women in International Trade, and the Canada’s 2SLGBTQI+ Chamber of Commerce.

Labour including the Rapid Response Mechanism

• The Government is committed to supporting the right to freedom of association and to free and fair collective bargaining through CUSMA.
• Cases resolved under the CUSMA Rapid Response Labour Mechanism have demonstrated benefits for Mexican workers and serve to level the playing field for workers in North America.
• The Government is also working with CUSMA partners to advance work on addressing the complex issue of forced labour in supply chains.

Supplementary messages

• The Rapid Response Labour Mechanism is a unique tool that helps the CUSMA Parties to work together in upholding the fundamental principles laid out in CUSMA’s Labour Chapter.
• The Government sees that resolutions reached in all the Rapid Response Labour Mechanism cases as key to strengthening union democracy and promoting labour rights in Mexico.
• On forced labour, supply chains are becoming increasingly complex, making it sometimes difficult to effectively identify the entities in supply chains that use forced labour.
• Collaboration with the United States and Mexico is critical to improving supply chain transparency. It informs research and policy, as well as compliance and enforcement measures.

Supporting facts and figures

• The only case that was filed, in March 2023, under the Canada-Mexico Rapid Response Labour Mechanism (RRLM), by Unifor along with a Mexican autoworkers syndicate, was resolved collaboratively.
• 22 cases have been filed under the U.S.-Mexico RRLM against facilities in Mexico and most have been resolved collaboratively.
• Canada committed $27.5M over four years starting in FY 2021-2022 to support Mexico’s labour reform. The United States allocated US$180M for similar programming.

Background

The CUSMA Labour Council last met in June 2023, in Mexico, and is due to meet again in 2025. The Labour Chapter includes a review clause requiring that, during the fifth year after the date of entry into force of the Agreement (2025), the Labour Council review the operation and effectiveness of the chapter.

The CUSMA commits Mexico to implement several changes in its legal framework consistent with Mexico’s labour reform initiated in 2019, which is based on independent and impartial labour justice, democratic trade unions, and authentic collective bargaining.

The RRLMs between Canada and Mexico and between the United States and Mexico are designed to make CUSMA labour obligations enforceable and address specific labour violations related to collective bargaining and freedom of association. The RRLM is consistently highlighted by the United States as a cornerstone of CUSMA, and a model for its approach to workers’ rights.

During the FTC meeting in May, the Parties discussed ways to enhance coordination of efforts to address forced labour and Mexico suggested that a “trilateral forced labour enforcement strategy” could be discussed during the upcoming CUSMA review.

Enforcement of Canada’s import ban on goods made using forced labour has faced growing criticism from U.S. legislators, who have called Canada and Mexico “back doors” for forced labour goods to enter the U.S. market, and ‘dumping grounds’ for forced labour goods turned away at the U.S. border. U.S. officials have questioned whether Canada has invested sufficient resources in its efforts to address forced labour. Budget 2024 includes commitments to further work on due diligence to eradicate forced labour from supply chains.

Environment

• The CUSMA Environment Chapter represents a highwater mark given level of ambition, comprehensive environmental provisions, and enforceable dispute resolution process.
• CUSMA commits Parties to pursue robust environmental protection, effectively enforce environmental laws, and promote transparency, accountability, and public participation.
• The 6-year review is an opportunity to take stock and determine what more the Parties could do cooperatively to support implementation of the Environment Chapter.

Supplementary messages

• There are opportunities to strengthen trilateral cooperation on a range of issues within the Chapter’s existing framework, including on climate change and the circular economy.
• The Commission for Environmental Cooperation (CEC) has a long history of advancing work to support implementation of the Environment Chapter through collaborative work.
• It is a crucial tool for our countries to tackle the triple planetary crises, namely climate change, pollution and biodiversity loss from a North American perspective.

Responsive – Carbon Pricing

• Although CUSMA does not contain specific language on carbon pricing or carbon leakage, there is nothing to prevent the Parties from cooperating on global environmental issues of importance to Canada, such as climate change.
• In addition, the Agreement on Environmental Cooperation between the Parties provides for cooperation to support strong, low emissions, resilient economies.

Background

• The CUSMA Environment Chapter requires a review of implementation and operation during the fifth year after the date of entry into force (by July 2025). Findings from the Five-Year Review will feed into the Agreement’s 6-year review.
• The Agreement on Environmental Cooperation (ECA) is a parallel agreement to CUSMA. It ensures that the unique institutions that have existed since 1994 under the North American Agreement on Environmental Cooperation (NAAEC – a parallel agreement to NAFTA) are retained and modernized, including the Commission for Environmental Cooperation (CEC) and its Montreal-based Secretariat.
• Submissions on Enforcement Matters (SEM) process is a unique mechanism administered by the CEC Secretariat that ensures government accountability regarding the enforcement of environmental laws. Through the SEM process, members of civil society can submit an allegation to the CEC Secretariat that a party is not effectively enforcing its environmental law, and request an independent and objective review and presentation of the facts. The process is intended to promote information sharing, and is a non-adversarial, non-binding process that does not result in binding remedies.

CUSMA Automotive Rules of Origin

• Canada stands ready to work with the United States and Mexico in a way that strengthens North American automotive production.
• A key objective is to provide automotive producers with clear and predictable rules of origin.
• Canada continues to engage its CUSMA partners regarding the automotive rules of origin dispute with a view of reaching agreement on a resolution.

Supplementary messages

If asked if Canada believes the CUSMA rules of origin need to be changed.

• We appreciate that the automotive industry is in the midst of significant technological change, and the rules of origin may need to be modified to take these changes into account.
• Any modifications would be discussed in detail with our CUSMA partners and stakeholders.

If asked if Canada will exercise its right to retaliate against the U.S. if they continue to not comply?

• Canada is focused on achieving progress with the U.S. and Mexico towards reaching an agreement on a resolution.

If asked about using rules of origin to address issues outside preferential tariff treatment.

• The CUSMA rules of origin apply to goods produced in Canada, Mexico and the United States and traded among the countries. The rules are designed to ensure that preferential tariff treatment only applies to North American- produced goods.

Background

To date no Canadian stakeholders have requested changes to the rules of origin for automotive goods as part of the six-year review. A difference of interpretation has arisen between the CUSMA Parties in relation to the implementation of the regional value content (RVC) requirements for core parts used in the production of vehicles. A CUSMA Chapter 31 dispute panel found in Canada and Mexico’s favour in January 2023, ruling that the United States was incorrectly administering a ruling related to the automotive rules of origin for core parts used in the production of vehicles. Resolution discussions amongst the Parties are ongoing.

Electric Vehicles (EVs)

• Aware of potential challenges posed by Chinese electric vehicle overproduction and closely monitoring and analysing the situation.
• Will continue working to support a level-playing field for international trade and address unfair trade practices that negatively impact Canadian businesses and workers.

Supplementary messages

If asked whether Canada will impose tariffs/take action on Chinese EVs

• Canada is assessing potential options to respond to this challenge, and would consult with Canadians before moving forward with any potential action.

If asked about the potential for Canada to be a ‘back-door’ for Chinese EVs into the U.S.

• Chinese automakers’ exports of EVs to Canada are minimal, and they do not have investments or manufacturing presence in Canada.
• The U.S. applies a substantial transformation rule to its Section 301 tariffs, which means Chinese-made vehicles transhipped through Canada (or any other country) would be subject to Section 301 tariffs (currently 25% for all vehicles, increasing to 100% for EVs in August).
• All vehicles can be tracked by their unique Vehicle Identification Number (VIN) that indicates the vehicle’s country of manufacture.

If asked about surging EV imports from China

• Closely monitoring imports of electric vehicles from China.
• Nearly all Canadian EV imports from China relate to Tesla's decision to export to the Canadian market vehicles from its production plant in China, rather than exclusively from its U.S. plants.

If asked about the U.S. Department of Commerce’s investigation into national security concerns related to connected vehicles

• The Government of Canada is closely monitoring the U.S. Department of Commerce’s investigation into national security concerns related to connected vehicles from countries of concern.
• Canada is not the focus of this investigation, and we will always ensure the mutually beneficial and integrated Canada-U.S. automotive sector is protected.

If asked about the ongoing EU investigation into Chinese EVs

• The EU launched an investigation into Chinese EVs further to a surge of imports from China.
• We are closely following developments in the investigation, including potential implications for Canada.

Background

Driven in large part by state intervention including heavy subsidization, Chinese automakers have significantly expanded production, leading to growing overcapacity and causing Chinese automakers to aggressively pursue export markets, particularly for EVs. Additionally, Chinese automakers, notably BYD, have recently announced plans to establish assembly plants abroad, including in Mexico.

Between 2020 and 2023, China’s global exports of light passenger vehicles of all engine types increased by 751%, from C$12 billion to C$102 billion. However, EV exports increased by 2,200%, from C$2 billion to C$46 billion.

In response to a surge in imports from China, in October 2023 the EU Commission self-initiated a countervailing duty (CVD) investigation into imports of EVs from

China.The investigation will attempt to determine the extent to which EVs exported from China benefit from subsidies and cause, or threaten to cause, economic injury to EU producers. The EU is expected to reach a preliminary determination by July 4, 2024, but certain parties to the process may receive the results of the preliminary determination in early June 2024. Duties could be applied following the preliminary determination as the investigating authority works towards a final determination, expected in November.

The U.S. has adopted measures to restrict imports of Chinese EVs, including a Section 301 tariff of 25% on vehicles imported from China in place since 2018, and restrictions on eligibility for the US$7,500 Clean Vehicle Credit (CVC), a tax credit to consumers who purchase an eligible vehicle. China has retaliated on the Section 301 tariffs and has initiated WTO disputes against the United States on both the Section 301 tariffs and the CVC. On May 14, 2024, the U.S. announced that it will increase Section 301 tariffs on US$18 billion worth of imports from China in “strategic sectors”, including EVs (to 100%) and EV batteries (to 25% from 7.5%). The higher tariffs on EVs and EV batteries will enter into force on August 1, 2024.

Additionally, the U.S. Department of Commerce is undertaking an investigation into national security concerns related to the collection of sensitive data by connected vehicles from countries of concern including China.

Canada’s policies do not discriminate against Chinese EVs, which are subject to Canada’s MFN tariff of 6.1% and may be eligible for purchase incentives of up to C$5,000 through the Incentives for Zero-Emission Vehicles Program (iZEV).

In 2023, Canada imported C$2.2 billion in EVs from China. In comparison, the U.S. imported C$448 million in EVs from China, while Mexico imported C$347 million.

Canadian automotive stakeholders have expressed concerns about the potential future influx of Chinese EVs, as well as Chinese automotive investment in Mexico.

During the fourth meeting of the CUSMA Free Trade Commission on May 22, 2024, Ministers agreed to jointly expand their collaboration on issues related to non-market policies and practices of other countries which undermine the Agreement and harm U.S., Canadian, and Mexican workers, including in the automotive and other sectors.

For additional information on the recent U.S. Section 301 announcements, see separate briefing note: Recent U.S. Announcements on Section 301 Tariffs on Imports from China.

North American competitiveness

• Under the Canada-United States-Mexico Agreement (CUSMA), work on North American Competitiveness is advanced by the Competitiveness Committee.
• Since inception, the Committee has focused its efforts on maintaining trade flows, workforce development, and investment attraction.
• North American Competitiveness is also advanced in other fora such as the North American Leaders’ Summit and by private sector organizations such as the NASCO Network and business chambers.

Update

The CUSMA Competitiveness Committee continues to advance implementation of the CUSMA Free Trade Commission (FTC) Decision No. 5 on Coordination and Consultation of North American Trade Flows in Emergency Situations. During the last FTC held in Phoenix, Arizona, May 21-22, 2024, you, alongside Ambassador Tai and Secretary Buenrostro agreed and signed an Addendum to Decision No. 5, which outlines trilateral procedures the Parties would follow in an emergency situation impacting trade flows.

Background

CUSMA Competitiveness Committee

The Competitiveness Committee, established under Article 26.2, seeks to promote further economic integration and enhance the competitiveness of North American exports. Its mandate is to discuss and develop cooperative activities in support of a strong economic environment that incentivizes production in North America, facilitates regional trade and investment, enhances a predictable and transparent regulatory environment, encourages the swift movement of goods and the provision of services throughout the region, and responds to market developments and emerging technologies. The Committee has met 10 times in person since its inception.

Implementation of FTC Decision No. 5 - Coordination and Consultation on North American Trade Flows in Emergency Situations

The Parties continue to work on the implementation of FTC Decision No. 5 and to date have accomplished the following: the Sub-Committee on emergency response has been established and first met March 2023. The Sub-Committee has met several times over the year, including in-person in Mexico City in March 2024.The Parties shared their domestic procedures related to consulting during an emergency response in summer 2023. They have recently been updated, with both Canada and the United States publishing its procedures online in May 2024. The Committee has also developed Procedures for Coordinating and Consulting in Response to Specific Emergency Situations, which Ministers endorsed at the CUSMA FTC meeting in Phoenix, Arizona, May 21-22, 2024.

Improving North America’s Investment Attraction Competitiveness

This workstream aims to enhance North America’s continental competitiveness, building on each party’s open and transparent investment environments and strengthen economic growth and competitiveness through information and best practice sharing to attract investment.

Canada-United States-Mexico Agreement Competitiveness Committee Workforce Development

The Committee has collaborated on workforce development efforts since December 2021. In May 2023, the U.S. hosted a forum on regional workforce development in Huntsville, Alabama, to discuss workforce development best practices and ways to address skills gaps. Canada hosted a workforce development event in October 2022 in Winnipeg, Manitoba that addressed opportunities for women, Indigenous peoples, youth, and other underrepresented groups in clean technology, renewable energy, and sustainable transportation sectors. The United States has advised they will likely host an event this fall.

Canada – Mexico trade irritants

• Canada and Mexico are long-standing partners.
• Our relationship is broad and multi-faceted, and our merchandise trade has grown 12-fold over 30 years of free trade in North America.
• Canada is committed to continue working with the incoming Mexican administration to advance and defend our trade and investment interests.

Supplementary messages

Mexico’s New Law for an Adequate and Sustainable Diet:

• Mexico has recently implemented a new General Law for an Adequate and Sustainable Diet, which requires GMO content to be labelled.
• Transparency is very important: Canada will be reviewing Mexico’s l notifications to the WTO on this, to better understand the law and implementing regulations, inform our exporters, and minimize impacts to trade.

Energy:

• Canadian companies are big investors in diversifying Mexico’s energy mix.
• Need long-term certainty to be able to continue investing in renewable electricity generation.
• Canada is monitoring court proceedings and proposed policies of next government closely.
• Seeking Mexico’s commitment to resuming electricity auctions and impartial regulation of the sector per 2014 legal framework.
• Ensuring transparency and autonomy of regulators is important to addressing stakeholder concerns about investment climate.

Mining:

• Hundreds of Canadian companies maintain operations or do business in Mexico; we expect this to grow.
• Canada investors have concerns about the investment and business environment in Mexico, including legislative changes, permitting issues, and security challenges.
• Some Canadian mining companies have been waiting for years to obtain certain permits which is putting at risk many good paying jobs in areas of Mexico where legal economic opportunities are scarce.
• Pleased that Mexico made some modifications to its Mining Reform last year and that they have been willing to undertake industry consultations; Canada will be reviewing the implementing regulations closely.

Biotech Dispute Settlement Case:

• Canada shares U.S. concerns with Mexico’s approach to genetically engineered (GM) corn and continues to advocate for science and rules-based decisions that enable and facilitate trade.
• We also have a systemic interest in ensuring that Parties meet their sanitary and phytosanitary (SPS) obligations of the CUSMA.
• SPS measures should be based on science and risk scientific principles, relevant international standards, guidelines and recommendations, or appropriate risk assessments.
• Mexico’s measures are not scientifically supported and have the potential to unnecessarily disrupt North American trade; this is why Canada continues to participate as a third Party in the dispute.
• Our technical experts will continue to work with Mexico and the United States to preserve trade predictability and market access for our farmers and exporters.

Steel and Aluminum:

• Canada places a high degree of importance on ensuring the integrity of the integrated North American steel and aluminum market, including maintaining a strong trade remedies regime and implementing country of melt and pour import monitoring.
• Will continue to engage with Mexico to advocate for strong measures to address the risk of unfairly traded steel and aluminum entering North American supply chains.

Background

Mexico’s New Law for an Adequate and Sustainable Diet: This law entered into force on April 18, 2024, and the Mexican government has 180 days to develop implementing regulations. The new law includes requirements to “advertise” food that contains GMOs, along with a 15% domestic content requirement for federal and state level procurements. Contrary to transparency provisions in CUSMA and the WTO, Mexico did not notify this law through the WTO. Canada has requested that Mexico notify its implementing regulations through the WTO to provide trading partners with an opportunity to submit comments for consideration. Officials will continue to analyze the law and implementing regulations, once received, for potential trade implications.

Energy: On January 31, Mexico’s Supreme Court ruled that the AMLO administration’s 2021 electricity sector reforms, which are the subject of Canada’s CUSMA dispute settlement consultations against Mexico, were unconstitutional. It upheld 6 injunctions (amparos) sought against the reforms by private sector investors and ruled that the original 2014 Electricity Industry Law (LIE) which opened the industry to private investment is the applicable legal framework governing the sector. Despite the ruling, Canadian renewable energy companies are likely to experience lingering effects from the 2021 reforms. [REDACTED]

Mining: In Spring 2023, a reform to several provisions of the Mining Law and other associated laws entered into force. After the Government of Canada and Canadian industry raised concerns, Economia established a consultation mechanism, though its establishment was delayed until January 2024. SEMARNAT officials (the Secretariat of Natural Resources and Environment) and associated agencies were unavailable, so the meetings were never held. It is unclear when the regulations will be published and permitting has therefore stalled. Industry is relying on an opposition-led constitutional challenge against the Mining Reform (Supreme Court’s decision expected in first half of 2024) and hundreds of legal injunctions launched against the Reform by the private sector. Several Canadian mining companies have proceeded with ISDS filings under CPTPP. Courts have reportedly been ruling in favour of business interests.

Biotech Dispute Settlement Case: On February 13, 2023, Mexico published a new Presidential Decree that further narrows the scope of its intent to restrict imports of genetically modified (GM) corn, preventing GM corn from being used in tortillas and tortilla dough, and phase out glyphosate imports by March 31, 2024. Technical consultations under the CUSMA SPS Chapter (March 2023) and formal dispute settlement consultations (June and August 2023) did not address U.S. concerns.

Consequently, the United States requested the establishment of a CUSMA dispute settlement panel, which was composed in October 2023. The dispute settlement proceedings are progressing as expected, and Canada continues to participate as a third Party.

Steel and Aluminum: Canada and U.S. industries are concerned with the potential for non-market and high-carbon steel and aluminum products to enter into North American supply chains through Mexico. The United States has been engaged in discussions with Mexico for several months, describing their efforts as consultations under the 2019 bilateral Joint Statement which led to the lifting of Section 232 duties. In April, Mexico announced measures aimed at strengthening its steel monitoring and import control requirements, including import monitoring, with a country of melt and pour component. Mexico further raised the applied tariffs on steel and aluminum products. U.S. stakeholders reportedly remain unsatisfied with Mexico’s efforts and continue to apply pressure towards the reapplication of Section 232 tariffs on imports of steel and aluminum from Mexico.

Canada – U.S. Trade Irritants

• Canada and the United States share one of the largest trading relationships in the world, with nearly $3.6 billion worth of goods and services crossing the border each day in 2023.
• The vast majority of this trade flows smoothly to our mutual benefit. But given the substantial volume of trade, inevitably some irritants will arise.
• Canada is committed to work towards finding mutually agreeable solutions that will advance and defend our interests.

RESPONSIVE – Softwood Lumber (SWL)

• Canada believes a negotiated resolution is in the best interest of both countries as it provides stability and predictability to the sector.
• Duties on Canadian softwood lumber not only hurt Canadian businesses and communities, but they are a tax on U.S. consumers - including U.S. home buyers - that makes housing less affordable for American families.
• U.S. duties on Canadian softwood lumber producers appear only to be benefitting third countries at the expense of North American supply chains in this sector. Canada will continue to vigorously defend our industry, including through litigation under NAFTA Chapter 19, CUSMA Chapter 10, the U.S. Court of International Trade and before the WTO.

If asked on Panel Composition:

• While litigation generally takes time, our binational panel cases are taking longer than they should. I continue to raise the importance of swift composition of impartial binational panels with my U.S. counterpart, Ambassador Tai.
• Progress is being made. Two panels were composed in the last six months, and decisions from previously composed panels are coming in, finding that U.S. duties are inconsistent with U.S. law.
• We strongly believe that, as in the past, neutral, third-party tribunals will continue to find U.S. claims to be without merit.

RESPONSIVE – if asked on Dairy Market Access/Disciplines:

• Canada takes its trade commitments seriously. Where we have been found offside our commitments, we have promptly brought ourselves back into conformity.
• The Government successfully defended supply management during the CUSMA negotiations and through both CUSMA dairy tariff rate quota (TRQ) disputes.
• We always stand up for the Canadian dairy industry and the farmers, workers, and the communities it supports, and we will continue to do so.
• We have engaged with dairy sector representatives and with provinces and territories to ensure the best defense of Canada’s interests and will continue to do so.

If asked on the ruling of the second CUSMA Panel:

• The Panel ruled in Canada’s favour on all claims made by the United States.

If asked on the expected next steps from the United States on the issue of dairy:

• The U.S. Administration, members of Congress and the dairy industry expressed disappointment with the second CUSMA dairy dispute findings.
• Canada is confident that our practices align with our obligations under CUSMA, and as we have repeatedly done so, we’ll continue to stand up for supply management and our dairy sector.

RESPONSIVE – Buy America

• The Office of Management and Budget’s final guidance on the implementation of the Build America, Buy America Act (BABA) was released in August 2024.
• While the guidance does not contain an explicit accommodation for Canada, we continue to engage with the White House to reiterate the importance of our integrated supply chains and ensuring compliance with international trade agreements, including the WTO Agreement on Government Procurement.
• Additionally, Canada is taking steps to implement reciprocal procurement policies to ensure we are procuring goods and services from countries that grant Canadian businesses a similar level of market access.
• This Budget 2024 commitment indicates that Canada will consider reciprocity as a key design element for new policies going forward.

RESPONSIVE – Steel & Aluminum

• Canada places a high degree of importance on ensuring the integrity of the integrated North American steel and aluminum market.
• We maintain strong trade remedies regime, are implementing country of melt and pour import monitoring for steel and have initiated consultations on the collection of smelt and cast information for aluminum.
• We will continue to work closely with industry and the United States to ensure predictable market access for Canadian steel and aluminum, and to address global challenges related to unfair trade and global excess capacity.

RESPONSIVE – Digital Services Tax (DST):

• Canada supports the multilateral “Pillar One” treaty being negotiated at the OECD; once it is finalized, signed and ratified, the multilateral system will come into effect and national DSTs will be removed.
• Since the multilateral treaty did not come into force by the end of 2023, Canada is moving forward with legislation to implement our DST, first announced in 2020.

If pressed about potential U.S. retaliation:

• We have clearly communicated our intention to implement the DST to U.S. representatives, including that the DST is not discriminatory.
• We have also indicated to the United States that Canada remains committed to the removal of the DST once a multilateral outcome is implemented.

RESPONSIVE – Online Streaming Act (Formerly Bill C-11):

• Government issued its final policy directions to the Canadian Radio-television and Telecommunications Commission (CRTC) as it works to implement the Online Streaming Act to set up a fair, flexible and adaptable framework to support Canadian artists and the growth of our creative industries.
• The CRTC is undertaking the second of three phases of public consultations and is targeting late 2025 to implement its policy decisions.
• Government will continue to work closely with U.S. stakeholders to ensure a good understanding of the Online Streaming Act and full participation in any implementation process.

RESPONSIVE – Online News Act (Formerly Bill C-18):

• The Minister of Canadian Heritage announced a path forward with Google for the implementation of the Online News Act, whereby Google would contribute $100 million in financial support annually for a wide range of news businesses across the country.
• Disappointed in Meta’s response, which continues to keep news off its platforms in Canada.

RESPONSIVE – Québec Bill 96:

• The Government of Canada is aware of the concerns expressed by various stakeholders regarding Quebec’s amendments to the Charter of the French Language, as modernized under Bill 96 and accompanying regulations.
• The Government of Canada has shared these concerns with the Government of Quebec and is closely following developments.
• We understand that Quebec has received a number of comments from industry and stakeholders and is currently reviewing these comments as they finalize the regulations; the timeframe for the adoption of the regulations remains unknown.

If trademarks are raised:

• Trademarks can be registered with the Canadian Intellectual Property Office (CIPO) in either of Canada’s official languages, English or French, and any trademarks registered by CIPO are valid.
• Companies operating in Quebec, including U.S. companies that have concerns regarding the language used in their signs and advertising, like trademarks, should consult with a licensed trademark agent or licensed legal practitioner in Quebec for advice regarding Quebec’s amendments.

If asked about the compliance of Quebec’s measures with CUSMA:

• As with all of Canada’s international trade obligations, Canada takes its CUSMA commitments seriously, and has conveyed this to the Government of Québec.
• The Government of Canada continues to follow the development of Québec’s regulations in this area, which have yet to be finalized.

RESPONSIVE – Line 5

• Top government priority to keep Line 5 open, essential to the Canadian economy, and for Alberta, Saskatchewan, Ontario and Quebec.
• Working closely with the provinces and industry to defend Canada's rights under the 1977 Transit Pipelines Treaty.
• We can achieve infrastructure solutions that keep Line 5 running, respect Canada’s Treaty rights. and respond to communities’ concerns, including Indigenous concerns.

Background

Softwood Lumber (SWL) – Panel Composition: [REDACTED] However, over the past 18 months, Canada and the United States have established two NAFTA panels and two CUSMA panels. Officials are pressing USTR counterparts to maintain the recent pace of exchanges and to compose the next panels in line swiftly. On May 6, a NAFTA Chapter 19 panel released an initial decision identifying several problems with the final U.S. countervailing duty determination and remanding them back to the United States for reconsideration. Canadian industry is increasingly concerned by the continued imposition of duties, particularly due to the significant rate increases anticipated in the near term (as soon as this summer). [REDACTED]

Dairy Market Access/Disciplines: In 2021, the United States requested the establishment of a dispute settlement panel – referred as the first CUSMA dairy TRQs dispute. The Panel ruled that Canada’s use of processor-specific pools was inconsistent with its CUSMA obligations. To comply with the panel ruling, Canada adopted new policies, in 2022, that ended the use of the pooling system altogether. In 2023, the second CUSMA dairy TRQs dispute settlement panel found in Canada’s favour on all claims challenged by the United States. There is no appeal mechanism under CUSMA. The U.S. Administration, members of Congress and the dairy industry expressed disappointment with the second panel findings. While their next steps are unclear, it is expected that the U.S.

Administration will continue to push for changes to Canada’s dairy policies [REDACTED] and explore all avenues to address their concerns. CUSMA requires that Canada and the United States meet in 2025 to discuss specific non-TRQ related dairy disciplines (i.e., milk pricing and export thresholds) established under Article 3.A.3. The purpose of these discussions is to determine whether conditions have changed such that modifications or termination of the provisions are needed.

Buy America: On August 23, 2023, the White House Office of Management and Budget (OMB) released its final guidance on the Build America, Buy America Act (BABA) domestic content preferences that apply permanently to all infrastructure projects benefitting from federal financial assistance. Despite Canada’s advocacy efforts, the final guidance contains no carve-in or special accommodation for Canada, instead reiterating that there is an established waiver process to address concerns related to supply chains. As part of Canada’s advocacy efforts to influence the implementation of the expanded Buy America requirements in the BABA, Budget 2024 echoes the 2023 Fall Economic Statement indicating that Canada will consider reciprocity as a key design element in the development of new policies and reiterates the commitment to implement reciprocal procurement measures in the near term. [REDACTED]

Steel & Aluminum cooperation: The Canadian steel and aluminum industries are exported oriented and rely on continued and predictable market access to the United States. The steel industry in particular places significant emphasis on the importance of a strong trade remedy and import monitoring system as a means to demonstrate that Canada is a trusted and reliable partner. The United States has welcomed Canada’s recent announcements related to the collection of steel country of melt and pour information and the launch of public consultations on the collection of aluminum smelt and cast information. Both Canadian and U.S. steel and aluminum industries are concerned with the potential for unfairly traded steel and aluminum products to enter into North American supply chains through Mexico. The United States been engaged in discussions with Mexico, and the potential implications should the U.S. administration decide to reinstitute Section 232 tariffs on Mexico. Most recently, the United States. has announced its intention to increase Section 301 tariffs on Chinese steel and aluminum from 7.5% to 25%. While the implications are unclear, in part due to the low level of trade the United States has with China on these products, it will be important to monitor any potential implications on imports into Canada.

Digital Services Tax (DST): 145 countries are working to finalize and sign by June 2024 a multilateral treaty to implement Pillar One of an OECD/G20 two-pillar tax reform. The treaty would reallocate taxing rights over large companies (including digital companies) toward market jurisdictions; in return, countries would remove national Digital Services Taxes (DSTs). Canada announced a DST in 2020 but agreed in 2021 to hold off for two years under a “standstill” on new DSTs, which expired at the end of 2023. Legislation to enact the DST is currently proceeding through Parliament (part of C-59).

Online Streaming Act (formerly Bill C-11): The Online Streaming Act received Royal Assent on April 27, 2023. The Act clarifies that an online audio or audio-visual service to “inform, enlighten or entertain” Canadians is subject to the Broadcasting Act, regardless of whether the content is streamed or accessed on demand. Canadian (e.g., Crave) and non-Canadian (e.g., Netflix, Spotify, DAZN) services could be required to contribute to the Canadian broadcasting system. U.S. stakeholders have raised concerns with Bill C-11 over broad authorities and discretion provided to the CRTC and that it could result in subsidisation of Canadian companies. Canada’s position is that neither the legislation nor forthcoming regulations will treat Canadian and foreign operators differently.

Online News Act (formerly Bill C-18): The Act, which entered into force on December 19, 2023, establishes a framework through which digital news intermediary (DNI) operators (e.g., Google, Facebook) and news businesses may enter into agreements respecting news content that is made available by DNIs. On December 15, 2023, PCH released its final regulations for the Act. The draft regulations were amended to facilitate an agreement with Google, whereby it will continue to share Canadian news online in return for annual payments to news companies in the range of $100 million. Meta continues to block access to news by Canadians on its platforms (i.e., Facebook, Instagram).

Quebec Bill 96: In June 2022, Quebec passed Bill 96 (An Act respecting French, the official and common language of Quebec), which modernizes Quebec’s Charter of the French language. A number of Canadian and U.S. stakeholders, as well as USTR, have raised concerns about Quebec Bill 96’s implications for the use of their trademarks in Quebec, alleging inconsistency with Canada’s intellectual property (IP) obligations under CUSMA. Bill 96, and Quebec’s January 2024 draft regulations, reinforce the use of French by requiring that any “generic” or “descriptive” term on a product or packaging be displayed in French, including where those terms are elements of a registered trademark. Canada’s view is that it remains fully compliant with all its CUSMA obligations on trademarks, which provide the rights holder with the exclusive right to prevent others from using the mark in Canada, but do not provide the trademark owner with a right to use the trademark.

Stakeholders have also raised concerns regarding the draft regulations which require the marking and labelling pertaining to the use of a product (i.e., not only related to safety) to be in French. [REDACTED] Quebec officials recently advised that the Ministry of the French Language has received a large number of submissions on its proposed regulations and is reviewing these comments as it finalizes the regulations.

Line 5:A cross-border pipeline, Line 5 carries light crude oil and natural gas liquids from western Canada to Ontario and Quebec, and the U.S. Midwest. Canada has twice invoked the dispute settlement mechanism of the 1977 Transit Pipelines Treaty, triggering formal, ongoing diplomatic negotiations over two sections of Line 5 located in Wisconsin and Michigan. Public authorities in these two states—the Bad River Band in Wisconsin and the State of Michigan—are attempting through court action to permanently shut down Line 5. This would deprive Canada access to its own energy, violate the terms of the Treaty and cause grave economic damage to both the Canadian and U.S. economies in the Great Lakes region. Canada supports infrastructure projects that represent solutions that would keep Line 5 running while at the same time responding to communities’ concerns in Wisconsin and Michigan, including Indigenous concerns.

Steel and aluminum

• Ensuring Candian producers can compete on a level playing field and continue to benefit from an integrated North American market is a key government priority.

Supplementary messages

Recent U.S. announcement on increased Section 301 tariffs

• Closely analyzing the results of the U.S. Section 301 review and the potential impacts on Canada.
• Important that we continue work to address the issue of steel and aluminum excess capacity and its implications on Canada, including with likeminded partners.

Unfairly traded imports and potential trade remedy system improvements

• Canada has a robust, responsive trade remedy system to address dumped and subsidized imports and is committed to protecting our workers and industry from unfair trade.
• The Minister of Finance has recently taken steps to increase funding and introduced legislative and regulatory amendments to support Canadian workers and industries.
• Similarly, I have advanced changes to our import monitoring regime for steel to require information on the country of melt and pour on imports. I have also launched consultations on doing the same for aluminum.

Bilateral engagement with the U.S., including on carbon intensity

• Continue to have a robust dialogue with the U.S. on a variety of issues facing the steel and aluminum sectors; this includes how to address unfair trade and promote trade in green steel and aluminum.

Background

U.S. tariffs: The U.S. maintains Section 232 tariffs or tariff rate quotas on most trading partners, with only a few exceptions including Canada, Mexico and Australia. Recent U.S. efforts towards reaching a Section 232 outcome with the EU in the context of the Global Arrangement on Sustainable Steel and Aluminum discussions were unsuccessful, in part due to the pressure on the Biden Administration to maintain protections in an election year.

Most recently, the U.S. announced its intention to increase Section 301 tariffs on imports of steel and aluminum from China from 7.5% to 25%. The impacts on U.S. steel and aluminum trade are expected to be relatively minor, given the impacts of existing Section 232 and 301 measures, as well as anti-dumping and countervailing duties.

Canada’s trade remedy system: Significant measures have been taken in recent years to strengthen the remedy regime and respond to industry concerns. This includes legislative and regulatory amendments on anti-circumvention, particular market situation and massive importations. Additionally, Budget 2024 provided funding to establish a Market Watch Unit, aimed at addressing industry concerns that normal values (i.e. the minimum price a covered good can be sold at into Canada without paying a duty) are not updated regularly enough to provide adequate protection in a volatile market environment.

Bilateral engagement with the U.S.: Canada regularly engages with the U.S. on issues related to steel and aluminum trade. We also work together closely to address common trade challenges, including in the context of the North American Steel Trade Committee, OECD Steel Committee and the Global Forum on Excess Capacity.

Promoting trade in green steel and aluminum: Informed in part by efforts under the bilateral Energy Transformation Task Force, Canada and the United States are making significant investments to decarbonize energy-intensive industries and support jobs that strengthen North American manufacturing competitiveness. Both governments are also undertaking efforts to better understand the carbon intensity of their steel and aluminum sectors and considering how to further collaboration in this space.

Canada-U.S. energy security (and Line 5)

• Energy trade fundamental pillar of the Canada-U.S. economic relationship and Canada’s #1 export commodity, ahead of autos, steel or aluminum.
• Each other’s #1 foreign supplier across every source of energy, carried by transboundary infrastructure: secure, reliable and affordable.
• Strengthens North American energy security, and our global competitiveness, manufacturing, investment and jobs.

Supplementary messages (Line 5)

• Top government priority to keep Line 5 open, essential to the Canadian economy, and for Alberta, Saskatchewan, Ontario and Quebec.
• Working closely with the provinces and industry to defend Canada's rights under the 1977 Transit Pipelines Treaty.

Supporting facts and figures

• In 2022, from a $236.9 billion two-way energy trade with the U.S., Canada had a bilateral trade surplus in energy of $166.7 billion.
• The U.S. accounted for 90% of Canada’s overall energy exports by value, and 96% of oil and gas exports (2022).
• Canada supplied the U.S. with about 3.9 million barrels of crude oil per day, representing 23% of daily U.S. refinery intake. Canada also supplied 9% of U.S. natural gas consumption (2022).
• Canada is the #1 supplier of imported uranium used to power U.S. nuclear reactors. In 2022, Canada provided 27% of U.S. purchases of uranium.
• Power produced by U.S. reactors using Canadian-origin uranium supplies electricity to approximately 1 in 22 U.S. homes (2017-22).
• In 2022, Canada’s clean electricity exports powered almost 6 million U.S. homes, concentrated in the Pacific Northwest, Minnesota, New York and New England..

Background

The free flow of energy back and forth across the Canada-U.S. border is a pillar of the bilateral economic and trade relationship. This assures North American energy security in the present and a stable energy transition in the future. Canada’s energy exports to the U.S. drive overall bilateral trade balances, generating for Canada large year-on-year trade surpluses dominated by the export of crude oil in transboundary pipelines. The cross-border energy infrastructure grid (70+ pipelines and 35+ clean electricity transmission lines) supports mutual energy reliance, in effect an integrated two-way energy supply chain. The bilateral energy relationship plays a role in advancing the transition to a clean energy future, and our Energy Transformation Task Force (ETTF) aims to identify additional opportunities for bilateral cooperation in key areas like electric vehicle supply chains, critical minerals, and nuclear energy.

Canadian and U.S. goals for decarbonizing North American electricity production are aligned.

Line 5, a cross-border pipeline, carries light crude oil and natural gas liquids from western Canada to Ontario and Quebec, and the U.S. Midwest. Canada has twice invoked dispute settlement under the 1977 Transit Pipelines Treaty, triggering formal, ongoing diplomatic negotiations over two sections of Line 5 located in Wisconsin and Michigan. Public authorities in these two states—the Bad River Band in Wisconsin and the State of Michigan—are attempting through court action to permanently shut down Line 5. This would deprive Canada access to its own energy, violate the terms of the Treaty and cause grave economic damage to both the Canadian and U.S. economies in the Great Lakes region. Canada supports infrastructure projects that represent solutions that would keep Line 5 running while at the same time responding to communities’ concerns in Wisconsin and Michigan, including Indigenous concerns.

Investor-state dispute settlement (ISDS)

• Clear and balanced rules, and an effective dispute settlement mechanism are key to a stable investment environment.
• Canada’s approach to ISDS in treaties carefully balances investor protection with a country’s right to regulate in the public interest.
• Canada will follow a tailored approach with respect to the inclusion of ISDS in new treaties.

Supplementary messages

• Right to regulate: Canada’s treaties protect the Government of Canada’s right to regulate in the pursuit of legitimate policy objectives, such as health, safety, environment, labour, and cultural diversity.
• ISDS tribunals: May only award monetary damages; may not impose the repeal of legislative instruments.
• CUSMA: The non-applicability of ISDS to Canada under CUSMA, following a now lapsed three-year phase-out period, was a negotiated North American outcome.

Supporting facts and figures

• In 2023, Canadian Direct Investment Abroad was nearly $2.2 trillion. In 2023, Foreign Direct Investment in Canada was nearly $1.4 trillion.
• 35 ISDS cases have been brought against Canada (34 under NAFTA, 1 under Egypt FIPA).
• 14 cases were won by Canada, 5* cases lost, 5 cases settled, 5* cases ongoing, and 7 inactive, terminated or withdrawn. (*one case was lost but is still ongoing so counted twice, as the investor is seeking a set aside of the damages decision.)
• Canada has paid approximately $208 million in settlements and awards, which is around 8% of damages originally claimed in all cases lost or settled by Canada.
• Canadian investors are the 6th most frequent users of ISDS, after investors from the United States, Netherlands, United Kingdom, Germany, and Spain.
• According to publicly available information, Canadian investors have initiated 68 cases.
• Of these 68 cases, Canadian investors won in at least 12 cases, and were awarded over US$3.2 billion (over CA$4.3 billion), which is at least 20 times more than what Canada has paid in both damages and settlements to foreign investors.

Background

Canada released its current model FIPA in 2021. It includes an updated and improved ISDS mechanism, reproduces elements from CETA and CPTPP and other innovations, and is in line with the Government’s inclusive trade agenda. It is also more accessible to SMEs.

Canada has traditionally included an ISDS mechanism in FIPAs and in investment chapters of FTAs. CUSMA is the first such treaty in which Canada is not subject to an ISDS mechanism. Under CUSMA, NAFTA’s ISDS mechanism remained available to investors with respect to their existing investments for three years (i.e. until July 1, 2023) pursuant to the legacy investment claims Annex (i.e. Annex 14-C). Following this 3-year transition period, investment disputes against Canadian measures or by Canadian investors under CUSMA can only be brought under the State-to-State dispute settlement mechanism.

Carbon border adjustments

• As export driven nation, border measures, like carbon border adjustments, of high interest to Canada.
• As countries accelerate their decarbonization efforts, more countries are considering using border measures based on the carbon content of imported goods (e.g. the EU, the UK).
• Essential that we engage with our trading partners, including the U.S. and the European Union, to minimize impact on Canadian exporters from these types of border measures.

Supplementary messages

Responsive: Domestic border carbon adjustment

• The Government is exploring border carbon adjustments however there is no decision on whether such measure will be pursued

Background

Border Carbon Adjustments: Carbon Tariffs

The EU is the first jurisdiction to implement a Carbon Border Adjustment Mechanism (CBAM), which began operation on October 1, 2023.

The initial requirements under the CBAM are limited to reporting of emissions of certain imported goods (i.e. aluminum, fertilizers, electricity, hydrogen and iron and steel). The border fee will enter into force on January 1, 2026, and it will increase over- time as the free allowances under the EU’s carbon pricing system are phased out.

The EU is not the only jurisdiction implementing carbon measures; the UK will implement its CBAM by 2027; Australia is now considering different border policies, including carbon border adjustments; and Japan is considering implementing a carbon levy for fossil fuel importers starting on 2028/2029.

There are also several bills currently before the U.S. Congress, for example the Foreign Pollution Fee Act, that would impose a fee on carbon intensive imports based on the greenhouse gas intensity of the imported good. Although it is unlikely that any carbon fee bills will pass Congress before the November election, these approaches have growing bipartisan support.

In practice, these border measures are “carbon tariffs” since the fee applied at the border is based on the emission of the traded goods. The border fee will be on top of the “regular” tariff, and the existence of an FTA will not prevent the trading party from applying a “carbon tariff”.

International Cooperation

In April, the White House announced the creation of a Trade and Climate Task Force and presented a proposal at the WTO on the need for members to focus on trade- related climate measures, including the need for greater coherence and interoperability between different measures.

Canada is a partner who can constructively contribute to the work on trade-related climate measures, including the interoperability of methodologies and requirements. However, given different approaches by countries to climate policy (e.g., carbon price as a key tool vs. no carbon price), Canada will need to engage with all trading partners while seeking to minimize impact on our export interests.

Canada: Domestic Carbon Border Adjustment

Since the announcement in the 2020 Fall Economic Statement, Canadian officials have been exploring Border Carbon Adjustments. At this time, there is no direction on whether border carbon adjustments will be pursued in Canada.

Recent U.S. Announcements on Section 301 Tariffs on Imports from China

• Aware that on May 14 the United States announced the imposition of Section 301 tariffs on approximately $18 billion of imports from China.
• Closely analyzing results of the U.S. Section 301 review and potential impacts on Canada.

Supplementary messages

If asked whether Canada will impose similar tariffs on imports from China

• Canada is assessing potential options to respond to the challenge of Chinese overproduction, and would consult with Canadians before moving forward with any potential action.

If asked about the impact of U.S. Section 301 tariffs on Canada

• The recently announced U.S. Section 301 tariffs will apply only to goods produced in China, and as such will not have a direct impact on Canada.
• We are closely analysing the new tariffs, including the possibility of indirect impacts on Canada.

If asked about the risk of diversion of Chinese goods

• Canada will not become a “back door” to the U.S. market nor a dumping ground for unfairly traded goods.
• Canada has a robust trade remedies system to address dumped and subsidized imports and to protect Canadian workers and industries.
• Canada is strengthening its trade remedies and enforcement system, as well as its import monitoring system, to prevent transshipment and diversion of unfairly priced offshore goods into the North American market.

Background

On May 14, 2024, the U.S. government announced the results of an extensive review of its existing Section 301 tariffs on goods from China. The U.S. will raise tariffs on US$18 billion worth of imports from China in “strategic sectors”, including electric vehicles (EVs), batteries, solar panels, critical minerals, steel, aluminum, semiconductors, ship-to-shore cranes, and medical products. Most of the tariff increases are intended to take effect on August 1, 2024, with certain others to take effect on January 1, 2025 or January 1, 2026. This announcement followed the completion of a four-year statutory review of the Section 301 tariffs first imposed by former President Trump in 2018, which concluded that China had not eliminated many of its unfair technology-transfer related practices that triggered the original measures. The review also concluded the U.S. would maintain its current Section 301 tariffs, which apply to US$300 billion worth of imports from China.

The immediate impact of the new tariffs on U.S. imports from China is expected to be minimal in most sectors, as the U.S. does not import large volumes from China for most of the covered goods, in part because of the existing Section 301 tariffs (and Section 232 tariffs in the case of steel and aluminum).

Impact on Canada

As with the current U.S. Section 301 tariffs on Chinese goods, the new U.S. Section 301 tariffs will apply only to goods produced in China. The tariffs do not directly affect goods that have been substantially transformed in Canada or third countries.

Higher U.S. tariffs increase the risk of the diversion of Chinese goods into other markets and could lead to increased U.S. concerns about the potential for transshipment via third countries. Notably, Canada has taken measures that will help prevent unfairly traded Chinese steel from being diverted to the Canadian market, including legislative and regulatory amendments to modernize and enhance the effectiveness of anti-circumvention measures and the trade remedy system, as well as increased funding to bolster trade investigations and enforcement. In addition, Canada has taken steps to begin collecting country of melt and pour information for imports of steel products into Canada, which will bring further transparency to the North American steel supply chain, a key interest for the U.S.

Stakeholder Views

The Canadian Steel Producers Association (CSPA) expressed support for the Section 301 tariffs and urged the Government of Canada to consider a “comparable tariff approach and evolve our trade tools”, specifically calling for the application of 25% surtaxes on imports of steel from China, as well as changes to Canada’s trade remedy system. The Automotive Parts Manufacturers’ Association (APMA) said “Canada has to” implement similar tariffs. The Canadian Vehicle Manufacturers’ Association (CVMA) is not advocating for Canada to specifically match the Section 301 tariffs, citing the risk of Chinese retaliation.

For additional information on issues related to EVs, steel and aluminum, see separate briefs on Electric Vehicles and Steel and Aluminum.

Team Canada Report Card

As of April 30, 2024

This report card captures some visits made prior to, in addition to the Canada-U.S. engagement efforts made since the launch of Team Canada by Prime Minister Trudeau on January 23, 2024.

States Visited (Including District of Columbia)

• Florida, February 11-14, Amb. Hillman
• Washington, February 19-21, Min. Beech
• New York, March 3-5, Min. Lebouthillier; March 25-26, Min. Champagne
• Michigan, March 5, Co-Leads
• Minnesota, March 5-6, PS Duguid
• Ohio, March 6-7, Min. Champagne 
• Maine, March 8, Min. Lebouthillier
• Massachusetts, March 9-12, Min. MacAulay, Hutchings, Lebouthillier
• Alaska, March 9, Amb. Hillman
• Georgia, March 10-11, Min. Champagne
• Rhode Island, March 12, Min. Hutchings
• District of Columbia, February 7, Min Ng; March 12 and April 27-28, Min. Champagne

Provinces / Territories Visited

• Toronto, Windsor & Mississauga, ON, March 4-6, 2024
• Victoria & Surrey, BC, March 13-14, 2024 
• London and Kitchener, ON, March 27-28, 2024
• Whitehorse, YK, April 22-23, 2024

Co-Leads & Ministers / Parliamentary Secretaries Engaged

• Minister Ng
• Minister Champagne
• Ambassador Hillman
• Minister Beech
• Minister Lebouthillier
• Minister MacAulay
• Minister Hutchings
• PS Duguid
• PS Sidhu

Number of Stakeholders Met

• Government: 155
• Businesses: 103
• Academia: 8
• Indigenous: 10
• Labour: 14

12 - Number of States Visited, Incl. DC

3 - Number of Provinces/Territories Visited

90 - Number of Meetings

22 - Number of Media Engagements

9 - Number of Co-Leads & Ministers / Parliamentary Secretaries Engaged

[REDACTED]

Top 3 Messages Delivered

• Canada is important to the U.S., and vice versa. We have a multitude of connections – people to people relations, business partnerships, and integrated supply chains through north-south corridors across the country. Team Canada is about doubling down on our essential relationship and raising the consciousness of all Americans about how Canada is a source of strength for the U.S.
• In a rapidly changing and shifting world, Canada offers the U.S. stability and predictability. Team Canada is committed to emphasizing to Americans that Canada is a steadfast partner, ally and neighbour, with no intention of going anywhere. We need to push through the pleasantries, connect the dots between stakeholders and ensure Americans understand the specific ways in which they need Canada.
• Team Canada is all of us – it is about using all the relationships we have to get all of Canada to talk to all of America. Security, prosperity, a healthy environment, and resilience are non- partisan issues, and the Canada-U.S. relationship affects all populations in both countries.

Top 3 Takeaways

• There is an opportunity for Canadian companies to fill gaps in the U.S. supply chain.
• It is critical to work on regulatory alignment – especially in emerging sectors.
• Team Canada engagement efforts highlighted the willingness of many stakeholders to share insights and contacts – many have agreed to follow-ups.

[REDACTED] Highlights of Media Coverage - April

• Bloomberg, 2024-04-05, 
• POLITICO, 2024-04-30,

Premier Visits Facilitated

• AB Premier Smith, February, Washington, D.C. and March, Texas
• NL Premier Furey, March, Washington, D.C.
• NS Premier Houston, PE Premier King, NL Premier Furey and NB Premier Higgs, March, Massachusetts
• MB Premier Kinew, April, Washington, D.C. and NYC

Parliamentary Visits Facilitated

• Canada-U.S. IPG, February, Albany, NY
• Great Lakes Day, March, Washington, D.C.
• Canada-U.S. IPG, May, Washington, D.C.

Look Ahead

• Nebraska, May, Min. Champagne
• NB and NS, May, DMT
• Washington D.C., May, Min. Blair
• Illinois and Washington, D.C., May, Min. Anand
• Arizona, May, Min. Ng
• Texas, May, Min. Ng and Amb. Hillman
• Iowa, June, Min. MacAulay 
• Georgia and South Carolina, June, Amb. Hillman
• West Virginia, North Dakota and South Dakota, July, Amb. Hillman
• Nevada, September, Amb. Hillman
• [REDACTED]

United States commercial relations

Context

No two nations depend more on each other for their mutual prosperity and economic security than the United States and Canada.The U.S. has consistently remained Canada’s top trading partner, its largest source of foreign direct investment, and it is the first export market of choice for Canadian companies. In addition, Canada is the single largest foreign supplier of energy to the United States.

The 2021 Roadmap for a Renewed Canada-U.S. Partnership serves as a framework for the bilateral relationship, one which was built upon during the March 2023 visit of President Biden to Canada.

For the better part of four decades, trade between Canada and the U.S. has been governed by a succession of free trade agreements, the most recent of which is the Canada-United States-Mexico Agreement (CUSMA), which entered into force in July 2020. CUSMA anchors our strong, balanced trading relationship with the United States and Mexico, built on resilient and effective supply chains across all key sectors of the economy. For their economic continued prosperity, both countries need to continue maximizing trading opportunities, including through CUSMA.

United States Economy

The United States has the largest economy in the world, with a per capita GDP of approximately US

$81,630 (GDP of US $23 trillion and 332 million people). The U.S. is the world’s largest consumer market, with private consumption making up nearly 70% of its GDP. Further, the United States is the centre for global innovation; it is responsible for 40 percent of total research and development expenditures in the world. This creates an environment that attracts global companies to operate in the United States and to be closer to their suppliers and customers.

Forecast: The Economist Intelligence Unit expects U.S. real GDP growth to slow to less than 1.8% in 2024, as elevated interest rates and still-high inflation start to weigh on consumption more heavily.

However, this slower growth might be somewhat offset by resilient consumer demand and a wave of public investment, largely directed toward infrastructure and industry. These factors are likely to support a sturdier average annual growth of 2% over the rest of the 2025-28 forecast period. Headline inflation for the same period is expected to hover slightly above the 2% target of the Federal Reserve.

Status of Commercial Relations

Canada and the United States enjoy the world’s most comprehensive trading relationship, which supports millions of jobs in each country. They are each other’s largest trade partners with nearly $3.6 billion worth of goods and services crossing the border each day in 2023. Many of these goods involve co-investing and co-development making our networks highly integrated. Priority sectors for the Trade Commissioner Service in the U.S. include automotive, aerospace & defence, ICT, life sciences, cleantech, and agriculture & processed food. Further, there are also significant opportunities for deeper integration between Canada and the U.S. in several strategic areas such as critical minerals, clean hydrogen, clean technologies, semiconductors, artificial intelligence, and quantum computing.

In 2023, the U.S. remained Canada’s top merchandise trading partner. Canada’s total merchandise exports to the U.S. in 2023 stood at $595.1 billion, a slight 0.7% decrease over the previous year. In that year, top exports to the U.S. were mineral fuel and oils ($173.1billion); vehicles and parts ($78.5 billion); machinery ($45.63 billion); plastics ($19.0B) and precious stones and metals (18.9 billion). For the same year, Canada’s total merchandise imports from the U.S. stood at $374.2 billion, a modest increase of 2.1% over the previous year. The top imports from the U.S. were vehicles and parts ($72.0B); machinery ($52.0B); mineral fuels and oils ($40.2 billion); electronics ($19.5 billion); and plastics ($17.9 billion).

Foreign Direct Investment

Canada and the U.S. have a significant investment relationship. The U.S. is the single greatest investor in Canada and Canada was the largest source of foreign direct investment (FDI) in the United States by ultimate investor country (UIC), at the end of 2022. In 2021, there were over 9,800 American affiliates that employed over 1.5 million Canadians and Canadian multinational enterprises in the U.S. supported nearly 700,000 jobs. Canadian investment in the U.S. makes up roughly 13% of all foreign investment.

In 2022, United States ranked as the largest investor country of FDI stock in Canada. FDI stock from the United States stood at $581 billion (on an UIC basis), an increase of $30 billion or 5.4% from 2021. This represented 49% of the FDI stock into Canada. In 2023, over 63% of American FDI in Canada concentrated in three sectors: 1) management of companies and enterprises (32% or $184 billion), 2) manufacturing (18% or $107 billion), and 3) finance and insurance (13% or $77 billion).

Canada-United States-Mexico Agreement (CUSMA)

The CUSMA, which received bi-partisan approval from the U.S. Congress, updated a 25-year-old agreement and provides the foundation for strengthened regional competitiveness. Among others, CUSMA includes new chapters on good regulatory practices, customs administration and trade facilitation, and improves disciplines for trade in goods and agriculture, and for rules of origin, such as those for passenger vehicles and trucks.

The CUSMA is a comprehensive, high-standard agreement, operationalized through a robust committee structure to oversee its implementation. While certain trade irritants persist, the Parties continue their productive dialogue on the effective implementation of the Agreement and, when necessary, invoke the treaty’s dispute settlement mechanisms. There have been six state-to-state dispute settlement cases initiated under the Agreement. Three of these cases remain in progress: the United States’ interpretation of the rules of origin for core parts in the automotive sector; Mexico’s measures in the electricity sector; and Mexico’s measures concerning genetically engineered products. There are also various softwood lumber related cases that Canada is advancing through the binational panel process under both Chapter 10 (Trade Remedies) of the CUSMA and Chapter 19 (Review and Dispute Settlement in Antidumping/Countervailing Duty Matters) of the NAFTA, which CUSMA replaced.

CUSMA contains a review clause which calls for the first joint review in 2026. Canada will be prepared to defend and advance its interests in a range of review scenarios.

Recent U.S. measures:

Buy America: The U.S. $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) included new and expanded Buy America requirements that apply to any infrastructure project undertaken with federal financial assistance.

EO Invent it Here, Make it Here: The Executive Order on “Invent it Here, Make it Here” (July 2023) expands the application of the Bayh-Doyle Act’s competitiveness provision, which requires that inventions funded by the U.S. government, be “manufactured substantially” in the United States.

Inflation Reduction Act (IRA): The Inflation Reduction Act (IRA), signed into law on Aug 16, 2022, is the U.S.’ largest piece of climate legislation in history, authorizing an estimated $369B in incentives and investments for the U.S.’ energy transition. It contains several incentives and tax credit programs to incentivize domestic production and the development of supply chains related to clean vehicles, batteries, renewable energy, and clean fuels production and related infrastructure projects.

CHIPS Act: The Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act is designed to support the U.S. efforts to “re-shore” semiconductor manufacturing to decrease reliance on the Asia-Pacific manufacturing cluster. The CHIPS Act includes funding for U.S. allies, like Canada, under the US$500 million CHIPS for America International Technology Security and Innovation Fund, administered by the U.S. State Department.

Canada and the United States Offices

Canadian presence in the United States: Canada has an Embassy in Washington, D.C., Consulates General in Atlanta, Boston, Chicago, Dallas, Denver, Detroit, Los Angeles, Miami, Minneapolis, New York, San Francisco, and Seattle, 3 trade offices, and 14 Honorary Consuls. The Trade Commissioner Service is present in 16 Canadian missions in the United States, with a total of approximately 180 employees supporting international business development initiatives.

United States presence in Canada: The United States maintains an embassy in Ottawa and consulates in Calgary, Halifax, Montreal, Quebec City, Toronto, Vancouver, and Winnipeg.

Representation: Canadian Ambassador to the U.S.: Kirsten Hillman (appointed on March 26, 2020);

U.S. Ambassador to Canada: David L. Cohen (appointed on November 30, 2021).

Mexico commercial brief

• Canada and Mexico are longstanding commercial partners. Our relationship is broad and multi-faceted, bound together by deep ties between our people and businesses.
• Mexico is key to our North American partnership; together with the United States, we cooperate closely to ensure that North America remains the most competitive region in the world.
• In the 30 years of free trade in North America, merchandise trade between Canada and Mexico has grown over 12-fold.

Supplementary messages

• The Government of Canada expects Canadian companies operating abroad to abide by all relevant laws, to respect human rights in their operations, and to adopt best practices and internationally respected guidelines on responsible business conduct.

Update

The CUSMA Free Trade Commission (FTC) meeting was held May 21-22, 2024, in Arizona. Minister Ng met with her Mexican counterpart Secretary of Economy Raquel Buenrostro on the margins of the FTC. Mexico’s Presidential Elections will take place on June 2 with the Presidential Inauguration scheduled for October 21, 2024.

Supporting facts and figures &²Ô²ú²õ±è;

• Mexico is Canada’s third-largest merchandise trading partner. In 2023, Canada’s exports to Mexico were valued at $8.8 billion and imports at $46.1billion. 
• In 2022, Foreign Direct Investment (FDI) stock from Mexico to Canada stood at $2.7 billion, an increase of $38M or 1.4% from 2021. 
• Mexico is an important destination for Canadian Direct Investment Abroad (CDIA) and in 2022, stock to Mexico stood at $33B, an increase of 18% or $4.9B from 2021. 

Background &²Ô²ú²õ±è;

Canada-Mexico Bilateral Relationship: Mexico is well connected to the Americas, North American supply chains, and is one of the most advanced economies in Latin America. Its strong manufacturing sector, relatively lower labour costs, and its proximity to the United States and Canada are some of the economic advantages that attract foreign businesses and investors. This offers significant opportunities to Canadian exporters in several Mexican industries, notably in mining, agriculture, and clean technologies. Mexico is a member of CUSMA, CPTPP, and is a full member of the Pacific Alliance. Mexico is also a key partner in the North American Leaders’ Summit (NALS); Canada is expected to host the next NALS in 2024. 

Partial Visa Reimposition: On February 29, 2024, Canada partially reimposed visa requirements on Mexican citizens due to an exponential increase in asylum claims. Advance notice was provided to Mexico, fulfilling Canada’s CUSMA obligation. The majority of Mexican business travellers are not impacted given many hold valid U.S. non-immigrant visas, exempting them from Canada’s visa requirement.  

Mexico-Canada High Level Economic Dialogue (HLED): The forum focuses on shared priorities (as opposed to irritants) such as the recovery from the pandemic, inclusive trade strategies, innovation, and the strengthening of regional and resilient supply chains. The dialogue has a mandate of enhancing collaboration between GAC, ISED, and Mexico’s Ministry of Economy. The first HLED meeting was held virtually on August 15, 2022 and discussions are underway regarding a second HLED as soon as this fall. &²Ô²ú²õ±è;

Responsible Business Conduct: RBC is at the nexus of many priorities for Canada such as the respect for human rights, taking action on climate change, inclusive trade, upholding the rights of Indigenous peoples and amplifying our feminist international assistance policy. In Canada, and in many of the jurisdictions where they operate, Canadian companies follow the Mining Association of Canada’s Towards Sustainable Mining standard. This is the first mining sustainability standard in the world and is considered a global best practice. Canadian mining companies in Mexico have played an important role in improving the social economic well-being of communities, including through investments in medical resources, road improvement and social support. &²Ô²ú²õ±è;

Canada-United States Trade Snapshot

This document is produced by the United States division (NGA) at ¶¶ÒùÊÓƵ in consultation with the Office of the Chief Economist. It is updated as most recent data becomes available.

Canada-U.S. Trade in 2023

• Canada and the U.S. share one of the largest trading relationships in the world, with nearly $3.6 billion worth of goods and services crossing the border each day in 2023.
• Canada-U.S. trade in goods and services was $1.3 trillion in 2023 and represented about two thirds of Canada’s total global trade.
• The U.S. remained Canada’s top merchandise trading partner, receiving $595 billion of Canada’s merchandise exports in 2023.
• 7.8 million U.S. jobs are supported by trade with Canada. The U.S. sells more goods to Canada than to any other country.
• Canada is the top trading partner for 35 U.S. states.

Canada-U.S. Trade in Services

Canadian merchandise exports 2023

• United States: 77.6% → To U.S. $595.5B CAD
• China: 4.0%
• Japan: 2.1%
• United Kingdom 1.8%
• Mexico: 1:1%
• All other countries: 13.4%
• Year over Year (YoY): U.S. share of Canada’s merchandise exports increased from 76.9% in 2022 to 77.6% in 2023.

Canadian merchandise imports 2023

• United States: 49.6% → From U.S. $374.0B CAD
• China: 11.8%
• Mexico: 6.1 %
• Germany 3.3%
• Japan 2.7%
• All other countries: 26.4%
• YoY: U.S. share of imports increased from 49.2 in 2022 to 49.6% in 2023.

Canada’s Merchandise Trade Balance with the U.S., in 2023 $221.5B CAD

U.S. merchandise exports 2023

• Canada: 17.5.% →To CA: $476.1B CAD; $352.8B USD
• Mexico: 16.0%
• China: 7.3%
• United Kingdom: 4.1%
• Germany: 3.8%
• All other countries: 51.3%
• YoY: Canada’s share of total U.S. merchandise exports increased from 17.3% in 2022 to 17.5% in 2023.

U.S. merchandise imports 2023

• Mexico: 15.4%
• China: 13.9%
• Canada: 13.7% → From CA $568.3B CAD; $421.1B USD
• Germany: 5.2%
• Japan: 4.8%
• All other countries: 47.1%
• YoY: Canada’s share of total U.S., merchandise imports increased from 13.5% in 2022 to 13.7% in 2023.

Canada’s merchandise exports to the U.S. by province in 2023

Top 10 Canadian merchandise exports to the U.S. 2023

Top 10 U.S. destinations for Canadian merchandise exports, 2023

Top 10 Canadian Merchandise Imports from the U.S. 2023

Canada-U.S. trade facts

• Canada-U.S. trade is built on long-standing binational supply chains; roughly 80% of Canadian goods exports to the U.S. are incorporated into U.S. supply chains.
• Canada buys more goods from the U.S. than China, France, and Japan combined.
• Canadian companies operating in the U.S. directly employ 866,300 Americans.
• In this trade relationship, Canada’s efforts are focused on ensuring the effective implementation of the Canada-United States-Mexico Agreement (CUSMA), strengthening supply chain resiliency, and resolving bilateral irritants.
• Canada is also seeking to establish enhanced collaboration with the U.S. to address global trade challenges, including with respect to China and the World Trade Organization. 

U.S. economic update

• Gross Domestic Product (GDP): Real gross domestic product (GDP) increased at an annual rate of 3.4 percent in the fourth quarter compared to 4.9 percent in  the third quarter of 2023. The increase in the fourth quarter primarily reflected broad-based increases in government and consumer spending, exports, and investment.
• Labour Market and Demographics Trends: In March 2024, the total nonfarm payroll employment increased by 303,000 and the unemployment rate changed little at 3.8%. 
• Consumer Price Index:. The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in March 2024 on a seasonally adjusted, similar to the increase in February. Over the last 12 months, the all-items index increased 3.5 percent before seasonal adjustment.

U.S. trade and economic policy

• EO Invent it Here, Make it Here: The Executive Order on “Invent it Here, Make it Here” (July 2023) expands the application of the Bayh-Doyle Act`s competitiveness provision, which requires that inventions be “manufactured substantially” in U.S.
• Inflation Reduction Act (IRA): Signed by President Biden on August 16, 2022, the IRA provides $369 billion over ten years in measures to address climate change, including financial support to industry and consumers for the decarbonization of manufacturing, transportation, energy generation and energy consumption. Under the IRA, Canadian-assembled vehicles and batteries, as well as critical minerals components, processed or recycled in Canada, are eligible for the U.S. Clean Vehicle Credit.
• CHIPS & Science Act: President Biden signed the CHIPS & Science Act, appropriating $280 billion to boost U.S. semiconductor manufacturing and scientific capabilities.

U.S. international trade in goods and services

• Balance of Trade: As per the U.S. Bureau of Economic Analysis and the U.S. Census Bureau, the U.S. goods and services trade deficit increased in February 2024. The deficit increased from $67.6 billion in January (revised) to $68.9 billion in February, as imports increased more than exports.
• Terms of Trade Index: The terms of trade (TOT) index measures the relative trade competitiveness between the U.S. and its trading partners by comparing the ratio of export prices to import prices. In January 2024, the U.S. TOT with Canada was 99.7 representing a monthly decrease of 0.2 percentage points. 

Trade Commissioner Service presence

• The Trade Commissioner Service is present in 16 Canadian missions supporting international business development initiatives.
• We also offer specialized programming such as Canadian Technology Accelerators (CTA) that support the international scale-up of high-potential, high-growth Canadian firms in cleantech, digital industries and information and communications technologies (ICT), and life sciences and digital health.

Canada-Mexico Trade Snapshot

This document is produced by the Mexico and Trilateral Affairs Division (NGI) at ¶¶ÒùÊÓƵ in consultation with the Office of the Chief Economist. It is updated as most recent data becomes available.

Trade update

Canada's trade and investment with Mexico continues to grow with over $54.8 billion in two-way merchandise trade in 2023 (exports: $8.8 billion; imports: $46.1 billion). Mexico is Canada's third largest single-country merchandise trading partner (after the U.S. and China). Canada was Mexico's fifth-largest merchandise trading partner in 2022.

Text version - Figure 3

Canadian Goods Exports, 2023

• All other countries, 13%
• China, 4%
• Japan, 2%
• United Kingdom, 2%
• Mexico, 1%
• United States, 77%

Canada merchandise exports to Mexico decreased by 3.8% from 2022 to 2023.

Text version - Figure 4

Canadian Goods Imports, 2023

• All other countries, 19%
• China, 8%
• Mexico, 4%
• Germany, 3%
• Japan, 2%
• United States, 63%

Canada merchandise imports from Mexico increased by 11.2% from 2022 to 2023.

Text version - Figure 5

Top 5 Canadian Goods Exports to Mexico by type, 2023

• Motor vehicles and parts, 25%
• Farm, fishing and intermediate food prodcts, 20%
• Consumer goods, 16%
• Metal and non-metallic mineral products, 11%
• Industrial machinery, equipment and parts, 8%
• All others, 19%

Text version - Figure 6

Top 5 Canadian Goods Imports from Mexico by type, 2023

• Motor vehicles and parts, 46%
• Electronic and electrical equipment and parts, 19%
• Consumer goods, 11%
• Industrial machinery, equipment and parts, 7%
• Farm, fishing and intermediate food products, 6%
• All others, 11%

Trade Commissioner Service (TCS)

Located in Mexico City, Monterrey, and Guadalajara with 35 employees supporting TCS clients. 

Complementing TCS, co-located colleagues include:

• Agriculture and Agri-Food Canada
• Canadian Food Inspection Agency 
• Export Development Canada 
• Ontario
• Alberta
• Saskatchewan
• British Columbia 

Additionally, Québec has a Délégation générale in Mexico City.

Text version - Figure 7

Mexico’s Real GDP Growth (%)

• 2018a, 2.2
• 2019a, -0.2
• 2020a, -8
• 2021a, 4.7
• 2022b, 3
• 2023b, 1.1
• 2024b, 1.8

a – Actual
b – EIU Projected

Canada-Mexico Trade in Services

• 1.2% of Canada’s services exports went to Mexico in 2022,
• 1.9% of Canada’s services imports were from Mexico in 2022

Text version - Figure 8

Canadian Good Exports to Mexico By Province, 2023

Note: % of Canada’s total exports to Mexico with top exported product per province

• NU: Arts & Antiques, 0.01%
• YT: Tools & Cutlery, 0.01%
• PEI : Mineral Fuels & Mineral Oils, 0.05%
• NL : Paper Products, 0.19%
• NS : Chemical Products, 0.33%
• NB : Iron and Steel, 0.37%
• BC : Ores, Slag and Ash, 2.10%
• MB : Meat, 7.20%
• AB : Meat, 10.50%
• SK : Oilseeds, 10.95%
• QC : Aluminium, 22.40%
• ON : Motor Vehicles & Parts, 45.88%

Commercial opportunities

• CanExport SMEs: FY 2023-2024 to date, CanExport SMEs has approved 43 projects targeting Mexico. The top sectors are: Information and Communications Technology (10); Agriculture & Agri-Food (9); Clean Technology (3); and Industrial Machinery (3).
• Canadian Technology Accelerator (CTA): In September 2019, CTA-Mexico started operations at the Embassy of Canada in Mexico. Since then, cohorts were hosted on ICT/Fintech, Cleantech, Women in Health Tech, Agtech (x2), Smart Cities (x2) and one multisectoral CTA focused on alumni from previous cohorts. A new cohort on Digital Health is expected for Fall 2024.
• Mining: Mexico is one of the world’s leading mining jurisdictions, and a top ten source country for 17 minerals, including silver, copper, zinc, lead and gold. Canada is an important investor in Mexico’s mining industry and represents 70% of all foreign investment in the sector.
• Advanced Manufacturing: Good from the manufacturing sector (including auto and aerospace) are Canada’s principal exports to Mexico. CDIA is the main driver of the increase in exports. New opportunities emerging in this sector, particularly in clean tech and water tech as companies implement ESG goals.
• Agri-Food: Mexico imports 40% of its foodstuffs, and is highly dependent on imports of grain, oilseeds, and meat. Canadian exporters are well placed to expand exports in health and gourmet products; private label; ingredients; ready-to-eat meals; and petfood. 

Commercial challenges

• Energy: CUSMA consultations are ongoing following regulatory changes impacting US$4.1b in Canadian energy investments in Mexico.
• Mining: Canadian investors face longstanding regulatory permitting, physical security, taxation, labour, rule of law, and insecure land access challenges. April 2023 changes to Mexico's mining laws have raised concerns and Canada is closely monitoring the forthcoming implementing regulations.
• Biotech: Canada has joined the U.S.-initiated CUSMA dispute settlement panel as a third party, challenging recent changes to Mexico’s approval process for agricultural biotechnology.
• Partial Visa Re-imposition: Canada imposed a partial visa requirement on Mexican nationals on February 29, 2024. Mexican passport holders looking to visit to Canada now require to have valid Canadian visa to enter, except those traveling by air that either hold a valid U.S. non-immigrant visa or have held a Canadian visa in the past 10 years.

Mexico's trade agreements, alliances & memberships

• Canada-United States-Mexico Agreement (CUSMA), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and 13 Free Trade Agreements (FTAs) covering 50 countries.

Canada-U.S.-Mexico Trade Snapshot

This document is produced by the Mexico and Trilateral Affairs Division (NGI) at ¶¶ÒùÊÓƵ in consultation with the Office of the Chief Economist. It is updated as most recent data becomes available.   

Canada-U.S.-Mexico trade

On July 1, 2020, the Canada–United States–Mexico Agreement (CUSMA) entered into force. Today this market represents 506 million consumers and a combined GDP of $42 trillion.

CUSMA includes new chapters on good regulatory practices, customs administration and trade facilitation, and improves disciplines for trade in goods and agriculture, and for rules of origin, such as those for passenger vehicles and trucks.

Trilateral merchandise trade between Canada, the U.S. and Mexico, as measured by the total of each country’s imports from its other two partners, reached $1.93 trillion in 2023, up from $1.86 trillion in 2022.          

At the end of 2023, the stock of direct investment in Canada from our North American partners was $700.1 billion, while Canada had invested C$1.1 trillion in our two North American partners.

Between 1993 and 2023, total merchandise trade between Canada and the United States more than tripled and total merchandise trade between Canada and Mexico grew nearly 11-fold. Overall, total trilateral merchandise trade increased nearly five-fold since 1993.

The CUSMA established 25 trilateral committees, working groups, and other subsidiary bodies between Canada, the U.S. and Mexico with mandates to implement the Agreement and resolve issues.

Text version - Figure 9

Canadian Missions In Mexico And The U.S

• Mexico City, Mexico- Canadian Embassy
• Washington D.C.- Canadian Embassy

Consulates General:

• Atlanta - Consulate General
• Boston - Consulate General
• Chicago - Consulate General
• Dallas - Consulate General
• Denver - Consulate General
• Detroit - Consulate General
• Houston - Consulate General
• Jalisco - Consulate General
• Los Angeles - Consulate General
• Miami - Consulate General
• Minneapolis - Consulate General
• New York - Consulate General
• Nuevo Leon - Consulate General
• Palo Alto - Consulate General
• San Francisco - Consulate General
• San Diego - Consulate General
• Seattle - Consulate General

Total annual value of trilateral* merchandise trade between Canada, the U.S. and Mexico

• $1.93 trillion in 2023
• A 3.5%, or $65 billion increase between 2022-2023.

Canada’s total bilateral merchandise trade with the U.S.

• $942.4 billion in 2023
• A 0.9%, or $8.3 billion increase between 2022-2023.

Canada’s total bilateral merchandise trade with Mexico

• $57.9 billion in 2023
• A 8.7%, or $4.6 billion increase between 2022-2023.

* Trilateral merchandise trade between Canada, the U.S. and Mexico is measured by the total of each country’s imports from its other two partners

The U.S. is Canada’s #1 bilateral merchandise trading partner (2023).

Mexico is Canada’s #3 bilateral merchandise trading partner (2023).

Canadian Merchandise Trade - Global

Canadian goods exports, 2023

• All other countries, 13%
• China, 4%
• Japan, 2%
• United Kingdom, 2%
• Mexico, 1%
• United States, 77%

Canadian good imports, 2023

• All other countries, 19%
• China, 8%
• Mexico, 4%
• Germany, 3%
• Japan, 2%
• United States, 63%

Data sources:
Macroeconomic information: World Bank/IMF
Trade and investment data: Statistics Canada

Quarterly economic and trade report – Q4 2023

Highlights

The global economy expanded in the 4th quarter (Q4) of 2023, with notable growth in the United States (U.S), as well as China and other emerging markets. After falling four consecutive quarters, world merchandise trade volumes grew in Q4.

Canada’s goods and service exports to the world rose 1.7% in the 4th quarter of 2023, with growth in services (+2.4%) outpacing goods (+1.5%). Energy exports, particularly crude oil volumes, contributed heavily to overall growth. Additionally, spending by foreign visitors to Canada bolstered travel services exports.

Canadian imports of goods and services edged up 0.3% in Q4. While imports of consumer and industrial goods increased, a notable decline in motor vehicle imports kept overall goods import growth subdued at 0.2%. On the services side, higher imports of transportation and commercial services helped bolster service import growth to 1.4%

Canada’s goods exports to the U.S. flatlined at 0%, while imports fell 1.7% in Q4. However, Canada’s trade in goods with the rest of the world grew, with exports (+6.9%) rising faster than imports (+3.3%).

Global economic activity in 2024 is expected to be subdued due to the lingering effects of elevated interest rates. However, as inflation subsides and prompts central banks to ease monetary policy, more favourable conditions for consumption, investment, and ultimately global trade should propel the world towards a projected 3.1% growth in 2024.

Most major economies post growth in Q4

Global economic growth in Q4 (+2.6% annualized) was supported by gains across several G7 countries (Canada, U.S., Italy, France) and China. Overall, quarterly growth in advanced economies (+1.6% annualized) trailed behind growth in emerging markets (+4.2% annualized).

The U.S. economy grew at a solid 3.2% annualized rate in Q4, supported by increases in various sectors like consumer spending, local and state government spending, residential and non-residential investment, and exports. Additionally, a 2.2% quarterly rise in real disposable income boded well for consumer spending. However, as the U.S. government works towards it stated goal of deficit reduction, potential cuts to fiscal spending and tax hikes could dampen economic activity.

In China, the economy grew 4.7% on annualized basis in Q4. Private and government consumption were key contributors to this growth, and increased government spending on capacity building against natural disasters is expected to further propel economic activity into 2024. 

In neighboring Japan, GDP declined a slight 0.4% (annualized) in Q4 with drags from private and government consumption as well as inventories.

Economic performance in Europe was lackluster in Q4, with GDP either contracting on an annualized basis in major economies like the U.K. (-1.4%) and Germany (-1.1%) or posting muted growth. The outlook for 2024 faces challenges as weak private and government consumption as well as investment are expected to restrain growth in the Eurozone.  

World merchandise trade volumes increase for the first time in four quarters

World merchandise trade volumes increased 0.5% in Q4, the first increase after four consecutive quarterly decrease. During Q4, both imports (+0.5%) and exports (+0.5%) expanded. On an annual basis, world merchandise trade volumes declined by 1.9% in 2023.

Economic growth in several regions supported domestic demand for foreign goods in Q4. Notably, import volumes in China (+1.7%) and other emerging economies in Asia (+4.0%) grew. U.S. import volumes also increased on a quarterly basis (+1.2%). However, in areas of the world where growth was more subdued, demand for foreign goods was less pronounced. Namely, overall import volumes from advanced economies fell slightly (-0.1%), with the Euro area experiencing a significant drop (-2.6%).

On the export side, export volumes from advanced economies grew modestly Q4 (+1.0%). While the U.S. posted a 0.9% gain in Q4, this represents a deceleration in growth from Q3. Emerging economies registered a 0.4% fall in export volumes, with notable slowdowns in China (-0.4%), and eastern Europe (-5.9%).

World industrial production edged up 0.5% in Q4, thanks to higher production volumes in both advanced economies (+0.2%) and emerging economies (+0.8%). Industrial production in China grew for a second quarter in a row, climbing 2.0%. 

Growth expected to remain muted in advanced economies

The IMF forecasts global economic growth to temper at 3.1% in 2024 (same as in 2023), before inching up slightly to 3.2% in 2025.

Economic growth in advanced economies is expected to drop to 1.5% in 2024, which falls below the historical average (2000-2019) of 1.9%. While the U.S. is projected to outperform the advanced economies average with 2.1% growth in 2024, growth is expected to fall to 1.7% in 2025. This deceleration is forecasted due to lagging effects of tighter monetary and fiscal policies, and dampened demand from a softening labour market.

While the IMF forecast for emerging economies predicts that real GDP growth will land at 4.1% in 2024, this figure remains below the 2000-2019 average of 5.5%. In China, economic growth is projected to reach 4.6% in 2024, buoyed by resilient economic performance in 2023 and the prospect of increased government spending. India’s economic performance is anticipated to expand notably, with growth projected at 6.5% this year.

A delicate balance of factors will determine the economic landscape for 2024. On the upside, a faster-than-expected slowdown in inflation offers hope for looser financial conditions. Furthermore, technological advancements like AI could unlock much needed productivity gains for economies that seize them. However, several risks remain. Geopolitical uncertainty, notably political instability in the Middle East, poses threats to commodity prices and supply chains. Moreover, stubbornly high inflation could necessitate prolonged monetary tightening and temper growth.

Canadian GDP grew modestly in Q4

The Canadian economy expanded 1.0% (annualized) in Q4, following an upwardly revised loss of 0.5% in Q3. Higher exports of goods and services (+5.6%) and lower imports (-1.7%) were key contributors to growth. Notably, net trade added 2.4 percentage points to GDP growth in Q4.

Household consumption climbed 1.0% in Q4, making it the second largest contributor to growth. This increase was led by higher spending on trucks, vans, and utility vehicles, which are benefiting from easing supply chain issues. The household savings rate remained stable at 6.2% in Q4, as spending and disposable income grew at nearly the same pace.

On the other hand, business investment placed a notable drag on growth, falling 5.3% in Q4. Investments in inventories also fell as lower retail and wholesale trade inventories were partially, but not fully, offset by higher manufacturing inventories. Furthermore, government spending (-1.9%) also drew back in Q4.

Despite the quarterly gain, GDP fell again on a per capita basis as economic growth struggles to keep up with an ever-expanding population. This dynamic also played out in the labour market, where employment growth (+0.5%) lagged labour force growth (+0.7%) for the fourth consecutive quarter. As a result, the unemployment rate climbed to 5.8% in Q4. A silver lining from higher unemployment is that it signals a rebalancing between labour supply and demand, which is expected to help lower core inflation.

On an annual basis, real GDP grew 1.1% in 2023, which represents the slowest growth rate from 2016 (aside from the 2020 contraction). Several factors stifled growth, including high interest rates, forest fires and drought conditions, as well as strikes across several industries.

Both goods and service producing industries expand in Q4

Both goods producing industries and service producing industries grew in real terms (0.2% and 0.1% respectively) in Q4. This marked the 10th consecutive quarter of growth for service producing industries.

Mining, quarrying, and oil and gas extraction (+2.2%) represented the largest driver of growth in the fourth quarter, largely thanks to growth in oil and gas extraction (+1.9%). In the service industries, retail trade (+1.2%) contributed the most to growth as gains were realized by health and personal care retailers.

Education services put a significant dent in growth, falling by 2.5% in Q4. Lower activity in elementary and secondary schools contributed the most to this decline, as strikes by Quebec public sector workers persisted from November to December.

The construction sector also contracted in Q4 (-0.7%) due to lower output in the engineering and other construction activities subsector. However, both residential and non-residential construction held strong, growing 1.3% and 1.6%, respectively.

Canadian trade ends Q4 on a positive note with growth in both exports and imports

Canadian goods and services exports grew 1.7% in value in Q4, representing a second consecutive quarterly growth. Goods exports increased 1.5% while service exports expanded 2.4%. Energy products (+5.5%) led the increase in exports, which were bolstered by higher crude oil volumes. Overall, 6 of 11 goods categories expanded, with metal ores and non-metallic minerals posting the largest recovery (+9.6%) after falling most significantly in Q3. In terms of services, 2 of 4 categories expanded. Export of travel services recorded the highest growth at 4.6%, marking the 11th quarterly consecutive increase for this category.

After falling in the previous quarter, good and services imports posted a slight gain of 0.3%. Goods imports inched up 0.2%, while service imports grew 1.0%. Overall, 6 out of 11 goods import categories increased. Increases in the import of consumer goods (+4.3%) and chemical, plastic and rubber products (+7.4%) were largely offset by lower imports of motor vehicles (-4.3%). On the services side, 2 of 4 categories increased. After falling in the previous quarter, transportation services ballooned 4.3%. On the other hand, imports of travel services fell 3.1% in Q4. As expenses of Canadians travelling abroad fell and expenses of non-residents visiting Canada grew, Canada ended Q4 in a travel services surplus.

On an annual basis, total trade in goods and services grew 2.5% in 2023, with imports (+3.3%) growing at a faster pace than exports (1.8%).

Goods trade growth in Q4 led by countries other than U.S.

Goods exports to the U.S. stagnated at 0.0%, while imports from the U.S. fell by 1.7% in Q4. Fluctuations in automotive trade partly explain these figures. At the start of Q4, strikes by U.S. auto workers hindered Canadian motor vehicle imports. Conversely, towards the end of the quarter, Canada exported fewer cars and light trucks due to model phase-outs.

On the other hand, Canada’s trade with non-U.S. countries expanded in Q4. Canadian exports to European Union countries grew modestly (+3.8%) as Canada exported various products ranging from minerals to aircraft parts. There were notable increases in exports to Italy, Spain, and the Netherlands, while exports to Belgium, France, and Germany fell on a quarterly basis. Furthermore, Canadian imports to the European Union also grew in Q4 (+2.9%).

Exports to China also expanded (+3.4%) in Q4 but were outpaced by import growth (+7.9%) which widened Canada’s goods trade deficit with China to $7.3B.

Canada’s service trade deficit narrowed in Q4

Service exports to the U.S. increased 2.3% in Q4, marking the seventh consecutive quarterly increase. Meanwhile, service imports from the US fell 3.3%. As a result, the services trade deficit with the U.S. contracted to $2.5 billion. 

Both service exports and imports to countries other than the U.S. grew in Q4. Service exports to the EU grew 3.7% as a result of widespread increases in exports to major countries like Italy (+20.7), Spain (+27.8%), and Belgium (+4.3%). Imports from the EU also posted a gain (+3.1%).

After falling in the previous quarter, service exports to China jumped up 5.6% in Q4. However, Canadian service imports from China grew at a faster pace than exports at 6.7%.

Growth in the number of Canadian travellers abroad (+7.4%) outpaced growth in the number of non-residents visiting Canada (+4.6%) in Q4. While the large majority of non-resident visitors to Canada were U.S. residents, there was a notable increase (+12.1%) in the number of non-U.S. travellers to Canada.

Canada's international student population surged by 29.4% in 2023, with significant growth coming from India, Nigeria, and the Philippines. This influx of international students bolstered Canada’s service exports to the world.

Canada's GDP forecasted to slow in 2024, with potential for higher growth in 2025

Canada's economy faces a potential deceleration in 2024 (0.8% growth) before speeding up in 2025 (2.4%), according to the Bank of Canada's January 2024 Monetary Policy Report.

The Bank of Canada anticipates inflation – which is already sitting at 2.8% as of February – to gradually approach the 2% target in the coming years. As past rate hikes continue to restrain consumption and investment and subdued foreign demand weighs on exports, output exceeds demand. Excess supply in the economy is forecasted to increase into the first half of 2024, thereby placing a downwards pressure on prices. While real wages have been rising in Canada, this trend may see some moderation as the labour market approaches a better balance between supply and demand. With these factors aligning, the Bank forecasts inflation to reach 2.2% in 2025. Despite these notes of optimism, persistent shelter inflation remains a challenge due to structural supply constraints, persistent demand from population growth and high mortgage interest costs.

In the short term, economic growth faces headwinds due to elevated interest rates, global uncertainty, and weak foreign demand for Canadian exports. However, as inflation subsides and the effects of past rate hikes wane, increased consumer spending and investment are anticipated to propel economic activity into 2025.

Annex: Tables

Foreign investment in North America

• Canada remains a steadfast partner in safeguarding North American competitiveness and resiliency amidst evolving global dynamics.
• The interconnectedness of North American supply chains and economies underscores the need for a coordinated approach to address challenges, strengthen our collective economic resilience and ensure our mutual prosperity and security.
• Canada is committed to expand collaboration with its North American partners to safeguard our shared economic interests, including that North American businesses can continue to collectively benefit from the advantages offered by the CUSMA.

Update

On May 23, 2024, following the fourth CUSMA FTC meeting in Phoenix, AZ, you, together with your U.S. and Mexican counterparts, issued a ministerial statement that Canada, the U.S. and Mexico would “jointly expand their collaboration on issues related to non-market policies and practices of other countries, which undermine the Agreement and harm U.S., Canadian, and Mexican workers, including in the automotive and other sectors.”

Supporting facts and figures

• In 2022, Chinese FDI in Mexico reached US$587.2 million, making them the 9th source of FDI for that year. In comparison, Chinese FDI stock in Canada stood at $21 billion in 2022.
• Up to September 2023, China ranked as the second country with the highest value in investment announcements, with an expected investment of US$12.6 billion over the next three years (12% of Mexico´s forecasted investment). The sectors having captured the most Chinese investment the last few years include low-value product manufacturing, automotive, IT and textiles.

Background

Growing Chinese investment in North America, particularly in Mexico, is increasingly dominating priorities and policymaking in the U.S. economic and trade policy space, including concerns that China may be able to circumvent U.S. tariffs and gain preferential access to the North American market, especially in the automotive sector. The Biden Administration has taken actions to bolster the U.S.’ own competitiveness through industrial policy (including through subsidies and tax credits to shift supply chains away from China), and to contain China’s economic and technological development through strategic interventions to limit China’s access to critical technologies. At the same time, political pressures in the United States are building for further actions, including safeguarding the collection of American sensitive personal data, and applying restrictions on goods produced in any country by “foreign entities of concern”, defined as entities owned by, controlled by, or subject to the jurisdiction or direction of the governments of China, Russia, North Korea and Iran.

Mexico's current position on Chinese investment remains neutral, with the government focused on maximizing FDI attraction as part of the nearshoring phenomenon. Yet, Mexico remains committed to expanding trilateral collaboration on issues related to non-market policies and practices of other countries, as agreed at the fourth CUSMA FTC meeting. In December 2023, US Treasury and Mexico’s Secretary of Finance signed a Memorandum of Intent (MOI) to stand up a working group for regular exchanges of information about how investment screening can best protect national security. Of note, large Chinese EV producers (e.g. BYD, MG Motor and Chery) have expressed interest in opening production facilities in Mexico. However, this has yet to result in actual investment operations.

In Canada, the Automotive Parts Manufacturers Association (APMA) has publicly voiced concerns about the growth of Chinese foreign investment in the Mexican automotive sector, including investments made by Chinese state-owned enterprises. APMA is concerned that Chinese suppliers, backed by the government of China, could displace existing investments in Mexico by APMA members.

Partial visa reimposition in Mexico

• In February 2024, Canada partially re-imposed a visa requirement on Mexicans nationals due to record-breaking levels of asylum claims. This was an important step to preserve mobility for Mexican citizens while ensuring the effective management of our immigration and asylum systems.
• Canada remains committed to its strong political, economic, and people-to-people relationship with Mexico, working collaboratively to strengthen regular migration pathways and support a managed migration system, ensuring the continued benefits of human mobility between our two countries.

Update

On February 29, 2024, Canada partially re-imposed a visa requirement on Mexicans nationals travelling to Canada. Advance notice was provided to Mexico, fulfilling Canada’s CUSMA obligation. Canada earlier imposed a full visa requirement on Mexican nationals in 2009 which was lifted on December 1, 2016. Both instances of visa impositions were the result of record-breaking levels of asylum claims.

Supporting facts and figures

• Claims by Mexican citizens in Canada rose significantly after the visa was lifted in 2016, from 260 claims in 2016 to a record high of 23,995 claims in 2023. In 2023 alone, asylum claims from Mexican citizens accounted for 17% of all claims made that year from all nationalities around the world. Approximately 60% of these claims were either rejected by the Immigration and Refugee Board of Canada or withdrawn or abandoned by the applicant. Since the measure was taken, claims have dropped significantly.

Background

On February 29, 2024, Canada re-imposed a partial visa requirement on Mexican nationals. All Mexicans travelling to Canada, including those on work and study permits, now require a Canadian visa to enter, except those traveling by air who either hold a valid U.S. non-immigrant visa or have held a Canadian visa in the past 10 years. Air travellers who meet one of the two conditions are eligible to apply for an Electronic Travel Authorization (eTA). All Mexican travellers entering Canada by car, bus, train, or boat (including cruise ship passengers who do not intend on leaving the ship) now require a Canadian visa to enter.

Impact on the business community has been minimal, with no significant issues reported. Most Mexican business travellers are not impacted given that many hold valid U.S. non-immigrant visas, thereby exempting them from Canada’s visa requirement. Mexicans looking to work in Canada for short or long terms can continue to travel to Canada under numerous regular pathways, including the Temporary Foreign Workers Program (TFWP) and the International Mobility Program (IMP) that includes mobility pathways under CUSMA and CPTP. They must also meet visa requirements. Under the TFWP, Mexico continues to be the top source country for the Seasonal Agricultural Workers Program (SAWP), which allows Canadian employers to hire temporary foreign workers for a maximum period of 8 months when Canadians and permanent residents are not available. Canada is currently negotiating with Mexico a modernized MoU for the SAWP that would expand occupations to include year-round primary agriculture and seasonal fish, seafood, and primary food processing.

For those requiring visas, Canada has taken multiple measures to facilitate the transition to the new entry requirements. In addition to the full-service Visa Application Centre in Mexico City, Canadian Biometric Operations Centres are operational in Guadalajara, Monterrey, and Merida. Canada is also working on opening Visa Application Centres in Guadalajara and Monterrey in the future. The Canadian Embassy has also introduced a “white glove” visa delivery service to alleviate the additional financial and logistical pressure on Mexican workers. The white glove service will run until the end of the year and be offered to TFWs under the SAWP and to select fish and seafood processing workers. The service allows these workers to submit their passport at the Embassy of Canada in Mexico the day of their departure and have their counterfoil placed in expedited fashion (usually on the same day).

Potential labour actions at CBSA and CN Rail (and supply chain impacts)

Top line messages

• The Government of Canada respects and has faith in the collective bargaining process because the best deals are the ones reached by the parties at the bargaining table.
• Everyone — employers, union, mediators, and Government — understand the urgency to resolve this as quickly as possible as Canadians and our international partners rely on efficient supply chains.
• Under the leadership of the Minister of Labour, federal mediators are working closely with federally regulated employers and unions in key sectors to support them in reaching an agreement.
• In the event of a work stoppage, the Government of Canada, under the leadership of the Minister of Transport, would continue to enforce safety requirements and maintain regular contact with any transportation companies whose operations could be affected, to assess potential impacts and ensure compliance with regulatory and legislative requirements at all times.

Background

There is currently the potential for several work stoppages in Canada that could affect supply chains, including at the Canadian National Railway (CN), Canadian Pacific Kansas City (CPKC), Port of Montréal, West Coast Ports, and the Canada Border Services Agency (CBSA).

CN and CPKC are negotiating (separately) with Teamsters Canada Rail Conference (TCRC) to renew three collective agreements. The Federal Mediation and Conciliation Service has been working with the parties since March 1, 2024. On May 3, federal mediators were appointed to continue assist the parties in their negotiations. On May 9, 2024, pursuant to Section 87.4 (5) of the Canada Labour Code, the Minister of Labour made a referral for decision on the question of maintenance of activities to the Canada Industrial Relations Board (CIRB). Specifically, the Minister has directed CIRB to determine whether there are any activities the parties need to maintain during a work stoppage in order to prevent an immediate and serious danger to the health and safety of Canadians. No strike or lockout can be declared until the CIRB renders its decision. The impact would depend on the nature of the disruption, which could take different forms. A combined work stoppage would be significant for Canadian and American businesses.

The Federal Mediation and Conciliation Service has been working with the parties at the Port of Montréal since October 2023. Bargaining is ongoing and federal mediators are supporting the parties in their negotiations. The parties could file a 72-hour notice of strike or lockout at any time; however, to date, no strike vote has been conducted. The impact would depend on the nature of the disruption, which could take different forms. A full stoppage of longshoremen at the Port will impact about 50% of total tonnage.

Collective bargaining is ongoing between the International Longshore and Warehouse Union Ship and Dock Foremen Local 514 and the British Columbia Maritime Employers Association (BCMEA). The parties are negotiating the renewal of their collective agreement covering foremen working in terminals throughout Canada’s West Coast. On May 10th, the parties acquired the legal right to strike/lockout but may not exercise this right until 72-hour notice has been provided. Federal mediators continue to work with the parties. The impact would depend on the nature of the disruption, which could take different forms. A stoppage could force most terminals to shut down on the West Coast, notably at the Ports of Vancouver and Prince Rupert.

Bulk grain handling activity will continue as it is protected under the Canada Labour Code.

The Government is monitoring ongoing bargaining at the CBSA that has the potential to affect cross-border movements. The union representing border services officers received a strike mandate from its membership when the vote concluded on May 23. The Public Interest Commission (an independent party that includes a union and a management nominee), was released on May 29, 2024, which provides recommendations to both parties to help bring the demands and offers of the two parties closer together. With the Commission’s recommendations, mediation will begin on June 3. The border will remain open; 90% of Border Services Officers are essential workers, which means that they will continue to staff ports of entry in the event of a strike.

The U.S. inflation reduction act and clean tech and environmental investments

• Canada is aligned with the environmental objectives of Inflation Reduction Act (IRA).
• Since 2015, the government has been making foundational investments in clean growth, many of which the U.S. is doing with the IRA.
• While the IRA includes mostly an incentive-based approach to reduce emissions, Canada has its own approach. We adopted a mix of policy tools.
• This includes carbon pricing which is central to our climate policy.
• To maintain competitiveness, the Government is deploying other measures including investment tax credits, low-cost strategic financing and targeted investments.
• The IRA and Canada’s Clean Growth Measures provide opportunities for Canada and the U.S. to collaborate on building the clean technology sectors needed for transitioning toward a net-zero North American economy.

Supplementary messages

• Canada remains concerned with certain discriminatory elements of the IRA that provide additional incentives for using U.S. steel, iron, and manufactured goods in energy projects.
• Canada takes its international trade obligations seriously, including WTO rules, which were a central consideration in developing the measures including those announced in Budget 2023.

Background

The Biden-Harris administration is investing heavily in clean technologies and environmental sustainability to combat climate change and meet US commitments under the 2015 Paris Agreement, with a goal of achieving net-zero greenhouse gas emissions by 2050. The inflation Reduction Act (IRA), signed into law on August 16, 2022, is the U.S. largest piece of climate legislation in history, containing an estimated $369B in tax credits, incentives and investments to reduce emissions, develop clean energy projects, advance clean energy manufacturing, promote electric vehicle adoption, and improve energy efficiency. Similarly, the Infrastructure Investment and Jobs Act (IIJA), signed in November 2021, aims to address climate change by investing in clean technologies and resilient infrastructure, including modernizing transit networks with zero- emissions vehicles (ZEVs), building a national network of EV chargers, cleaning up polluted sites, and upgrading power infrastructure to support renewable energy and next-generation technologies.

The IRA contains several incentives and tax credits to incentivize domestic production and the development of supply chains related to clean vehicles, batteries, renewable energy, and clean fuels production and related infrastructure projects.

Certain IRA incentives have the potential to adversely impact Canada’s competitiveness to attract or retain foreign investment. The most significant outstanding concern for Canada in the IRA is the clean electricity tax credits that include local content requirement “boosters” if 100% of iron and steel and not less than 40% (increasing to 55% by 2026) of other manufactured products used in a project are produced in the U.S.

In light of these conditions, Budget 2023 announced targeted consultations on the possibility of introducing reciprocal treatment to Canadian measures. It proposes a range of measures totaling more than $80 billion over 10 years to ensure Canada remains competitive and supports investments critical for the realignment of global supply chains and the net-zero future. It includes a set of clear and predictable investment tax credits, low-cost strategic financing, and targeted investments and programming, where necessary, to respond to the unique needs of sectors or projects of national economic significance. The targeted investments include the contribution agreements concluded in respect of Northvolt, NextStar (Stellantis-LGES) and PowerCo (Volkswagen) to provide production-based financial support for battery manufacturing. These investments are underpinned by Canada’s world-leading pollution pricing systems and large- emitter credit markets.

Some key areas of U.S. Investments under the IRA and the IIJA include:

• $7 billion investment in the regional clean hydrogen hubs program through the IIJA Act: to establish the foundation of a national clean hydrogen network that will decarbonize multiple sectors of the U.S. economy.
• $6 billion investment for battery manufacturing through the IIJA Act: to retrofit and expand U.S. facilities for battery-grade processed critical minerals, battery precursor materials, battery components, and cell and pack manufacturing.
• $27 billion under the Greenhouse Gas Reduction Fund: to mobilize financing and private capital for clean energy and climate projects that reduce greenhouse gas emissions.
• $5 billion in credit subsidies to support up to $250 billion in loan authority for projects repurposing inactive energy infrastructure or enhancing operating energy facilities to reduce greenhouse gas emissions.
• $1 billion investment in the Clean Heavy-Duty Vehicles Program to replace existing non-zero-emission heavy-duty vehicles with zero-emission vehicles, support zero-emission vehicle infrastructure, and train and develop workers.
• Tax credits account for $270 billion of the $369 billion in incentives for the IRA.

According to a tally by the White House in August 2023, companies have announced more than $110 billion in new clean energy manufacturing investments, including more than $70 billion in the EV supply chain and more than $10 billion in solar manufacturing since the enactment of the IRA.

“P” and “O” visa fees for performing artists in the United States

• We are aware of the concerns of the Canadian artistic community regarding the increased fees to obtain a visa in the United States.
• Canada and the U.S. each determine their respective immigration systems, including setting their individual application fee structures.

Background

The United States Citizenship and Immigration Services recently increased the filing fees for O-type visas (individuals with extraordinary ability or achievement) and P-type visas (internationally recognized athletes/entertainers). The Department of Homeland Security (DHS) published the proposed fee increases in the U.S. Federal Register on January 4, 2023. A public consultation process on this initiative concluded in March 2023 and received nearly 8,000 submissions, including over 300 submissions mentioning Canada. The U.S. delayed implementation of the increased fees until March 2024. The rate increase saw the filing fees for regularly processed O-type visa petitions increase from $460 to $1,655, an increase of 260%. Processing fees for P-type rose by 251% from $460 to $1,615.

Visa fees for performing artists or other cultural-related occupations are not covered under CUSMA, and, as such, the U.S. retains the right to set visa fee levels as part of its general immigration measures. Under CUSMA the core obligation on processing of applications only requires that any processing fees be commensurate to the cost of services rendered (which is the rationale used by U.S. authorities to justify this fee increase).

Canadian stakeholders view these fees as a discriminatory barrier to Canadian artists seeking to perform in the United States. Canada does not impose visa requirements on American artists seeking to perform in Canada. According to the U.S. Department of State Bureau of Consular Affairs, 76 visas were issued to Canadians under the “O visa” category in 2022; and 34 visas were issued to Canadians under the “P visa” category in 2022

MINT@CIIT - Additional material on seizure of goods from Xinjiang

Responsive - Forced Labour in Xinjiang

• Deeply concerned by ongoing human rights violations against Uyghurs and Muslim minorities in China.
• Government is aware of recent information linking Xinjiang forced labour to Canadian solar and fishery supply chains.
• Government is working to better understand the involvement of Xinjiang forced labour within Canadian supply chains, as well as intersections with Canadian legislation, such as the import prohibition.
• Canada introduced several measures in 2021 to help address risk of being complicit in human rights abuses in Xinjiang, China.
• Currently working with federal partners to introduce new legislation in 2024 that will eradicate forced labour from Canadian supply chains and strengthen the existing import prohibition on goods produced with forced labour.
• Remain committed to understanding and addressing forced labour in Canadian supply chains.

Responsive – Why hasn’t Canada adopted a Foreign Entities list like that found in the United States?

• The U.S. operates under a different regime and evidence threshold. Canada collaborates closely with the United States, and other partners and international organizations to strengthen global efforts to address forced labour.
• The import prohibition is only one component of a range of initiatives that Canada is advancing to address forced labour.
• Canada has a number of measures, including federal procurement requirements, a new Responsible Business Conduct Strategy, and enforceable labour provisions in trade agreements. This is in addition to the government’s commitment to advance legislation to eradicate forced labour from Canadian supply chains.
• Departments whose ministers share mandate commitments on these issues are also continuing to work together and with stakeholders and counterparts in other countries to strengthen the import prohibition on goods made with forced labour, and other Canadian initiatives to address exploitation in supply chains.

Background

Credible sources have indicated a campaign of repression and human rights violations by the Chinese government against Uyghurs and other predominantly Muslim communities in Xinjiang. Violations have a strong commercial dimension and supply chain implications, whether through the importation of goods produced using forced labour, the use of Canadian exports in repression, or business dealings with implicated entities. Solar supply chains, fish processing, and automotive sector inputs have received recent public attention and scrutiny related to Xinjiang forced labour. Canada is currently assessing new and existing legislative tools that will help address these concerns. For example, Canadian companies must sign the Xinjiang Integrity Declaration (XID) prior to receiving support from the Trade Commissioner Service if they are: sourcing directly or indirectly from Xinjiang of entities relying on Uyghur labour; established in Xinjiang; or, seeking to engage in the Xinjiang market. By signing the Declaration, companies affirm they are aware of the human rights situation in Xinjiang, are not labour or other human rights violations and commit to conducting due diligence on their suppliers in China.

Québec Bill 96 and Draft Regulations

Issue:

In June 2022, the Government of Québec passed Bill 96 (An Act respecting French, the official and common language of Québec), which introduces new French language requirements in the province of Québec related to trademarks and marking/labelling. Bill 96 and the accompanying January 2024 regulations are expected to come into force in June 2025. A range of Canadian and U.S. stakeholders have expressed concerns that new French language requirements will limit their ability to maintain a business presence in Québec, as well as in Canada more generally. The Office of the United States Trade Representative (USTR) has raised this matter with the Government of Canada [REDACTED] with news reporting suggesting that U.S. stakeholders have lobbied USTR to consider trade sanctions against Canada in response to Québec’s measures.

Background:

Bill 96 modifies more than twenty provincial laws, including the Charter of the French Language and the Civil Code of Québec. The measures narrow the existing exception for the use of non- French language on public signs and on marking/labelling on products and packages in Québec. While Québec’s existing exception permits the use of non-French language on “recognized trademarks” provided that there is no corresponding French version registered, the amendments narrow this exception by requiring that any “generic” or “descriptive” terms on a product or package be displayed in French, including when the terms are elements of registered trademark. The new measures will limit the use of non-French trademarks in Québec to those trademarks that are already registered in Canada, unless a corresponding French version is already registered. The amendments also require that any inscription related to the use of a product (including containers, wrapping, and accompanying documents, as well as inscriptions that are permanently engraved, baked, or inlaid on a product) must appear in French, in addition to any other language. This currently only applies to inscriptions related to the safety of a product.

Further to concerns expressed by stakeholders regarding the possibility that trademarks filed with the Canadian Intellectual Property Office (or CIPO) may not necessarily be registered in advance of the 2025 entry into force of the amendments due to a “backlog” of applications with CIPO, Québec’s draft regulations now broaden the term “registered trademark” to include a trademark applied for with CIPO. This means that a trademark application made to CIPO before June 1, 2025 would not need to meet all of the requirements of Bill 96. Note that recent news erroneously suggests that the CIPO backlog remains an issue for stakeholders, which is not the case because this matter has been addressed in Québec’s draft regulations.

Nevertheless, a number of Canadian and U.S. stakeholders have expressed concerns that Québec’s language requirements will limit their ability to maintain a business presence in the province, as well as in Canada more generally, given the costs associated with translating products and packaging. For instance, the [REDACTED] maintains that the new requirements would require changes to manufacturing supply lines, such as for inscriptions engraved or inlaid on a product, including in the auto, aerospace,

construction, and home appliance sectors. The [REDACTED] has also led a coordinated advocacy campaign against Bill 96, and has lobbied USTR to consider trade sanctions against Canada in response to Québec’s measures. [REDACTED]

[REDACTED] At this time, Québec’s timeline for finalizing its regulations in advance of the June 2025 entry into force of the measures is not clear. In the meantime, the Government of Canada encourages that all businesses with concerns about the new requirements to consult a licensed trademark agent or lawyer in Québec.

Key messages:

• The Government of Canada is aware of stakeholder concerns regarding Québec’s Bill 96 and has relayed these concerns to the Government of Québec.
• We understand that the Government of Québec is still finalizing its regulations to implement Bill 96.
• The Government of Canada continues to closely follow these developments, and remains in contact with the Government of Québec on this matter.

RESPONSIVE – If asked whether the U.S. has raised this matter with Canada, including the possibility of trade sanctions

• The U.S. government has not raised the possibility of imposing sanctions on Canada over Québec’s Bill 96.
• U.S. officials have engaged with the Government of Canada to share concerns of U.S. stakeholders regarding Québec Bill 96 and accompanying regulations.
• Canada has shared these concerns with the Government of Québec, and is closely following developments.

Responsive – If asked about the consistency of Quebec’s measures with Canada’s WTO and CUSMA obligations

• As with all of Canada’s international trade obligations, Canada takes its WTO and CUSMA commitments very seriously.
• Government of Canada continues to follow developments on Québec’s regulations in this area, which have not yet been finalized.

Responsive – If asked about trademarks

• The Government of Québec’s Bill 96 does not affect federally protected trademark rights.
• Trademarks can be registered with the Canadian Intellectual Property Office (CIPO) in either of Canada’s official languages, English or French, and any trademarks registered by CIPO are and will remain valid.
• Québec’s measures will allow for use of non-French trademarks that have been applied for by the June 2025 entry into force but are not yet registered.
• The Government of Canada has advised that any companies operating in Québec that have concerns regarding the implications of Québec’s measures for the language used in their signs and advertising, like trademarks, should consult with a licensed trademark agent or a licensed legal practitioner in Québec.