The Canada-United States-Mexico Agreement (CUSMA) was, and remains, a necessary deal for our businesses. It’s not perfect, but it provides a crucial element of certainty for anyone doing cross-border trade.
The negotiations are now done, but the process is not yet complete. It will only be final when each of the three countries passes enabling legislation to bring the agreement into force. And there is still important unfinished business: removing the illegal and unjustified steel and aluminum tariffs that the U.S. administration had promised would be resolved as part of the broader agreement.
President Trump needs to understand that Parliament is scheduled to rise at the end of June and not return until after the October election. If Canadian ratification doesn’t take place before MPs leave Ottawa, it won’t happen until after a new Parliament has been formed.
The U.S. government must do two things before Parliament can act. First, it has to decide whether it is satisfied with the agreement as written or will insist on changes. Canadian and Mexican legislators need to know what they’re voting on. Otherwise, they might have to revote on an agreement that has been amended.
Even more importantly, the steel and aluminum tariffs that are killing tens of thousands of jobs on both sides of the border need to be removed. Not only was that the promise made by the President and his team, but it is a precondition to swift ratification in each of our three countries, including the United States. Republican Senator Charles Grassley, the Chairman of the U.S. Senate Finance Committee, could not have been clearer last week. He warned, “The tariffs are going to come off because the President has a good agreement. It’s just a matter of his realizing that nothing’s going to happen until the tariffs go off. And so the tariffs come off if he wants to get a win.”
Within the narrow confines of U.S.-Canada trade relations, the concerns of Congressional Democrats are well-known on CUSMA’s labour, environment and pharmaceutical patent protection provisions. It would be a fool’s errand to speculate about the final outcome of the inevitable horse-trading within the Democratic caucus, and between Congress and the White House to deliver the deal. No one can really discern at this stage to what extent the White House will accept the demands of the Congressional Democrats and how we will get there.
While the tendency is to hold up the U.S. Trade Promotion Authority as the immutable gospel of trade agreement approvals in Washington, the process is far more secular. There have been signals that House Speaker Nancy Pelosi could delay bringing CUSMA to the floor of the House of Representatives and effectively stop the clock on the process.
On our side of the border, I have no doubt that the deal will go through our Parliament even in the febrile political environment of a Canadian federal election year. Our main political parties understand the mission-critical nature of CUSMA. While there may be bumps along the way, our Parliament will not jeopardize our country’s most important trade relationship once the tariffs issue has been resolved and we know what we’re being asked to approve.
Our legislative system provides the tools to move quickly if needed, as we saw with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. However, Foreign Minister Chrystia Freeland has appropriately served notice that letting the tariffs remain in place will make it more difficult for the government to move quickly with CUSMA legislation, particularly in an election year.
A forgotten point in all of this, too, is that whatever is cooked up between Congress and the White House will have to be acceptable to Canadian interests, as well as Mexico.
Last week an International Monetary Fund study found that maintaining the tariffs would cost us $650 million. It might sound small in the overall Canadian economy, but the tariffs and our regrettably necessary countermeasures are not creating winners. Only losers.
I have heard first-hand from Canadian businesses about the decisions companies are having to make, especially those operating on already thin margins. Tariffs raise input costs to make businesses less competitive. They also hurt consumers’ pocketbooks by making every dollar go a little less further.
Instead of having tariff tit-for-tats, the U.S., Canada and our allies should be tackling global steel over-production problems. We need to forcefully make this case to the Americans.
The U.S. Congress will no doubt move at its self-determined cadence. Let’s use this time where it is best invested: getting these illegal tariffs removed.
Honourable Perrin Beatty, P.C., O.C.
President and CEO
Canadian Chamber of Commerce