\t\tRead: 4 min\t\t<\/p>\n
During testimony<\/a> to Congress on Dec. 16 and 17, U.S. Trade Representative Jamieson Greer made clear that the United States\u2019 renewal of the Canada-U.S.-Mexico Agreement (CUSMA) is far from assured.<\/p>\n \u201cThe shortcomings are such that a rubber stamp of the agreement is not in the national interest,\u201d said Greer, adding the administration would recommend renewal only if those shortcomings were resolved.<\/p>\n Such statements have Canada considering whether to push for renewal of a trilateral agreement that includes Mexico, or to take a bilateral approach to North American trade.<\/p>\n \u201c\u200aI think everyone is thinking about the bilateral option,\u201d said Kathleen Claussen, a law professor at Georgetown University in Washington, D.C.\u00a0<\/p>\n \u201cWe know that this administration likes bilaterals,\u201d she said.\u00a0<\/p>\n CUSMA\u2019s uncertain future<\/p>\n North American trade was governed by bilateral agreements before trilateral ones. <\/p>\n In 1988, Canada and the U.S. entered the Canada\u2013United States Free Trade Agreement, a bilateral accord that was replaced in 1994 by the North American Free Trade Agreement (NAFTA), which added Mexico as a third partner.<\/p>\n CUSMA, known in the U.S. as the USMCA, is the trilateral trade pact that replaced NAFTA in 2020. It is subject to a mandatory review by July 1, 2026.\u00a0<\/p>\n If the parties cannot agree to extend CUSMA by this date, the agreement does not expire immediately. Instead, it would run to its current, 2036 termination date. And the parties would continue to meet annually about a potential extension.<\/p>\n In his congressional testimony, Greer outlined a wide range of concerns with the current U.S.-Canada trade relationship. These include supply management, Canada\u2019s Online Streaming Act and Online News Act, provincial procurement rules, alcohol distribution policies and customs procedures.<\/p>\n Greer said these issues would need to be resolved for the review to be successful.<\/p>\n \u201c[The U.S. trade office] will keep the president\u2019s options open, negotiating firmly to resolve the issues identified, but only recommending renewal if resolution can be achieved,\u201d Greer said.<\/p>\n Canada has so far signalled it has no intention of forfeiting supply management, a system that shields industries such as dairy and poultry from competition.\u00a0<\/p>\n \u201c[Supply management is] not the only reason we\u2019re locking horns with the U.S., but it\u2019s the one that never really goes away,\u201d Sylvain Charlebois, a professor at Dalhousie University, told Canadian Affairs in August.<\/p>\n The bilateral route<\/p>\n Ed Fast, Canada\u2019s international trade minister from 2011 to 2015, says a bilateral treaty with Washington would have greater economic upsides for Canada than the current trilateral framework.<\/p>\n In August 2018, during the final negotiations of the current agreement, Mexico \u201cthrew us under the bus,\u201d said Fast, who recently retired from politics. After three-way talks had failed to produce consensus<\/a>, the U.S. and Mexico had jointly resolved their issues, putting pressure on Canada to agree to their terms to remain part of the deal.<\/p>\n This time, if Canada and the U.S. were to approach talks one-on-one, they could focus on a narrow set of issues, says Fast, citing resource development and continental security<\/a> as two examples.\u00a0<\/p>\n Fast says it is imperative Canada maintain a strong trade relationship with the U.S. He dismisses the idea that Canada can meaningfully decouple from the U.S. by diversifying trade with Asian and European markets.\u00a0<\/p>\n \u201cQuite frankly, I consider that to be a fool\u2019s game,\u201d he said. \u201c\u200aWe will always have the United States as our largest economic partner; geography makes it so, culture makes it so, values make it so, supply chains make it so.\u201d<\/p>\n