USMCA Deal Would Have Left Canada in 'Difficult Position'

Canada's chief trade negotiator from 2017-21, Steve Verheul, notes that agreeing to the U.S. deal on Friday night would have been worse for Canada. The proposed agreement included tariffs against key Canadian exports in an integrated North American economy and against the fundamental obligations of the existing free trade agreement.

The auto industry faced a 15-per-cent tariff under the terms of the proposed deal without an exemption for Canadian content, which illustrates obstacles that other industries would have also faced. Signing a deal heavily slanted in the U.S.'s direction would have serious implications for Canada's long-term economic position and how it attracts investment.

The U.S. agenda is focused on reorienting rules of origin in their favour, greater alignment among the three parties on tariffs against imports from other countries (primarily China), and converging policies on investment screening and export controls. This would further lock Canada into a North American market with formal trade obligations that are even more tilted in the U.S.'s favour.

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