Canada and the United States are set to commence formal discussions regarding the review of their free trade agreement in mid-January 2024. The announcement was made by the office of Canadian Prime Minister Mark Carney, who confirmed the plans after a meeting with provincial leaders. Dominic LeBlanc, the designated Canadian representative for U.S.-Canada trade relations, will engage with U.S. counterparts to initiate these discussions.
The talks will focus on the United States-Mexico-Canada Agreement, known as USMCA, which is scheduled for review in 2026. This agreement, negotiated during the first term of former U.S. President Donald Trump, contains a clause that allows for potential renegotiation in the upcoming year. The discussions come at a crucial time, as Canada relies heavily on trade with the U.S., with more than 75% of its exports directed south.
Context and Challenges in Trade Relations
During a meeting with provincial leaders, Carney provided an update on the current state of trade relations. He noted that previously halted discussions regarding tariff reductions in areas such as steel and aluminum had resumed. Tariffs have adversely affected key sectors of the Canadian economy, including aluminum, steel, automotive, and lumber industries.
In the past, trade negotiations faced challenges, particularly after the Ontario provincial government launched an anti-tariff advertisement in the U.S. This led to a pause in discussions aimed at reducing tariffs. Carney emphasized that trade issues raised this week by U.S. Trade Representative Jamieson Greer are part of a broader conversation about continental trade and economic relations.
Greer highlighted that the upcoming review of the USMCA will depend on addressing U.S. concerns related to Canadian policies on dairy products, alcohol, and digital services. The need for a cooperative approach is crucial as both countries navigate these complex trade dynamics.
Significance of Trade Between Canada and the U.S.
Canada represents the top export destination for 36 U.S. states, with nearly CAD 3.6 billion (approximately USD 2.7 billion) worth of goods and services crossing the border every day. The U.S. imports approximately 60% of its crude oil from Canada and 85% of its electricity imports. Additionally, Canada is the largest foreign supplier of steel, aluminum, and uranium to the U.S., as well as a critical source of 34 minerals and metals that are vital to U.S. national security.
Carney remarked that U.S. access to Canada’s critical minerals is not guaranteed, stating, “It’s a potential opportunity for the United States, but it’s not an assured opportunity. This is part of a bigger discussion regarding our trading relationship, especially with other global partners, including those in Europe.”
As the January discussions approach, the focus will be on fostering a collaborative environment that addresses mutual concerns and strengthens the economic ties between Canada and the United States.
