Tag Archives: cusma

Canada and the CUSMA Crossroads: Policy Recommendations for Ottawa

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As whispers from Washington grow louder about replacing the trilateral CUSMA with two separate bilateral trade agreements, one with the United States, one with Mexico, Canada finds itself at a pivotal moment. How Ottawa responds over the next eighteen months could determine not just near-term economic outcomes, but the resilience and global standing of the Canadian economy for decades to come.

The U.S. sees bilateral deals as a way to tighten rules of origin, enforce labour and environmental standards more aggressively, and gain leverage on regulatory issues. While these measures might appear to offer Canada the chance for a “customized” agreement, they also carry serious risks: fractured supply chains, diminished investment, and reduced bargaining power on the global stage. Canada cannot afford to approach this negotiation as a passive actor.

Policy Recommendations

1. Protect Integrated Supply Chains
Canada should insist on provisions that preserve existing supply-chain networks spanning Canada, the U.S., and Mexico. Standstill clauses and grandfathering mechanisms should ensure that Canadian investments in autos, aerospace, electronics, and agriculture are not penalized under stricter U.S. bilateral rules.

2. Negotiate Realistic Rules of Origin
Ottawa should push for rules that recognize Canada’s production capacities and global sourcing realities. Overly restrictive thresholds would damage competitiveness; instead, the agreement should balance protection of U.S. interests with Canada’s need to remain a hub of North American manufacturing.

3. Secure Trade Policy Autonomy
A bilateral agreement must not lock Canada into U.S.-imposed restrictions on third-party trade. Canada needs the freedom to deepen relationships with the EU, Asia-Pacific, and emerging markets. Ottawa should insist on explicit clauses preserving this sovereignty.

4. Embed Environmental and Labour Standards Strategically
Canada should leverage the negotiation to advance shared values on environmental protection and labour rights. By including enforceable, mutually beneficial standards, Canada can turn compliance obligations into a competitive advantage for Canadian businesses, particularly in clean energy, forestry, and high-value manufacturing.

5. Diversify Market Access
The U.S. will always be Canada’s largest trading partner, but Ottawa must use this moment to accelerate diversification. Strong bilateral terms with the U.S. should complement, not replace, agreements with other regions. This strategy will reduce vulnerability to U.S. policy swings and strengthen Canada’s global economic resilience.

6. Maximize Leverage on Strategic Resources
Canada possesses energy, critical minerals, and clean-tech assets of global significance. Ottawa should use the bilateral framework to secure access to U.S. markets without ceding control or undervaluing these resources, ensuring that Canada retains long-term strategic advantage.

7. Prepare for Transition and Communication
Any shift from CUSMA to bilateral arrangements will create uncertainty for businesses. Ottawa should implement a clear, phased transition plan and communicate proactively with domestic industries. Providing certainty and guidance can prevent disruption, maintain investment confidence, and reinforce Canada’s reputation as a stable, reliable partner.

8. Protect Agricultural Supply Management Sectors as Part of Food Security Strategy
Canada’s supply-managed sectors — dairy, poultry, and eggs — are vital not only to farmers’ livelihoods but to national food security. Any bilateral agreement must safeguard these systems against excessive U.S. pressure or forced liberalization. This will ensure that Canadians maintain stable domestic production, buffer against global market volatility, and preserve a cornerstone of rural economic resilience.

Conclusion
The U.S. drive toward bilateral deals presents both danger and opportunity. Canada must approach negotiations not as a defensive exercise in preservation, but as a chance to reshape its trade strategy for a new global environment. By insisting on supply-chain continuity, flexible rules of origin, strategic autonomy, market diversification, and protection for food security, Ottawa can turn potential disruption into a springboard for long-term economic strength.

Canada’s response will signal whether it remains a reactive participant in North American trade or assumes the role of confident, sovereign actor capable of shaping its own destiny. This is not a time to defer to Washington. It is a time to plan boldly, negotiate shrewdly, and safeguard Canada’s future.

North America’s Strategic Choice: Integration or Irrelevance in a Multipolar World

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As the global trade landscape shifts, alliances such as BRICS and infrastructure developments like the International North-South Transport Corridor (INSTC) are redrawing the map of commerce. These projects are not just economic arrangements, they are strategic assertions of a multipolar world, where emerging economies are building financial systems and trade networks that bypass traditional Western-dominated institutions. In this changing environment, deeper integration across North America is no longer just desirable, it is essential. The United States, Canada, and Mexico share geography, economic interdependence, and complementary strengths. But instead of leaning into this partnership, the U.S. has at times acted in ways that undermine its closest allies, and in doing so, it is undercutting its own long-term strategic interests.

BRICS, now expanded to include nations like Egypt and the UAE, is working toward reducing reliance on the U.S. dollar and building alternative financial infrastructure. Simultaneously, the INSTC, a 7,200-kilometre multimodal corridor linking India, Iran, Russia, and Europe, offers a faster and cheaper trade route than the Suez Canal. These shifts are enabling new alignments between Asian, Eurasian, and Global South nations. In contrast, the U.S. risks being left behind unless it reinvests in its regional relationships. North America, bound by the Canada-United States-Mexico Agreement (CUSMA), already possesses a solid legal and regulatory foundation. What is missing is the political will to push that foundation into a fully integrated economic zone.

Closer North American integration could strengthen supply chains, enhance competitiveness, and boost regional innovation. Mexico’s manufacturing power, Canada’s resource wealth and technological expertise, and the U.S.’s financial and consumer might together could create a resilient and globally influential economic bloc. However, protectionist impulses from Washington, such as tariffs on Canadian aluminum, trade disputes over softwood lumber, and threats against Mexican imports, erode trust. These actions push Canada and Mexico to expand trade elsewhere, increasing their engagement with China, the EU, and the Asia-Pacific. While diversification is strategically wise, a fragmented North America plays directly into the hands of BRICS and INSTC-aligned actors.

Still, for Canada and Mexico, investing further in North American integration remains the most strategically sound choice. Despite political turbulence, the U.S. offers unmatched access to capital, consumer markets, and legal protections. CUSMA provides a rules-based framework that supports long-term stability more effectively than newer or looser trade deals. And while deeper trade ties with China or Europe may offer short-term gains, they cannot replicate the geographic, cultural, and logistical synergies of the North American relationship. Rather than turning outward in frustration, Canada and Mexico can use their economic leverage to influence U.S. trade policy from within, helping to shape a trilateral vision rooted in shared democratic values and mutual prosperity.

The U.S., for its part, must recognize that its global position depends not just on military strength or Silicon Valley innovation, but on the strength of its closest partnerships. The path forward lies not in undermining allies, but in building with them a regional powerhouse capable of competing with the rising multipolar world. Failing to do so means ceding both economic and geopolitical ground – to rivals who are already moving with speed and purpose.