The first North American Leaders’ Summit in five years brought together Prime Minister Trudeau, US President Biden and Mexican President LÃ³pez Obrador in Washington, DC last Thursday. The result holds important lessons for Canadian businesses going forward.
In a bid to re-energize trilateral cooperation under the Canada-United States-Mexico Trade Agreement (ACCUM) which governs some US $ 1.5 trillion per year in North American trade, the three leaders in statements public spoke in positive terms of their common interest in an open and competitive North American economy, based on bilateral and trilateral agreements to promote commercial, environmental and infrastructural interests, as well as their shared commitment to an economy that benefits people. all segments of society, including workers, youth and others. The Prime Minister had separate bilateral talks with each of his counterparts and also met with representatives of Congress.
More specifically, the leaders agreed to:
- form a trilateral working group, building on an existing table between the United States and Mexico and on bilateral Canada-United States work under the “road map” agreed at the first meeting ( virtual) Trudeau with President Biden, to address regional supply chain issues, including a constant supply of minerals;
- develop a North American strategy to reduce methane;
- ban imports of products made by forced labor (due to reported abuses by China against the Uyghur population in its western region of Xinjiang);
- revive a North American task force on violence against Indigenous women and girls, which Prime Minister Trudeau and President Obama agreed to in 2016; and
- donate COVID-19 vaccines to Latin America and the Caribbean.
Bilaterally, the Prime Minister and President Biden agreed to:
- review the implementation of the bilateral roadmap for a renewed partnership between the United States and Canada, launched in February;
- promote innovation in sensitive and emerging technologies (including artificial intelligence and quantum computing), and shape global digital policies and governance;
- negotiate a bilateral science, technology and innovation agreement in 2022; and
- establish a strategic dialogue on the Indo-Pacific to promote regional security, the rule of law and good governance in the region.
However, points of disagreement dominated the discussions. Between the United States and Mexico, the stubborn challenge of border management in the face of large migratory flows has long defied easy resolution under successive Administrations. Although the Biden administration maintains the previous government’s “stay in Mexico” policies, the recent number of people seeking to cross the border from Mexico and Central America has increased and three times as many migrants have been migrated. detained by the American authorities only in 2020 But no new initiative resulted from the bilateral meeting of the two presidents.
For Canada, the proposed tax credit of up to US $ 12,500 for consumers purchasing âmade in Americaâ electric vehicles contained in the Infrastructure Bill, now passed by the House of Representatives, is a flagrant violation of the terms of CUSMA, which in its automotive provisions require equal treatment of cars manufactured in the three countries meeting a North American content requirement. The Prime Minister has made it clear that the measure is “counterproductive” to promoting North American trade, and said he has directly raised Canada’s broader concern about Buy America policies. President Obrador echoes the same sentiment, describing the failure to strengthen competitiveness on a North American basis as contributing to an “unacceptable imbalance” of economic power with China. President Biden responded without commitment, suggesting that the bill would undergo several modifications before taking final form through the Senate and returning to the House. For this reason, the Prime Minister and ministers reinforced their message during meetings with members of Congress, who will have a say in determining the final provisions of the bill to be sent to the President’s office.
The Prime Minister also referred to Michigan’s proposed blockage of Line 5 modernization, which, if implemented, could stop a significant volume of gas exports to the United States. For its part, the American side has already challenged the Canadian implementation of its dairy and cheese quotas under the ACCUM, and softwood lumber remains a perennial plant between the two countries and our respective industries.
According to reports, President Biden and Prime Minister Trudeau have expressed concerns to President Obrador over administrative and regulatory measures taken against private investors in the energy sector, including major changes to two laws on the energy sector. energy in favor of public enterprises and against private enterprises.
What are the main takeaways for Canadian businesses?
First, the summit and bilateral leaders’ meetings confirm that the three governments share a common interest in addressing key challenges, such as supply chain bottlenecks and the fight against COVID, and share a commitment in promoting workers’ well-being and an inclusive economy. More generally, the establishment of a Canada-United States strategic dialogue on the Indo-Pacific brings Canada closer to the United States and other Western allies with a view to a more concerted commitment to counter the economic influence and China’s growing policy in Southeast and Southeast Asian countries. . Even in areas of agreement, however, companies should be alert to initiatives that could affect the regulatory environment and, ultimately, costs, for example as the proposed strategy to reduce methane emissions unfolds. and that the measures require compliance with import bans on the products of forced labor. may impose more stringent reporting and accountability requirements.
Second, President Biden’s response to complaints from Mexico and Canada about the electric vehicle tax credit confirms the reality that even though former President Trump is no longer in office, the protectionist impetus of “America First Remains more generally. Biden’s top priority (as with all U.S. administrations) is not to strengthen business partnerships or friendships, but rather to win votes in the midterm elections of 2022 and beyond in wealthy states. Midwestern labor, automobiles and other manufacturers. , including Michigan and Pennsylvania, and on dairy, the Wisconsin farm vote.
Thus, unilateral actions by the United States that go against ACCUM or other treaty commitments remain a permanent risk, and the United States administration and Congress should continue to be vigorous in their search for ‘Stricter enforcement of US interests in areas ranging from agriculture and agribusiness to steelmaking. and aluminum. Therefore, while continued advocacy with allies in the United States is essential for the government and Canadian stakeholders, Canada will likely need to pursue formal dispute resolution procedures under CUSMA.
Third, as the Summit aimed to convey a common cause in strengthening North American competitiveness vis-Ã -vis China, the prospect of increased restrictions on the supply of Chinese inputs, in high-tech or related products, cannot be ruled out.
Canadian business and government must therefore remain proactive with suppliers and customers in the United States as advocates for an open and integrated North American industrial base. Supporting free trade in Canada and more actively exploiting the opportunities offered by Canada’s trade agreements in Europe, Asia and the Americas can improve competitiveness.