Canada and the United States are preparing to initiate formal discussions regarding their free trade agreement, known as the United States-Mexico-Canada Agreement (USMCA), in mid-January 2024. This announcement was made by the office of Canadian Prime Minister Mark Carney, who informed provincial leaders during a meeting on Thursday.
The upcoming discussions will be led by Dominic LeBlanc, the Canadian Minister of Intergovernmental Affairs, who is the designated point person for trade relations with the U.S. According to Carney’s office, LeBlanc will meet with U.S. officials to commence formal negotiations aimed at reviewing the trade pact.
Background on USMCA and Trade Dynamics
The USMCA, negotiated during the presidency of Donald Trump, is scheduled for a review in 2026, which includes provisions allowing for potential renegotiations. Following the conclusion of trade talks in October 2023, Carney met with provincial leaders to discuss the current state of trade relations with the U.S. Canada relies heavily on trade, with over 75% of its exports directed to the United States. Currently, many of these exports benefit from exemptions under the USMCA.
Trade relations between the two nations experienced tension last year when discussions aimed at reducing tariffs were halted after an advertisement campaign by the Ontario provincial government criticized U.S. tariffs. Carney indicated that, at that time, they were close to reaching an agreement on tariff relief in several sectors, including steel and aluminum, both of which are significantly affected by current tariffs.
Furthermore, Jamieson Greer, the U.S. Trade Representative, has pointed out that the upcoming review will focus on resolving U.S. concerns regarding Canadian policies on dairy products, alcohol, and digital services. These issues are expected to play a central role in the broader discussion surrounding the trade agreement.
Economic Significance and Future Outlook
Trade between Canada and the U.S. is substantial, amounting to nearly $3.6 billion CAD (approximately $2.7 billion USD) in goods and services crossing the border daily. Canada is the primary export destination for 36 U.S. states and supplies approximately 60% of U.S. crude oil imports, alongside being the largest foreign supplier of steel, aluminum, and uranium to the U.S.
During the meeting with provincial leaders, Carney emphasized that while U.S. access to Canada’s critical minerals and metals presents a potential opportunity, it is not guaranteed. He noted that Canada has other global partners, particularly in Europe, that are also keen to engage in trade discussions. “It’s part of a bigger discussion in terms of our trading relationship,” Carney stated, reflecting on the complexities ahead.
The upcoming discussions in January will be closely watched, as they may set the tone for future trade relations and economic collaboration between Canada and the U.S. With significant economic stakes on both sides, the outcome will be pivotal in shaping the landscape of North American trade.
