Canada and the United States remain "far apart" in their trade negotiations as the July deadline for a review of the Canada-U.S.-Mexico Agreement (CUSMA) approaches, according to former chief trade negotiator Steve Verheul. Speaking at the Public Policy Forum's Canada Growth Summit in Toronto, Verheul noted that the U.S. is seeking concessions from Canada on sensitive issues, while Canada wants movement on major concerns. He expressed skepticism about short-term progress, suggesting the review deadline will likely pass without a significant announcement.
Limited Room for Negotiation
Verheul emphasized that Canada cannot force the U.S. to conclude negotiations or dictate an endgame. "We can't entice them to an end game," he said, adding that U.S. domestic politics, rather than Canadian actions, are more likely to bring Washington back to the table. Reports from last fall indicated a potential grand bargain that collapsed at the last minute, but Verheul believes the current impasse will persist.
North American Trade Dynamics
On a positive note, Verheul stated that Mexico is also making little progress in its trade talks with the U.S., and the U.S. appears keen to preserve North America as a trade zone. He suggested that trilateral cooperation could revitalize discussions. "There is a more common ground there with respect to how we deal with the North American market," he said. However, as Canada diversifies its trade through deals with non-North American countries, it becomes harder to agree on protective trade zones with Mexico and the U.S.
Impact of Tariffs and CUSMA
Despite ongoing U.S. tariffs, Verheul noted that a high proportion of goods traded among the three countries cross borders duty-free under CUSMA, which "takes the heat off" all parties. Nevertheless, Canadian diplomat Louise Blais, who spoke on the same panel, stressed the urgency of resolving tensions. She pointed to businesses and consumers suffering from tariffs and inflation, with companies going bankrupt. "The longer trade tensions persist, the harder it will be to patch up the situation," Blais warned, noting that the pandemic had already weakened corporate resilience.
Conclusion
Verheul's remarks underscore the challenges ahead for Canada-U.S. trade relations, with no immediate breakthrough expected. The July review may come and go without major changes, leaving businesses to navigate continued uncertainty.
