Connect with us
[the_ad id="89560"]

Alberta

The USMCA’s self-destruct button: review clause conjures fears of 2018 all over again

Published

7 minute read

WASHINGTON — It’s been less than three years since the U.S.-Mexico-Canada Agreement replaced NAFTA as the law of the land in continental trade, and there are already hints of the existential anxiety that preceded it.

That’s because of the so-called “sunset provision,” a clause that reflects the lingering working-class distrust of globalization in the U.S. that helped Donald Trump get elected president back in 2016. 

Article 34.7 of the agreement, the “review and term extension” clause, establishes a 16-year life cycle that requires all three countries to sit down every six years to ensure everyone is still satisfied. 

That clock began ticking in the summer of 2020. If it runs out in 2026, it triggers a self-destruct mechanism of sorts, ensuring the agreement — known in Canada as CUSMA — would expire 10 years later without a three-way consensus.

For Canada, the sunset provision “is a minefield,” said Lawrence Herman, an international trade lawyer and public policy expert based in Toronto.

“It is certainly not a rubber-stamping exercise — far from it.”

Of particular concern is the fact that the provision doesn’t spell out in detail what happens if one of the parties indicates that it won’t sign off on extending the deal without significant changes to the terms. 

“The concern is that this could mean, in effect, that we’ll be into a major renegotiation of CUSMA in 2026,” by which time the political landscape in both the U.S. and Mexico could look very different, Herman said.

“What happens then? The government and business community need to be thinking about this and start preparing the groundwork and doing contingency planning now.” 

The deal as it stands is hardly perfect, if the number of disputes is any indication. 

In the 33 months since USMCA went into effect in July 2020, 17 disputes have been launched among the three countries, compared with a total of 77 initiated over the course of NAFTA’s 25-year lifespan. 

The U.S. remains unhappy with how Canada has allocated the quotas that give American dairy producers access to markets north of the border. Canada and Mexico both took issue with how the U.S. defined foreign auto content. And Canada and the U.S. oppose Mexico favouring state-owned energy providers.

The Canada-U.S. disputes are likely to be on the agenda when Prime Minister Justin Trudeau sits down later this week in Ottawa with President Joe Biden, his first official visit to Canada since being sworn in two years ago. 

“The president’s really excited about doing this, about going up there and really going to Ottawa for no other purpose than the bilateral relationship,” National Security Council spokesman John Kirby told the White House briefing Monday. 

Prior meetings between the two have typically been on the margins of international summits or at trilateral gatherings with their Mexican counterpart, Andrés Manuel López Obrador. 

Kirby cited climate change, trade, the economy, irregular migration and modernizing the continental defence system known as Norad as just some of “a bunch of things” the two leaders are expected to talk about.

“He has a terrific relationship with Prime Minister Trudeau — warm and friendly and productive.”

Trade disputes notwithstanding, the overwhelming consensus — in Canada, at least — is that USMCA is vastly better than nothing. 

“I don’t want to be alarmist about this, but we cannot take renewal for granted,” said Goldy Hyder, president and CEO of the Business Council of Canada, after several days of meetings last week with Capitol Hill lawmakers. 

Constantly talking up the vital role bilateral trade plays in the continent’s continued economic health is a cornerstone of Canada’s diplomatic strategy. The message Hyder brought home from D.C.? Don’t stop now.

“We met several senators, we met people from the administration, and their message was, ‘Be down here. Make your case. Continue to remind Americans of the role that Canada has in their economy,'” he said. 

“We’ve got to … be a little less humble in the United States and start reminding Americans just how much skin in the game that they have in Canada.”

That can be a challenging domestic political truth in the U.S., where deep-seated resentment over free trade in general and NAFTA in particular metastasized in 2016 and persists to this day. 

Biden likes to put a blue-collar, Buy American frame around policy decisions. His original plan to advance electric-vehicle sales saved the richest incentives for vehicles assembled in the U.S. with union labour.

Aggressive lobbying by Canada helped avert a serious crisis for Canada’s auto sector; the Inflation Reduction Act that Biden ultimately signed included EV tax credits for vehicles assembled in North America. 

For many, it was a cautionary tale about the importance of arguing Canada’s interests in Washington. 

A strong U.S. depends on a strong Canada, said Rob Wildeboer, executive chairman and co-founder of Ontario-based auto parts supplier Martinrea International Inc., who took part in last week’s D.C. meetings.

“The USMCA and the ability to move goods across borders is extremely important to us, it’s extremely important to our industry, it’s extremely important to this country, and it’s a template for the things we can do together with the United States,” Wildeboer said. 

“In order for the U.S. to be strong, it needs strong neighbours, and Canada’s right at the top of the list.”

This report by The Canadian Press was first published March 21, 2023.

James McCarten, The Canadian Press

Storytelling is in our DNA. We provide credible, compelling multimedia storytelling and services in English and French to help captivate your digital, broadcast and print audiences. As Canada’s national news agency for 100 years, we give Canadians an unbiased news source, driven by truth, accuracy and timeliness.

Follow Author

Agriculture

Lacombe meat processor scores $1.2 million dollar provincial tax credit to help expansion

Published on

Alberta’s government continues to attract investment and grow the provincial economy.

The province’s inviting and tax-friendly business environment, and abundant agricultural resources, make it one of North America’s best places to do business. In addition, the Agri-Processing Investment Tax Credit helps attract investment that will further diversify Alberta’s agriculture industry.

Beretta Farms is the most recent company to qualify for the tax credit by expanding its existing facility with the potential to significantly increase production capacity. It invested more than $10.9 million in the project that is expected to increase the plant’s processing capacity from 29,583 to 44,688 head of cattle per year. Eleven new employees were hired after the expansion and the company plans to hire ten more. Through the Agri-Processing Investment Tax Credit, Alberta’s government has issued Beretta Farms a tax credit of $1,228,735.

“The Agri-Processing Investment Tax Credit is building on Alberta’s existing competitive advantages for agri-food companies and the primary producers that supply them. This facility expansion will allow Beretta Farms to increase production capacity, which means more Alberta beef across the country, and around the world.”

RJ Sigurdson, Minister of Agriculture and Irrigation

“This expansion by Beretta Farms is great news for Lacombe and central Alberta. It not only supports local job creation and economic growth but also strengthens Alberta’s global reputation for producing high-quality meat products. I’m proud to see our government supporting agricultural innovation and investment right here in our community.”

Jennifer Johnson, MLA for Lacombe-Ponoka

The tax credit provides a 12 per cent non-refundable, non-transferable tax credit when businesses invest $10 million or more in a project to build or expand a value-added agri-processing facility in Alberta. The program is open to any food manufacturers and bio processors that add value to commodities like grains or meat or turn agricultural byproducts into new consumer or industrial goods.

Beretta Farms’ facility in Lacombe is a federally registered, European Union-approved harvesting and meat processing facility specializing in the slaughter, processing, packaging and distribution of Canadian and United States cattle and bison meat products to 87 countries worldwide.

“Our recent plant expansion project at our facility in Lacombe has allowed us to increase our processing capacities and add more job opportunities in the central Alberta area. With the support and recognition from the Government of Alberta’s tax credit program, we feel we are in a better position to continue our success and have the confidence to grow our meat brands into the future.”

Thomas Beretta, plant manager, Beretta Farms

Alberta’s agri-processing sector is the second-largest manufacturing industry in the province and meat processing plays an important role in the sector, generating millions in annual economic impact and creating thousands of jobs. Alberta continues to be an attractive place for agricultural investment due to its agricultural resources, one of the lowest tax rates in North America, a business-friendly environment and a robust transportation network to connect with international markets.

Quick facts

  • Since 2023, there are 16 applicants to the Agri-Processing Investment Tax Credit for projects worth about $1.6 billion total in new investment in Alberta’s agri-processing sector.
  • To date, 13 projects have received conditional approval under the program.
    • Each applicant must submit progress reports, then apply for a tax credit certificate when the project is complete.
  • Beretta Farms has expanded the Lacombe facility by 10,000 square feet to include new warehousing, cooler space and an office building.
    • This project has the potential to increase production capacity by 50 per cent, thereby facilitating entry into more European markets.

Related information

Continue Reading

Alberta

Alberta Next: Alberta Pension Plan

Published on

From Premier Danielle Smith and Alberta.ca/Next

Let’s talk about an Alberta Pension Plan for a minute.

With our young Alberta workforce paying billions more into the CPP each year than our seniors get back in benefits, it’s time to ask whether we stay with the status quo or create our own Alberta Pension Plan that would guarantee as good or better benefits for seniors and lower premiums for workers.

I want to hear your perspective on this idea and please check out the video. Get the facts. Join the conversation.

Visit Alberta.ca/next

Continue Reading

Trending

X