Colin Robertson, the Vice President and a fellow of the Canadian Global Affairs Institute, said Canada’s ratification of the USMCA restores economic stability to North America during an uncertain time as the result of dropping oil prices and the implications of COVID-19.
On Friday, March 20, the House of Commons passed legislation to ratify the United States-Mexico Canada Agreement, after which the Senate signed off on the bill.
Robertson said ratification of the agreement by all three signatories brings much-needed stability back to the North American trading platform.
The uncertainty had frozen investment by Canadians in Canada and certainly by foreign investment in Canada, as remarked by the Governor of the Bank of Canada. With a similar situation in Mexico, it brings stability back to North America.
“We have a young population, highly educated, a massive market of 500 million people with the United States, Mexico and Canada, lots of energy, and the bonus of working together,” said Robertson. “The supply chain established since NAFTA came into effect in 1994 is working well and working better, this agreement gives assurance to foreign investors and within North America that you can continue to do business with an agreed-to set of rules that includes dispute settlement.”
Besides, Robertson said this much needed North American stability because of COVID-19 and the dropping price of oil, is timely.
Robertson realizes each country still must go through the steps to confirm each country meets conditions for implementation, after which the USMCA will replace the current North American Free Trade Agreement.

He said when Donald Trump became president in 2016, part of his platform was the worst trade deal ever, that is NAFTA, which he would rescind. The negotiations over the future of NAFTA started since his inauguration in January 2017.
The negotiations took almost two years with an agreement reached on the text last December and further amendments when it went through the U.S. Congress earlier this year. Next, the Canadian parliament, which had looked at the legislation last year before it rose for the election, and now considered the legislation, and it mirrors what the U.S. and Mexico passed.
Robertson hopes it will become effective later this year or perhaps January of 2021, it will depend on when all of this stuff gets done, then the agreement will take effect.
The current NAFTA still operates, but there are new provisions in the new Canada-US-Mexico Agreement or US-Mexico-Canada Agreement that affects pharmaceutical prices, for example. Rules that relate to the trade-in rules of origin for it to qualify for free trade in North America, there has to be a certain percentage built at a certain wage level, and this will have some implications for Mexico.
Robertson said the agreement is in effect for six years and then renewed for another six years.
“In reality though, my sense is that we will, because this is what they call an evergreen agreement with negotiators meeting to take into account changes to, for example, digital commerce, I suspect that we will be making small modifications to this evergreen Canada-US-Mexico Agreement over the coming years,” he said. “I do not anticipate any problem after six years because I suspect all three countries will understand how important it is, and I think we’ll just keep rolling this agreement forward.”
He said the trade agreement for Canada is significant because 75 per cent of exports go to the United States. Eighty per cent of Mexico’s exports go to the U.S. For Canada and Mexico, getting the security of this agreement once again will mean that investors can put money into North America and conduct trade without a lot of problems.
It doesn’t solve everything because the US-China phase one agreement slightly sideswipes Canada and not sure what will happen in phase two. World markets are in turmoil because of COVID-19, and of the decision by the Saudis and the Russians not to reach agreement stabilizing the outflow of oil.
“So in uncertain times, it is good to have an insurance policy that you can rely upon and that insurance policy in terms of trade and investment for Canada is always the relationship within North America. So that at least is settled for the next six years.” •
—By Harry Siemens