Canadian leaders have spent weeks fighting to avoid a threat to the president of the United States, Donald Trump, to impose 25 percent tariffs on the goods that direct the side of the state from this side of the border.
The American leader repeated that threat in Thursday afternoon, only two days before the date of February 1, his administration suggested that tariffs could be implemented.
In the midst of these tensions, CBC readers have been asking how it is possible for the United States to do this when it signed the Canadá-US-Mexico (Cusma) agreement: the commercial agreement that arose after Trump forced a renegotiation of the agreement of Free trade from North America (NAFTA) not long ago.
However, experts in economics and commercial law say that the United States could, under Cusma, cite national security as a justification of their actions and advance with tariffs knowing that Canada cannot prevent that from happening.
“A commercial agreement is just a treaty … and treaties can break,” said Gust Van Harten, a commercial law professor and investment at Toronto University.
With the president of the United States, Donald Trump, threatening with economic tariffs, Adrienne Arsenault of the National asks Alex Panetta and Catherine Cullen de CBC to break down what Trump really wants from Canada.
Erin Brown, partner of the law firm Norton Rose Fulbright and a member of his Transfording Commercial Law Task Force, agreed that Canada does not have to occur a tariff action of the United States, only through Cusma.
“The reality is that Cusma … has a lack of teeth,” he said in an interview.
In any case, the will of the United States to threaten Canada, and also Mexico, seems to underline the dissatisfaction of the Trump administration with the status quo, when it comes to commerce.
“I would interpret the tariffs (threatened) as a statement that they are destroying the trade agreement,” Torsten Søchting Jaccard, an assistant professor at the Vancouver Economy School of the University of British Columbia, said.
Why Cusma?
Trump had criticized the NAFTA before arriving at the White House. Cusma was negotiated during his first mandate in the Oval office.
Canada, Mexico and the United States agreed in the Cusma Agreement in the fall of 2018, but was modified the following year before the ratification finally occurred in 2020.
The Canadian government Summary of Cusma’s results He says that the agreement was aimed at strengthening the economic ties between the three parties while preserving the commercial benefits brought by NAFTA, with some adjustments “to address modern commercial challenges and opportunities.”
Robert Lighthizer, The United States Commercial Representative During the first Trump administration, At that time he praised the appearance of Cusma as “a historical achievement” in efforts to stimulate manufacturing and investment in the US economy.
Brown, by Norton Rose Fulbright, said the goal for Canada when signing commercial agreements such as Cusma is to facilitate trade, and that includes addressing rates.
“The fundamental principles of Cusma and the other trade agreements is that we are reducing or eliminating the rates,” he said.
Another objective of a commercial agreement as Cusma is to achieve “a sense of stability in the future,” says Jaccard de UBC, and points out that any action that the United States takes otherwise could undermine its reputation in trade.
However, there are indications that the Trump administration can have a combination of motivations to exercise a tariff threat now.
Tariff before, after Cusma
Canada already faced American tariffs during Trump’s first mandate in office, both before and after the existence of Cusma.
In the spring of 2018, a White House led by Trump cited national security when he went to Canadian steel with tariffs and 25 percent aluminum with 10 percent tariffs. Ottawa retaliates with his own tariffs. However, it was not until almost a year after the two parties announced that the tariffs would withdraw.
With the threat of American tariffs that are coming, many encourage buyers to buy Canadian, but Lyndsay Duncombe de CBC breakd down why it could be more difficult than you plan to buy Canadian.
But Trump again resorted to tariffs in August 2020, slapping a 10 percent tariff on Canadian aluminum, Again citing national security By imposing them. Canada, in turn, threatened retaliation measures, and on that occasion, the president of the United States arrested tariffs the next month.
A series of exceptions are established in Cusma, which includes An article about “Essential Security” which does not establish that nothing in the agreement prevents any of the parties “to apply measures that it considers necessary for the fulfillment of its obligations regarding the maintenance or restoration of international peace or security, or the protection of their own essential security interests. ”
The translation is that the United States can advance with tariffs using this justification.
Upon listening to Trump and other administration officials invoke concerns about traffic and fentanyl migration, Brown said the president’s administration may be leading to “an exception of national security type” to justify tariffs.
What can Canada do about it? I could find a dispute resolution process, but Van Harten from the University of York said it is not a process overnight and, in his opinion, there is no guarantee that Canada is successful at the end.
“Even if we win, the remedy is to authorize the sanctions of retaliation,” said Van Harten, and said that at the time it happened, any tax tariff would have already harmed the economy of Canada.
At a broader level, Brown said Trump does not seem to “feel too restricted” by the international order based on rules that has long governed trade. That can have implications for what to expect from your administration.
“I don’t think it’s ready to break it completely,” Brown warned, noting that Trump has He indicated that he wants to renegotiate Cusma.
The future
Van Harten argues that the recent actions of Trump are equivalent to “a complete policy change that takes us out of all this era of globalization”, with the declared approach of his administration to put the United States first.
And he says he believes that Canada will be perpetually at risk of the whims of the United States unless he chooses a different path.
“If we do not change … we will always be threatened,” said Van Harten, who says that Ottawa has long projected a misleading image of the benefits of trade agreements such as Cusma, after making the decision to go in that direction before the Talta
Jaccard of Ubc, on the contrary, would look for more in the open approach to continue by Canada to perform trade in the world as the way to follow.
He said that this could include working to extend Canada’s scope to other markets around the world, or see this country buying more internationally, instead of the United States.
