Question Period Note: CUSMA - General

• Canada, the United States and Mexico have agreed to amend certain elements of the new NAFTA to make it more progressive and inclusive, to improve the overall functioning of the Agreement and to facilitate ratification in all three countries.

• These changes will improve enforceability, worker and environmental protections, and access to medicines. The changes will also further strengthen the automotive rules of origin related to steel.

• The changes are good for Canada and good for Canadians.

• The Government of Canada is committed to working with the United States and Mexico towards the timely ratification and implementation of the Agreement, and to supporting Mexico’s efforts to implement its historic labour reforms.

Responsive – enforcement
• The NAFTA parties have updated provisions to strengthen the effectiveness of the state-to-state dispute settlement process.
• Importantly, these changes will ensure that disagreements between the Parties with respect to how the Agreement is to be implemented can be resolved efficiently and effectively.
Responsive - labour
• Updates to the labour chapter were made to strengthen the obligations and provide greater protections for workers.
• Importantly, Canada and Mexico have also agreed on an enhanced enforcement mechanism for labour, specifically with respect to the right to freedom of association and collective bargaining.
• This mechanism will complement Canada`s ongoing efforts to support Mexican labour reform.
Responsive – environment
• Changes to the environment chapter will strengthen obligations and enhance enforcement.
• A new commitment has been added that requires parties to implement their existing commitments under specific multilateral environmental agreements (MEAs).
Responsive – intellectual property
• The changes on intellectual property clarify that Parties continue to meet certain patent and pharmaceutical IP commitments in their domestic regimes, and that they retain flexibility under CUSMA to pursue domestic policy priorities in these areas.
• Most notably, Parties have agreed to remove the requirement to provide 10 years of data protection for biologics, meaning that Canada will no longer be required under CUSMA to make changes to its domestic regime in this area.

Responsive – autos rules of origin
• The changes to the automotive rules of origin will require automakers to purchase steel from North American producers in order for their vehicles to qualify as originating.
• Canada is a major producer of steel and this amendment is consistent with Canada’s objective of incentivizing the use of Canadian materials in the production of vehicles.
Responsive – aluminum
• Canada sought to include a parallel provision for aluminium, but trilateral support was not achieved on this point.
• Canadian aluminium producers successfully compete in global markets and we anticipate that they will continue to be preferred suppliers to the automobile industry.

Responsive – if asked about Mexican labour reform
• Effective implementation of the Agreement’s labour obligations is very important for Canada.
• We are particularly focussed on supporting Mexico’s labour reform efforts and are strongly committed to ongoing engagement on this issue.

The Parties signed a new protocol of amendment in Mexico City on December 10. Similar to the original Agreement signed on November 30, 2019, the amending protocol will be subject to a detailed verification following signature, with the intention of ensuring accuracy, clarity and consistency among the English, French and Spanish texts.
Status of Domestic Processes
Canada
• In order to advance Canada’s domestic process, implementing legislation needs to be introduced in Parliament.
• Prior to taking legislative action to implement the Agreement, the amending protocol would need to be tabled in Parliament in line with the Policy on the Tabling Treaties in Parliament.
United States
• The U.S. administration is expected to submit implementing legislation to Congress as soon as possible after signature. Once implementing legislation is submitted, trade promotion authority (TPA) provides for expedited consideration in Congress with a simple majority ‘up or down’ vote. While a maximum of 90 days is provided for Congressional consideration, the process can be completed quickly when political wills align.
Mexico
• In Mexico, the original Agreement was approved by the Senate on June 19, 2019. Given the modifications to the Agreement, it is expected that Mexico may need to revisit certain aspects of its domestic process, including a vote by the Senate.
• Until the new Agreement enters into force, the current NAFTA remains in force.
Negotiating Process
• Negotiations started in August 2017. Seven formal negotiating rounds were held before discussions transitioned into continuous intersessional engagement in April 2018 and May 2018.
• On June 1, 2018, the U.S. imposed Section 232 tariffs on Canadian and Mexican steel and aluminum.
• Mexico and the U.S. met bilaterally over the course of the July and August ostensibly to advance discussions on bilateral issues, including autos rules of origin. On August 27, the U.S. and Mexico announced a “preliminary United States–Mexico Trade Agreement”.
• On August 31, President Trump formally notified Congress of his intent to enter into an agreement with Mexico “and with Canada-if it is willing”.
• From August 28, 2018 to September 30, 2018, there were intensive negotiations between Canada and the U.S. On September 30, 2018, Minister Freeland and USTR Lighthizer announced that a deal had been reached on a modernized NAFTA.
• On November 30, Canada, the United States and Mexico signed the Canada-United States-Mexico Agreement (CUSMA) in Buenos Aires, on the margins of the G20 Leaders’ Summit.

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