CIIT meeting 4 · 2025-10-02 — Committee Evidence — LegisWatch

Summary

The committee studied Canada's trade relationship with the United States and preparations for the upcoming joint review of the Canada-United States-Mexico Agreement (CUSMA). Appearing were Martin Moen, Associate Assistant Deputy Minister, Trade Policy and Negotiations; Lynn McDonald, Director General, North America Trade Policy Bureau; and David Hutchison, Director General, Trade Strategy Bureau, all from the Department of Foreign Affairs, Trade and Development.

Martin Moen said discussions with the United States on sectoral tariffs, including those on steel, aluminum, autos, and softwood lumber, are active and ongoing, but he could not predict a resolution date. He emphasized that Canada is not waiting for the CUSMA review to address these tariffs and is working to convince U.S. stakeholders of the mutual benefits of trade, arguing that section 232 duties are unjustified for Canada. He disagreed with the suggestion that Canada's strategy of removing tariffs while the U.S. adds more is flawed, stating the broader effort includes messaging to U.S. business and political leaders about the harm tariffs cause to both economies.

Lynn McDonald explained that the CUSMA review, set for 2026 under article 34.7, is a review of the agreement's operation, not a renegotiation or reopening. She said Canada is conducting its second round of public consultations and engaging with provinces and territories, while analyzing areas where the agreement could be improved, such as dispute settlement, though she cautioned that Canada must balance its asks to avoid prompting further U.S. demands. She noted that areas like artificial intelligence and cybersecurity could be explored for trilateral cooperation.

David Hutchison said the trade commissioner service stands ready to support Canadian businesses in diversifying into new markets, and that trade infrastructure, such as ports, is a key consideration in the development of the government's trade diversification strategy. He did not provide specific details on changes to the service's approach compared to a year ago.

On supply management, Minister LeBlanc committed that there would be no breach or increase in quotas for dairy, and that import rules would not be changed, while Minister Sidhu gave a similar commitment for poultry in the context of Mercosur negotiations, though he did not guarantee no concessions. Minister Sidhu also said that while China is Canada's second-largest trading partner and presents opportunities, the government is being pragmatic and constructive in its approach. Officials noted that Canada and Mexico are working together on the CUSMA review, aiming for cooperative improvements rather than a confrontational renegotiation, and that the review is not a path to annual renegotiations. The committee did not debate procedural motions or votes.

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Witnesses · 3

Martin Moen

Associate Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development

Opening remarks

Thank you for your question. It's definitely a very important question right now. We are very much aware, of course, of the current situation for many Canadian exporters—certainly for the softwood lumber industry, steel and aluminum, and the auto sector, but also for many more. We've already heard about other issues, such as de minimis, etc. There are many issues. We're very aware that these issues are pressing and that diversification is an option, of course, but it's not an immediate option for many industries, so we are working very hard in all of these areas to see what is possible, to see where the solutions might be found. We are also looking at the question of predictability over the longer term, because for many, as was mentioned earlier, it is not simply a question of their access today to the United States or the situation today. It's a question of how comfortable they are about the longer term and how comfortable they are about making investments. We are very much aware of that. That's why, as we look to the review of CUSMA, which has provided some significant access to many Canadian exporters and therefore has alleviated the situation somewhat—not, of course, for…

Full testimony ↗

Lynn McDonald

Director General, North America Trade Policy Bureau, Department of Foreign Affairs, Trade and Development

Opening remarks

Thank you for the question. In CUSMA, also known as USMCA or T-MEC, depending on which country you're in, article 34.7 sets out the provisions and notes that in 2026, five years after the agreement came into force, the parties would take a review of the operation of the agreement and come forward with recommendations for consideration by the free trade commission, the ministers of the three parties. The review was pre-set at the time of the agreement coming into force. There would be a look at what is working well and where some improvements might be brought. Currently, all three countries are undergoing public consultations. For Canada, it's our second set of public consultations to get insight and input into what some of those recommendations might be on how to improve aspects of the operation of the agreement for consideration by the three parties. That's the general context for the review.

International Trade

Summary

Witnesses · 3