Cross-cumulation needed in trade agreements

Cross-cumulation needed in trade agreements

When the Three Amigos meet in Ottawa in June, Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto should press U.S. President Barack Obama to commit to a cross-cumulation provision in the trade agreement the U.S. is currently negotiating with Europe.

So said Eric Miller, vice-president of policy, cyber-security and North America for the Business Council of Canada, at a Hill Times event on March 24 titled “A New North American Future” and sponsored by Export Development Canada.

“Canada has CETA, which is a great thing; the U.S. is negotiating TTIP [the Transatlantic Trade and Investment Partnership]; Mexico has had an agreement with Europe since 2001,” Miller said. “But one of the things that we don’t have in North America is a way for our agreements to talk to each other.”

Putting it simply, he said, the Europeans get content from across their entire integrated region, but North Americans can’t tap content from across the continent under any of their agreements with Europe currently.

“I think CETA will bring enormous benefit on its own, but it could be a lot more impactful if we let our agreements talk to each other,” Miller said.

Another panellist, Matthew Wilson, vice-president of national policy for the Canadian Manufacturer and Exporters, agreed.

“The reason cross-cumulation is so important is because of the integrated market in North America,” Wilson said. “None of us builds things on our own. The more we can do around cross-cumulation, the better.”

Wilson noted that Canada, the U.S. and Mexico all negotiated separate free-trade agreements with South Korea.

“It was all done in isolation,” he said. “We could have done a joint automotive trade agreement and then separated the rest.”

Wilson added that if North America doesn’t start acting like a unified trading bloc, it won’t see much benefit from the Trans-Pacific Partnership currently being considered by the Liberal government.

Miller took the opportunity to plug the TPP, saying that Canada’s largest trading partners are part of the agreement. “If there’s one thing world history teaches us, it’s that you want to be on the trade routes.”

Mairead Lavery, senior vice-president of business development at EDC, spoke about the opportunities for Canadians within North America.

“The good news is, if [U.S] growth can take root and sustain itself, it will build demand for which Canada and Mexico can supply the U.S.,” Lavery said. “The U.S. is still the biggest growth driver in the world.”

She noted that though we read often about Canada’s slumping economy and the effect of low commodity prices, there was good news in January — exporting was up one per cent for the month. That may seem like a small number, but she noted that seven of Canada’s 12 categories of exports increased that month.

“That’s not a stat we hear often,” she said, and added that EDC figures there are 560,000 companies in Canada that could be exporting, while only 100,000 actually are. “We’re seeing that demand starting to flow through to our manufacturers. North America is a wonderful opportunity.”

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