Tensions brim over CUSMA ahead of Biden’s Ottawa Visit

It’s been less than three years since the U.S.-Mexico-Canada Agreement replaced NAFTA as the law of the land in continental trade, and there are already hints of the existential anxiety that preceded it

That’s because of the so-called “sunset provision,” a clause that reflects the lingering working-class distrust of globalization in the U.S. that helped Donald Trump get elected president back in 2016.

Article 34.7 of the agreement, the “review and term extension” clause, establishes a 16-year life cycle that requires all three countries to sit down every six years to ensure everyone is still satisfied.

 “The U.S. remains unhappy with how Canada has allocated the quotas that give American dairy producers access to markets north of the border”

That clock began ticking in the summer of 2020. If it runs out in 2026, it triggers a self-destruct mechanism of sorts, ensuring the agreement — known in Canada as CUSMA — would expire 10 years later without a three-way consensus.

The deal as it stands is hardly perfect, if the number of disputes is any indication.

In the 33 months since USMCA went into effect in July 2020, 17 disputes have been launched among the three countries, compared with a total of 77 initiated over the course of NAFTA’s 25-year lifespan.

The U.S. remains unhappy with how Canada has allocated the quotas that give American dairy producers access to markets north of the border. Canada and Mexico both took issue with how the U.S. defined foreign auto content. And Canada and the U.S. oppose Mexico favouring state-owned energy providers.

The Canada-U.S. disputes are likely to be on the agenda when Prime Minister Justin Trudeau sits down later this week in Ottawa with President Joe Biden, his first official visit to Canada since being sworn in two years ago.