Better to have separate U.S., Mexico agreements if CUSMA collapses: trade lawyer

Lawrence Herman, international trade lawyer at Cassidy Levy Kent LLP, joins BNN Bloomberg to discuss the likelihood of U.S. ending CUSMA.

Separate bilateral agreements could still be beneficial if the Canada-United States-Mexico Agreement (CUSMA) falls apart, explains an international trade lawyer.

His comments come after reports that U.S. Trade Representative Jamieson Greer suggested this week that the U.S. is considering negotiating separate trade deals with the two countries rather than maintaining the trilateral pact up for review on July 1.

The possibility of this even happening was envisaged from the very start, when there were talks of CUSMA coming under review, Lawrence Herman, international trade lawyer at Cassidy Levy Kent LLP, told BNN Bloomberg.

Herman said separate bilateral deals would not be easy, but could be done.

“There are a lot of provisions in the CUSMA that could be used in a bilateral agreement with Canada, as well as a separate bilateral agreement with Mexico,” said Herman.

‘We will have an aggressive partner on the other side’

Negotiations will be difficult whether they are three-party or bilateral between Canada and Mexico, said Herman.

“The point is, we will have an aggressive partner on the other side,” said Herman.

“I think Canada has to be prepared to say, you know, these are the red lines, and there are certain things that Canada cannot accept.”

At the end of the day, he said Canada must decide how much longer it can remain at the table if the other party is unwilling to reach a mutually satisfactory arrangement.

“The priority is to ensure that we get out from this volatile, uncertain, unstable relationship,” said Herman.

He also said many major companies in the U.S. are dependent upon free trade and fair trade with Canada, highlighting Michigan Governor Gretchen Whitmer’s recent pushback after U.S. President Donald Trump threatened to block the opening of the Gordie Howe International Bridge. She called it “a really important part of our economy.”

‘Canada has been regrettably wedded to the U.S. market’

Canada has opportunities to expand in other markets, and the government has been looking at those opportunities to diversify its trade, but the reality is, “Canada has been regrettably wedded to the U.S. market,” said Herman.

“It is always a bad business practice to be so dependent on one customer, because that customer can turn ornery, as this customer, the U.S. has done so,” said Herman.

“There are so many things that tie Canada and the U.S. together that I cannot see things going forward without some kind of agreement.”

Canada is already in another agreement with Mexico

Herman noted that Canada and Mexico already have a trade agreement outside of CUSMA called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes 11 Pacific Rim countries. The U.S. withdrew from the original agreement in 2017.

“Mexico is party to the CPTPP, and so there would be an ongoing arrangement between Canada and Mexico,” said Herman.

He also said it would be better to have a straight bilateral agreement if the whole trilateral CUSMA falls apart.