Head of Canada’s top bank says U.S. trade deal too crucial to ‘cancel’

Royal Bank president Dave McKay speaks in Toronto on April 6, 2017. (Frank Gunn / THE CANADIAN PRESS)

The North American free trade agreement is too important for the United States, Canada and Mexico to ditch, the head of Canada’s largest bank said Tuesday, voicing confidence the deal would endure.

U.S. President Donald Trump said last week that he was not “looking to renew” the agreement known as the USMCA, which he signed and praised during his first term.

If it is not renewed by July 1, the USMCA will remain in force but will be subject to annual reviews, unless one party withdraws entirely.

Trump has described the deal as “irrelevant” and insisted the United States does not need anything Canada produces.

For Royal Bank of Canada CEO Dave McKay, the fact that there has been no discussion of terminating the USMCA is crucial.

“There’s been no mention of cancelling the agreement,” McKay told reporters in Toronto at an event hosted by Bloomberg.

“Cancellation means you’re giving notice of a permanent withdrawal. This agreement is too important to the United States and to Canada and to Mexico, I believe, to cancel,” he said.

McKay was asked about a core message of Prime Minister Mark Carney’s government: that Canada needs to reduce its reliance on the United States, a historically vital ally that Carney says Canada can no longer trust.

McKay said trade diversification was crucial for Canada.

“Canada has 80 percent of its trade with the United States,” he said, stressing that if he were advising a client whose business was 80 percent reliant on one customer, he would suggest they “diversify a little bit to de-risk that.”

But he said broadening Canada’s overseas markets should come as an addition to US trade, not a replacement.

“We want to maintain our CAN$1.3 trillion ($930 billion) relationship with the United States,” he said.