CME is working to help you access new markets and expand your business in existing ones. Our priorities are: removing barriers to trade; creating a level playing field; and helping you succeed everywhere.
Why It Matters
A dynamic exporting sector is critical for our future success as a country. Exports drive growth in output and profitability. They also fuel innovation and new product development, and spark investment in new machinery, equipment and facilities.
Despite Canada’s exports success of the 1980s and 1990s led by the development of our trade relationship with the United States and subsequent manufacturing supply chain integration, Canadian export performance has been anemic since the early 2000.
Canada’s commitment to expanding market access through free trade agreements has resulted in unpreceded preferential market access in 14 countries or trade blocs. Canada, however, continue to struggle to export. While expansion of export markets through new free trade agreements can be beneficial, manufacturers need more to succeed in global markets.
COMMUNICATIONS WITH THE GOVERNMENT
- Letter to the Minister: EDC Critical to Canada’s Trade Diversification Agenda
- Remarks: House of Commons Committee on International Trade: CUSMA Ratification
- Letter to the Prime Minister: CUSMA Ratification
- Remarks: Standing Committee on International Trade on International Trade of Small and Medium-sized Businesses
- Remarks: Canada – ASEAN Free Trade Agreement Consultations
- Remarks: House of Commons Standing Committee on International Trade, Study on the Impacts of Tariffs on Canadian Businesses, Companies and Workers
- Remarks: House of Commons Standing Committee on International Trade, Study on the potential Canada-Mercosur Free Trade Agreement
- Remarks: Senate Standing committee on Agriculture and Forestry, Study on How Value-Added Food Secore can be more Competitive on Global markets
- Remarks: Senate Standing Committee on Banking, Trade, and Commerce, Study on Trade and Competitiveness
After initial review of the CUSMA, it is apparent that the Canadian government consulted with CME’s and our members.
The government tightly negotiated for, perhaps at the expense of other sector, and implemented many of CME’s core recommendations to strengthen and improve the trading relationship for manufacturers across North America.
From the start, the NAFTA renegotiation was never an exercise in modernizing the agreement – it was fight to maintain Canada’s access to the world’s biggest market. Given this context, maintaining status quo is, in fact, a win.
CME’s top priority was that no harm should be done to the integrated manufacturing sector.
In almost all areas where CME made recommendations, the USMCA maintains or improves on previous NAFTA commitments.
10 OF 11 CME RECOMMENDATION ADOPTED
- Ensure NAFTA renegotiation results in maintaining at least the same degree of access into and from the Mexican and US markets that Canadian manufacturers currently enjoy.
- Update, modernize and coordinate customs procedures to reflect current business realities; and better leverage technology to reduce administrative burdens, increase security and speed border crossing times.
- Strengthen regulatory cooperation to allow products to be designed, tested and produced once and sold across the region without additional regulatory approvals.
- Expand NAFTA’s Trade in Services chapter by using the framework TPP agreement to broaden and deepen Canada’s commitments to eliminate existing and potentially future exclusions.
- Using the TPP agreement’s Digital Trade chapter as a model, create a new chapter within NAFTA to support growth in the digital economy and manufacturing.
- Work with the US and Mexico to develop a common North American approach to addressing unfair trading practices from outside the region – an approach that specifically addresses industry concerns about currency manipulation, illegal substitution and dumping.
- Work with the US and Mexico to develop a common approach to eliminating non-tariff barriers in non-NAFTA countries. In addition, develop a unified approach to raising regulatory, environmental and labour standards outside NAFTA to North American standards.
CME RECOMMENDATIONS PARTIALLY INCLUDED IN USMCA
|•Expand and update the range of business professionals, including skilled workers, permitted to move freely within NAFTA without administrative reporting requirements.||>||Canada fully supported CME position, but the US wanted this chapter eliminated. It was maintained exactly as in the NAFTA|
|•Enhance Chapter 19 dispute resolution processes by eliminating Article 1902 and replacing it with a common North American approach to defining what constitutes an actionable trade offence.||>||Canada fully supported CME’s position, but US wanted this chapter eliminated. It was maintained exactly as in the NAFTA
|•Except in cases that fall under existing national security exemptions, completely eliminate all national and sub-national government procurement restrictions under NAFTA to allow for the free flow of goods, services and technologies.||>||Canada fully supported CME’s position, but US wanted very a restrictive procurement chapter. USMCA puts in place WTO GPA rules, which is an improvement over NAFTA.
In many areas championed by CME, the US was looking to take significant steps backwards, which Canada ultimately did not agree to.
So, while CME’s initial recommendation may have not been met, CME’s overall objective to do no harm and strengthen integrated manufacturing base within a global context is reached. These areas include most notably government procurement and dispute settlement.
Diversifying Canadian Trade
The Government of Canada has shifted its trade policy to focus more on export diversification.
This has resulted in the rebranding of the Minister of International Trade into the Minister of International Trade Diversification and the adoption of a formal trade diversification strategy.
IMPACT ON MANUFACTURERS
Canadian manufacturers are part of regional as well as global supply chains. Trade diversification is positive for businesses if it:
- generates new production mandates;
- opens new markets access gains; and
- results in incremental export growth.
A diversification strategy offers little benefit if it comes at the expense of integrated North American supply chains, or merely substitutes one export destination for another.
CME supports free trade and trade diversification. We are working to ensure that new free trade agreements meet the following three standards:
- They create a fair and level playing field for Canadian manufacturers and exporters and result in reciprocal access to foreign markets;
- They expand Canadian exports of value-added goods and not just natural resources; and
- They do not undermine the existing integrated manufacturing supply chains developed through previous FTAs, especially the NAFTA/USMCA.
We are also working with governments to ensure that SMEs can benefit from these agreements by: improving access to market intelligence; creating better export-readiness programs; and simplifying government supports.
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
The CPTPP is a new free trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Once ratified, the CPTPP will provide Canadian exporters with access to a market with 495 million people and a combined GDP of $13.5 trillion.
IMPACT ON MANUFACTURERS
The CPTPP will provide Canadian businesses with significant new export market opportunities. When it enters into force, Canada will be the only G-7 country with free trade access to North America, Europe, and Asia-Pacific.
Features of the CPTPP that will benefit Canadian manufacturers include:
- Immediate elimination of tariffs on most industrial goods and consumer products;
- Phase-out of most remaining tariffs over a 10-year period;
- A dedicated chapter on enhancing SME trade; and
- Provisions that address non-tariff barriers, investment, and intellectual property protection.
CME supports the CPTPP and the export growth opportunities it creates for Canadian manufacturers. We are working with the federal government to ensure that businesses are able to maximize the potential benefits of this agreement by:
- Improving access to market intelligence about export opportunities in the region;
- Enhancing government support programs and services;
- Ensuring that non-tariff barriers do not limit market access gains; and
- Lowering the domestic business cost structure to improve export competitiveness.
CHALLENGES & SOLUTIONS
Canadian manufacturers face many obstacles competing in global markets and against foreign rivals at home:
- A lack of information about new market opportunities
- The costs and risks associated with new business development
- Unfamiliarity with foreign regulatory and legal frameworks
- Non-tariff barriers and discriminatory practices in other countries
- Non-reciprocal access to government procurement markets
- Dumping and other unfair trading practices from their competitors
- Transportation costs and bottlenecks that prevent timely and cost-effective delivery.
These and other issues are preventing Canadian manufacturers from exporting to their full potential and are undercutting their ability to compete at home and abroad.
On top of that, businesses are having a harder time than ever navigating international waters. Global trade uncertainty has impacted our business relationship with our most important trading partner, and is disrupting well-established supply chains.
CME believes we can build on the momentum from the newly agreed upon USMCA and use it as a platform to build a long-term export strategy for future economic growth and market diversification. CME has identified three pillars for export growth:
- Strengthening Canada’s existing export foundations, with a focus on building from existing trade agreements, especially the USMCA, and leveraging our natural and existing strengths and resources
- Scaling up small and medium-sized companies to support them going global through stronger support programs for domestic investment as well as international growth opportunities
- Attracting foreign direct investment and global production mandates from large multinational companies
How CME is Helping
CME is helping pave the way to your export success. Our National Policy Team is working to:
- Lower the cost of doing business in Canada
- Ensure trade agreements create meaningful export opportunities
- Protect you from unfair trading practices
- Help you find new customers
- Make government supports more relevant and easier to access.
CME SERVICES FOR MANUFACTURERS
CME's Sales Marketing & Exporting Council (SMEC) and Exporters Executive Council (EEC) bring executives and seniors managers together to exchange information, ideas, and insights on trade issues. Members meet regularly in facilitated peer groups of 8 to 10 individuals from non-competing companies.