The chief negotiator for the United States on North American free trade said Canada’s policy on China explains in part why the continental trade agreement was not renewed this week.
United States Trade Representative Jamieson Greer specifically identified Ottawa’s deal with Beijing to bring in Chinese electric vehicles (EVs) and investments for their production in Canada.
“What I don’t want is a situation where Canada is bringing in a lot of Chinese investment and Chinese cars and sending them into America,” Greer told Global News in Washington, D.C., on July 2. “That is actually totally at odds with what we’re trying to do.”
The United States is trying to bolster its domestic car manufacturing sector through tariffs and reduce overall reliance on China, including in the auto industry, by strengthening rules of origin for goods traded freely under the Canada-United States-Mexico Agreement (CUSMA).
Greer made the comments a day after he met virtually with Canada-U.S. Trade Minister Dominic LeBlanc and Mexico Secretary of Economy Marcelo Ebrard for the July 1 review of CUSMA.
Canada and Mexico want to renew the agreement for another 16 years, but Greer’s office said following the meeting it opposes a renewal “in its current form,” adding it would continue discussions to address the deal’s “shortcomings” and the trade deficits with Canada and Mexico.
The absence of renewal means CUSMA will remain in force with annual reviews until 2036, or for longer if the parties agree to an extension. One party could also withdraw from the pact after giving six months’ notice.
Greer’s concerns about Canada’s China policies refer to a deal made by Prime Minister Mark Carney when visiting Beijing in January. Carney agreed to drop the 100 percent tariff on Chinese EVs to 6.1 percent on 278,989 units over five years.
In exchange, China agreed to remove or reduce tariffs on Canadian agricultural and seafood products, some only until the end of 2026. The deal did not prevent China from slapping a 73.5 percent tariff on Canadian pea starch as of July 1.
U.S. President Donald Trump had reacted negatively to Canada and China striking a tariff deal in January, saying Canada is “systematically destroying itself.”
“The China deal is a disaster for them. Will go down as one of the worst deals, of any kind, in history,” he said.
Carney met with Trump at the G7 Summit in France last month where he was caught on a hot mic telling the president that Canada was only bringing in 49,000 Chinese EVs for “less than 3 percent of the market.”
“I was explaining the actual structure of the deal… He likes the structure,” Carney told reporters afterwards.
Along with bringing in Chinese EVs, the Carney government is seeking investments in Canada from Chinese carmakers. Two cabinet ministers have met with Chinese car companies in recent weeks.
After a visit to China in mid-June, Industry Minister Mélanie Joly said that four automakers are interested in exploring joint ventures in Canada to produce cars.
Joly said the four conditions for Chinese carmakers to establish production in Canada include that the joint ventures must be majority Canadian-owned, labour standards must be at the Canadian level, supply chains have to be local, and there must be safeguards around software and data security.
Industry stakeholders say bringing in Chinese cars threatens the market and Canadian jobs. They also say it poses national security and privacy risks, given that modern cars are internet connected and loaded with sensors, and Chinese companies are legally obligated to help the state collect intelligence.
‘Don’t Fit’ Well
Greer’s comments about Canada being “totally at odds” with policies pursued by the United States echo what he said during congressional testimony in April.
Greer told U.S. lawmakers at the time that the economic models of Canada and the United States “don’t fit together very well.”
“They’re doubling down on globalization when we’re trying to correct for the problems of globalization,” he said.
The Carney government says it aims to double non-U.S. exports over the next decade as it pursues trade diversification in light of U.S. tariffs. Carney has touted multiple international deals with that purpose.
Along with Canada’s China policy and its economic approach, Greer identified other trade irritants in comments to Global News.
The United States has longstanding grievances with the supply management system for dairy and poultry products, and its opposition to Canada taxing U.S. tech companies is well established. Greer said these irritants are “a little hard to get past.”
“We have seen the Canadians threaten some actions on digital. They’ve paused on that for a variety of reasons. Obviously that’s good, it’s good not to do something you shouldn’t have done to begin with,” he said.
Canada pledged to rescind its nascent Digital Services Tax in June last year to facilitate trade talks. The tax was fully repealed in March of this year.
The Carney government also told the broadcast regulator CRTC to review its decision to triple its tax on large online streamers such as Amazon and Netflix in recent weeks. Ottawa made that call the day after Minister LeBlanc met Greer in Washington in early June.
Commenting on the July 1 CUSMA review, LeBlanc said Canada gives its “unwavering support” to the trade agreement and that it approaches related discussions “from a position of strength and with the goal of preserving and strengthening one of the most successful trading relationships in the world.”
