Geographically, Canada sits at the top of North America’s three-country pillar. At the GBD event on July 24, an event devoted to North American trade,
Flavio Volpe
provided the view from Canada. Mr. Volpe is the President of the
Automotive Parts Manufacturers Association
of Canada. That means that he is part of an industry – the making of cars, trucks, and SUVs – that is vitally dependent on the integration of, and cooperation among, the three North American economies.
Today’s quote is from comments he made in the Q&A portion of last month’s discussion at GBD. Mr. Volpe acknowledged that Canada has a number of other trade agreements but was quite clear that there really is no comparison between any of those and NAFTA/USMCA, the arrangements with the United States. After noting that 80 percent of the Canadian population lives within 100 miles of the U.S. border, Mr. Volpe said:
"Geography dictates how we do business. You can’t run just-in-time supply chains across two oceans. And so, we’ve always said publicly that the biggest losers [from the loss of] NAFTA or USMCA [would be] Canada right up there with the U.S. The fact of the matter is that the U.S. has got a heck of a lot more industrial capacity to absorb a stupid move like that. We’d be lighting the wick. And however long the wick is, you’re done."
As Mr. Volpe talked about the interplay of geography, politics, and the North American trade agreements – it seemed clear that, if the United States ratifies the agreement, so will Canada. But the timing could be tricky. Parliament is in recess now, and by law a federal election must be held on or before October 31. No one, of course, knows how that election will turn out, but Mr. Volpe did hazard a guess. “I think the current government is going to be re-elected,” he said, “[but] in a minority.” If in fact that is the result, he said, namely a Trudeau-led minority government, “we won’t see the House return until January, as the new government negotiates with other parties on who will support the government, going forward.”
What might those complications mean for the implementation of the USMCA and the all-important rules of origin for automobiles? Mr. Volpe spoke to those issues. He said:
“The three-party agreement says it [USMCA] will come into effect three months after the last country ratifies. And then the automotive rules say the following January is when the new rules come into play. So, if Canada is the last [to ratify] and it does it in December, January, with a new government or maybe the return government, then we’re seeing the automotive rules of origin starting in January 2021 instead of January 2020.
The automakers will be happy for another year of transition.”
