On March 18, the Canada West Foundation hosted The Other NAFTA Partner, the fourth and final session in the Trade Ahead Series. Canada’s Ambassador to Mexico, Graeme Clark, shared his perspective on Canada-Mexico trade relations, which are often overlooked in favour of Canada-US trade relations. Joining the Ambassador at the virtual coffee table for the discussion were: CWF’s Carlo Dade, Director, Trade and Investment Centre, and co-moderators Chris Dekker, President and CEO, Saskatchewan Trade Export Partnership, Patrick Mattern, Vice President, Business Development, Calgary Economic Development, Mariette Mulaire, President and CEO, World Trade Centre Winnipeg, Mustafa Sahin, Vice President, Investment & Trade, Edmonton Global.
Here are a few highlights from the talk:
- In 2020, Canadian agricultural products were the only traded goods with Mexico that saw growth; canola and similar products were up 25 per cent and cereals, such as wheat, were up 15 per cent.
- While most people think of the trade of goods, the Mexico-Canada relationship also has a significant exchange of people. Prior to the pandemic, Canada received 27,000 students, half a million tourists, as well as seasonal agricultural workers. Canada sent 2.5 million travellers to Mexico each year.
- In terms of goods, Mexico ranks as the third most important bilateral trading partner for Canada (C$ 36 billion or 3% of Canadian trade), and 4th most important partner for the Prairie provinces with C$ 4.3 billion two-way trade as of 2020.
- With the new NAFTA and new U.S. administration, Canada and the U.S. will take steps to scrutinize labour practices in Mexico.
- The relationship between Canada and Mexico is not without challenges, which current issues around energy and mining highlight.
- On mining, see similar issues to those experienced in other Latin American and African countries. These issues are related to land access, Indigenous consultation, laws, and taxation. The Ambassador hopes to meet with President Andres Manuel López Obrador (AMLO), who has publicly asked for involvement, and other officials to work on these issues.
- There is over $10 billion of Canadian investment in Mexican energy across oil and gas and renewables. For electricity, the Mexican government has taken measures to favour state-owned generation, which would negatively affect 4.17 billion of Canadian renewable energy investment. There is still opportunity for Canadian companies to bring expertise around reducing the carbon footprint in oil and gas.
- On the Mexican side of the ledger, the Ambassador noted that there is unhappiness over air travel, Mexicans and Canadian snowbirds are not happy with the cancellation of direct flights between the countries. However, goods still continue to move despite the pandemic. Calgary is in an interesting position as the connection point for the TransCanada Highway and the CANAMEX Corridor, which is the roadway access between Canada and Mexico. Calgary is also the site of the Consulate of Mexico, which covers Alberta and Saskatchewan.
- Post-pandemic, the North American countries need to have discussions on what was learned from the pandemic on the movement of goods, people, and how to collectively manage. Carlo noted the current North American Pandemic treaty has been practically worthless and would be a good place to start working together again.
- While Canada has significant investment in Mexico at $40 billion, there is a reciprocal imbalance. Canada could attract investment in agricultural and agri-business, marketing and education. One area Canada does well is the attraction of Mexican students, but Canadian students do not go down to Mexico as much so could develop programs to build relationship with Mexico through students.
- Agri-food processing could be another opportunity. Mexican company Grupo Bimbo acquired Canada Bread from Maple Leaf Foods which gave the company access to Latin America and the Pacific Rim.
- The tech sector in Mexico is growing in Guadalajara and Monterrey, where there is an MIT campus, as well as a push to bring advancements to manufacturing. Mexico offers an opportunity for Canadian firms to build supply and production partners that can be used under both the new NAFTA and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) agreements, to sell goods and move workers, something partnerships with US firms don’t allow.
- Mexico has banned glyphosate and genetically modified white corn by 2024. Canada does not export either product to Mexico directly. However, embassy staff are monitoring to understand what the glyphosate ban will mean for maximum residue levels. More broadly, staff are also monitoring to ensure that the Mexican government is basing decisions in science and does not affect Canadian market access. Canada does not export white corn to Mexico.
– Stephany Laverty is a policy analyst at the Canada West Foundation