North America Brief
Issue 07 | March 31, 2023
The North America Brief is a compilation of stories and links on the United States and Mexico’s trade relationship with Canada’s Prairie provinces focusing on stories and topics not always “on the front page” of mainstream media.
In this issue: CPKC merger to open doors for Western Canada’s grain, U.S. proposes stricter “Product of USA” labelling rule and Alberta beef made it onto Biden’s plate.
CPKC merger to open doors for Western Canada’s grain
Great news for our producers and exporters here in Western Canada. After two years of review, the $27 billion merger (that we covered back in October) between Canadian Pacific (CP) Railway and Kansas City Southern (KCS) has been approved following CP’s acquisition of KCS, Mexico News Daily reports. CPKC will become the first railroad company to offer a single-line service that connects Canada, the United States and Mexico. While it could take about three years for CP to physically merge the railroads, the Alberta-based company could take control of Kansas City Southern as early as mid-April.
This is a big deal, especially for Canadian grain shippers who will soon have access to once inaccessible export destinations in the U.S. and Mexico, according to Joan Hardy, CP’s VP of sales for grain and fertilizers. The new project is expected to employ about 20,000 people. But not all wheat producers are happy with this big move. U.S. based producers and industry advocates are concerned about implications the merger could have on U.S. wheat’s competitiveness compared to other exporters, Farm Progress reports.
U.S. proposes stricter “Product of USA” labelling rules
The USDA has suggested a new voluntary regulation that would restrict the use of “Made in the USA” and “Product of USA” labels to animal products that were born, raised, slaughtered and processed in the United States, Inside News reports.
Canada is wary this labeling is similar to the U.S.’s mandatory Country of Origin Labelling (m-COOL) legislation which Canada successfully challenged in front of a World Trade Organization dispute settlement panel. Canadian Agriculture Minister Marie-Claude Bibeau said Canada will participate in the U.S. rule-making process to ensure that these changes comply with international trade obligations, Pembina Valley reports. Bibeau highlights that Canadian and U.S. meat and livestock sectors are highly integrated.
Although the new policy is not mandatory, implementing the change has the potential to reignite the trade dispute between Canada, Mexico and the U.S. regarding country-of-origin labeling.
The North American Meat Institute (NAMI) has criticized the USDA’s proposal, stating that it could trigger trade retaliation from Mexico and Canada, Real Agriculture reports. However other groups, such as the National Farmers Union and the U.S. Cattlemen’s Association, have welcomed the proposal.
Alberta beef made it onto Biden’s plate
If you haven’t heard already, President Biden made his first presidential visit to Canada last week. From a new migration deal, to a $100 million aid injection into Haiti, to critical minerals reassurance there is no shortage of coverage in the public media on the visit. So for our western Canadians, we took a look at how the West was represented during Biden’s visit … via food. And we hate to break it to Saskatoon berry, Manitoba pickerel and B.C. wine producers but it appears Alberta beef was the only western Canadian food that made it to Biden’s dinner plate.
For more on the visit, our friend and Director of the Canada Institute at the Wilson Center in Washington, Chris Sands, explains why “U.S.-Canadian relations are stronger this week than they were last week.”
On the topic of strengthening North American relationships, the Center for U.S.-Mexican Studies (USMEX) at UC San Diego’s School of Global Policy and Strategy, the George W. Bush Institute, Canada’s Future Borders Coalition and the Mexican Council on Foreign Relations have joined forces to establish a working group to explore ‘nearshoring’ potential in North America. The group includes former Deputy Prime Minister of Canada Anne McLellan, former Undersecretary of Foreign Trade in Mexico Juan Carlos Baker, and representatives from Mexican steel company Deacero and Harvard Kennedy School. Set to convene virtually throughout 2023, the group plans to release a set of policy recommendations in early 2024.
If you like what we write in this brief, keep an eye for CWF events. Last week at the CWF office, Canada’s Ambassador to Mexico Graeme Clark and Economic Counsellor Frederick Caldwell shared insider insights on topics ranging from the Mexico-Canada relationship today to potential trade opportunities with Western Canada and much more.
American retailers closing shop in Canada
Nordstrom’s recent announcement it is pulling out of Canada is just the most recent example of big-box American companies struggling to remain competitive in the Canadian retail market. While Nordstrom’s Canadian division generated sales of approximately CAD$515 million in 2022, they also incurred a loss of $72 million during this period, CBC reports. Liza Amlani, founder of the Retail Strategy Group, shared that mistake common to American retailers is assuming strategies successful in U.S. markets will yield the same results in Canada. Other companies that have paid the price are Target, Sears, Bed Bath & Beyond and Express.
Investing in Mexico
On the topic of American businesses operating abroad, a new report from Rice University’s Baker Institute for Public Policy suggests that relocating business operations from China to Mexico would bring economic advantages to the entire North American region.
Canada is also joining the trend. At a recent networking event in Queretaro, Mexico, Canada’s trade delegate and representatives from various Canadian companies met with the Secretariat of Sustainable Development of Queretaro, to discuss a Canadian trade mission to enhance investment ties between the two countries, Mexico Now reports. Investment opportunities in the state’s sectors of plastics manufacturing, auto parts, information technology, aerospace and protected agriculture were discussed. Canadian investment in Queretaro reached US$2.3 billion from 1999 to 2022. And just last year Canada invested US$2.3 billion in the region.
SK exports to MEX break records
Saskatchewan’s exports to Mexico exceeded $1 billion in 2022 and most of them were agricultural commodities: canola oil, canola seed and non-durum wheat, the Western Producer reports. Canola seed made up nearly 55 per cent of total exports to Mexico.
The impressive expansion of exports can largely be attributed to the provincial government’s international office in Mexico City which opened in 2022. Canola oil is expected to see continued growth due to investments in crushing plants, with $13.6 billion expected to be invested in Saskatchewan alone.
Canada requests consultations with Mexico over GMO restrictions
Following the Biden administration’s request for consultations on biotech farm products, including corn, under the food-safety measures chapter of the U.S.-Mexico-Canada Agreement (USMCA), Canada has requested formal consultations with Mexico on its restrictions on genetically modified agricultural imports, Bloomberg reports. While Canada is not a significant corn exporter, it is concerned about Mexico’s arbitrary prohibitions on biotechnology-produced agriculture and its lack of adherence to the USMCA trade pact, the Western Producer notes. Dispute talks could be requested if the technical discussions don’t take place or don’t lead to a resolution.
Nexus to resume
The Nexus program, which allows pre-approved travelers to cross the Canada-U.S. border more quickly, will resume over the course of the next month after being on hold in Canada for nearly a year due to a disagreement over the right of U.S. agents to carry guns on Canadian soil, CBC reports. Nexus enrolment centres will reopen for applicant sit-down interviews in Halifax and Winnipeg at the end of this month, followed by other airports in a staggered reopening. The Canada Border Services Agency said that Canadian border agents will interview Nexus applicants separately from U.S. agents at eight Canadian airports, as part of a compromise reached in January.
- Vancouver’s YVR has been ranked the second-best airport in North America behind Seattle. Looks like our other western Canadian airports didn’t crack the top-ranks this year.
- North America’s first hydrogen-powered train will get moving this summer in Canada. Read more about it here.
- Our friends at the CATO institute have a great take on the American version of March Madness: their 2023 Protectionist Madness which pitches U.S. trade policy decisions like softwood lumber tariffs against the TPP withdrawal to determine the worst U.S. trade policy.
- Meanwhile, CWF’s annual March Madness Basketball pool is over before the final four. Former CWF energy analyst and Georgia Bulldog Nick Martin tied for first with Christina Steed, aide to Alberta PNWER Rep. Richard Gotfried. Your author and CWF Trade Centre Director Carlo Dade (both Georgetown grads) tied for second to last. Who brought up the rear? Gary Mar, our CEO and former AB Rep. to Washington.
- 2026 World Cup Venues have been selected and for the first time Canada will host in two cities: Vancouver and Toronto. There were also 11 venues selected in the U.S. and two in Mexico.
— Taylor Blaisdell, policy analyst
The North America Brief is a compilation of stories and links related to the U.S. and Mexico’s relationship with Canada’s West. The opinions expressed in the links don’t necessarily reflect the views of the Canada West Foundation.