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. This is trial run for the brief; we welcome your feedback as we test the idea.  

In this issue: Canada warms up to friend-shoring, Blocking carbon pipelines, Canadian trade and investment with Mexico grows and more. 

On Canada’s Friend Shoring…

Canada appears to be warming to the concept of friend-shoring, a term attributed to U.S. Treasury Secretary Janet Yellen. The Financial Post produced a skeptical take from an informal canvass of Canadian and global trade analysts. But support for the idea keeps coming from elected government officials in Canada. If the idea develops policy legs, Western Canada will have to think about its application to the export of commodities to locations in which markets and friends may not overlap. 

A good example is that despite Deputy Prime Minister Chrystia Freeland saying Canada is going to ramp up mining projects, reservations from the mining community on the friend-shoring doctrine exist.  

Accelerating regulation and permitting processes, Natural Resources Minister Jonathan Wilkinson has said that the federal government hopes to align regulatory and permitting processes to “speed up” the rate at which projects are built through so-called Regional Energy and Resource Tables. The tables would bring together federal, provincial and Indigenous partners to identify and accelerate resource projects. So far, British Columbia, Manitoba, Newfoundland and Labrador, New Brunswick, Nova Scotia, Prince Edward Island, the Northwest Territories and the Yukon have all agreed to join the regional tables initiative. Alberta, Ontario and Quebec have not. 

A piece in the Winnipeg Free Press notes some concern about the recent federal government imposition of new review criteria for foreign investment in critical mineral projects. Canada’s provinces have significant deposits and the technical capacity to exploit but will need significant investments including infrastructure for roads.  

There is positive reaction in Mexico to the idea of friend-shoring, columnist Luis Miguel González recently wrote in El Economista, that looking to relocate the production of goods to North America would be a good opportunity for Mexico. And noted columnist Andrés Oppenheimer also wrote that friend-shoring could present a huge opportunity for Latin America and the Caribbean if supply chains are redirected to those regions from China and other Asian countries.  

On Energy…

Apparently, it’s not only birds that migrate south to escape Canadian winters. Landowners hoping to block proposed carbon pipeline projects in the U.S. Midwest are getting help from some of America’s most prominent anti-pipeline campaigners including groups that fought the controversial Keystone XL and Dakota Access oil pipelines. Environmental non-profit Sierra Club and progressive group Bold Alliance are working alongside local organizations to support property owners across five Midwest states and are applying lessons learned in their past campaigns, they told Reuters 

And in Mexico, President Andres Manuel Lopez Obrador announced goals to turn a northwestern agricultural state into a green energy center earlier in October, ahead of a visit later this month by U.S. climate envoy John Kerry. The plan envisions the construction of four or five new solar plants and incorporates efforts to develop Mexico’s lithium industry, which Lopez Obrador’s government nationalized this year, as well as the electric car industry in Sonora. 

But other aspects of energy policy in Mexico under President Obrador’s government continue to cause problems. Mexico’s energy policy has triggered the worst trade dispute with the United States in years with Washington accusing the Lopez Obrador’s government of adopting measures that discriminate against U.S. companies. 

As if Canada’s push to develop its own critical minerals and EV strategy needed any more help, recently reported that Mexico could get Latin America’s first major lithium-ion battery cell gigafactory with the world’s largest battery manufacturer, CATL, announcing it was looking at sites in the country. One of the U.S.’s biggest battery storage system integrators, Powin, recently moved the assembly of its products to a site in Monterrey, north Mexico. 

On Trade and Investment in Mexico…

Canadian trade and investment with Mexico is steadily growing, with over $41.7 billion in two-way merchandise trade in 2021. Mexico is Canada’s third largest single-country merchandise trading partner (after U.S. and China). Canada was Mexico’s sixth-largest merchandise trading partner in 2021. Canadian Direct Investment in Mexico was $25 billion in 2021, which is Canada’s ninth-largest direct investment destination  

Saskatchewan Minister of Agriculture David Marit visited Mexico to advance Saskatchewan’s interests at trade and investment meetings in Guadalajara, Saltillo and Mexico City. Mexico was Saskatchewan’s fifth largest export market last year with $993 million in sales, with agrifood products accounting for $959 million of the sales. Top exports included canola, wheat and pulses. Saskatchewan opened an international office in Mexico City earlier this year. 

On Grain…

As grain elevator levels in Western Canada hit 85 per cent capacity there are now fears of grain delivery delays. Western Canada’s grain harvest is at an estimated 75 million tonnes this year, said Wade Sobkowich, Executive Director for the Western Grain Elevator Association, up from last year’s below average harvest which was a low 49 million tonnes because of drought, floods and wildfires. The windfall has farmers ordering around 10,000 to 11,000 railcars per week, said Sobkowich. AG Transport Coalition’s grain report from September said both CN and CP rail had increased their fulfillment rate by 73 per cent from the prior week. CP spokesperson, Salem Woodrow said the company is prepared to meet the transportation needs of grain customers this crop year and that CP had ramped up hopper car delivery at the start of the crop year, matching record order fulfillment and port unload levels over September. 

Meanwhile, in October the Federal government announced an $8-million investment in new grain terminal equipment in the Port of Montreal to improve the quality of the grain-cleaning service, optimize traffic flow in the yard and increase capacity for loading and handling containers.  

On Drought Impacts…

Barges run aground as Mississippi River levels drop. The agriculture sector is feeling the impacts of barge delays since 60 per cent of U.S. soybean and corn exports are transported via the Mississippi River, according to the U.S. Department of Agriculture. Until rain relieves a worsening drought in the region, it’s becoming increasingly difficult to maintain water levels high enough to carry critical exports from the nation’s bread-basket. The last time the U.S. saw similar low water levels and dry conditions was a decade ago.  

Little relief in sight for drought-stricken farmers beyond the Mississippi River. The U.S. Drought Monitor reports that close to 82 per cent of the country is experiencing at least abnormally dry conditions. The National Integrated Drought Information System reports that 50 per cent of the U.S. is in drought and more than one-third of the country’s population lives in areas affected by drought.  

But the heat has helped some farmers north of the 49th parallel. In B.C., those growing pumpkins have recovered from the late cold spring and report good mature crops.   

Other News

  • The train merger between KCS and CP that we covered in a previous brief was approved this month and now awaits review from the Surface Transportation Board. The final decision will likely be announced in the first quarter of 2023, Freight Waves reports.   
  • The last time Canada was in the World Cup tournament was in 1986 in Mexico. This month they will reappear after 36 years at the 2022 Qatar World Cup.   

— Carlo Dade, Director of Trade and Investment Centre and 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.