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: In our first “Quarterly Spotlight” feature experts weigh in on opportunities to advance regional agendas on North American transportation issues. Also, a spike in production of lithium, copper and other electric vehicle metals is coming, Canada invests in American water, and more.
On how a new U.S. congress could impact Canada’s energy world…
A spike in production of lithium, copper and other electric vehicle (EV) metals is coming and may be facilitated by the GOP takeover of Congress, Reuters reports. U.S. Republicans hope to cut the mining permit processing period by half to boost the electrified economy. Approval of mining projects in the U.S. will begin to look a lot different now that the Republicans are in Congress following the November midterm elections.
And while Canada was promised EV tax credits for Canadian minerals by Biden’s Inflation Reduction Act this summer, we wait to see what the new congress will prioritize and if U.S. policies will threaten Canada’s piece of the pie. When asked if rising protectionism in the U.S. is a concern for Canada, Trudeau said in an interview at the Reuters NEXT conference that “protectionism against Canadian investors or Canadian companies actually ends up hurting U.S. companies and U.S. workers in significant ways,” US News reports.
On the counter narrative about critical minerals in Canada, a Globe and Mail headline says it all: Critical minerals hype doesn’t match reality in Canada.
On Canada investing in America water…
Edmonton-based EPCOR is Arizona’s largest private water utility in the state, but why? Canadian utility companies are investing in the U.S. to expand opportunities that accompany water scarcity. The CEO of Edmonton EPCOR told the Globe and Mail that, “water scarcity, while it brings challenges, also brings opportunities. And it requires expertise that we believe we can bring to bear.” EPCOR is finding water sources in the U.S. outside of major cities and building pipelines, like the already constructed Vista Ridge Pipeline in Texas that delivers one-fifth of San Antonio’s water.
On corn and wheat causing drama…
Mexico has threatened to ban imports of genetically modified yellow corn, National Post reports. This is a bigger deal than it sounds. Imposing the ban, following Mexico’s concerns that genetically modified corn damages human and animal health, would significantly disrupt North America’s corn trade and cause Canada and the U.S. to lose a massive market. If imposed, the U.S. will lose its largest export destination for corn, valued at $3 billion per year, and Canada will lose $92.85 million over 10 years, the Wall Street Journal Reports. The U.S. has responded with plans to take legal action if “no acceptable resolution” is found, BBC reports.
Who’s spring wheat does the world want? Canada’s aggressive wheat pricing concerns U.S. wheat farmers as spring purchasing approaches. Iraq and South Asia are eyeing Canada’s nicely priced wheat this season as competition between the two North American wheat markets heightens. Jim Peterson, Market Director for the North Dakota Wheat Commission, told Farm and Ranch Guide that “the challenge again [for the U.S] will be that south Asian competition, into Philippines, Indonesia, where Canada is pricing aggressively into those corridors.”
On trilateral and bilateral meetings…
The North American Leaders Summit (NALS) also known as the “Three Amigos Summit,” initially scheduled for November, will now take place early in the new year in Mexico City, Mexico Daily News reports. A comprehensive opinion piece, published in the Hill by our friend over at the Wilson Centre, Alan Bersin, says that “as supply chains are reconfigured and near-shoring is pursued, North America has never been more important for Canadian, Mexican, and U.S. business communities than it is right now.” Another piece in the Hill argues that it is time to “take a fresh look at North America” as the three countries enter the upcoming summit.
Canada’s Minister of Commerce, Mary Ng and Mexico’s Secretary of the Economy, Raquel Buenrostro met recently to discuss concerns about the energy and mining sectors in Mexico, according to Milenio. Alleged violations of the new NAFTA, CUSMA, come at the heels of Mexico’s shift in energy policy, Mexico Business News reports. The same article says that because “Mexico has been identified as a priority market for Export Development Canada” what happens next in these consultations is critical. At least $25 billion in direct Canadian investment for Mexico is on the line, on top of energy sanctions that could permeate into other economic sectors such as agribusiness, automotive and manufacturing due to tariffs on Mexican export products.
On a once looming but now averted rail strike…
Just last week, the Canada-U.S. rail logistics system was bracing for a massive strike, one that would cost the U.S. economy $2 billion per day, Real Agriculture reports. Greg Northey, VP of Pulse Canada told our friend and podcast host Shaun Haney that “we (Canada) do send a lot of product down there. And so if they were to go on strike, all that would be impacted. A lot of movement would get bottled up here in Canada, and then the concern, obviously, is all that movement that usually would be going to Canada then creates congestion in our own networks, and so impact can be quite large.” The strike has been averted for now.
Quarterly Spotlight Feature
On the topic of cross-border supply chains and transportation corridors, we have asked some experts and friends ‘in-the-know’ to comment on a specific issue as part of our quarterly spotlight question.
What we asked the experts
With the White House and congress divided following the 2022 midterm elections, is it time to look toward states and provinces of North America to advance regional agendas on North American transportation issues? From ‘near shoring,’ to applying lessons from COVID disruptions, to reducing GHGs, to coordinating rules on testing and operation for the coming autonomous trucking industry, there’s no shortage of opportunities. For northern Mexico, the U.S. plains and mountain west, and the Canadian prairies, how realistic is regional state-provincial leadership? What areas or ideas would be most fruitful and doable? Along which corridors or regions might coalitions most easily emerge?
Tiffany Melvin, President and Rachel Connell, Vice President of North American Strategy for Competitiveness (NASCO)
With the increased focus on nearshoring / re-shoring or “ally” shoring as NASCO and other passionate North Americans call it, we must seize the opportunity to make our North American freight networks competitive to attract manufacturing and the relocation of industry to our continent.
North America needs a tri-national, regional approach to facilitate freight movement, transition to innovative methods to improve the environment and optimize performance along major freight corridors and networks. We don’t have to wait for federal agreement; much can be done at the sub-national level. There is a need and opportunity to coordinate policies, regulations and efforts across provincial, state and international borders.
In 2023, NASCO will lead an effort along the I-35 / I-29 Midcontinent Freight Corridor that may be of interest to Canada. The initiative will encourage and coordinate efforts of state and provincial Departments of Transportation to prepare for autonomous vehicles, increase electric vehicle charging infrastructure, explore hydrogen fueling infrastructure, and harmonize regulations impeding the seamless and secure movement of freight. NASCO has members from across North America – a starting point. We plan to expand to other freight corridors and partner with regional and/or corridor coalitions to take similar, tangible steps resulting in advanced competitiveness.
Freight networks are the backbone of every nation’s economy. We have completed enough pilots and research to see the real potential and benefit of more deeply integrated and reliable North American supply chains and a coordinated approach to continental freight networks. It is time to turn the vision into reality by taking detailed, measurable, sustainable steps forward. In the words of Lizzo – “It’s about damn time!”
John Law, Senior Fellow at the Canada West Foundation
The case for regional leadership on transportation issues in North America is strong and the timing never better, irrespective of the state of affairs on transportation at the federal level in the United States and Canada. This is certainly the case when it comes to the Canadian prairies and the U.S. Midwest where the United States ranks as the number one destination for the exports of all three of Canada’s Prairie provinces, including a nation-leading 89 per cent for the province of Alberta. In recognition of this reality, each of Saskatchewan, Manitoba and Alberta have for the last two years articulated as explicit priority investments to strengthen their transportation infrastructure connections to the United States in their annual budgets and provincial throne speech priorities. Yet, for years the worry has been that these potential benefits will be stranded if they stop at the border.
Provinces have jurisdictional authority for construction, operation and maintenance of much of Canada’s transportation network and not surprisingly therefore, have been responsible for the majority of successful efforts to harmonize and coordinate east-west interprovincial regulatory policy regimes and operational protocols in areas like trucking weight requirements and safety to improve supply chain fluidity. Realizing similar efficiency and economic benefits by formalizing regional improvements to north-south transportation movements is a logical next step to help close the gap with trade bloc competitors whose recognized best practices have recently prioritized regional considerations amongst their national infrastructure project criteria. Capitalizing on the next generation of shared U.S.-Canada infrastructure opportunities can begin by coordinating regional approaches to new programs like the recently announced U.S. Alternative Fuel Corridor Designation Program to modernize electric vehicle charging station infrastructure or by adapting existing provincial regulatory regimes.
It is worth remembering that Canada’s last visit to the top 10 world rankings on infrastructure emanated from regional leadership amongst Western provincial transportation ministers that led to several ground-breaking national programs including the Asia-Pacific Gateway and Corridor Initiative, and the National Gateways and Border Crossings Program.
Elaine Nessle, Executive Director of the Coalition for America’s Gateways and Trade Corridors (CAGTC)
While it is true the United States Congress will be divided, at a minimum, in the first session of the 118th Congress, the Federal government’s role remains: to regulate and facilitate interstate commerce. Of course, much groundwork must take place at the local and regional level. Stakeholder engagement, planning and coalition building are critical to all significant infrastructure projects and must occur in the communities most impacted. When it comes to trade infrastructure, the federal government’s role is unique and equally important. The federal government, for example, has a deep interest in providing financial support for projects that reap national and regional benefits. Afterall, while the benefits of freight movement are disbursed nationally, it is often the negative impacts – such as poor air quality and traffic congestion – that are felt locally. Local communities cannot shoulder these burdens alone.
New commerce corridors may emerge as shippers continue battling COVID-related supply chain disruptions and tri-national coordination is necessary to navigate the shifting regulatory and business landscape. While much can be learned from successful corridor coalitions of the past, supply chain practitioners and state, local and regional planners are faced with unprecedented challenges. This all points to the need for increased coordination among emerging corridors.
In the United States, the federal government guaranteed a minimum five years of funding through the Bipartisan Infrastructure Law and the Inflation Reduction Act. While these laws provide a record level of funding and a much-needed layer of certainty, inflationary cost increases threaten their impact.
Laura Dawson, Executive Director at Future Border Coalition
U.S.-Canada cooperation along state-provincial lines is always a good idea, but it’s exactly the right idea for the present moment when expected logjams in Congress are going to block almost any high-level, Canada-U.S. initiatives that require organization or staffing out of DC.
It’s not just the paralysis of a divided Congress that makes the case for regional initiatives, it is how cross-border trading relationships mature. First, we reduce the tariffs, next, we accelerate the flow of goods and services by removing the thousands of small irritants that slow trade and cost producers and consumers money – and many of these irritants are most visible from the state-provincial vantage point.
Tackling irritants is slow and not sexy. “Alberta and Montana agree on new veterinary inspection standards,” is a headline that excites no one (unless you’re a cattle producer). But these unsexy arrangements deliver lasting gains to producers and increase our ability to attract investment.
Border improvements rely on state-provincial cooperation in order to send specific and effective recommendations to federal decision makers. What is proposed in Ottawa and DC must be field tested in Sweetgrass and Coutts.
CP’s acquisition of Kansas City Southern creates a unique trilateral rail link among Canada, the U.S. and Mexico, but the benefits of this new infrastructure are diminished if there are not enough customs officials to staff the crossings.
Effective bilateral cooperation begins with regional champions. And real progress can only come from specific goals. There are too many conferences on the general theme of improving U.S.-Canada relations. Instead, we need to focus on sector-specific targets for high-demand products like automated vehicles, critical minerals, energy and food.
While the states and provinces have little formal authority for trade rules and agreements, it is in local communities where trade actually takes place that the roots of competitiveness find the best ground.
- What if Canadians voted in the U.S. midterm elections? This survey gives us a pretty good idea of what it would look like, and there is lots of blue.
- More than 8,000 Mexican nationals have sought refuge in Canada in 2022, with the majority taking direct flights from Mexico to Montreal.
- Air Canada is the best airline in North America? For the fourth year in a row the readers of the Global Traveler have selected the Canadian airline for its cabin cleanliness and overall experience.
- Are your cervezas at risk? Droughts in Northern Mexico are so bad that many breweries have faced shutdowns and look to relocate if conditions continue to be this dry.
- A few articles have commented on all three North American countries being in this year’s World Cup including some that poke fun at the north North Americans. But as our Trade and Investment Centre director is fond of reminding anyone who passes his office, only one North American team made it out of the first round, making the U.S.A. the number one power in North America in….whatever you want to call it.
— 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.