The Future Of The U.S.-Canada Trade Relationship In Light Of The Election

By Scott Maberry and Lisa Mays of Sheppard Mullin; and Vincent J. DeRose, Jennifer Radford, Greg Tereposky and Daniel Hohnstein of Borden Ladner Gervais LLP. Today's Global Trade Law Blog is brought to you by a collaboration between the international trade group at Sheppard Mullin and the team at Borden Ladner Gervais LLP (BLG).

The United States and Canada enjoy a unique bilateral relationship. That relationship reflects a unique friendship, underpinned by shared geography, similar values, common interests, deep connections and powerful, multi-layered economic ties. The United States and Canada have both repeatedly confirmed their common commitment to strengthening the security of the border by working cooperatively to address threats early, facilitate trade, promote economic growth and jobs, integrate cross-border law enforcement, and bolster critical infrastructure and cyber-security.

The recent election of Donald Trump creates uncertainty in the current trade and investment relationships between the United States and Canada. Although election promises do always result in post-election action, given the conviction of President-elect Trump's promises and the anti-trade perspective of many of those who elected him, it can be expected that some action will be taken to further his international trade and investment promises.

Renegotiation of NAFTA

During the Presidential campaign, Mr. Trump declared that the North American Free Trade Agreement ("NAFTA") was a "disaster" that he would renegotiate or even abrogate. NAFTA has a termination clause that can be invoked upon six-month notice by the United States. It was within this context that Canada's Prime Minister, Justin Trudeau, unilaterally offered to renegotiate NAFTA just days after the election.

Since the Canada-United States Free Trade Agreement came into force in 1989 (followed by NAFTA in 1994), trade between the United States and Canada has more than tripled. It is currently estimated that nearly nine million U.S. jobs depend on trade and investment with Canada, and approximately $2 billion worth of goods and services cross our borders each and every day.

Moreover, the labor mobility provisions of the NAFTA have been used by companies on both sides of the border to facilitate the temporary entry of certain categories of workers, such as intra-company transferees and professionals. Today there are thousands of Canadians working in the United States, and thousands of Americans working...