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Christopher Worswick – Let’s Grab a Labour Mobility Win from the Trump Trade Turbulence
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Page Title: | Christopher Worswick – Let’s Grab a Labour Mobility Win from the Trump Trade Turbulence – C.D. Howe Institute |
Article Title: | Christopher Worswick – Let’s Grab a Labour Mobility Win from the Trump Trade Turbulence |
URL: | https://cdhowe.org/publication/christopher-worswick-lets-grab-labour-mobility-win-trump-trade-turbulence/ |
Published Date: | December 9, 2024 |
Accessed Date: | February 14, 2025 |
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From: Christopher Worswick
To: Concerned Canadians
Date: December 9, 2024
Re: Let’s Grab a Labour Mobility Win from the Trump Trade Turbulence
Last month Donald Trump said he’d impose a 25-percent tariff on all products from Canada and Mexico. Next, he reportedly joked that, if Canada cannot bear the economic consequences of the tariff, then it should become America’s “51st state.”
Canadian leaders are now bracing for, and have to be open to, radical changes to our relationship with the United States once the Trump administration is in place.
Our leaders should be taking this as an opportunity. Canada can use this reset in North American trade relations to realize benefits. And one way to do that is to take some inspiration from Mr. Trump’s “51st state” comment.
That comment was no doubt meant to be provocative, but is also full of irony. Mr. Trump wants to put up tariff walls between the United States and Canada and at the same time jokes about removing borders altogether.
It is within that irony, that there may be an opening for serious progress. We do need fewer of the traditional barriers that countries have with each other.
It begins with Mr. Trump’s proposed tariff, which would have a serious consequence for our export-oriented economy if enacted. Canadian leaders must fight it. But our leaders must also think beyond the tariff and consider the benefits of further economic integration.
We should look across the Atlantic. The European Union (EU) involves not only free trade across member states, but also a common labour market. Citizens of one EU country can apply to jobs in another EU member on a level playing field with citizens there.
What would be the advantages of a common labour market between Canada and the US? Canadians would have the opportunity to gain work experience in the US and could share those skills and professional networks after returning to Canada. Similarly, Americans would have the opportunity to work in Canada, expanding their understanding of Canada’s economy and building networks that could lead to new business opportunities.
The upcoming automatic renegotiation of the USMCA has opened a window for increased labour market integration between the US, Canada and even Mexico.
For higher wage workers, this integration is already in progress. The importance of worker mobility between member states was recognized by the architects of the original 1987 Canada-United States free trade agreement. They included a temporary visa clause to be assigned to workers in a specific set of occupations. If a person working in one of those occupations in Canada received a US job offer to work in the same occupation, then they would be granted what the Americans now call a TN visa with no requirement for a labour market impact assessment.
These visas were retained as part of NAFTA, and even through the highly contentious USMCA renegotiation, which suggests that Mr. Trump may be supportive of this type of temporary and reciprocal labour mobility, at least for certain higher wage occupations. These TN visas have a limit of three years, can be renewed in principle, and do not lead to permanent residency.
The existence of the USMCA visas means that we are already benefiting from some of the gains from worker mobility that arise from an EU-style common labour market, and more can be done in the upcoming USMCA renegotiation round.
First, the occupation list should be expanded as many higher wage occupations are not listed. For example, accountants, economists and even hotel managers are on the occupation list, but financial analysts are not. Given the importance of the financial sector in New York and Toronto, extending the occupation list in this way would have large economic benefits.
However, rather than adding new occupations to the list, it would be better to come up with a general mechanism for higher wage individuals to gain these visas. Perhaps, a new omnibus ‘other high-wage’ occupation category could be added with a minimum salary stipulation. This could greatly expand the number of higher wage workers eligible to work in another USMCA country without having to list every possible occupation.
But what about lower wage workers? Since the creation of NAFTA, it has been hard to see a full labour market integration across the three countries, given that wages are very low for so many Mexican workers.
Could a movement in this direction be made under the next USMCA round? A lower wage mobility clause should be included, perhaps with numerical limits to avoid too large of an inflow of such lower wage workers entering either the US or Canada from Mexico to limit any negative consequences for lower wage workers in the receiving country. If no negative consequences emerge, then the numerical limits could be relaxed in subsequent USMCA negotiation rounds.
Christopher Worswick is chair of the Department of Economics at Carleton University.
To send a comment or leave feedback, email us at blog@cdhowe.org.
The views expressed here are those of the author. The C.D. Howe Institute does not take corporate positions on policy matters.
A version of this Memo first appeared in The Globe and Mail.
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