In “Countdown to the CUSMA Review – Pitfalls, Politics and Horse-trading Ahead,” author Lawrence L. Herman – who has practiced international trade and investment law for governments and the private sector for over 45 years – closely examines the issues that need to be resolved prior to the agreement’s operations review on June 30, 2026. The purpose of this review is to see if the three countries can agree to extend the treaty for another 16 years.
“To help ensure that it doesn’t go off the rails, managing all of these processes will be important,” says Herman, a Senior Fellow at the C.D. Howe Institute.
“Work should start now, while the clock is ticking and while there’s time to get some of the procedural elements and guidelines in place to ensure that the process is well-orchestrated. Leaving things to chance in the hope that these will sort themselves out unnecessarily compounds the uncertainty.”
Aspects that need clarification according to Herman include whether the possible 16-year extension runs from CUSMA’s formal end date in 2036 or the time when the three governments agree to such extension. They also include the role of the Commission, which is not a standalone independent body but the three governments exchanging positions and priorities amongst themselves under the guise of being a Commission.
Further, Herman says these exchanges are in the form of “recommendations for action,” which are sent in at least a month before the review and will see the Commission – meaning the governments – decide on appropriate actions. However, he says, there is nothing in the agreement that specifies what is meant by “appropriate actions.”
“This is the part that seems likely to lead to an opening up of the Agreement and – again being realistic – that can lead to re-negotiation of major parts of the deal,” he says.
Further, notes Herman, there is no set timeline for the 2026 review. Under the scenario where there is no extension of CUSMA, he says the timelines and procedures for 10 years of annual reviews need to be settled. “It would be damaging to have them running on indefinitely, as a kind of rolling exercise.”
Herman adds that whatever the political situation amongst the three countries in the future, the US position in the review will be dominant. However, all three governments can also undertake two important actions now for preliminary scoping. These include either agreeing on a defined list of subject areas or parts of CUSMA that can be opened up to keep the process reasonably contained and maintain the basic rules of the trading relationship; or an agreement not to foreclose any subject from being opened up.
“At the end of the day, whatever emerges from the forthcoming review, a proper, stable treaty framework is needed to govern the three-country trading relationship,” says Herman. “This should be the ultimate goal of the three governments as they prepare for the review process.”
For more information contact: Lawrence L. Herman, International Lawyer, Herman & Associates and Senior Fellow, C.D. Howe Institute; and Lauren Malyk, Senior Communications Officer, C.D. Howe Institute, 416-865-1904 Ext. 0247, lmalyk@cdhowe.org
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