We need to resolve all trade disputes under the USMCA continental free-trade pact

As published in The Globe and Mail

Friday marked a historic moment in the North American railway and supply chain landscape. The first truly transcontinental railway in North America, Canadian Pacific Kansas City (CPKC), commenced operations as we completed the combination of Canadian Pacific and Kansas City Southern, two of North America’s largest railway companies.

This new rail network will operate 32,000 kilometres of track, spanning Canada from coast to coast, through the centre of the United States from the Upper Midwest to the Gulf of Mexico, and stretching across Mexico’s industrial heartland, with access to ports on the Pacific, Atlantic and Gulf coasts.

The creation of a new North American rail logistics chain, offering highly efficient single-line service to many of the largest markets and ports across the continent, takes place against the backdrop of North American economic integration under the United States-Mexico-Canada Agreement. We believe that this new rail supply chain, operating at the apex of rail safety, will help attract investment and contribute to economic growth throughout the continent.

The passage of USMCA in 2020 provided the framework for free trade in North America for years to come. CPKC is committed to pushing governments for the long-term policy certainty to help develop the potential that this combination brings.

The impetus to take action dates back nearly three years to a time when supply chains faced unparalleled stress and disruption. After decades of expanding global supply chains, factors such as elevated geopolitical tensions between the United States and China and the repercussions of the COVID-19 pandemic further reinforced the importance of supply chain resilience and strengthening domestic manufacturing capacity.

With the third anniversary of the entry into force of USMCA on July 1, we will mark the halfway point to the first joint review of the agreement in 2026. Now is the time to accelerate efforts to resolve disputesso that the agreement reaches its full potential and that its benefits are widely understood.

Currently there are many disputes under USMCA involving rules of origin, which calculate the amount of regional content required for tariff-free imports of goods. Resolving them will result in increased trade and greater integration across the three countries to create shared economic growth and prosperity.

North American trade has grown almost threefold from US$461-billion in 1995 to US$1.13-trillion in 2020, with a real GDP larger than that of the European Unionor China. It represents 30 per cent of global GDP as of 2020, and supports close to 15 million jobs across our three countries. The economic benefits of increased trade and investment speak for themselves – including empowering small-business exporters in states and provinces across all three countries.

CPKC recognizes the challenges and opportunities ahead. We are determinedto continue leading private-sector engagement with all three governments to advance USMCA and prioritize collaboration in areas that will reinforce the region’s competitiveness. Those areas include energy, trade facilitation, the digital economy, strengthening small businesses, and the building of strategic supply chains in semi-conductors, electric vehicles and critical minerals.

We are engaged in these efforts in collaboration with the largest business associations on the continent, including the U.S. Chamber of Commerce, Mexico’s Business Coordinating Council, and the Business Council of Canada. Our experience at the recent North American Leaders’ Summit in January provides a model for continued collaboration between the three governments and the business community.

We commend the Trudeau government, the Biden administration and Andres Manuel Lopez Obrador’s government for prioritizing these imperatives, but our most important shared work is to come. Working with the three governments, we are determined to do our part to ensure USMCA renewal. We invite all who are interested to join us in efforts to preserve the critical North American trade architecture so crucial to maintaining our shared continental prosperity and competitiveness.