Elizabeth Morgan | Is Canada quietly forging its own path?

We here in Jamaica spend a lot of time following the news out of the US and are quite knowledgeable about the political and economic developments there.

Although Canada is a member of the Commonwealth and, like some CARICOM countries, is a realm state with King Charles III as its head of state, and, with over 300, 000 people from Jamaica or of Jamaican descent living there, we do not follow news out of Canada unless it is something related specifically to Jamaicans. We may know that Canada had general elections in April, has a new prime minister, about the Trump US 51st state proposal, and that Canada is a co-host of the FIFA World Cup. These have been widely reported. Given our relationship with Canada, we should pay more attention to developments there.

President Donald Trump will be completing the first year of his second term in January 2026. He came to office threatening to impose tariffs on Canadian exports violating the US, Mexico, Canada Agreement (USMCA), concluded in his first term. He also sought to belittle Canada’s then Prime Minister Justin Trudeau and proposed that Canada should become the US’s 51st state.

Prime Minister Justin Trudeau, a Liberal, with poll ratings plummeting, resigned and the Liberal Party chose a new leader, economist and former head of the Bank of Canada and Bank of England, Mark Carney. With popular opposition to the rhetoric coming out of the USA and his slogan ‘Canada Strong’, Carney and the Liberal Party won the elections in April, forming a minority government. He had assumed the post of prime minister of Canada in March.

CALM NOT POSTURING

Mark Carney, recognising that he faced serious challenges at the national, bilateral and multilateral levels, took a calm, level-headed approach. He brought a calm demeanour to meetings with US President Donald Trump, including at the G7 Summit he hosted in June. It was evident that he was not subordinate to President Trump. For the symbolism, King Charles III, Canada’s head of state, was invited to open the new session of parliament.

Given the importance of US trade, Carney sought to resume negotiations. He recognised, however, that it was necessary for Canada to diversify its trade and decrease its dependence on the US, as that country increasingly showed itself to be an unreliable partner.

IMPROVING INTERNAL TRADE

Carney recognised that Canada needed to reduce or fully remove internal trade barriers hampering the flow of goods among its 10 provinces. For years, such barriers increased the cost of goods. The tensions with the US led the provinces to accept that it was necessary to address internal trade barriers. Work is in progress to address this matter.

PROMOTING FREE TRADE WITH OTHER COUNTRIES

The Trudeau government had taken a decision to prioritise diversifying trade to limit dependence on the US. Canada concluded 15 free trade agreements (FTAs) covering 51 countries and over 1.5 billion consumers. These agreements include with the European Union (EU), the United Kingdom (UK), the Trans-Pacific Partners (10 countries in the Asia-Pacific region), and countries in Central and South America.

Canada is engaged in free trade negotiations with the countries of MERCOSUR and other countries in Asia.

Interestingly, Canada and Mexico recently concluded a bilateral economic partnership agreement.

Canada is also negotiating or updating Foreign Investment Promotion and Protection Agreements.

CARICOM countries continue to trade with Canada under the non-reciprocal Caribbean-Canada Trade Agreement (CARIBCAN).

From reporting, it seems that using its FTAs, Canada has been able to divert trade from the US.

STATUS OF THE USMCA

The USMCA, concluded in 2020, was lauded by President Trump as the greatest trade deal. In his second term, he breached it by imposing tariffs on both Canada and Mexico. Negotiations between Canada and the US have not gone well and are currently on hold. However, the agreement remains in force and 85 per cent of goods traded with Canada are duty-free. Prime Minister Carney thus decided to remove most of Canada’s retaliatory tariffs on US goods imposed in March, but has retained tariffs on US steel, aluminium and automobiles. Carney remains open to advancing negotiations with the US.

A formal review of the USMCA is actually due in 2026.

CARNEY’S YEAR-END INTERVIEWS

In year-end interviews with Canadian media houses, Prime Minister Carney has been clear that his priority is Canada and its economy, and focusing on what can be achieved to improve it.

He also seems to be quite conscious of the internal challenges he faces in Canada with separatist movements in the provinces of Quebec and Alberta, and with other issues such as defence, immigration and cost of living.

On the multilateral front, on climate change, PM Carney is aware of the situation in Canada’s oil province, Alberta, which has the world’s third largest oil reserves. He seems to be taking a practical approach, recognising that fossil fuels cannot be phased out immediately, but trying to limit the carbon impact of oil supplies while working to promote climate mitigation and green technology.

For now, Mark Carney continues to have favourable poll ratings in Canada. Two Conservative members of parliament have crossed the floor to join his Liberal Party, increasing his seats in parliament and thus taking his party closer to the majority of 172. The Liberals won 169 seats in April.

It is not known what 2026 will hold but, for now, the Canadian rime minister is endeavouring to stay above the hubbub emanating from the US and remain focused on making Canada strong by ensuring that the country addresses its internal problems, reduces its dependence on the US, and forges a more independent path.

Best wishes for the New Year!

Elizabeth Morgan is a specialist in international trade policy and international politics. Send feedback to columns@gleanerjm.com