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Legislation in the form of Bill C-4 to implement the Canada-United States-Mexico trade agreement (CUSMA) was tabled in Parliament last month, has been given second reading in the House, and is now being examined by the Commons Trade Committee.

Once cleared through the committee and ultimately passed into law, it will allow the federal government to ratify CUSMA (Donald Trump may call it “USMCA” but there’s no reason we have to). The U.S. and Mexico have already ratified the agreement. Ninety days after we do, too, it will enter into force. All three countries will then be under legal obligations to comply with its trade-liberalizing provisions. That will be a great benefit to Canada, stabilizing what has been a very stressful situation in the face of Trump’s unilateral measures and America First policies.

Regardless of political posturing in committee, where the Liberals no longer hold a majority, the fact is that CUSMA itself is not up for re-negotiation. Everyone knows that, opposition sturm und drang notwithstanding. It’s a done deal, already approved in the two other countries.

While some tinkering with C-4 may be needed here and there, it appears very thorough and carefully crafted. Canadian officials have had extensive experience drafting trade laws and there’s nothing in it that seems at variance with the terms of the agreement or out of line with previous implementing bills for trade agreements like the original Canada-U.S. FTA (1988), the NAFTA (1994), the Canada-EU Agreement (2017) and the Trans-Pacific Trade Agreement (2018).

How did Bill C-4 end up before the Trade Committee? Under Canada’s Constitution, the federal government (technically the Governor-in-Council) has exclusive authority to negotiate, sign and even ratify trade agreements without parliamentary approval. That being said, trade treaties usually require changes in domestic laws to enable Canada to meet its treaty obligations. Changes in tariff rates are the most obvious example. And CUSMA involves more than trade in goods. That’s where Bill C-4 enters the picture. Only when our law is brought into line with the agreement will the government be in a position to issue the necessary ratification notice.

Reduced to its basics, Bill C-4 follows the same approach as previous trade-implementing legislation. Much of it is generic and applies across the board to all persons from all countries, CUSMA parties or not, such as changes to the Copyright Act, extending the term of protection, or to the Criminal Code, making it an offence to fraudulently obtain and use trade secrets. There are also amendments that provide preferences available only to the U.S. and Mexico and their nationals. That’s because the basis of CUSMA (as with all free trade agreements) is that it is preferential, giving benefits to the U.S. and Mexico over other countries. It meets all WTO requirements in this regard.

Other provisions give powers to the government to issue regulations or directions to implement the agreement. An example is changes to the Broadcasting Act that give the federal cabinet authority to issue directions to the CRTC to rescind its policy regarding simultaneous commercial substitution on U.S.-origin TV broadcasts. Similar powers are given to cabinet to issue CUSMA compliant regulations under the Bank Act. There is nothing unusual here. The same sorts of powers were provided in the 1988 Free Trade Agreement Implementation Act and the 1994 NAFTA Implementation Act.

Parts of CUSMA don’t require changes (or major changes) to Canadian laws because existing legislation meets CUSMA requirements. For example, while the agreement contains important new provisions on digital trade, C-4 contains only minor amendments to the Competition Act because the law mostly complies with CUSMA already.

CUSMA is obviously more complex and comprehensive than the Canada-U.S. FTA, the NAFTA or Canada’s other trade agreements. Because of that, the Trade Committee has every right and duty to go through Bill C-4 in a diligent — but preferably expeditious — fashion. As noted, while the bill is in line with CUSMA and conforms to previous Canadian trade-implementing legislation, it may need small technical adjustments in places.

Given the Liberals’ minority position, the Commons could reject Bill C-4 and in effect refuse to approve CUSMA. Parliament could also make changes to it that are inconsistent with or contravene Canada’s CUSMA obligations. Should either scenario occur, the federal government wouldn’t be in a position to ratify the treaty.

But let’s be clear. Rejecting Bill C-4 or radically altering it would result in immediate and serious negative consequences for relations with the U.S., not just in trade but across the board. It would be a disastrous setback for Canada of historic proportions.

At the end of the day, once all the political posturing has run its course, the Trade Committee and Parliament should move quickly to pass Bill C-4 and get on with a deal that is in Canada’s undeniable long-term interest.

Published in the Financial Post 

Lawrence L. Herman, a former Canadian diplomat, is counsel at Herman & Associates and a senior fellow of the C.D. Howe Institute in Toronto. This article is adapted from his testimony Thursday before the House of Commons Trade Committee.