THE STANDING SENATE COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE
EVIDENCE
OTTAWA, Wednesday, November 26, 2025
The Standing Senate Committee on Foreign Affairs and International Trade met with videoconference this day at 4:14 p.m. [ET] to examine and report on such issues as may arise from time to time relating to foreign relations and international trade generally.
Senator Peter M. BoehmChair in the chair.
[Translation]
The Chair: My name is Peter Boehm. I am a senator from Ontario and the chair of the Standing Senate Committee on Foreign Affairs and International Trade.
[English]
I would invite committee members participating in the meeting to introduce themselves.
[Translation]
Senator Hébert: Martine Hébert, Victoria division, Quebec.
[English]
Senator Coyle: Good afternoon. Mary Coyle, a senator from Antigonish, Nova Scotia.
Senator M. Deacon: Welcome. Marty Deacon, Ontario.
Senator Wilson: Duncan Wilson, British Columbia.
Senator Harder: Peter Harder, Ontario.
Senator Ravalia: Welcome. Mohamed Ravalia, Newfoundland and Labrador.
[Translation]
Senator Gerba: Amina Gerba from Quebec.
[English]
Senator Adler: Charles Adler, Manitoba.
The Chair: Thank you very much, and Senator Woo is just in time, Senator Woo from British Columbia.
I wish to welcome all senators and everyone who may be watching us across Canada on ParlVU.
Colleagues, we are meeting under our general order of reference to continue discussing the Canada-United States-Mexico Agreement, or CUSMA, and Canada’s trade relationships with the United States and Mexico.
Today, for our first panel, we are pleased to welcome, from the Business Council of Canada, Louise Blais, Senior Advisor. Importantly, for today’s discussion, among her many previous roles as a diplomat, Ms. Blais has served as Canada’s consul general in Atlanta and multilaterally as ambassador and deputy head of mission at the United Nations in New York. Welcome. Thank you for joining us today.
Regarding Laura Dawson, Executive Director, Future Borders Coalition, who was supposed to appear on this panel, she unfortunately can’t join us today due to the technical requirements that I think you’re all familiar with. We look forward to welcoming her in the future.
[Translation]
Before hearing your statement, Ms. Blais, and moving on to questions and answers, I would like to ask everyone present to kindly mute the notifications on their devices.
[English]
Also, please observe the guidelines for keeping distance between your earpiece and the microphone so we can avoid audio feedback that could be injurious to our interpreters and others who are listening.
Ms. Blais, you have the floor.
[Translation]
Louise Blais, Senior Advisor, Business Council of Canada: Honourable senators, thank you for inviting me to appear today on behalf of the Business Council of Canada, or BCC. The BCC represents the chief executive officers of 170 leading Canadian companies operating in all sectors of the economy and in all regions of the country.
[English]
I will keep my opening remarks focused. The United States-Mexico-Canada Agreement, or USMCA, is simply indispensable. For the business community, that point is not in dispute because the livelihoods of Canadian workers and their families depend on the continued, certain and predictable operation of the USMCA, or CUSMA.
This agreement is what keeps more than three quarters of our exports flowing, anchors integrated North American supply chains and provides the stability companies need to invest, expand and create jobs here at home. Therefore, the question before us is how Canada positions itself for the successful renewal in 2026, one that protects jobs at home and reinforces North American competitiveness in an uncertain world. As the CEO of the Business Council of Canada, Goldy Hyder, has often said this review is not a bureaucratic checkpoint; it is a strategic moment for Canada.
The global environment has become more competitive and more protectionist. We cannot afford to approach this passively. And we must do so on the basis of goodwill and good faith with not only the United States but also Mexico. I am pleased to appear just prior Undersecretary Roberto Velasco Álvarez whose leadership on North American cooperation is well recognized. I congratulate the committee for inviting him. His participation is a reminder of something we sometimes minimize in Canada: USMCA, CUSMA or T-MEC is a trilateral agreement, not two bilateral tracks running in parallel. North America only works when all three countries are aligned.
That brings me to my central message today: Canada must treat our continental relationships as foundational. Trade diversification is an additional element, not a replacement. In fact, our global position has always been strengthened by our strong North American base.
Coming back to Mexico, it is now the United States’ largest trading partner, surpassing Canada as a customer. It is a critical hub for continental supply chains in manufacturing, energy, agriculture, digital services and logistics. For Canada, a strong relationship with Mexico is not a “nice to have”; it is central to our economic and security interests. Our companies see this clearly. Integrated supply chains rely on three predictable partners, not two that are hoping the third will adapt later. We must resist this.
Looking ahead to the 2026 review, the Business Council of Canada believes Canada’s priorities should focus on three areas.
The first is reducing uncertainty and reinforcing investor confidence. Rules of origin, dispute settlement and trade remedies must be predictable. Capital is mobile, and it will not wait for North America to get its act together.
The second is modernizing the agreement for the economy we are actually living in. Digital trade, secure data flows, advanced manufacturing and clean technologies — including AI — must be core pillars, not afterthoughts, of this review.
The third is strengthening the trilateral framework, politically and operationally. This means deeper Canada-Mexico cooperation and more structured dialogues on supply chain security, regulatory alignment, labour mobility and energy transition.
[Translation]
Let me conclude with this thought: Next year is not just about preserving what we have built together, but about shaping a new economic future for Canada.
The position of the Business Council of Canada, echoed by Goldy Hyder, is that we must approach this process with positive ambition and a better understanding of our partners. A confident and coordinated North America is Canada’s greatest asset in a fragmenting global economy.
Thank you, and I look forward to your questions.
The Chair: Thank you, Ms. Blais.
[English]
I would like to note that we have been joined by Senators Ataullahjan and Al Zaibak, both of Ontario, and Senator MacDonald of Nova Scotia.
We will go to questions and answers. Colleagues, the three minute rule will apply, so please make sure your questions are concise and pointed. I would suggest the same to our witness with respect to her answers.
Senator Ravalia: Thank you very much, Ms. Blais, and thank you for the work you’ve done on behalf of Canada in your remarkable career.
Mexican President Claudia Sheinbaum’s approach to dealing with President Trump has been described by many observers as cautious and measured. There were no retaliatory tariffs on the part of Mexico. It would appear that that relationship is perhaps in a stronger position than our current relationship with the U.S. I wonder if you could comment on that strategy and potentially what impacts that might have in terms of the renegotiation of CUSMA.
Ms. Blais: Thank you, senator.
When I spend time in D.C., we often hear that the Americans really have a view that the President of Mexico has been able to maintain a very good dialogue. It’s very interesting that she’s never met him in person, but they speak regularly, and her teams are in D.C. all the time.
They started with a much longer list of irritants than we had, and they’re making their way rigorously through, one after the other. I’m hearing that there are about five or six left — probably the hardest ones to deal with. So we don’t know what the outcome will be.
Part of the reason for this is that Mexico has been used to being treated — what’s the diplomatic word to use here? They have had a difficult relationship with the United States regarding the border, the cartels and on all sorts of issues. It didn’t believe it had a special relationship, and it didn’t believe it was the favoured one. Psychologically, I think they were at a different starting point than Canada was. Although the U.S. president does sometimes mention that he intends to send the army to deal with the cartels, he has not called upon Mexico to be the fifty-first state. Although, he did rename the gulf. It’s a little bit different.
The Prime Minister was elected with a mandate by Canadians to stand up to the president. That’s the mandate we gave him as a nation. I’m not sure it was the right mandate to give him. I’m not sure that standing up was the right way to approach it. I think instead of “elbows up,” it should have been “chin up.”
The Chair: Okay. This is getting interesting already.
Senator M. Deacon: Just before I ask my question, thank you for being here.
That “chin up” — would you care to elaborate any more on that with my time?
Ms. Blais: Sure.
“Chin up” is not confrontational. In other words, you go there as proud Canadians, defending our interests. That will be respected, but at the same time you don’t poke the bear. You don’t make it more difficult, politically, for the president to come to an agreement with Canada.
When the Prime Minister would meet with the president, it always went well, because I think they were able to speak and see eye to eye, but you have to maintain that impression by what you say when you come home or what you say on the international stage. It has to be consistent, that we’re going to work with the Americans and there are things we could do together, but if you say that but then we describe them as unreliable as partners, there is a disconnect there that I think we probably could have handled a little bit better.
So “chin up” is what I mean. It’s defending our interests, being proud Canadians but, at the same time, not necessarily being there to criticize the Americans in how they’re going about managing their own country.
Senator M. Deacon: Thank you, and thank you for framing your statement the way you did today. I really appreciated that, particularly those areas at the end that you described as priorities.
So much debate we’ve had has been around U.S.-Canada trade, focusing on things such as supply management, softwood and automotives. I would like to shift to the service economy, digital services and other more technologically focused areas. We rescinded the Digital Services Tax in Canada. What were the sectoral specific impacts on trade, and how are these sectors faring in this ongoing trade war?
Ms. Blais: Clearly, we’re in a very complex environment because there is a series of different tariffs that are being applied using different mechanisms. We have the IPA tariffs, the “fentanyl tariffs,” and those apply across the board, except not on CUSMA-compliant ones. Then, in addition, you have the 232 sectoral tariffs that are applied globally, not just to Canada but around the world. Those are on steel, aluminum, softwood lumber, et cetera, which some of the countries have negotiated a reduced rate on. Canada has not so far.
Some sectors are more impacted than others by those tariffs. The lumber industry is reeling from the tariffs, but I understand the overall tariff rate on Canada is around 5%, average, but it’s much higher in certain sectors and nonexistent in others. So the impacts are felt in completely different ways across the country by different provinces. Some provinces are more affected than others. Quebec is more affected when you look at the sectors that are targeted as opposed to other provinces like Newfoundland and Labrador. We’re less exposed to U.S. import tariffs. You have different pain felt across the board.
I hear, from time to time, of different steel and aluminum producers that are still able to do business in the U.S. for a variety of reasons, one of which is that the American producers have become greedy and have raised their prices. Therefore, we still remain competitive, but it depends on the product. You really have to look at the different products.
The Chair: Thank you very much.
Senator Wilson: I want to go back to the “chin up” comment. I see the Prime Minister has spoken to the president, and he will be going to Washington next week. Do you think we’re recovering from that “elbows up” moment to a new posture? What is your perspective on the current situation?
Ms. Blais: I think the Prime Minister is doing everything that he personally can to maintain contact under difficult circumstances. I don’t think we are recovering yet. With the president, you have to go there and come back and then say, “Okay, it went well.”
I welcome the fact that he will be going. I think contact is important. I really do believe that this will be solved at the top. There is no way around it. It will be around the draw, which is the FIFA World Cup that we’re cohosting with Mexico. How was this organized? We are cohosting, Mexico, Canada and the United States, in the year of the review of the USMCA. We should leverage this goodwill. These are occasions that matter. Hopefully, it will all be in good humour and good time, and maybe privately they’ll have honest conversations. I want to be hopeful, but we’ll have to wait to see how it goes.
Senator Wilson: We’re never supposed to have all our eggs in one basket, but we have most of our eggs in one basket, and I think members of the committee would probably agree that USMCA negotiations are the top priority, absolutely, no question. That being said, I’m interested in what your members might be doing to move some eggs into other baskets in terms of diversification.
Ms. Blais: Diversification is important and always has been important if, perhaps, neglected. I think it’s important for the Business Council of Canada and its members to lead the way, because they are bigger companies. Eighty per cent of Canada’s economy is small- and medium-sized companies. It’s not easy to start to export halfway around the world. It’s not impossible at all but just much more challenging.
The business council has been doing a great deal of work travelling around the world. Goldy Hyder is coming back now from the U.S., but he’s been in Asia regularly, as well as in Europe and across the world, and in India regularly in the past, establishing really strong business-to-business linkages for that very reason. The Business Council of Canada pushed for the Asia-Pacific strategy way before it was finally released because we feel that growth is in Asia and this is where we must go so our members are there.
Moving forward, one of the recommendations of the Business Council of Canada — and I will finish with this thought — is that there should be closer collaboration between government and the private sector so that we can put in place the kinds of activities and programs that could see big-corporation Canada helping small companies scale up and strategies that will help advance our smaller companies, but that can only if we work together.
Senator Coyle: Thank you to our witness. I appreciated your remarks and this premise that we can’t just abandon our main partner here, and why would we want to? That’s just not going to work. We have to grow the whole pie. In doing so, perhaps we’ll have more trade with other countries.
I’m interested in all of your points, the three points that you made about the relationship and the future of CUSMA or USMCA, but I’d like to ask you to delve into your second point, which is modernizing the agreement in a way that it represents not only the economy we currently live in but, I imagine, also the new economy we are transitioning into it. Could you speak specifically about what we don’t need anymore that’s there and may be obsolete, given the change, and where you see us focusing?
Ms. Blais: About eight months ago, the position of the council was just renewal, that there’s nothing to see here, let’s renew it and everything is fine, because the idea of reopening it or adjusting it is dangerous.
Since we are now hearing from the Americans that they want to review it — and I’m not using the word “renegotiate,” I said “review” — then perhaps there will definitely be opportunities, not so much in deletion but in addition. I think obviously of AI, data centres and the sovereignty of personal data. We all have to come to terms with the challenges related to that. With everything now being digital, there are weaknesses in our power grids, for example, that cross the border, and we need to work together to protect that. That’s a technology issue. You could use the review to strengthen some of those chapters.
However, there is a bit of a debate as to how far you can go, how much you can change, until it’s no longer the same agreement and everyone has to go back to their parliament or congress or see if the president needs to seek fast track authority. We’re hearing in the U.S. that they may want to not touch USMCA too deeply because there are a lot of technical provisions there that they’re totally happy with and, instead, probably work with side annexes and agreements that would complement what we already have there. That would be the mechanism.
I’m not going into detail on the digital side. I’m just giving you a bit of an example, but it could be far deeper than that.
The Chair: Thank you very much.
Senator Woo: Thank you for your testimony.
I like the vision that the Business Council of Canada is advancing, that of deeper integration that allows secure access ultimately for greater North America competitiveness to export to world markets and, of course, secure supply for Canadian manufacturers and other businesses. But I have to say that vision really strikes me as quite fantastic. When you think about deals that Trump is either brokering or entering into, they’re extortionate. They’re all extortionate. I can’t see a scenario where it wouldn’t be extortion for us as well.
What I worry about is that we will settle for a deal that does give us secure access, does restore some of the difficulties we have in exporting to the U.S. market, but with reduced competitiveness for North America as a whole because that is the way America is going. America is not going to allow its competitiveness vis-à-vis the world to be undermined by Canada because Canada is part of the North American space.
There is a scenario in which we get secure access and we can do reasonably well, but essentially we’re still a branch plant, maybe even more so. We’re a supplier of raw materials, and we have high external tariffs on certain products. That’s already happening. This means that the competition within North America is reduced, which means our companies will be less able to innovate because they don’t have competition. Think about EVs. Ultimately, in the long-run, it’s going to make us more dependent and less able to diversify. I’m sure your members have thought about this scenario, but can you engage me on that idea?
Ms. Blais: Absolutely, and I think your concerns are well founded in many ways. It was quite striking to see the president of the United States talk about Canada as a competitor and actually use that word in the context of the auto industry. That’s a perfect example. He said that Canada can do parts but the U.S. wants to assemble, as if it’s somehow a right of the United States to be the sole assembler of cars sold in the U.S. He was specific: Cars bought in the U.S. need to be made in the U.S. But he’s forgetting that a lot of cars assembled in North America or in the U.S. are exported. Every single BMW X5 made in the world is made in Spartanburg, South Carolina. Yes, they sell a lot to Americans, but most of the production is sold abroad. That is thanks to the help of Mexico, Canada and the supply chain. I don’t think we abandon continuing to try to get through to the Americans about what we mean to them in terms of making them competitive. I don’t think we’ve found the way to do it effectively enough.
Senator, you served in Washington, and I spent a great deal of time with Republicans, because, in the southeastern United States, that’s the majority. I can tell you that they understand the value of Canada. There’s a lot of support, but everyone is navigating a really complex American political landscape. I’m criticized for it from time to time, but I remain optimistic. Things will not be the same, but they won’t necessarily be bad. I think we have to hold on. It’s just been eight months. Our relationship with the United States is decades and decades old. Eight months — yes, some fundamental changes. The article today in The Globe and Mail was quite striking regarding all the things that have changed, so let’s not be naive. At the same time, I still believe there’s a great deal of support for the vision the business council is putting forward. Our counterpart in the U.S., the Business Roundtable, believes the same thing, as does the U.S. chamber. We have a lot of allies. We have to hold steady without being naive.
[Translation]
Senator Gerba: Welcome back. I will continue with Senator Wilson’s question. I understand that it was the Business Council of Canada that proposed the possibility of market diversification; is that correct?
Ms. Blais: We didn’t come up with the idea, but we’ve always been very positive about it and have been talking about its advantages for several years, especially in the context of Asia.
Senator Gerba: So, in the 2025 budget, the government is presenting a target of doubling its exports outside the United States over the next year. Do you think that is realistic?
Ms. Blais: Thank you for the question. I believe that doubling current exports is not impossible. It is not impossible, but we will need to establish partnerships and programs to work with businesses. Canada’s missions abroad alone will not succeed in opening up these markets. As I said, we are talking about the United States, which is protectionist. There are trends. It is difficult to penetrate certain markets, not because of tariffs, but because of non-tariff measures that make market access difficult.
For example, we are currently talking about a military industrial base partnership with Europe, but it is important to note that the certifications required to become a supplier to these delicate and sensitive supply chains take years to obtain. So, will we be able to open all these doors, which are difficult to unlock, overnight? Consider the CETA that we concluded with the European Union several years ago: it has not even been ratified by all countries yet, but it is in place. It is disappointing because of the lack of appetite on the part of companies and the lack of capacity — I come back to this idea of SMEs, because it is very hard for them to export to markets that are difficult to access.
So, what are the programs and what are the methods? Sometimes you have to set ambitious goals to keep everything on track, but you have to work with the business community, and specifically with the members of the Business Council of Canada, because it’s the big companies that will be able to help and involve the smaller ones.
Senator Gerba: Are there any priority markets, according to the Business Council of Canada? How important is the African continent to the Business Council of Canada?
Ms. Blais: That’s a very good question. Indeed, we have focused a lot on Asia. However, we are beginning to explore opportunities in Africa. Our members come from all walks of life and all economic sectors. Within the Business Council of Canada, we currently have representatives abroad, particularly in Europe, Asia and Mexico. Wouldn’t it make sense to have someone on the ground in Africa?
There is also the Middle East, where we want to try to explore certain opportunities. It’s all about relationships; we need to build working relationships with companies. So yes, Africa is fertile ground to be explored, in my opinion, because it’s a continent that is experiencing extraordinary growth.
Senator Hébert: Ms. Blais, it is a pleasure to see you again today. We knew each other in our previous life, and it is a great pleasure to work with you.
I would like to come back to the issue of diversification; more specifically, you said earlier that it is important for Canada to have a consistent and coherent position. In other words, we need to walk the walk. The international approach, the fact that we want to diversify, that we are going around internationally saying, “We want to develop new partnerships because our main partner is no longer as reliable as it used to be”. . . The fact that you also mentioned Asia and our position with regard to China. . . I feel like Canada is walking a tightrope over a pond full of crocodiles and trying not to fall.
What approach should Canada take in this context, given what you said earlier about the need for a consistent approach?
Ms. Blais: Thank you very much for your question, senator; I am also very pleased to see you again. You are also very familiar with the United States.
That’s what we were saying: we need to expand, add, but not replace. We should have big ambitions. I think it’s all in the tone, how we say it and how we approach it. We can’t be criticized for wanting to diversify our markets and have other markets abroad; that’s normal. The American President was in the Middle East in May, and he too went looking for investment. That’s perfectly normal. We don’t need to take these steps because we have difficulties with the United States; we should do it simply because it’s a good idea to have markets on a global scale. What’s more, as the Prime Minister said, we are a country that has what people want.
I have the honour of sitting on the board of directors of Invest in Canada. I am not speaking on their behalf today, but I do have experience in this area as well. I can tell you that our relationship with the United States, our access to their market and what we have been projecting for several decades has been an indispensable asset in attracting investment. Why? Because we do things together, which we then export abroad. Today, I think that leaders and business people around the world are asking themselves the following question: What does the future hold for the North American continent?
I reject the temptation to say that we are an alternative to the Americans; let’s be careful. Many Canadian companies depend on American supply chains and work closely with American partners who have customers in the United States; we don’t want to undermine what works. It still works today, eight years after President Trump arrived at the White House.
We must understand that Canada’s strength has been partly due to its partnership with the United States; we must therefore resolve this issue first, and we will be stronger in the pursuit of our diversification goals. I sincerely believe this.
[English]
Senator Ataullahjan: My colleague just asked a question about diversification, so I’ve changed the question I was going to ask you. This morning, I had a senator from Uzbekistan and their ambassador to Canada in my office, and they indicated that Central Asia is very keen to do business with Canada. Now that we’re looking for new markets, do you feel that’s a region we have ignored? Reading between the lines, he indicated that they really wanted Canadian companies because of what Canada stands for.
Ms. Blais: That’s interesting and very good. We should play on all fronts. With those who are really happy to work with us because we’re not the United States, let’s go ahead. We don’t need to define or restrict ourselves. We are what people see. But I hear the other side from investors and Canadian companies that are not able to secure investments because of the uncertainty happening now with the United States. There’s a little bit of everything happening at the same time. We have to use finesse and be astute about it. There are regions of the world that really do see Canada as a great partner. We have a lot of things to offer. We have the rule of law, which the Prime Minister and many governments in succession have said. So, sure. But then what? Do we take a mission over to the region? Do we look at what the potentials are? Absolutely, 100%.
Senator Ataullahjan: Canada has consistently had a trade deficit with Mexico. Looking at the current atmosphere, I see it as an opportunity for Canada and Mexico to increase bilateral trade. In which key sectors could we increase our trade?
Ms. Blais: Thank you for that question.
I wrote a report for the Business Council of Canada three years ago that was called Primed for Growth, and it was very much about the bilateral relationship between Canada and Mexico and that it had been neglected within the North American agreement — that we had focused too much on the United States to the detriment of the potential of Mexico. Mexico is a growing economy, and we could work closely together. We have a lot of companies there. Goldy Hyder of the Business Council of Canada has been in Mexico five times this year. We have invested in this relationship with the Mexicans over the past five years. Senator, you were there recently as well.
The areas are actually quite strong on AI and on technology. They’ve been at the forefront of that. We don’t really think about that, but they are. When it comes to advanced manufacturing, they’re getting better and better. We have a lot of Canadian companies there. Martinrea and others are operating there. We need to look at advanced manufacturing and what we can do better with mobility. We have a great seasonal workers program with Mexico. It’s been running well for many years. We should continue it.
However, we need better infrastructure for trade right now. We don’t have the infrastructure to expand our goods exchange — ports and roads. We have to look at how we can work together to modernize that infrastructure.
The last point I want to end on is that Canadians are great investors in Mexico — in the energy sector, the automotive sector and other manufacturing sectors. What we have not seen is investments from Mexican companies that are becoming bigger and bigger by the day into Canada. We mention that to them all the time. We want to have a good relationship, and it has to be balanced.
The Chair: Thank you. Time has expired, Ms. Blais. We might want to mention that in the second panel when we have the Mexican Undersecretary for North America.
Senator MacDonald: Thank you. It’s great to have you here, Ms. Blais.
I concur with your assessment on how to approach this — low key, turn the temperature down, work behind the scenes — but it didn’t work out that way. We know the president is a mercurial character, but it hasn’t stopped Japan, South Korea, the EU, the Philippines, Indonesia, Thailand or Viet Nam — any such countries — from cutting a deal. The more deals he cuts with other countries while we’re sitting by, watching — what impacts do you think that has on whatever leverage we have? How do you think it would impact our negotiations when we finally sit down and deal with our issues?
Ms. Blais: May I be frank, senator?
Senator MacDonald: Yes, please.
Ms. Blais: I think we missed our window. I really do. My Republican counterparts I speak to agree. I think we had a window early on, and we came with specifics. For reasons that were understandable and have been mentioned, we didn’t want to fall into the trap of Donald Trump, but all we had to do was announce something big and worry about the details later. This is what everyone else has done. They’re still haggling on all the details — EU, Japan and everyone — no one knows what they agreed to, but they announced something, and everybody felt better, and he moved on. This is maybe my cue to stop talking. It is my understanding that we went at it the way we always used to, with very specific negotiations, very pragmatic, facts here and there, and this is Point A and a comma here — the old-fashioned way. I’m told that’s not where they were. They wanted something bigger. So then we lost the window. Then they signed deals with others that understood how to navigate. It’s telling to me that the EU, with 27 member states with which it had to check in, was able to come to a deal and we weren’t. So I think that’s true. We’re just now trying to catch up.
I personally think there is a cost to — an early bad deal is not a good idea, clearly, but I think a lot of goodwill was lost with our methods. That’s just not a good place to be, I don’t think, as we prepare for USMCA review. I would have preferred more. We’ll see what happens next week in D.C. It’s never too late with this president. There’s always a way back. But the sooner we come back and we change the tone and the approach, the better. We’ll get somewhere without committing or caving but getting people in a better frame of mind —
The Chair: Thank you very much. We’ve run overtime on your segment, but maybe we can get something going in the second round. There are a few senators who will have to work hard on that.
Senator Adler: I’m just wondering about the business of “elbows up” being perceived by some people as hyper-aggressive as a campaign sales pitch. When I look at Mamdani, the incoming mayor of New York, the stuff he was doing during the campaign but especially when he won the election — the stuff he was doing directly in the face of Donald Trump, which was essentially treating him like public enemy number one — if we’re looking for animal analogies, Mamdani was a ferocious lion and this “elbows up” business is like a hamster. Days after Mamdani did his PR, he’s in Trump’s office, and Trump was literally holding his hand and having a bromance with him. You said earlier, and I agree with much of it, that this essentially gets settled by people at the top, so if Mamdani was doing what he was doing, then the idea that Carney can’t do a deal with Donald Trump — help me with that, because I’m failing to understand how a little bit of an elbows-up sales pitch is making any difference at all here.
Ms. Blais: It’s really interesting. You have to study these situations to understand how to approach the characters.
Essentially, what I’m told when I’m in D.C. by senior Republicans close to the White House is that they understood the Prime Minister had to run a campaign that was anti-Trump because that was sentiment in Canada. They get it and understand it, but the campaign’s over. It’s the pivot that wasn’t completed, in my view. There were attempts to complete it. There was the G7 moment. The first meeting went well when the Prime Minister went down for the first time in May. Whenever they’re together, it goes well, but I do believe that the Prime Minister didn’t have the full political room when he came home to be — I just know the kind of reactions I get or even that the business council gets for talking the way I’m talking with you today from some Canadians who get really upset with me. I don’t think the Prime Minister had a great deal of room to really start a bromance with the president of the United States. Mamdani found a way, but is it going to work? Is it going to last? It’s a bit fresh. We’ll see. What Mamdani did is say, “Here are the things that I agree with you on. Let’s work together.” The president likes that.
But I will add one thing. The president of the United States — hopefully he’s not listening — understands that he’s in a different place now, at eight months into his mandate, than where he was, and there are political advantages to him dealing with Mamdani the way he did. We may not have such an advantage. On the other hand, Canada has a great deal of goodwill in the United States. Few are the people who want to stick it to Canada.
The Chair: Thank you.
Senator Al Zaibak: Contrary to the earlier statement and characterization, I do not recall ever hearing our Prime Minister describing President Trump as being unreliable. I believe he remains consistently respectful to President Trump, and instead, in my view, he bent backward to maintain a friendly relationship. I stand to be corrected.
Beyond CUSMA, I’m wondering whether there is any more comprehensive framework that transcends CUSMA and provides a win-win situation for Canada and the U.S. without undermining our sovereignty. You mentioned a few aspects that went beyond CUSMA, but don’t we need something more comprehensive that transcends that?
Ms. Blais: Thank you, senator.
I agree with the first part of what you said. I agree the Prime Minister has done a lot to develop a good rapport and a good relationship with the president. He has personally treated him with respect, and I wouldn’t want to say otherwise. It is my understanding that as a government in general, as well as Canadians and the media, we have said that the United States was no longer a reliable partner. I think that has been said, but it wasn’t specific to Donald Trump himself. I think I just want to make sure I’m clear on what I’ve said. But I agree that there has been a lot of effort, and those efforts continue and should continue. I have great faith in the Prime Minister’s ability to succeed. In my view, there is urgency as opposed to not urgency in this area.
I agree with your second point and the Business Council of Canada agrees that we should be ambitious about our continental partnerships, and I include Mexico in this because what happens in Mexico has an impact in Canada. We are already the world’s most competitive trading block, but we are at risk of letting that fall if we don’t continue to nourish it. You don’t nourish by keeping the status quo. You nourish by growing. You nourish by looking at all the shared elements, whether it’s border management, security, cybersecurity partnerships — as I was mentioning earlier, one partner getting hit impacts another partner — or aviation, all these things. We live in a very integrated world. We should be ambitious and we should work together. Certainly, from the Business Council of Canada and our counterparts in Mexico and in the United States, the vision is to be bolder, more ambitious and do more together.
The Chair: Thank you very much.
I’m going to ask a quick question. I think it follows well on Senator Al Zaibak’s question. Ms. Blais, during 9/11, you and I were in the embassy when the planes hit. We all had to take action as Canada. We came up with proposals. We developed a ground game all over the United States of reassurance on the security side, a willingness to keep trade flowing and correcting some misinformation that was out there. That was mainly your job. Are we doing everything we can now on the ground? I was in Halifax at the security forum this past weekend, and I talked to a number of U.S. senators. I had my fact sheets with me, or in my head, in terms of Canada being the number one customer and source of income for all of their states, basically. They knew that. But are we getting the messages across that we want to get across in terms of our operations?
Ms. Blais: Thank you, senator. Certainly, I remember that period clearly. We were very successful. There was the terrorist that tried to cross the border, and everyone was so on edge, and we were successful at that time in managing all of those things. You can never underestimate the Americans’ will to secure their borders and themselves. It is fundamental. Now the issue has to do with China. They feel with COVID that they are now vulnerable on health supply chains and chips and so on and so forth.
In terms of Canada in this context, I might get in trouble again for this, but we have a great network of offices throughout the U.S. and consulates throughout all the important regions. We’ve got great people on the ground. Some of them are Americans working for our consulates who believe in the relationship. I think that Trump won, and with Biden, there was whiplash, and I’m not sure that we were as effective in the last seven years in our advocacy. It was really difficult to navigate January 6 and Congress’s positioning on that and how we engaged with those members of congress. I have a different vision than some of my colleagues on that. I think we engage, engage, engage, even if we don’t like what we’re hearing.
Having said that, I think your impression is right. Most senators and congressmen that I interact with understand the importance of Canada and have a great deal of goodwill vis-à-vis our country and are worried about the state of the relationship today and are saddened by it.
The Chair: Thank you very much.
We have about six minutes. We have six senators in round two. What I’m going to suggest, if you agree, colleagues, is that you all put your questions forward in about 30 seconds or less. We’ll do that all in one batch, and because Ms. Blais is such a seasoned diplomat and knows how to do these things, she will then respond to all of your concerns.
[Translation]
Senator Gerba: You mentioned the possible reopening, renegotiation or revision of CUSMA. We need to establish priorities. According to the members of the Business Council of Canada, what are the priorities Canada should focus on?
Senator Hébert: On a scale of 0 to 10, how confident are you that we will get through this, with 10 being “very confident”?
[English]
Senator Wilson: I’d like to build on the infrastructure comment that you made earlier in terms of trade with Mexico. What do you see as the biggest infrastructure priorities?
Senator MacDonald: When we get to negotiating our final trade deal and we get to CUSMA in 2026, do you think there is a chance that the Americans will put an end to CUSMA and we will have to negotiate a bilateral deal with the U.S., a bilateral deal with Mexico, and the U.S. will instead also negotiate two bilateral deals?
Senator Al Zaibak: I’m referring to your statement earlier that we might have missed the window of opportunity with the U.S. I’m wondering whether we have missed the window of opportunity with Africa and with the Middle East. Why are we still considering or questioning the viability of setting up offices in Africa and the Middle East?
The Chair: Thank you. Most of those questions are related. Ms. Blais, please go ahead.
[Translation]
Ms. Blais: One of the priorities I haven’t mentioned yet is the External Advisory Committee on Regulatory Competitiveness; we’re promoting the idea that business people should be part of this kind of committee. This is somewhat similar to what we were saying: We need to build more bridges between the business sector and the government sector.
Governments negotiate agreements, but businesses implement them. There needs to be more regular contact in this regard.
I would rate our chances as a nine on the scale.
[English]
I think they will want to keep all the meat that’s in USMCA that they like. I don’t see them tearing it apart, but I do think it is possible. We don’t want that at the Business Council of Canada. In fact, I said the opposite in my remarks. It is not out of the question that they will negotiate bilaterally, but it will be under the umbrella. Mexico does not wish that either. You might hear differently, but I doubt it. We all want to stay together, but we might have to see.
In terms of infrastructure: ports, ports, ports, better port connections. It’s not just the infrastructure of the ports; it’s the ships. With railway, we’re lucky now because it’s a Canadian company that is tying all three countries together, CPKC. We need to make sure that we support their work to connect the country.
In terms of the Middle East and Africa, we have to get on it as fast as possible. The world is a big place with a lot of opportunities.
[Translation]
The Chair: Thank you very much, Ms. Blais, that was quite a feat.
[English]
Thank you very much on behalf of the committee. These are important issues. We will be coming back to this subject time and again, and I’m sure my colleagues would agree that we would like to have you back as a witness.
Colleagues, for the second panel, we are pleased to welcome, via video conference in Mexico City, from Mexico’s Ministry of Foreign Affairs, Roberto Velasco Álvarez, Undersecretary for North America.
Mr. Velasco Álvarez, it is good to see you again. The last time, it was in your office. This time, we’re meeting virtually. Thank you for being with us today. We are ready to hear your opening remarks, and, as is the custom, these remarks will be followed by questions and your answers. You have the floor.
Roberto Velasco Álvarez, Undersecretary for North America, Mexico’s Ministry of Foreign Affairs: Thank you very much, Senator Boehm. It is a pleasure to be here with the honourable members of the Standing Senate Committee on Foreign Affairs and International Trade. I want to thank you for your invitation to share Mexico’s perspective on the state of our bilateral relationship and the upcoming review of the Canada-United States-Mexico Agreement, or T-MEC, as we call it in Mexico.
Our economic ties have steadily strengthened over time. As you probably know, in 2024, bilateral trade in goods between Mexico and Canada reached nearly $50 billion U.S. From January to July 2025, trade with Canada totalled $19.5 billion U.S., a 5% increase compared to the same period in 2024. This makes Mexico Canada’s third-largest trading partner.
Canadian investment continues to grow in sectors such as manufacturing, mining, energy and agri-food, while Mexican companies are increasingly active in the Canadian market. These figures illustrate a partnership that has grown stronger under CUSMA.
The agreement continues to be the foundation of North American competitiveness and a key driver of investment and innovation in our region. Last year, Mexico’s trade with Canada and the United States reached $806 billion U.S., accounting for 64% of our total trade. Despite a complex global environment, exchanges within North America have remained robust. The same pattern persists in terms of investment. Between 1999 and 2024, over 50% of Mexico’s foreign direct investment came from North America, with 44% from the United States and 8% from Canada. This demonstrates the depth and lasting stability of our economic relationship. Building on this foundation, Mexico considers CUSMA an essential framework for successfully meeting global economic competition. The treaty also supports Mexico’s commitment to strengthening the pillars of regional stability and promoting policies that turn economic growth into social well-being.
Furthermore, Mexico and Canada are deepening specific cooperation that enhances the CUSMA framework. This year, our governments are engaging at the highest level. In June, Prime Minister Mark Carney invited President Claudia Sheinbaum to the G7 Leaders’ Summit in Kananaskis, where they met in person for the first time. Following this initial meeting, President Sheinbaum invited Prime Minister Carney to visit Mexico. During Prime Minister Mark Carney’s visit to Mexico last September, both governments agreed to elevate their collaboration to the Canada-Mexico Comprehensive Strategic Partnership, guided by the Canada-Mexico Action Plan 2025-2028. This plan outlines a clear, future-oriented roadmap based on four shared pillars — prosperity; mobility, inclusion, and well-being; security; and environment and sustainability — reflecting the scope and maturity of our partnership.
Under the prosperity pillar of this plan, both nations are working together to strengthen maritime connectivity routes, promote trade and improve supply chain resilience. These initiatives reflect a shared vision: a North America that is efficient, interconnected and prepared for the future.
As an example of the first results of this elevated collaboration, agriculture and agri-food has grown stronger in recent months. During the visit of Canada’s Minister of Agriculture and Agri-Food, Heath MacDonald, both governments discussed strengthening the integration of agri-food value chains, improving food security and diversifying commercial opportunities. These efforts underscore our commitment to reducing barriers, improving predictability and supporting producers in both countries.
Our dialogue at the ministerial level has also intensified. In August, Ministers Anita Anand and François-Philippe Champagne visited Mexico and held productive meetings with President Sheinbaum and members of her cabinet, reaffirming our shared commitment to deepening cooperation in trade, infrastructure and innovation. More recently, under Canada’s G7 presidency, Mexico participated in the G7 Energy and Environment Ministers’ Meeting and in the G7 Foreign Ministers’ Meeting. These engagements underscore the strength of our partnership and reflect a shared willingness to work together on the strategic priorities that matter for our region.
For Mexico, the CUSMA review is a top priority in terms of our foreign policy, our trade policy and, naturally, in general, for our economy. We believe that CUSMA, as I said before, is fundamental for the three countries of North America, and we believe it has proven to be a foundation for a successful relationship among the three countries. In that sense, we believe that CUSMA should remain a trilateral agreement and that the review should be just that, a review and not a full renegotiation of an agreement that we negotiated just a handful of years ago.
Certainly, I believe we are aligned with Canada. We believe that we are working constructively with the Government of the United States, and hopefully, we will be able to continue to do so in the coming months in the midst of this review of the CUSMA and have a successful review. I know this is a challenging and an uncertain time for both Mexico and Canada and, in general, I would say for the world, but I’m sure, as we have done several times in the past, by working together, the countries of North America will prove to be more resilient and more successful.
Thank you very much again for this invitation. I look forward to hearing your comments and questions.
The Chair: Thank you very much, Undersecretary Velasco Álvarez. We will start the question and answer round.
Senator M. Deacon: Thank you very much for joining us today. It’s certainly good to see you again.
North American free trade, as we know, is quite U.S. centric. Not only are they the world’s premier economy but, by virtue of geography, it’s easier for Canada and Mexico to focus on trade with the United States. The knowledge economy, however, is borderless. In terms of trade and services more generally, I’m wondering, today, from your point of view, are there any opportunities that Canada is overlooking in Mexico in this aspect where we could still strengthen our trade ties?
Mr. Velasco Álvarez: Thank you very much for your question.
Yes, of course, both Mexico and Canada have a relationship with the U.S. that in many ways is closer simply by the fact we share enormous land borders with the United States. That makes trade between Mexico and the U.S. and Canada and the U.S. easier. However, we now have important ways that connect not only Mexico and the U.S. or Canada and the U.S. but the three countries. Particularly, there is now a railroad owned by a Canadian company that connects the three countries and that is growing its presence in the three countries, which we believe is a good opportunity to increase trade between Mexico and Canada.
Furthermore, talking about those overlooked opportunities that you mentioned, we believe there is a big opportunity to increase maritime trade between our countries. We see an opportunity in working together to further develop some of the ports in Mexico that would have good connectivity with Canadian ports and increase our trade in that way. Of course, that would be direct trade between Mexico and Canada.
Regarding digital services and the knowledge economy, there are many opportunities. Canada is becoming a leader in technology and some of these services in many ways, which is a big opportunity for Mexican companies to engage and for your companies to view Mexico as a market. There are also growing companies in some spaces in Mexico. For example, we have very successful fintechs that I believe could also be looking at the Canadian market. I definitely believe that there is space to continue growing in many different ways.
As it usually happens, it is in times where some of the things that we took as certain become more uncertain that we look at other venues for opportunities and growth. Certainly, the relationship between Mexico and Canada is fertile ground for that because we think alike. We are countries that, in general, have an amity with each other, have a long-standing friendship, so hopefully we can take advantage of all these opportunities that are in front of us.
Senator Coyle: Thank you, Mr. Velasco Álvarez. I just wanted to say that I am a huge fan of Mexico, being a grandmother of two children who were born in Monterrey. I have a personal interest as well as a professional one in this conversation.
I’m interested in a number of things, and one is investor confidence. We just had a person from the Business Council of Canada speaking with us about the uncertainty that we’re living with, and I know you are as well. One of the key issues will be to find a way to restore and grow investor confidence. We have a trade mission going to Mexico — I believe Mexico City, Monterrey and Guadalajara — in February. It’s all great, and there’s so much we could be doing. How are you working on that issue of ensuring confidence for investors so that we can really grow this the way we want to?
Mr. Velasco Álvarez: There are some things that are outside of our control, and those are the same things that you are struggling with. Of course, we’re doing everything in our power to have, as I said, constructive and productive conversations in that space. Hopefully, we will get to better outcomes down the road.
In the case of Canadian companies that are investing in Mexico and that want to invest in Mexico, our biggest bet is on dialogue. We’re trying to have very close dialogue with Canadian investors and companies that are doing business with Mexico. I can give you a few examples.
One of the largest FDI projects in Mexico in the past few years is a project from a Canadian energy company, TC Energy. They built an undersea gas pipeline in the Gulf of Mexico in partnership with CFE, our state-owned energy company. Of course, there were many challenges to get that project going, but working very closely between the different areas of the Mexican government and the company and sometimes the Canadian government, we have been able to get that through successfully.
We just had a mission — I think it’s the first one of its kind — of federal government public servants, of which I was a part, who went and met with Canadian pension funds that are large investors in Mexico to see how they’re doing and what we can do to keep working with them. Of course, we’re open to discussing any of the issues that any Canadian companies might have questions about or where they would like to see more attention from the Mexican government.
Even in the meeting between the Prime Minister and President Sheinbaum, we had a delegation of companies from the two countries, and they were able to have a very substantive conversation with the two leaders. That is what we intend to keep doing. Of course, we are open to hearing any suggestions that you as well might have in this space.
Senator Al Zaibak: Thank you, Mr. Velasco Álvarez, for being with us today.
From your vantage point, what specific, concrete steps could Canada take in the next six months to reinforce the political and diplomatic foundations of the trilateral relationship and improve the likelihood of a successful and constructive joint review in 2026?
Mr. Velasco Álvarez: Thank you very much for your question.
First of all, let me commend the diplomatic efforts of Canada. I know this is a challenging effort for all of us, but I think Canada is doing many of the right things. I think Canada is also trying to work constructively with the United States. Certainly, there has been a very good-faith approach from the Canadian government and some of its provinces towards the Mexican government and the Mexican private sector in these months, which we also believe is fundamental. I think Canada is making important multilateral efforts that also showcase the proximity between the three countries. We certainly, in this space, for example, appreciate the invitations we got to the G7 from the Canadian presidency of the G7 to participate even though we’re not a member of this group. I think many of the things that the Canadian government and the Canadian private sector and, in general, Canada is doing are important in this space.
I’m sure you would say we’ve already been doing some of the things I mentioned for a long time, but it doesn’t matter. We need to continue talking about the importance of the relationship between the three countries, particularly how many jobs it creates in the three countries and how important it is for competitiveness and for affordability of different parts in the three countries. A lot of the things that our consumers are used to getting at good competitive prices are because we have this relationship between the three countries.
Also, I would highlight how the companies of the three countries in many instances are already North American companies. Many Canadian companies have a presence in both Mexico and the United States. The same is true for Mexican companies that are present in the U.S. and Canada. The same is true for U.S. companies. Showcasing all of this, insisting on the importance of this, insisting on how big these relationships are and making sure that we get to as many people as possible, I think, is the right path forward, senator.
Senator Ataullahjan: Looking at the current atmosphere, are we going to be seeing more bilateral agreements, such as a bilateral agreement between Canada and Mexico and the U.S. and Mexico? As I asked the previous witness, I see this as an opportunity for Canada and Mexico to increase their bilateral trade. In which areas would we have the greatest potential for growth?
Mr. Velasco Álvarez: Thank you very much.
On the first part regarding bilateral agreements, I think there’s always space to do bilateral agreements, even in the framework of trilateral agreements, even in the case of CUSMA. Each of the countries has its own bilateral agreements. There is the North American Development Bank that works only on the U.S. and Mexico border. It is actually a bilateral bank between Mexico and the United States to further develop the border between the two countries and to do environmental projects in that space. Certainly, in the face of some of the challenges that we have today, there are some issues where Canada might say, well, that is a Mexico-U.S. issue. I would not expect Canada to play a big role in some of the long-standing issues that we have with the United States. For us, what is important is that we keep the trilateral architecture and the trilateral nature of the CUSMA, even if we have some executive agreements that are part of the CUSMA framework eventually or some side bilateral agreements that are part of the CUSMA framework. That is one distinction that I would make.
Of course, outside of the CUSMA framework, there are many opportunities for Canada and Mexico to engage bilaterally on several issues. There are some very successful agreements that we have. Some of them are actually treaty, and some are not. I can mention, for example, the Seasonal Agricultural Worker Program, which brings 25,000 Mexican agricultural workers to Canada every harvest season, every year. Those people are actually anchored in Mexico even more because of this program because they come back and they have money that they sometimes use to open a business here in Mexico or to buy a house. Certainly, it is something that I believe is important and makes sense for the two countries.
You mentioned some of the areas of opportunity. Let me mention a couple. I had already mentioned agriculture, but let me say why I believe that’s such a big opportunity. For most of the things that Mexico and Canada produce in the agricultural space, we are not competitors; we are complementary. You have crops that grow in a certain season and that grow in certain weather and altitude, and Mexico is a tropical country that has, obviously, very different weather, and that allows us to grow crops that need sometimes an entire year season. That is, I think, one of the big areas of opportunity.
The Chair: I’m sorry, I’m going to have to interrupt. We’re over time for that particular segment.
[Translation]
Senator Gerba: Thank you for joining us today. The 2026 review of CUSMA is a key milestone in assessing how the agreement is working and identifying any adjustments needed to maintain predictability and stability in North American trade.
During the previous panel, it was mentioned that your president has a different approach to diplomacy with President Trump. How is Mexico generally approaching this review of CUSMA, which will take place in 2026? What do you think are the key priorities that need to be maintained?
[English]
Mr. Velasco Álvarez: Our view, first of all, is, as I mentioned, that the review should be a review, not a renegotiation of the agreement. I personally believe that there’s no such thing as opening Pandora’s box just a little. Either you open it or you close it. Certainly, once you start renegotiating areas of the agreement, it will be difficult to decide where you stop or what are the only areas that you renegotiate.
However, of course, we’re in the early stages of this process. We just finished our consultation process, and we’re still hearing from the Mexican society, the Mexican business sector, about what their priorities are. We will be constructing our priorities, obviously taking into consideration the results of those consultations.
The approach in general, what I can tell you, will be that this is an essential agreement for the three countries. We need to do this preferably as quickly as possible to provide certainty to investors and to people who trade between our three countries as soon as we can, and again, as I mentioned, with as few changes as possible. We believe this is an agreement that, as anything, can always be perfected. It was negotiated five years ago, and what we do is essentially provide stability to the people who invest in the three countries and do business among the three countries of North America.
Senator Wilson: I want to follow up on your comment about port infrastructure. We were talking about this with the previous witness as well. From your perspective, I would like to understand what type of infrastructure Mexico needs in order to advance seaborne trade between Canada and Mexico, and also where you see the opportunities both in terms of Mexico selling into the Canadian market and also Mexico buying from the Canadian market, not just the typical things we think about but also commodities and other things.
Mr. Velasco Álvarez: On the port infrastructure, Mexico has been in the process of modernizing very old ports and providing basic logistics infrastructure in some cases and expanding the logistics infrastructure for container movement to increase the capacity of the ports to receive larger container ships. We are working with some Canadian companies that are interested in making investments in the Mexican ports to do this infrastructure modernization. There are several areas that we believe are great opportunities, particularly in what we call the Isthmus of Tehuantepec, which is the narrowest area of Mexico that connects the Pacific Ocean and the Gulf of Mexico, and that has a railroad that connects the two of them. There is a big opportunity in this corridor because it will feature a series of industrial parks that will allow companies not just to move things from one point to another but to add value between the Gulf of Mexico and the Pacific. Those are some areas. Of course, there are always opportunities in the space of energy, particularly with gas. I mentioned that we have been working on that for a while.
On the trade opportunities, I was going to mention in a previous comment that tourism is also another big area of opportunity for the two countries. Mexico is one of the nations that visits Canada more, and Canada is already our second market for tourism. Certainly, there are many opportunities to partner there and to increase not only the movement between our countries but the investments in the tourism sector and some of the exchanges we do there.
On commodities, we have many mining companies from Canada here in Mexico that are part of the North American trade. I’m sure that there are many opportunities in different spaces where we can increase the exchanges between the two countries.
[Translation]
Senator Hébert: You spoke about the virtues of bilateral agreements and the possibility for Mexico and Canada to move forward in this direction. My grandmother used to say that “what’s sauce for the goose is sauce for the gander.”
[English]
That means that what’s good for the cat of the house should apply to the dog of the house too.
In that sense, apart from discussions that Mexico is having with the United States on the border issue and those issues, do we understand from what you were saying that Mexico is also having bilateral discussions with the U.S. on other topics?
Mr. Velasco Álvarez: Yes, certainly. In many different areas. Some are trade related and some are not. The cases that are not, we have many different issues with the U.S., such as water, infrastructure, air transportation and many issues that are more bilateral in nature.
In the trade space, we also have conversations that mainly involve the two countries. I’m sure you know that the U.S. has delivered to each of our countries a long list of what they call non-tariff barriers. Those are unique to each of our countries. We’re working bilaterally with the United States to resolve what can be resolved, because there are some issues that also entail the sovereignty of both of our countries and that cannot be easily solved. That is the way we’re working.
In some cases, there might be a space where eventually a bilateral agreement makes sense. Again, that does not mean substituting, from our perspective, CUSMA with bilateral agreements, which we believe would cause enormous uncertainty. They could be very hard to negotiate. Certainly, from our perspective, it makes no sense when we have an agreement that is successful for the three countries.
Senator Ravalia: Thank you, Undersecretary Velasco Álvarez.
To what extent is Mexico pursuing a path of diversification away from U.S. markets, given the current volatility in our trilateral relationships? Are you reaching out to the broader global sphere in terms of enhancing trade relationships?
Mr. Velasco Álvarez: Our priority is the North American market, and certainly, Canada is part of that. Of course, we have always tried to diversify our trade for different reasons. In some cases, for example, it is because of the bonds of friendship and the cultural ties that we have with South American countries and with Central American countries that are our neighbours in the South. In some other cases, it is because we have tried to open markets for our products in other areas of the world. We are a country that has many trade agreements and many free trade partners throughout the world. Certainly, that has been part of our history. It is something that we have always prioritized. However, it is difficult when you have such a large market right next to you where your companies are already used to working with them. But certainly, it has always been part of the Mexican trade policy to try to diversify all over the world.
Senator MacDonald: Thank you, Mr. Velasco Álvarez, for meeting with us today.
Looking at the data I have here on our trading relationship, I want to make one observation, and I have one question. If this were a bilateral economic relationship, you’d certainly be doing better in this relationship than Canada is. You export a lot more to us than we do to you.
The question is this: In the last 20 years, in terms of direct foreign investment, our investment has gone from between $1 billion and $2 billion in 2004 to between $45 billion and $50 billion today. But Mexico’s investment in Canada has almost flatlined. It’s really between $1 billion and $2 billion. There’s almost no investment here in relative terms, after 30 years of being part of a trilateral agreement. Why do you think that is? Why do you think there’s so little Mexican investment in Canada?
Mr. Velasco Álvarez: That’s a great question, senator.
First of all, there is an issue of the size of our economies. Naturally, I also believe that Mexican companies have grown used to simply looking at the United States when they look north and overlooking the tremendous growth that has happened in Canada over the past few decades and the big opportunities that exist in Canada for Mexican companies.
Certainly, I also believe that there is a big opportunity in terms of the internationalization of Mexican companies to look at the Canadian market as part of where they can do that internationalization. I also believe there are opportunities for Mexican funds to invest in Canada. I understand they are already doing so, but naturally, there are bigger pension funds in Mexico that represent big opportunities in this space. They are looking for mature markets that provide stability for the kinds of clients they have, which is basically mostly young and middle-aged Mexicans.
There is also a big opportunity for Mexican producers to look at Canada not just for exports but also as providers for different things that we buy from other countries. As part of the current policy of the Mexican government, we’re also in the process of implementing a new tariff policy to countries with which we don’t have a free trade agreement, in order to reinforce the integration with the countries where we do have a free trade agreement.
Senator MacDonald: When they address CUSMA, are there changes you could make to CUSMA that would increase the trade we do with each other and increase Canada’s ability to export to Mexico? We don’t seem to be getting as much benefit as I think we should get under the agreement. Are there things that we are missing that could be included in the agreement?
Mr. Velasco Álvarez: The main issue is not the agreement. The agreement has certainly proved to be successful for the people who want to sell in the Canadian market or sell in the Mexican market from either of the two countries. Certainly, it has been a good framework for mutual investment. The main issue is to continue to promote each of our countries in each other’s markets and to have our business sectors become closer. For example, there wasn’t a long-standing relation between the CCE and the Business Council of Canada until a couple of years ago. That just started, and those are the kinds of relationships that we need to foster because the two countries are market economies. This is not government-led but rather business-led, and we need to ensure that the businesses are talking to each other and looking at the opportunities that exist in each of our countries.
Senator MacDonald: Thank you.
The Chair: I will use my prerogative as chair to ask two questions.
The first follows from Senator MacDonald’s question as to where we could step up. One of the areas where I feel we really could step up — and this goes back to Senator Wilson’s question earlier — is on ports, both on the Atlantic and the Gulf of Mexico side. I’m thinking of Port Saint John which is very well developed in New Brunswick, down to Veracruz and on the Pacific coast we, of course, have Vancouver and the Port of Manzillo. I know, Secretary Velasco Álvarez, that you mentioned the work that’s being undertaken in Mexico. With that and with the Canadian Pacific-Kansas City, which you mentioned in your opening statement, which is headquartered in Calgary, on the rail side, we could be doing a lot more and perhaps be providing incentives. That’s my one question.
My other one is, you have a very vast network of consular missions in the United States. Yours is greater in terms of more establishments than ours, but ours are more trade-focused and yours are more migratory-consular-focused. We understand all of that. Are you, in your operations, looking at changes to have more, shall we say, regional trade promotion activities or public affairs activities, as we do, to get that Canadian message or that Mexican message out to the Americans and into the public sphere?
Mr. Velasco Álvarez: Thank you, senator.
Let me start with your second question. In the case of our consular offices in the United States, there are dramatic changes in the U.S. migratory policy right now. In fact, we have over 40 million people of Mexican origin living in the United States, out of which approximately 11 million were born in Mexico. In this huge community, over 3 million people are of undocumented status in the United States. Our consular offices right now in the United States are focusing on the protection of human rights and, in general, providing services to the Mexican community in the United States. In the case of Canada, the situation is very different.
Of course, we want to make sure that our consular offices serve as trade promotion offices. Actually, in one of my past lives, I was an officer in what was called ProMexico, which was the Mexico trade promotion agency at the time. Certainly, we are in the process of training our consular officers and creating new systems and providing information to have them work in this way. We are happy to listen to any good practices and to get any good ideas that come from Canada.
On your first question about port and rail infrastructure, I was actually very much involved in one of the projects that Canadian Pacific-Kansas City Southern had in the north of Mexico to open a second bridge between Laredo and Nuevo Laredo in Mexico. This is already one of the busiest points along our border and an area through which most of the trade passes between Mexico and the United States. Certainly, that was a big change. I understand the Ministry of Infrastructure, Communications and Transport is working with CP/KCS to help them grow their infrastructure in Mexico. Of course, we would be happy to hear any ideas on incentives that could accelerate that process and that could also promote greater connectivity for products between Canada and Mexico. On the ports that you mentioned, those are exactly the ports we are looking at in terms of this program for increasing connectivity between the two countries.
The Chair: Thank you very much.
Senator M. Deacon: When we look at the trade mission planned for the new year with Canada and Mexico, three cities are being included in the mission. Certainly, I would understand the first two, but in Guadalajara, what are the trade priorities there? I was first thinking of agriculture.
Mr. Velasco Álvarez: Guadalajara is also a big technology hub in Mexico. It is one of the largest producers of different technology products. Several Taiwanese and U.S. companies are present in that area, and they assemble semiconductors. They do a lot of assembly, testing and packaging of different semiconductors and computers and different electronics. That is another big area of opportunity in Guadalajara, certainly. It is similar to the hub that Canada has been creating in Quebec. That is an area of opportunity. As to the priorities of Guadalajara, I am not sure what they are, but certainly they are the biggest exporter of tequila and also very big exporters of berries.
The Chair: Thank you. Well, now we know where the priorities are.
[Translation]
Senator Gerba: You spoke with some assurance of the renewal or review of CUSMA. We agree that this agreement is essential to North American stability.
However, we are faced with a trading partner that has become uncertain and unpredictable. Are you really sure that this agreement. . . How confident is Mexico that this crucial agreement will be renewed or reviewed?
Mr. Velasco Álvarez: Thank you, senator.
[English]
Of course, there are no guarantees in the kind of world that we’re living in, and it’s much more uncertain than we would like. However, my sense is that reality has a way of imposing itself in the end and that the backbone of this relationship is so strong and the reality of this agreement is so important among the three countries that, in the end, there will be a good result. The road to get there won’t be easy, I’m sure, and I’m also sure the end result will not be as bad as the pessimistic prognostic scenarios are, but it will not be the ideal situation we would like.
If you think of all the options, I don’t think there is a better alternative to what we have in terms of North American trade, because we’re not just working between the three countries; we’re competing with other regions in the world. Certainly, the companies that are successful because of this agreement are competing with other companies in other trade blocs in the world. Right now, I can’t see any other path for these companies to be as successful as they are without the CUSMA. I don’t see how we could substitute all the jobs it creates. I don’t see how we substitute all the different financial benefits that we get from this agreement.
It’s difficult to think of a great outcome right now, but hopefully, in the end, as has happened many times in the past, we will look back and say that it was better than we thought.
The Chair: We’re at the end of our time. Undersecretary Velasco Álvarez, we thank you very much for being with us today. We have greatly appreciated your commentary. It has helped to educate us. Because this is a huge issue, I daresay we will be coming back to the issue and to you personally. We know you were recently in Toronto, and if we can encourage you to come a little further north and east to come see us in Ottawa, we would be very grateful.
As we sometimes say up here, especially in winter, Muchas gracias. Esta la proceso. Thank you very much.
Mr. Velasco Álvarez: Thank you. Gracias.
The Chair: Colleagues, we’ll reconvene tomorrow at 10:30 to discuss Canada’s foreign policy with the Minister of Foreign Affairs, the Honourable Anita Anand.
(The committee adjourned.)