Fortresses and trade agreements

"POOR Mexico, so far from God, so close to the United States"-Porfirio Diaz, Ruler of Mexico (1876 1911).

- By Prof. Rohan Samarajiva

US President Donald Trump Canadian Prime Minister Mark Carney

My interest in trade agreements arose while working on my PhD in Canada in 1982-1985. Having been immersed in the protectionist/Statecentric discourse that pervaded Sri Lanka in the 1970s, I was intrigued that the Canadian Government was pressing for a bilateral agreement with the more powerful and much larger United States.

The Canada-US Free Trade Agreement (CUFTA) that was signed in 1987 was the first to include services trade. Given the cultural protectionism that was pervasive among many of the people I interacted with, I was also surprised that services were included. In one of my first publications on services trade I stated: "the Canada-US FTA is the only availability 'laboratory' for the study of free trade in services. ... Such research is also of value to groups in other countries seeking to shape integration processes of various kinds including free-trade arrangements and labour exports."

CUFTA became NAFTA, which then was renegotiated and renamed during the Trump first term as USMCA. This served to blunt the force of the pressure exerted on Canada and Mexico by President Trump in 2025. He announced massive tariffs but found they would not apply to trade that was covered by the agreement. This was a confirmation of the central justification for trade agreements: protection of the smaller partners (Canada and Mexico) from bullying by the powerful partner.

The USMCA is up for review in July 2026. Trump is likely to try to insert provisions harmful to Canada and Mexico. Will Canada and Mexico push back and achieve a mutually satisfactory agreement? Or will they walk away? If the latter, they will be subject to Trump's volatility with no safeguards. These are issues that must be on the Canadian Prime Minister Mark Carney's mind these days.