Why doesn’t Canada already have a stronger relationship with Mexico?

By Verity Stevenson, CBC News, RCI

FILE: Prime Minister Mark Carney met with Mexican President Claudia Sheinbaum at the G7 Summit in Alberta earlier this year. (Photo: Claudia Sheinbaum Pardo/Facebook)

It’s time to treat the country as a modern, diversifying economy, trade experts say

With tensions once again heating up in Canada’s trade negotiations with the United States, and the Trump administration blaming the “elbows up” approach, Canadian officials are scrambling to build new relationships, including with one of its closest neighbours: Mexico.

The effort began at the G7 summit in Kananaskis, Alta., in June, where Prime Minister Mark Carney invited Mexican President Claudia Sheinbaum to meet with him privately, Foreign Affairs Minister Anita Anand said from Mexico City Tuesday.

Anand is in the Mexican capital with Finance Minister François-Philippe Champagne to build a bilateral economic relationship.

But the trip has prompted some experts to ask why it didn’t happen sooner. Carney’s first trip abroad was to France and the United Kingdom, where he discussed not only broadening trade, but security ties as well and invited King Charles to deliver the throne speech.

While France and Britain are key allies, Mexico is a bigger trading partner than those two countries, said Laura Macdonald, a political science professor at Carleton University.

There’s a historic reluctance by Canada to engage seriously with Mexico, Macdonald said. And there’s a tendency for them to fail when they try to work together.

Anand and Champagne’s visit signals a willingness to change that, Macdonald added.

No bilateral trade agreement, says Sheinbaum

While the two senior ministers met with Sheinbaum for more than an hour and Champagne hailed the talks as quite extraordinary, anyone hoping that they would leave with the makings of a bilateral trade deal shouldn’t get their hopes up.

At a news conference Wednesday, Sheinbaum said her meeting with the Canadians was very good, but that there is no need for a separate agreement. We have the trade deal with the United States, Canada and Mexico, Sheinbaum said.

Anand wrote on X Wednesday that she and Champagne are meeting with Mexican business leaders on the second day of their trip to explore new opportunities and to strengthen strategic partnerships.

Getting over the halting nature of Canada and Mexico’s relationship will take work, Macdonald said.

Canadian businesses have been so used to prioritizing U.S. partners that there has been little effort to, for example, learn Spanish or work to overcome other cultural barriers, she said.

I don’t think it’s been taken seriously as a modern, diversifying economy and I think that’s short-sighted and portrays our kind of colonial mindset toward the world in general, Macdonald said.

Mexicans, similarly, don’t know very much about Canada, and think of it as a cold place and an extension of the United States.

WATCH | ‘Elbows up’ sets Canada apart from Mexico in negotiations, says U.S. ambassador:

Macdonald has been part of a project by the Canadian union Unifor to partner with Mexican unions to help fight labour abuses in Mexico.

It’s important for Canada to be seen as part of solutions to problems of inequality in Mexico … and not just see it as a site for low-wage production as it was kind of built into NAFTA and CUSMA, Macondald said.

She noted that arrangement contributed to the U.S. and Canada losing manufacturing jobs.

Stuart Bergman, the vice-president and chief economist at Export Development Canada (EDC), has made a case for shoring up Canada’s trade relationship with Mexico.

In April, he wrote on EDC’s website that only three per cent of Canada’s two-way merchandise trade is attributed to Mexico, while the U.S. accounts for 70 per cent. He said that a portion of the merchandise Mexico imports from China could be replaced by Canadian equivalent products, including autos and parts.

Canada-Mexico trade ‘far below potential’

Tuesday, the Business Council of Canada echoed Bergman’s post, calling Canada (BCC)’s trade and business ties to Mexico “underdeveloped and far below its potential.”

Canada and Mexico buy fewer than three per cent of each other’s overall exports, wrote Shauna Hemingway, the BCC’s senior special adviser on Mexico and the Americas.

And while Canadian investments in Mexico have increased dramatically since 2010, Mexican investment in Canada stalled at $3.1 billion US in 2023, she said.

Source: Statistics Canada Photo: CBC

See interactive chart here

Our inability to accurately assess what we mean to each other’s economies … impacts our decision-making and both countries tend to look much more readily to the east to Europe and west to Asia, Hemingway said.

Economists and trade experts say the potential for increased trade lies especially in goods not covered by the Canada-U.S.-Mexico Agreement (CUSMA) — such as raw materials like lumber and critical minerals, as well as on goods U.S. President Donald Trump has slapped with high tariffs (or threatened to do so), including steel, aluminum, copper, autos and pharmaceuticals.

Anand said Canada and Mexico have agreed to build a work plan that focuses on resilient supply chains, port-to-port lines of trade, artificial intelligence, agri-food, the digital economy and energy security.

WATCH | G7 prompted Canada-Mexico diplomatic efforts, says Anand:

On the periphery of Canada’s diplomatic efforts toward Mexico, a rumour emerged that the two countries had agreed to create a trade corridor somehow bypassing U.S. duties.

The rumour appears to have come from a seemingly AI-generated YouTube video from the channel PPR Mundial posted July 18, alleging Canada and Mexico are planning to divert $120-billion worth of U.S. trade from American ports by delivering goods by rail and sea without entering Texas ports in a so-called Northern Corridor.

The video claims Canada’s exports like steel, maple and lumber will head to the Gulf of Mexico via a coastal shipping bridge. The distance between the two countries’ largest ports, the Port of Vancouver and Port of Manzanillo, is around 4,917 kilometres by ship according to one estimate.

The video is riddled with factual errors, including the types of customs charged on goods passing through the U.S. as well as trade and economic figures, and rarely cites verifiable sources.

The first thing I thought is, ‘How in the world would this be done?’ said Debra Steger, professor emerita at the University of Ottawa’s faculty of law and a senior fellow at the Centre for International Governance Innovation and the C. D. Howe Institute, specializing in international trade law.

I guess if you went out into international waters, sure, OK. But I mean, how many goods could you put on ships and how long would it take for them to get there? And putting things on planes — you can’t put everything on a plane and it’s very, very expensive.

Steger added that she hopes Champagne and Anand are exchanging information with Mexican officials on their respective countries’ negotiations with the U.S.

It’s unclear if that has happened. When asked repeatedly by reporters Tuesday evening, the ministers declined to answer whether they knew why Mexico has been so far spared the 35 per cent tariffs on non-CUSMA-compliant goods.

Anand said only that Canada and Mexico’s trade relationships to the U.S. are complex and different. Carney indicated Tuesday that Canada could ease up on retaliatory tariffs and that he would have a phone call with Trump when it makes sense.

Sheinbaum spoke with Trump shortly before news of her country’s 90-day exemption from the upped tariffs.

With files from The Canadian Press and Reuters

This article is republished from RCI.