A significant Canadian trade delegation is set to embark on a six-day mission to Mexico, beginning this Sunday, as the government seeks to bolster economic ties between the two nations. Spearheaded by Dominic LeBlanc, the federal minister in charge of North American trade, this mission includes representatives from around 250 Canadian businesses alongside government and industry officials. LeBlanc described this as “the largest bilateral trade mission undertaken by Canada” in decades.
Context of the Mission
The backdrop to this ambitious trade initiative is a climate of uncertainty surrounding continental trade agreements. The North American Free Trade Agreement (NAFTA), now known as CUSMA (Canada-United States-Mexico Agreement) or USMCA, is under review, raising concerns about potential withdrawal by the United States. U.S. Trade Representative Jamieson Greer recently indicated a preference to negotiate separately with Canada and Mexico, citing difficulties with Canadian negotiations. However, LeBlanc remains optimistic, suggesting positive private discussions with U.S. officials, including Greer and Mexican President Claudia Sheinbaum.
Focus on Diversification
While discussions on the USMCA status will occur during the visit, LeBlanc emphasised that the primary goal is to diversify Canada’s trade partners and reduce reliance on the U.S. The trade mission will target five key sectors with strong growth potential for Canadian exports to Mexico: agriculture and food, advanced manufacturing, clean technology, information and communication technology, and creative industries.
Business leaders and trade experts have welcomed this renewed focus on Mexico. Shauna Hemingway, a former Canadian diplomat now advising the Business Council of Canada in Mexico City, noted that Canada is finally adopting a dedicated approach to enhancing business relationships with its southern neighbour.
Trade Statistics and Opportunities
The commercial relationship between Canada and Mexico has evolved significantly since the inception of NAFTA in 1994, with Mexico often touted as Canada’s third-largest trading partner. Nonetheless, trade statistics reveal a more nuanced reality, indicating untapped opportunities. In 2024, Mexico accounted for approximately $47 billion in Canadian imports, predominantly in automobiles, electronics, and consumer goods, positioning it as a critical manufacturing hub. Conversely, Canadian exports to Mexico totalled around $8.6 billion, starkly contrasted by the $600 billion exported to the U.S. that same year.
This trade mission is designed to improve demand for Canadian products and cultivate supply-chain partnerships, particularly by introducing small and medium-sized enterprises to the Mexican market. LeBlanc remarked that this mission differs from past trade trips, which often focused on large corporations and pre-arranged deals. Instead, this initiative will prioritise networking and hands-on engagement for smaller businesses.
Challenges and Considerations
Despite the potential for growth, doing business in Mexico is not without its challenges. Concerns regarding the rule of law, particularly following judicial reforms under former President Andrés Manuel López Obrador, have raised apprehensions about political interference and corruption. Regulatory hurdles, particularly in the energy sector, have also stalled investments, with approximately $3.5 billion in Canadian mining projects facing delays. Moreover, safety issues linked to drug cartel violence remain a serious concern, underscored by a recent tragic incident involving a Canadian mining company in Sinaloa.
To address these challenges, the trade delegation will receive briefings on navigating the Mexican business landscape.
Strengthening Bilateral Relations
This trade mission also signals a positive shift in relations between Canada and Mexico, crucial for the ongoing USMCA negotiations. Under Prime Minister Mark Carney, who recently visited Mexico to enhance bilateral ties, there is a renewed commitment to working collaboratively. Notably, while Mexico has reacted to U.S. trade concerns by increasing tariffs on Asian imports, Canada has opted to lower tariffs on some Chinese electric vehicles, showcasing divergent strategies.
Amidst this fluctuating environment, the trade delegation aims to demonstrate the value of free trade. Hemingway emphasised, “The best way to guarantee a continuance of CUSMA is to use it,” underscoring the importance of active engagement in preserving and enhancing trade relations.
Why it Matters
This trade mission represents a pivotal moment for Canada as it seeks to diversify its economic partnerships in an increasingly protectionist global landscape. By fostering closer ties with Mexico, Canadian businesses could unlock significant opportunities for growth and collaboration, positioning themselves to thrive in a complex international trade environment. The outcomes of this initiative will be closely monitored, as they may redefine Canada’s approach to trade and economic strategy in the years to come.
