Thank you, Chair Sgro and committee members, for the invitation to be here today.

I teach North American trade relations, and this is my primary area of research. I participate in a number of trilateral initiatives focused on North American trade, including those led by U.S. and Mexican partners. I write extensively on the implementation of CUSMA, and I'm completing a report now on the upcoming review, which I'd be pleased to share with the committee.

I'm really pleased that the committee has established this study and I hope it marks the beginning of a sustained parliamentary focus on this important file.

Canada's objective for the 2026 review should be the extension of CUSMA by all three countries. Realistically speaking, this is going to be challenging, but it should be our goal nonetheless. In order to be successful, it is incumbent on Canada to prepare extensively over the next year.

I want to underscore the urgency, because July 1, 2026, represents the cleanest opportunity to reach a trilateral agreement to extend the agreement for 16 more years. If that doesn't occur, then a joint review will take place, and reviews will continue annually until all three countries agree to extend the agreement or it eventually terminates in 2036. Clearly, the latter scenario of annual reviews would be destabilizing for business and would undermine trade and investment certainty in North America.

Today, I'd like to focus my comments on three processes Canada should put in place now to secure the best possible outcome for our country in 2026.

First, the proactive engagement by this committee to launch this CUSMA study must be paralleled at the officials' level. We need a named senior official at Global Affairs to lead Canada's activities, and this work should be their exclusive daily focus. Their team should launch broad consultations with Canadian stakeholders on the implementation of CUSMA, and they should work to develop solutions to the irritants they encounter before 2026. They should also work to develop proposals to address new shared trilateral challenges, such as artificial intelligence, digital privacy and the disruptive consequences for electric vehicle supply chains and national security. Canada can lead the development of proposals for adoption by CUSMA partners, which focus on North American-made parts and production, to reflect industry changes while satisfying the interests of all three countries.

Canada can't wait for pressure from the U.S. to launch our own domestic CUSMA review process. This year, Americans will be preoccupied with the U.S. presidential election. However, when the U.S. Congress turns its attention to its own U.S. domestic review in 2025, it will be understandably focused on advancing U.S. interests. The best way for Canada to steer the six-year review toward our desired outcomes, then, is to have developed our solutions by the spring of 2025. Committee members should know that Mexico has already announced the launch of its own domestic consultations.

Second, if the extension of CUSMA in 2026 is Canada's goal, then we have to demonstrate that it's working well now, which, for the most part, it is. In addition, we must demonstrate that dispute-settlement processes can be effective. Doing this means encouraging all three countries to abide by rulings under the CUSMA process, even when our interests are not satisfied, such as on aspects of Canada's tariff rate quota allocation process for dairy.

However, implementing CUSMA in good faith also means not adopting legislation and regulatory measures that contravene CUSMA and antagonize the Americans. For example, on digital trade, the Online Streaming Act would be in violation of the chapter of CUSMA on digital trade were it not for Canada's cultural exemption. Similarly, unilateral action by Canada to introduce a digital services tax would discriminate against large U.S. firms. We should be prepared for U.S. retaliation if these measures are enacted, and Canadian lawmakers should be aware of the damaging consequences for the broader CUSMA review process.

Third, as committee members know, China will be the elephant in the room leading up to and throughout the CUSMA review. In particular, the new tariffs on Chinese EVs, steel, and aluminum announced by President Biden will necessarily impact the integrated North American supply chain. This U.S. trade action will increase the likelihood of a surge in transshipment by China through Canada and Mexico, and it is vital that Canada not be regarded as a leaky entry point into U.S. markets. Just as Canada resolved to align with the U.S. on its Inflation Reduction Act incentives to encourage domestic battery and EV production, it now follows that Canada will need to address Chinese subsidies, overcapacity and potential dumping on the Canadian market. Given the current global dependence on Chinese critical minerals and processing capacity, Canada must weigh its options very carefully. Mexico faces its own challenges in this regard, particularly with respect to onshore Chinese investment. Nevertheless, since maintaining open, tariff-free trade with the U.S. reflects Canada's most important economic interest, we must address this issue.

I hope these three recommendations can help position Canada to achieve its ultimate objectives for a successful extension of CUSMA in 2026. Millions of Canadians rely on the agreement's success, and your committee is engaged in vital work.

I look forward to answering your questions.