Canada’s auto industry was built on free trade commencing with the 1965 Auto Pact, the principles of which were entrenched the Canada-U.S. Free Trade Agreement, the North American Free Trade Agreement (NAFTA), and now the Canada-United States-Mexico Agreement (CUSMA).
The CUSMA provides certainty, reinforces the long-established integration of the auto industry supply chain necessary for its competitiveness, and facilitates regulatory alignment of vehicle technical regulations with the U.S. This gives Canadian consumers access to leading vehicle safety and advanced vehicle emissions technologies and at the lowest cost. The CUSMA also provides Canadian manufacturers with duty free access to the much larger U.S. market. In 2024, $46.5 billion in vehicles were exported, with 92% of exports destined for the United States.
With the upcoming review of the CUSMA, Canada must do everything possible to remove tariffs on the auto industry; renew the agreement; protect our preferential access to the U.S. market; and, to support the integrated automotive supply chain.
CVMA member companies support principled trade policy that takes a balanced approach, promoting and enhancing all aspects of our economy.
Trade policies must ensure that domestic companies receive, on an equivalent basis, the same opportunities to compete fairly in foreign markets as non-Canadian companies have coming into our domestic market.
The CVMA supports five core principles for Canada’s trade policy:
- Rules of origin that fully consider and align with our strong dependence and ongoing reliance on sourcing within North America;
- Currency disciplines to ensure that market access provisions in trade agreements are not undermined by a country(s) inclination to manipulate its currency given the intersection of trade and finance;
- Full acceptance of U.S./Canadian safety and technical standards (FMVSS/CMVSS) as compliant with trade partner country rules;
- Removal of all non-tariff barriers such as unique regulations or taxes; and,
- Outcomes that are favourable to the North American integrated automotive industry interests and to the economy.
Trade policy must support manufacturing strategies that foster the global competitiveness of this important sector and be motivated by a goal of strengthening investment and production in Canada, supported by border infrastructure and customs procedure efficiency. Canada’s trade policy must recognize and include the following:
- The significant investments that Canada’s existing automakers have made – and continue to make – to Canada’s economy and manufacturing sector.
- The fact that those investments were made in the context of an integrated North American marketplace.
- Adjusting for new opportunities outside of North America.
CVMA and its members will continue to contribute to the discourse with the government of Canada on trade agreements to ensure Canada’s auto industry is accorded the full economic benefits of expanded international trade.