Carney heads to Mexico in search of an ally — and opportunities

Prime Minister Mark Carney heads to Mexico Thursday with two separate, but related, goals.

The first is to find ways to work with Mexico to preserve North America-wide free trade, or at least as much of it as can be saved from the most protectionist U.S. administration in a century.

The second is to develop a bilateral trading relationship with Mexico that operates independently of the whims of the White House, and can survive whatever fate lies in store for the Canada-U.S.-Mexico Agreement (CUSMA) when its renegotiation finally happens.

The trip is expected to produce an agreement on a new Canada-Mexico comprehensive partnership and a security dialogue focused on issues such as transnational crime and drug-smuggling.

“We are focused on elevating our partnerships in trade, commerce, security and energy,” Carney said in a written statement before his departure for Mexico City. “Together, we will build stronger supply chains, create new opportunities for workers and deliver greater prosperity and certainty for both Canadians and Mexicans.”

But there has also been some turbulence in the relationship, as there was during U.S. President Donald Trump’s first term, and the trip is an effort to build trust between the two partners that neither will throw the other under the bus.

The Mexicans are perhaps the ones with better reason to feel wary of the Canadian embrace. 

“There’s been concerns in Mexico about statements that were made by premiers Doug Ford and Danielle Smith,” said Laura Macdonald of Carleton University’s institute of political economy, and that members of the Trudeau government had also hinted “we’d be better off without Mexico” soon after Trump’s re-election.

But Canadian leaders, both federal and provincial, seem to have dropped the notion that Canada can escape Trump’s sights by pushing Mexico out in front.

Alberta premier joins pitch to cut Mexico from North American trade pact

In August, Smith visited Mexico and appeared to do some fence-mending. Finance Minister François-Philippe Champagne and Foreign Affairs Minister Anita Anand visited Mexico the same month and met with Mexican President Claudia Sheinbaum, building on Carney’s bilateral talks at the G7 summit.

“I think now, after some eight months of Trump, it’s become clear that Canada is not better off without Mexico,” said Macdonald.

“We really need to work with our partners and allies, the Mexicans,” she said, given the unpredictability of Trump’s tariffs and other moves. “Going at it separately from the Mexicans would just weaken us.”

The trading relationship with Mexico has grown in recent years, though most of the growth has been in Mexican imports to Canada.

Canadian direct investment in Mexico, always big in the mining sector, has diversified as it has expanded.

For the first time this summer, more new cars entered Canada from Mexico than from the U.S., largely a function of automakers such as GM and Volkswagen sourcing cars from their Mexican plants to avoid Canadian counter-tariffs that apply to American, but not Mexican, vehicles.

Flavio Volpe of the Automotive Parts Manufacturers’​ Association says Canadian politicians who disparaged the relationship were in the wrong: “Donald Trump tried to put a wedge between us. We took the bait.”

He said “friends of the auto industry” were quick to say they didn’t need Mexico in an attempt to defend Canada’s economy.

“Well, the truth is we do need Mexico to be as prosperous as we have been,” he said, pointing to Canadian-owned auto parts plants based in Mexico.

“When we talk to the Mexican government and Mexican interests, we talk as Mexican investors and Mexican employers.”

In the early days of the Trump administration, Sheinbaum was heralded by some international observers as a leader who appeared to have cracked the code for dealing with a truculent U.S. president.

Trump has always spoken respectfully of Sheinbaum, much as he has of Carney, in sharp contrast to his demeaning tone toward former prime minister Justin Trudeau.

Mexico’s strategic decision not to retaliate to U.S. tariffs allows for a straight comparison. Before Canada dropped many of its counter-tariffs, the White House singled out Canada and China as the only countries to hit back.

But it’s hard to see how Mexico gained any real advantage with that approach, says Volpe.

“I think we’re both in the same boat,” he said.

Both sides have often talked about expanding free trade outside of CUSMA, but neither has really done much to promote the idea, says Carlo Dade of the Canada West Foundation, a member of the Mexican Council on Foreign Relations (COMEXI).

“There’s a baseline of benign neglect,” he said. “We don’t capitalize on opportunities, but we’re not causing problems. I would characterize it as that’s where we’ve returned to, after the premiers of Alberta and Ontario, let’s be blunt here, threw Mexico under the bus.”

Dade said that even within CUSMA, neither Mexico nor Canada have “fully taken advantage of the whole agreement.”

Talk of a new Canada-Mexico trade corridor has yet to move much beyond the inspirational phase. One Mexican official who spoke to CBC News on background said Mexico had doubts about the capacity of Canadian infrastructure to handle commerce that would, by definition, mostly have to go by sea around the United States.

Mexico has multiple ports on each coast, most notably Manzanillo and Lazaro Cardenas on the Pacific and Veracruz and Altamira on the gulf. Manzanillo is undergoing a major expansion that will allow it to handle the equivalent of five million containers a year by 2030 — twice the volume that moves through the ports of Montreal and Vancouver combined.

Why the Port of Montreal expansion project is a national priority

Mexican officials are eager to discuss expansions of those two Canadian ports (one of which is on Carney’s major projects list), and the possible construction of dedicated facilities to support Canada-Mexico trade in goods such as minerals and parts that are used in the construction of electric vehicles.

Dade says there are opportunities for the countries to join together in producing goods for growing Asian and South American markets — and they have a competitive advantage over the U.S. in doing so as members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

“It has nothing to do with Donald Trump, has nothing to do with the U.S. We could actually work together in the Pacific, yet we haven’t,” he said.

But Dade warned they need to be discreet in doing so; there is no point in spitting in the eye of the Trump administration.

“What we don’t want to see is gloating about working together or statements about how we’re going to gang up together on the U.S.,” he said.

“We have to quietly work together, but we can’t publicly boast about it.”