Friendship with California More Important than Ever in Global Pandemic Fallout

A View from Canada

The following answers to questions posed by the California Chamber of Commerce are from Rana Sarkar, consul general of Canada, Northern California.

Rana Sarkar, consul general of Canada, Northern California

Free Trade Agreement

What does the newly implemented U.S.-Mexico-Canada Free Trade Agreement mean for Canada?

The newly implemented agreement underscores a renewed understanding between the U.S.-Mexico-Canada Agreement (USMCA) parties on the importance of our mutual trading relationship and marks an important milestone in Canada’s economic relationship with the U.S. and Mexico.

Canada is pleased the final outcome preserves key elements of the North American Free Trade Agreement (NAFTA), modernizes provisions to address 21st century trade challenges, reduces red tape at the border, and provides enhanced predictability and stability for workers and businesses across the integrated North American market.

The USMCA includes updates in key areas, including rules of origin for automotive manufacturing, agriculture, labor, intellectual property rights, culture, and dispute settlement, all of which were extremely important to Canada.

The agreement also means that North American supply chains are strengthened and enables Canada, along with the U.S. and Mexico, to compete as a regional bloc against international competitors.

In some areas—notably in the auto sector—we have strengthened rules of origin and provided added certainty for continued market access should Section 232 measures be taken—which will help incentivize North American production and sourcing and create well-paying middle-class jobs in our countries.

The agreement includes robust chapters on labor and the environment—both of which are top priorities for the government of Canada. In these chapters and throughout the USMCA, updates to the agreement will help create incentives for higher wages and better working conditions in all three countries.

Lastly, the new agreement means Canada will likely remain the United States’ largest customer; and ensures the billions of dollars in goods and services that cross the Canada/U.S. border every day will continue to do so in a time when stability and economic recovery are of the utmost importance.

COVID-19 Impact on Canada

As countries all over the world feel the pandemic, what is the economic impact of COVID-19 on Canada?

Canada, like the U.S. and rest of the world, has seen devastating economic impacts to the economy as a result of the COVID-19 outbreak. In April 2020, Canada’s gross domestic product (GDP) dropped by 11.6%, the single largest drop in history.

Canada’s unemployment rate remains at an unprecedented 13.7%, despite an increase of 290,000 jobs in May from recent public health restriction easing in Canada.

In response to the economic downturn, the government of Canada has implemented unprecedented economic support measures to ensure all Canadian citizens and business have the federal support they need.

Canada’s economic response to COVID-19 includes direct financial support for families, workers and employers. To help meet the cash needs of Canadian businesses and households, liquidity relief is provided through tax and other payment deferrals.

Further credit and liquidity supports are provided through Business Development Canada, Export Development Canada and Farm Credit Canada, as well as the Bank of Canada and the financial regulators.

Taken together, the Government of Canada’s COVID-19 Economic Response Plan will provide up to $107 billion in direct support to Canadian workers and businesses, $85 billion in liquidity relief through deferred payments, and over $570 billion in credit and liquidity supports delivered through Canada’s Crown corporations, the Bank of Canada and our financial regulators.

This plan builds on coordinated action taken to protect the health and safety of Canadians, including the more than $1 billion COVID-19 Response Fund, which provided funding to provinces and territories to strengthen critical health care systems, as well as over $2 billion to ensure the availability of personal protective equipment and supplies.

Canada-California Relations

Please describe your thoughts on the unique relationship between Canada and California.

No two economies are more closely connected than those of Canada and the United States—with unprecedented flows of trade, investment, water, power, people, and technology. We view the Canada-California friendship as one of the most unique national-subnational relationships in the world, built on fair trade and shared values.

Canada is California’s second largest trading partner. Over $56 billion dollars in goods and services are traded between our two regions every year, and Canadian-owned businesses directly employ over 76,000 people in California.

California exports advanced electronic equipment, agricultural commodities, and technology and financial services to Canada—and in turn buys vehicles, energy, meat, seafood, and wood products from Canada.

And let’s not forget exports of superstars like Drake, Joni Mitchell, Justin Bieber, the Ryans (Gosling and Reynolds), Rachel McAdams, and so many other Canadians living and working in California.

We also have shared values in governance around workforce development and climate change policies, among others. Canada and California both value a skilled workforce, investing billions of dollars every year into education and skills training, and sharing best practices between California legislators and Canadian policy makers.

Canada, like California, has made emissions reduction and climate goals a top priority. Canada’s federal and provincial governments have signed several environmental Memorandums of Understanding (MOUs) with the State of California, and often work closely on issues like Low Carbon Fuel Standards, Cap and Trade, and vehicle emissions standards.

We are also working together on the rules and platforms for the digital economy. Silicon Valley and California’s astonishing global-scale tech industry are deeply interconnected with Canada through talent (Canadians have been co-founders of many leading unicorn companies from Uber to Slack), and Canadian groups, like the C-100, continue to innovate and focus on start-up development in California to address COVID-19 challenges.

In the midst of global economic fallout from COVID-19, Canada’s friendship with California is more important now than ever. Our companies and public authorities are working together on key initiatives, from vaccines to critical supply chains and digital tools—all of which will be integral to building back better.

Our strong trade relationship and shared values serve as a foundation for future economic growth and policy collaboration, and we’re proud to call the California Chamber of Commerce a partner.

This question-and-answer article is the second in a series with representatives of California international trade partners.

Staff Contact: Susanne T. Stirling

Previous articleGovernor Declines to Delay Minimum Wage Hike Scheduled for 2021
Next articleCOVID-19: What Employers Ask – Part 3
Susanne T. Stirling, senior vice president, international affairs, has headed CalChamber international activities for more than four decades. She is an appointee of the U.S. Secretary of Commerce to the National Export Council, and serves on the U.S. Chamber of Commerce International Policy Committee, the California International Relations Foundation, and the Chile-California Council. Originally from Denmark, she studied at the University of Copenhagen and holds a B.A. in international relations from the University of the Pacific, where she served as a regent from 2012 to 2021. She earned an M.A. from the School of International Relations at the University of Southern California.