A trade expert is warning that the Canada-United States-Mexico Agreement (CUSMA) could become a 'zombie' deal, creating years of uncertainty for businesses and trade relations. Joy Nott, partner on trade and customs at KPMG, discussed the issue on BNN Bloomberg, highlighting the risks of political and economic instability surrounding the agreement.
What is the 'Zombie' CUSMA?
The term 'zombie' CUSMA refers to a situation where the trade deal remains in effect but is undermined by ongoing disputes, lack of enforcement, or political changes that create unpredictability. Nott emphasized that without clear commitments from all parties, the agreement could become a source of friction rather than stability.
Impact on Canadian Businesses
Canadian businesses, particularly those reliant on cross-border supply chains, could face significant challenges. Nott noted that uncertainty around tariffs, rules of origin, and dispute resolution mechanisms may deter investment and complicate trade logistics.
Political and Economic Context
The warning comes amid broader trade tensions between Canada and the United States, including disputes over dairy, lumber, and digital services taxes. Nott called for proactive engagement to prevent the agreement from stagnating.
Key Recommendations
- Strengthen dispute resolution mechanisms to ensure compliance.
- Increase transparency in trade negotiations and policy changes.
- Foster dialogue between business leaders and government officials.
Nott concluded that while CUSMA remains a vital framework, its longevity depends on active management and political will. Without these, it risks becoming a 'zombie' that haunts North American trade for years to come.
