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Despite all of the tariff disputes with the United States, currently the provisions of CUSMA?USMCA are in place and support Canadian exports to the US market.

Current Status:

The Canada-United States-Mexico Agreement (CUSMA) functions well and benefits all parties, particularly the US, which enjoys a substantial trade surplus in textiles and apparel with Canada.

Key Concerns for the Canadian Apparel Industry:

• Tariff Preference Levels (TPLs): These preferential quotas allow Canadian manufacturers to use imported textiles while maintaining duty-free trade within the region. They are vital for maintaining Canadian jobs and investment in the apparel sector.

• Yarn-Forward Rule of Origin: This rule requires that yarn and fabric used in apparel production originate in a CUSMA country. While TPLs offer some flexibility, any further restrictions on their use or administration would negatively impact Canadian companies and employment.

• Trade between Canada and the US (and Mexico) is mutually beneficial.  
  
  

Recommendations for Government:

• Maintain the Current TPL System: Resist any US proposals that might undermine or eliminate TPLs.

• "Do No Harm": The guiding principle for CUSMA renewal should be to avoid changes that negatively impact the Canadian apparel industry.

• Protect Against New Duties: Ensure that the renewal process does not result in the implementation or confirmation of new duties on Canadian exports.  Additional duties would continue to erode the manufacturing base for apparel in Canada.

• Secure Renewal and Minimize Uncertainty: Work with trade partners to ensure a swift and transparent renewal process to minimize uncertainty for businesses.   

Key Points:

• CUSMA is working; there is no need for major renegotiations, especially regarding rules of origin for textiles and apparel.

• All associations/industries (apparel/textiles) in the three countries support renewal.

• The US has a substantial surplus in the apparel/textiles trade with Canada.

• TPLs are essential for the Canadian apparel industry and must be maintained.

• The Canadian government should prioritize stability, consultation, and protecting Canadian interests during the CUSMA renewal process.