Canadian Mining Journal


North America’s disrupted equilibrium

The new world trade reality

Every year, we dedicate one issue of CMJ to looking outside of Canada’s borders to the business climate in North America as a whole. Last December, we noted that there was a marked homecoming trend among Canadian miners with heavy international exposure, with many acquiring assets in Canada. In an environment that was becoming riskier abroad, Canada looked like a friendlier and safer place to invest.

This year, which has been dominated by the NAFTA renegotiations with the United States and the subsequent United States-Mexico-Canada Agreement, has also been marked by uncertainty. (At press time, it looked like the USMCA would be signed in late November.)

In addition, U.S. domestic reform of taxes and regulations have put the squeeze on Canada, prompting Finance Minister Bill Morneau to include billions in tax incentives for Canadian business in his recent fall economic statement.

And the separate issue of steep tariffs imposed by the U.S. earlier this year on Canadian steel and aluminum has not yet been resolved.

Not only is U.S. policy throwing us for a loop, but Canadian miners in Mexico are also facing a changing landscape. While Mexico has been an attractive place for mining over the past 15 years, it’s losing some of its competitive advantages. “It’s now no better or worse than Canada or the U.S., or Peru or Chile,” says Bradford Cooke, CEO of Endeavour Silver (see Page 19).

One unknown for the industry is the election of a new left-of-centre government in Mexico under President Andrés Manuel López Obrador. After he’s sworn in on Dec. 1, more changes for miners may be yet to come.

For Canada’s mine supply companies, an interesting effect of the U.S. turning inward under Trump could be to look for new business opportunities with new partners. Canadian companies don’t seem to be making the most of the Comprehensive Economic and Trade Agreement (CETA), which only came into effect last year, says Dalton Albrecht, a partner at EY who specializes in international trade law.

While Canada’s exports to EU countries have gone up 3.8% since September 2017, exports to the rest of the world have increased by 5.4%. Meanwhile, EU exports to Canada went up 13%, Albrecht notes.

“That suggests that Canadian companies aren’t taking advantage of CETA the way EU companies are and there are some advantages, particularly for mining companies,” Albrecht said.

Under CETA, tariffs on mined products that were an average of 2.5 to 8% and on mining tools and equipment of 4-6% have been eliminated. “All those are duty free right now.”

Companies can also look to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The agreement will come into force on Jan. 1, 2019 for six of the 11 countries involved – Canada, Japan, Mexico, Australia, New Zealand and Singapore.

Print this page

Related Posts

Have your say:

Your email address will not be published. Required fields are marked *