Renegotiating the North American Free Trade Agreement: Impact on Immigration

October 2017

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While increased mobility for labour (specifically professionals) is a key objective for both Canada and Mexico, the same cannot be said of the U.S. The ideological gap between Canada and Mexico, who favour a more global approach to trade, and the U.S., which has taken a protectionist stance, will only add to growing tensions when negotiators address the flow of labour between the three countries.

Exactly when that will happen is anyone’s guess. After three rounds of negotiations, the topic has yet to be discussed. For both Canada and Mexico, updated mobility rules that facilitate the movement of qualified workers, and especially professionals, is essential in today’s business environment.

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What jobs are recognized in the current NAFTA?

In the current NAFTA, there is a list of 60 recognized professions--defined as business persons-- who enter one of the three countries to provide pre-arranged professional services either as salaried employees of an enterprise, or through a contract between the business person and employer/enterprise. Among the list of 60 occupations are accountants, engineers, economists and management consultants. However, there is a significant gap the digital space, given that the NAFTA was drafted over 20 years ago.

The myriad of professions we have today is hugely different than when NAFTA was introduced. The impact of globalization and technological advancement created an entirely new business landscape, heavily reliant on IT and digital professionals. As a result, both Canada and Mexico are keen to expand the list of professions, to include more IT related positions; which will immediately facilitate the process for cross-border employees to obtain work authorization. The U.S., under its current administration, remains focused on its ‘Buy American, Hire American’ policies that inherently oppose open immigration policies.

Although the two sides appear to be holding firm and no discussions yet reported on the labour mobility chapter, we can anticipate one of the following outcomes:

  • The existing rules around labour mobility remain as they are;
  • The rules around mobility are enhanced and expanded; or
  • The current rules are eliminated altogether. This would leave Canada free to enter into a bilateral agreement with Mexico; and, automatically revert back to the even more antiquated Free Trade Agreement with the U.S. that came into effect in 1988 when global mobility was not a key consideration.

What’s at stake for Canadian businesses?

Currently, to obtain any kind of work authorization in Canada, an employer must investigate and certify that they have tried to find a Canadian for the role. This requires undergoing an assessment by Service Canada to prove the employer has done their due diligence in finding a Canadian worker. This certification process takes between three to four months, is very expensive, and not always effective or practical.

Understanding the practical considerations of the labour market test, the Immigration Regulations provide exemptions to that process, including Free Trade Agreements like NAFTA and CETA. Under the current NAFTA, professionals listed are able to get facilitated work permits directly at the border or point of entry almost immediately after taking an assignment. If the NAFTA chapter on labour (chapter 1603.D.1) is eliminated, Canadian businesses will no longer be able to access critical international talent they need to execute high-value, often time-sensitive projects. For foreign professionals in Canada under the existing rules, it remains unclear as to what would happen if NAFTA is amended or ceases to exist. We expect there would be a transition period to all NAFTA based work permit holders to allow them to return to their home countries, change the conditions of their work permits, or initiate the permanent residence process.

For now, it’s business-as-usual for Canadian employers and professionals who rely on the NAFTA treaty. While we continue to monitor and report on the negotiations, we also recommend you:

  1. Follow the news and updates to stay well-informed on any changes
  2. Start thinking about alternate strategies in the event that drastic changes do come into effect. For example, opening a subsidiary office now in Canada while NAFTA is still in place could provide flexibility for alternate work permit categories
  3. Consider leveraging dual citizens for cross-border work, or start transitioning long-term foreign workers to Canadian permanent residence

An opportunity for Canada to lead the way in immigration policy-making

The uncertainty around NAFTA renegotiations is a good opportunity for Canada to lead inclusive and immigration friendly policy-making on the world stage. Our government has shown it is eager to create new categories of work permits to facilitate global mobility, thereby promoting innovation and international cooperation. Expanding our International Mobility Programs will not only set us apart, but it will also address labour shortages, skills gaps, and will promote Canada as a go-to market for global investment.

What’s next?

NAFTA negotiations continue on. In the mean-time BDO are updating business owners and decision makers as and when updates are announced.

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For more information about NAFTA, read our other NAFTA insights:
NAFTA 2.0: Key Issues and Next Steps
Summary of NAFTA Round 1 Negotiations (Washington, August 16-20)
Summary of NAFTA Round 2 Negotiations (Mexico City, September 1-5)
Summary of NAFTA Round 3 Negotiations (Ottawa, September 23-27)
Summary of NAFTA Round 4 Negotiations (Washington, October 11-15)
NAFTA Renegotiation Impact on the Retail Industry
NAFTA Renegotiation Impact on Government Procurement

BDO would also like to get your take on how negotiations are going. Have your say by taking part in our survey:

NAFTA – What are Canadian Businesses Thinking About?