Threshold
Back in February, US President Trump gave the State Department 180 days to review America's participation in all international organizations and report on which "are contrary to the interests of the United States and whether such organizations, conventions, or treaties can be reformed".
Six months have come and gone and if such a report has been made, I can’t find any trace of it. Who knows if it exists or if we'll ever see it? But honestly, for many international organizations it probably doesn't much matter.
Take the World Trade Organization. Its mission, according to its website, is "to ensure that trade flows as smoothly, predictably and freely as possible". Mr. Trump's goal, as far as anyone can tell, is pretty much the opposite.
Lack of support -- or full-on animosity, depending on how you want to read it -- has been the Trumpist policy toward the WTO for some time. At the end of 2024, the US was in arrears on its payments to the WTO to the tune of over 22 million Swiss Francs, and it formally suspended financial support in March.
In 2019, toward the end of Mr. Trump's first term, the US blocked the appointment of new judges to the WTO's Appellate Body, the Geneva-based kinda-court whose role is to decide on appeals from trade dispute panels. These days the Appellate Body has exactly zero members, the last one's term having expired in 2020.
Not that the WTO on its own has been a paragon of swift action & impressive accomplishment. Its most recent attempt at global trade negotiations, the Doha Round, was launched in 2001, and drifted sideways until it was sunk by the tsunami of the Great Recession in 2008. The WTO still pretends that Doha is alive -- touchingly, it's referred to it in the present tense on the WTO website -- but it most certainly isn't.
The bottom line is that as far as the WTO is concerned, the US is out. It has been for some time, and will be for a while to come.
Meanwhile in Canada, our law and foreign investment policy have yet to catch up with this reality.
The Investment Canada Act is designed to work in conjunction with old-school trade policy, rewarding free-traders with the ability to make larger investments without review.
The ICA has essentially three sets of thresholds applicable to foreign investors who aren’t state-owned. For those who come from non-WTO countries -- think economic pariah's like Iran or Sudan -- all investments over a meager $5M are scrutinized under the Act. Conversely, investors from WTO countries have a threshold of $1.386B, and those who also have their own trade deal with Canada are bumped up to $2.079B.
The point is reciprocity. The more you open up your economy to free trade with Canada, the more we allow investment from your country without the hassle of regulatory review.
The United States is, technically, a member of the WTO, and -- once again, more-or-less technically -- has a direct trade deal with Canada, the CUSMA. So even with everything that's going on, the ICA gives the US the full benefit of being a free trade nation.
That seems kind of weird doesn't it? Under the ICA, membership in the WTO is supposed to function as a handy shortcut, an elegant way to refer to countries that support the goals and mechanisms of global free trade. It's simply not credible to include the US in that group anymore.
Looking forward, no one will be surprised if the US walks from CUSMA, or at least demands a radical renegotiation on terms difficult-to-impossible for Canada and Mexico to accept. The collapse of a North American trade alliance would drop the US to the second tier of ICA investors, and lower their review threshold to $1.3B.
That would be an unpleasant but small side effect, and likely livable for US companies and institutional investors looking to buy Canadian businesses. But add in a US withdrawal from WTO and they drop into the bottom rung, where essentially all investments require a thumbs up from the Investment Review Division of Industry Canada, the bureaucrats who administer the ICA. For those who care about such things, that would sting a little more.
The bigger question is whether Canada should wait to rethink thresholds under the ICA. The current situation, where the US is rewarded for being a free trade nation, can only be described as perverse.
No world leader wants to attract Mr. Trump's attention. So don't expect Canada to move on this unless provoked. However, provocation is the name of Mr. Trump's game. And somewhere on a desk in the West Wing maybe, just maybe, there’s a report from State concluding that belonging to the WTO isn’t Making America Great Again.