Canada: Trump's NAFTA Pledge Threatens U.S. Expats In Canada

Last Updated: February 1 2017
Article by Amandeep Hayer

Donald Trump infamously called the North American Free Trade Agreement (NAFTA) "the single worst trade deal ever approved by [the United States]"1 and vowed to withdraw from the deal once elected. This policy was such a core plank of his platform that as soon as it become abundantly clear that Trump would win the U.S. election, the value of Mexican Peso relative to U.S. dollar dropped precipitously under the expectation that the U.S. would likely withdraw from NAFTA.2

Since then, much has been written about the potential economic fallout caused by Trumps pledge. However, little has been written about what might happen to Americans who are working in Canada.

The NAFTA Work Permit

Like most trade deals, NAFTA has a labour mobility provision which allows for the free flow of labour across borders. While this is nowhere near as generous as the European labour mobility rules,3 it has massively simplified the ability for Americans to work in Canada.

The NAFTA Work Permit has allowed qualifying professionals (accountants, lawyers, doctors, teachers, nurses, and scientists) to easily work in Canada without going through Canada's usually cumbersome Foreign Worker Program (FWP). Normally, under the FWP, an employer must do a Labour Market Impact Assessment (LMIA) and advertise for several months before they may extend a job offer to a non-Canadian. Under NAFTA, an employer can extend a job offer to an American and that American would then qualify for a NAFTA Work Permit. This NAFTA Work Permit gives Americans nearly the same level of access to the labour market as your typical Canadian.

If the U.S. Pulls Out of NAFTA, What Happens?

It is not clear what would happen to American workers who are in Canada on NAFTA Work Permit if the U.S. were to pull out of NAFTA.

One possibility is that the Canadian government automatically transfers everyone to a Work Permit under the old Free Trade Agreement (FTA) between Canada and the United States. FTA contains labour mobility provisions which, on the whole, are virtually identical to NAFTA, but this is not a guarantee. For one, although the FTA was never repealed, it was only suspended, it's not clear what steps will have to be taken to revive it. Would it automatically come back into force once the U.S. pulls out of NAFTA, or would it require additional steps from the U.S. and Canadian governments?

It is also not clear whether or not President Trump has any interest in maintaining the FTA. There are plenty of Americans who blame Canada (as much as Mexico) for unfair trade practices and the decline of manufacturing. It is not inconceivable that under a Trump Presidency the U.S. would pull out of NAFTA and the FTA, thus closing one possible avenue of relief for Americans in Canada on a NAFTA Work Permit.

Considering past practices, we might not know what President Trump's plans are until his 3 a.m. tweet announcing a withdrawal from NAFTA.

Could the Canadian Government Provide Relief?

The Government of Canada has not provided any indication as to what it would do in the event that the U.S. pulls out of NAFTA. Beyond stating that they would be open to negotiations, the Canadian government has given no indication about how it might react.

Parliament certainly has the power to enact a special transitional visa for Americans already in Canada. But anything permanent raises constitutional issues. Without a trade deal, it would be incredibly difficult for the Canadian government to legally enact a preferential visa for just American citizens as it is unconstitutional to give preferential treatment based on nationality.

Thus, from our initial assessment, the hands of the Canadian government could be effectively tied from providing relief.

What Should Americans on a NAFTA Work Permit Do?

The worst decision a NAFTA Work Permit holder can make is to simply wait and see what might happen. It's better to take steps under the existing immigration laws and regulations while you have options.

The best option is to apply under the Express Entry Program (EE Program) for Permanent Residency. To qualify, a foreign national must reach a minimum points threshold, the threshold varies based on the applicant pool with the most recent threshold requiring at least 459 points.4

Under the revised rules and regulations of the EE Program, issued in November of 2015, American citizens on a NAFTA Work Permit can receive an additional 50 or 200 points if they are applying for Permanent Residency under the EE Program. These bonus points give Americans an edge when applying for Permanent Residency under the EE Program.

Once a foreign national is granted Permanent Residency, it can be withdrawn only if the foreign national commits certain crimes or is absent from Canada for an extended period of time. Therefore, if the U.S. pulls out of NAFTA, an American with Permanent Residency is no longer at risk of losing his or her legal status in Canada.

Rather than waiting for the 3 a.m. tweet, Americans on a NAFTA Work Permit should quickly apply under the EE Program and secure their place in Canada.




[3] The free movement of workers, is one of the four fundamental economic freedoms of the European Union. It allows a person to seek employment or to settle anywhere in any European Union without a visa. 45 TFEU

[4] EE Program Draw on January 11, 2017

Moodys Gartner Tax Law is only about tax. It is not an add-on service, it is our singular focus. Our Canadian and US lawyers and Chartered Accountants work together to develop effective tax strategies that get results, for individuals and corporate clients with interests in Canada, the US or both. Our strengths lie in Canadian and US cross-border tax advisory services, estateplanning, and tax litigation/dispute resolution. We identify areas of risk and opportunity, and create plans that yield the right balance of protection, optimization and compliance for each of our clients' special circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Amandeep Hayer
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