Nervous About NAFTA?

What Does NAFTA Mean For US or Mexican Employees in Canada on a Work Permit?

Watching the NAFTA negotiations over the last week of the summer was like following a television melodrama. The corporate villain trying to manipulate the hero into a deal that benefits only one side. The hero committing to holding fast to the needs of his constituency. And we have another 90 days (at least on the current deadline) to endure…I mean, wait for the conclusion.

Political agreements such as NAFTA are very nuanced with multiple layers of complexity on both sides. In order for all to benefit, compromises need to be made. The problem here is that there seems to be an unwillingness to compromise which prevents movement forward. Will there be a deal or won’t there? It’s hard to predict, but everyone has an opinion.

Although intriguing, this constant back and forth has had many individuals who are in Canada on NAFTA based work permits concerned about their ability to remain in Canada if a deal isn’t reached. Although we never know what will happen until it does, it is unlikely that Canada will immediately cancel all NAFTA based work permits should the agreement be terminated. The economic and subsequent political fallout from this course of action would be too great. In addition, processing new work permits for all these individual or enforcing the termination of all NAFTA based work permits at the same time is not only impractical but expensive.

The NAFTA agreement contains a six-month sunset clause, in which the terms of the agreement remain in effect after notice has been given to terminate the agreement. This gives all parties time to transition out of the agreement effectively. In theory, new NAFTA based work permits can still be applied for and obtained during this period, however the durations of these work permits are likely to be short term. Obtaining a full three-year NAFTA based work permit would be unlikely.

Applying for a NAFTA based work permit at this time should only be done to manage short term needs and a longer-term plan should be put in place to allow the employee to remain in Canada for the full term of their assignment. If the employee is to remain in Canada indefinitely, a plan for applying for Canadian permanent residency is critical.

For those already holding long term NAFTA based work permits, Immigration, Refugee and Citizenship Canada (IRCC) will likely allow NAFTA work permits to run their course and then upon expiry the work permit will need to be renewed under a different basis such as an intra-company transfer, a Labour Market Impact Assessment (LMIA), or other basis.

The best thing you can do to prepare for this is to be aware of those in your organization who are affected and to plan for next steps. In my opinion it is premature to act on anything until it is clear that NAFTA will terminate, but to have a plan in place will decrease the anxiety and concerns of your board, your clients, and your employees. It gives you a framework to have these discussions with stakeholders and to show them you have the situation under control.

Key things to do in order to plan for the potential breakdown of NAFTA are the following:

  1. Know your company’s foreign national population
  2. Know which of these individuals is affected
  3. Understand the timelines and the potential renewal options for each affected person
  4. Identify critical employees within these groups and consider moving them towards Canadian permanent residency as soon as possible.

Even if all goes well with NAFTA negotiations and a new agreement is signed, this exercise of knowing the foreign national population in your company is useful knowledge for ensuring immigration compliance and the continued employment of key personnel.

If you need help implementing the above recommendations, let us know. We’re here to help.


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