The cultural and linguistic similarities between Canada and the United States bring familiarity and ease to trade between businesses across the border. In Canada, the corporate tax rate is 15%, which some businesses argue is more competitive than that of the United States.1
The rise of remote work as a consequence of the COVID-19 pandemic has increased the amount of investment in technology which has expanded the pool of candidates across labor markets as a result of the flexibility enabled by remote work. Physical location does not present businesses in the PBS sector with the same impediments to trade as it once did, which has particular advantages for companies operating in the management consulting industry and in markets where professional certifications do not limit employment opportunities.2 Canada’s technology sector already serves as a major source of economic growth – in 2018 the sector grew by 3.7%.3 Increasingly, mechanisms for facilitating trade in services across the U.S.-Canadian border include associated technological advances that streamline regulatory processing, which has reduced the friction associated with traveling back and forth between the countries.
The U.S.-Mexico-Canada Agreement (USMCA) also presents opportunities on the professional services front. The agreement aims to facilitate trade in this sector via Annex 15-C (Professional Services) of the Cross-Border Trade in Services chapter, which encourages professional services organizations to establish dialogues on the recognition of professional qualifications, licensing, or registration.4 It also established a Professional Services Working Group, comprised of representatives from the three member countries. In addition, USMCA presented guidelines for professional services regulatory bodies in pursuing mutual recognition agreements (MRAs) or other recognition arrangements.
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1 Government of Canada, “Corporation Tax Rates,” April, 9, 2021. Available: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/corporation-tax-rates.html.
2 Susan Lund, Anu Madgavkar, James Manyika, and Sven Smit, “What’s Next for Remote Work: An Analysis of 2,000 Tasks, 800 Jobs, and Nine Countries,” McKinsey Global Institute, November 23, 2020. Available: https://www.mckinsey.com/featured-insights/future-of-work/whats-next-for-remote-work-an-analysis-of-2000-tasks-800-jobs-and-nine-countries
3 International Trade Administration, “Canada – Country Commercial Guide: Market Opportunities,” August 20, 2021. Available: https://www.trade.gov/knowledge-product/canada-market-opportunities.
4 Office of the U.S. Trade Representative, “United States-Mexico-Canada Agreement: Chapter 15: Cross-Border Trade in Services.” Available: https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/Text/15-Cross-Border-Trade-in-Services.pdf.
