‘Three Amigas’ meet in Cancun to review pending trade deal between Canada, Mexico and US

Three government representatives from North America’s trading partners are in Cancun, Mexico, for two days to discuss trade agreements.

That’s Canada’s Minister of International Trade, Mary Ng encounter with Mexican Economy Minister Raquel Buenrostro and US Trade Representative Katherine Tai to discuss the last three years of the US-Mexico-Canada Agreement (CUSMA), a trade agreement between the three North American countries.

Mrs. Ng calls the group of women “the three amigas.” At a meeting with women entrepreneurs in Mexico City on July 5, she said CUSMA, which the United States refers to as USMCA, is “the most successful in the world.”

“This agreement, as negotiated, provides both predictability and stability for 16 years, through 2036. These regular check-in points, including those in 2026, are an opportunity to create even more certainty to extend the agreement beyond 2036,” said she. .

According to the US Department of Commerce, North American exports contributed to 2.1 million jobs in 2021. The United States also said it exported nearly $790 billion in goods and services under the trade deal in 2022, an increase of 31 compared to 2012.

The CUSMA has a six-year review clause, meaning all three countries must review the deal by June 2026. Ms Ng said she would not view the review date as a deadline, but would like Mexico and the United States to support extending the agreement into the future.

Ms Ng also said a tribunal ruling on how the United States classifies foreign car content has been “on my desk” for months and that all parties must abide by the terms for the deal to be successful.

“The rules that underlie this agreement for all of us are rules that we all value and that we must all respect,” she said.

“We are also all working to fight climate change – and the automotive sector plays a very important role in that, namely electric vehicles – and make sure we create stability and security for the sector.”

The tribunal’s ruling, released in January after the North American leadership summit, rejected the US interpretation of foreign content rules for automobiles as “inconsistent” with the terms of CUSMA. The tribunal was established as part of the dispute resolution regulation in CUSMA.

Under the terms of the trade agreement, the allowed “regional value content” for auto parts was increased from 62 percent to 75 percent, so that all three countries would have greater investment in the auto manufacturing sector in all three countries. There are complex rules about the percentage of core parts that must come from one of the three countries, with flexible methods for calculating these parts.

Part of the tribunal’s decision affects how vehicles are designated tax-free. At some level, vehicles can be considered 100 percent North American, if regional thresholds of various elements can be demonstrated.

The panel reigned that the US requirements for calculating regional value content for passenger cars and light trucks violated the trade agreement. In short, the United States did not allow automakers to apply roll-up rules that considered a core component consisting of, say, 85 percent North American components to be 100 percent North American in calculating whether tariffs and duties would apply. would be.

The United States has not released a statement following the tribunal’s decision, and a spokesman for Ms Tai’s office said: “We are in talks with Mexico and Canada to find a positive resolution. We want to find one that benefits all parties and stakeholders by improving North American motor vehicle production and employment.”

Two points of disagreement between the countries include Mexico’s production of genetically modified corn and Canada’s strict rules on export quotas for dairy products. Each has a separate dispute resolution mechanism.

Ms Tai said on July 6 that some progress had been made regarding an energy dispute between the US and Mexico, according to a report in Reuters, but the US official said dispute resolution would help resolve the issue.

She was quoted as saying, “If we are unable to make more progress, the next step in the formal toolkit would be to request a dispute resolution panel.”