Canadian, Costa Rican, US Leaders Want to Reinvigorate Trade
Canadian Trade Minister Mary Ng said that Canada and its partners in NAFTA 2.0 will not be caught unawares when it's time for the sunset review in 2026. She said that she and her counterparts in Mexico and the U.S. will be taking stock of how the agreement is working in July.
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Ng, who was speaking at the Washington Conference on the Americas in Washington, D.C., on May 2, said, "It is an agreement we must continue to nurture. You’ve got to take the weeds out from time to time."
She referred to two times the U.S. didn't follow NAFTA or its successor pact's text -- when it imposed safeguard tariffs on Canadian solar panels and its auto rules of origin interpretation.
"With a trading relationship like this that is so large, of course there are going to be issues," she said. "That’s why we negotiated the dispute settlement mechanism that actually allows our three countries to resolve issues when they come up."
Ng said the NAFTA region is "at a very important inflection point," as all three countries are affected by climate change, and all three want to grow jobs in fields that are helping to tackle climate change. Canada is building a very strong supply chain for electric vehicle batteries, she said, from the critical minerals to the battery to assembly of EVs.
Eric Farnsworth, vice president of the Council of the Americas, asked Sen. Bill Cassidy, R-La., how the hemispheric trade agenda could be reinvigorated. Cassidy said during the conference that he supports adding Costa Rica to USMCA -- Costa Rica's trade minister was the other panel participant.
He also talked about his Americas Act (see 2301130042) proposal, and said, "so if we can promote that trade is not zero sum, or rather initiates a virtual cycle, in which both sides of the partnership benefit," then the U.S. can lower tariffs for more of its neighbors. He said if trade helps countries to develop, then waves of migration will recede -- he noted that Mexico's net migration fell after NAFTA.
Some of the countries where many of the migrants have come from in the last five years -- Nicaragua, El Salvador, Guatemala, Honduras, Haiti -- do have free trade agreements with the U.S.
Cassidy acknowledged that he hears from businesses that are hesitant to invest in some countries because of "the level of corruption." He suggests that requiring more electronic submissions for government permits or other interactions with the government as a condition for market access could tackle that problem -- as could making public which companies are paying their taxes. If more companies pay their taxes, the countries will have the money to invest in human capital and in physical infrastructure, he said.
"It doesn't matter if you have market access, if people don’t want to go there" to source goods, he said.
Costa Rica Trade Minister Manuel Tovar acknowledged there are "regional challenges" with respect to the rule of law, and said that if Central American countries "do not take care of these challenges, we have a benefit that is less than expected" in the Central America-Dominican Republic Free Trade Agreement, known as CAFTA.
Farnsworth asked Cassidy if the U.S. doesn't want to talk about market access any more in trade negotiations, and asked: "Should tariff reduction be the primary driver?"
Cassidy said, "I think market access is the primary directive." He referred to how Ng said that although Canada is pro-trade, it is trying to make sure the trade doesn't undermine domestic wages and doesn't despoil the environment, and said he agreed. "You can’t sacrifice everything for market access." He noted that he wants to introduce a carbon border adjustment tax to put a price on the global warming that industry is contributing to.
"We would have the ability for countries to join into a carbon club, and that would benefit those who tend to have higher environmental standards," Cassidy said. "If Costa Rica is doing well with its environmental standards, it would be rewarded for that in trade access."
In an interview after the panel, Cassidy said he intended to introduce the bill "relatively soon," but not in May. "We are vetting that with stakeholders, and colleagues, making I think, an even better product."
He also said another office is doing "final vetting" of his Americas Act proposal, and he expects a Democratic co-sponsor soon. He said when he talks about some of the concepts -- like online transparency -- with colleagues who have traveled to South America on delegation trips, they are "very interested." Cassidy said he's "optimistic we'll end up with kind of a cadre of bipartisan senators supporting" a trade bill that focuses on Latin America.