Auto ROO, Mexican Steel Exports to US, Use of Rapid Response Discussed in Mexico
Canada and Mexico talked about the panel ruling on auto rules of origin -- a decision that went their way but that the U.S. has chosen not to implement -- and Canada brought up the issue with U.S. Trade Representative Katherine Tai as well, according to readouts from Mexico and Canada about the bilateral meetings July 6 ahead of the official Free Trade Commission meeting in Cancun, Mexico.
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Tai was silent on what the U.S. is planning to enforce for auto imports in her readout of her meeting with Canada, but she emphasized service export issues between the two countries. The readout said: "Ambassador Tai underscored the need for Canada to fully meet its USMCA commitments, including on home shopping. In addition, she urged Canada to refrain from imposing a digital services tax while the [Organization for Economic Cooperation and Development] process continues this year."
Canada's trade minister Mary Ng said she "raised issues of concern to Canada and Canadian workers that undermine the integrated nature of the Canada-US economy. This includes U.S. duties on Canadian softwood lumber and the implementation" of the USMCA "dispute panel ruling on automobile rules of origin. The Minister and Ambassador discussed shared concerns regarding reforms in Mexico’s energy sector and their approach to biotechnology."
Ng also said she urged the U.S. to implement the OECD global tax arrangement, which is designed to forestall digital services taxes by allowing extra-territorial taxation and establishing global minimum corporate tax rates.
Ng and Tai also talked about reform at the World Trade Organization, including dispute settlement, as did Mexico's economy secretary and Ng. Economy Secretary Raquel Buenrostro said Mexico promised to continue to lend its support to WTO reform, to ensure the institution's relevance, and to bolster a rules-based trading system.
Ng told Buenrostro that she hopes Mexico, the U.S. and Canada reach a "full resolution" of the concerns of U.S. and Canadian companies operating in Mexico in the energy sector. The readout also said: "The Minister recognized Mexico’s commitment to sustainable mining and discussed the importance of implementing mining reforms that uphold rules-based trade, both under" USMCA and "through a strong multilateral trading system with the WTO’s agreements at its core." Ng said Canadian mining companies are important to Mexico's development and participation in the critical minerals supply chain.
Tai's readout on the Canadian meeting said she and Ng talked about the importance of energy and biotech consultations with Mexico, as well.
The U.S. readout of the meeting between Tai and Buenrostro said: "Tai stressed the importance of Mexico fully meeting its USMCA commitments, including those related to certain of Mexico’s energy measures, enforcement of its fisheries-related environmental laws, and biotechnology measures."
Buenrostro said she spoke of "relevant advances in the preservation of the vaquita and biodiversity in the Upper Gulf of California," the fisheries issue Tai alluded to, according to an unofficial translation of the Mexican readout.
Tai said she told Buenrostro it's important to address "the recent surge of imports of steel and aluminum products, and agreed to have their teams intensify their engagement. Ambassador Tai stressed the importance of Mexico enhancing its monitoring of its steel and aluminum exports to the United States in accordance with the 2019 Joint Statement by the United States and Mexico on Section 232 Duties on Steel and Aluminum, and ensuring greater transparency with regards to Mexico’s steel and aluminum imports from third countries."
Senators from both parties have complained there is a surge of steel imports from Mexico (see 2302160001); Mexico has warned it will not accept a return to Section 232 tariffs, nor will it accept quotas (see 2302240060).
Buenrostro said she and Tai talked about energy, and the importance of reasonable use of the rapid response mechanism for labor complaints, which she said "should be a last resort and should not seek to replace ... national institutions."
Mexico argued that the alleged denial of union rights should have happened after USMCA entered into force, and that the plant in question should sell goods to U.S. buyers (or is U.S. owned) if the U.S. is bringing the complaint. The readout also said, "Mexico expressed concern to the United States that all the cases they present are duly substantiated."
Buenrostro said she, Ng and Tai share the view that electronics and cars and trucks purchased in North America should be made more often in the region, and they will accelerate a plan to increase production in those sectors.