Canada threatens USMCA action over car rules. Canada’s Industry Minister François-Philippe Champagne, at his meeting with Trade Minister Gina Raimondo earlier this month, called for the removal of “policy uncertainties” in the automotive industry, such as electric vehicle tax credits.
Mexico’s domestic policies have also raised trade concerns, particularly an upcoming energy reform that Washington says would violate the North American trade pact by restricting private investment in favor of state-backed Pemex.
The US Ambassador to Mexico, Ken Salazar, expressed “serious concerns” about the law earlier this month, but Smith Ramos said Americans have been “cautious” with the law so far and will “wait” to see if it is in Mexico Congress is passed.
The growing trade disputes among the USMCA are the main risk if leaders can’t start improving their relations this week. As part of the agreement, Mexico has already called for talks on automobile rules of origin that make compliance at Mexican plants more difficult. She could refer these concerns to a dispute settlement body if not addressed, potentially leading to tariffs or trade restrictions.
The US could also up the stakes by pushing further USMCA measures to access agricultural markets in Mexico and Canada, where Washington, DC says governments are restricting access to American crops.
“The US has not gained a foothold in terms of access to agricultural markets or efforts to implement energy counter-reforms in Mexico,” said Smith Ramos. “Hopefully this will all be resolved or you’ll have a bunch of irritants in energy, agriculture and automobiles that can cause trouble in the area.”
And there is an added risk for Biden. If he is unable to resolve these differences as of this week, they could have long-term consequences for his collaboration with López Obrador to steer the flow of Central American migrants through Mexico and into the United States
A separate Biden government official said leaders are expected to discuss how to tackle the “root causes” of immigration, such as economic insecurity in Central America, but that “there will be no real focus on our borders this time.”
Trudeau took up the China issue on Wednesday and said that “not even the United States” can and that, on its own, can win Canada and Mexico over to combat China’s economic rise “If we work together as western democracies, we will get things done”. But this cooperation, like any other, depends on friendly relations between the countries.
“It is very difficult to bring other countries into a joint project, especially with a focus on China, if you hold it somewhere else,” said Reinsch.