Canada, Mexico agree to team up to fight U.S. auto tariffs

Canada and Mexico will work together to try to get the U.S. to cut auto tariffs on imports from the two countries, Mexico’s foreign affairs secretary said Friday at a meeting with his counterpart in Ottawa.

Roberto Velasco Álvarez said the auto industry will be a key part of Mexico’s “general co-ordination” with Canada in preparing for negotiations with Washington over the Canada-U.S.-Mexico trade agreement, which the U.S. declined to renew by a July 1 deadline, setting off annual reviews with accompanying negotiations.

“This is part of the conversation we’ve had with the United States,” Velasco told reporters in a joint press conference with Anita Anand, Canada’s foreign affairs minister. “And of course this is part of the conversations that we have with Canada in terms of our general co-ordination around (North American free trade).”

The meeting of the ministers and Velasco’s comments suggest that Canada and Mexico are trying to join forces to get a deal, or deals, with Washington to maintain the low-barrier trading relationship that has existed since the beginning of NAFTA in 1994. U.S. negotiators have signalled a preference to negotiate separately with Canada and Mexico as much as possible.

When asked about the touchy issue of Chinese-made electric vehicles, which are now permitted in both Canada and Mexico, Velasco seemed to suggest that the issue will be on the table during talks with Washington. The U.S. maintains punishing tariffs on Chinese vehicle imports and the Trump administration and a bipartisan group of U.S. lawmakers are working to block the vehicles from even driving into the country.

Chinese-branded autos, including MG Motor, Chery and BYD, represent up to 19 per cent of the Mexican market, although very few of those vehicles are made in North America.

Prime Minister Mark Carney agreed in January to allow up to 49,000 Chinese-made electric vehicles a year into the Canadian market (about three per cent of total sales) at a reduced tariff rate of 6.1 per cent in exchange for reduced duties on Canadian seafood and some key agricultural products.

To qualify for duty-free access to the U.S. market, vehicles must meet strict rules of origin for both labour and parts.

Anand said the three North American countries will work together on autos and other difficult trade issues in what is one of the most integrated regional markets in the world.

Despite all three countries seeming to enjoy clear economic benefits since NAFTA, U.S. President Donald Trump has imposed a series of tariffs on Canada, Mexico and many other countries that have impeded trade. They included a 25-per-cent tariff on vehicles imported into the U.S., which has upended Canada’s auto industry, resulting in significant layoffs and lost investment. General Motors has closed an auto plant in Ingersoll, Ont. and eliminated a shift at an Oshawa, Ont. assembly plant. Stellantis has postponed the re-opening of a plant in Brampton, Ont.

Trump has said that he’s not looking to renew the trade deal, although it’s unclear if that is a firm view or simply a negotiating tactic. Unless the U.S. eventually agrees to renew, the agreement will expire in a decade if the three countries aren’t able to negotiate an extension.

Mexico and the U.S. are scheduled to sit down for their third round of negotiations next week, but Canada and the U.S. have not yet held any official talks.

Trilateral talks between the North American countries will begin when “it’s appropriate,” said Velasco, a former civil servant who was appointed to his position in April.

Canada and Mexico would clearly prefer the security of a long-term deal instead of annual reviews that create uncertainty for investors and supply chains.

Although Mexico is Canada’s third-largest market for exports after the U.S. and China, Velasco said there are no serious trade irritants between the two countries.

During the press conference, Anand also announced a $12.1-million contribution to projects in Latin America, including the United Nations Population Fund’s human identification program and efforts to combat international crime organizations involved in human smuggling and trafficking.

She also said that Canada would work with Mexico to use Canadian satellites to try to detect vessels involved in illegal fishing.

National Post