US metal tariffs could stall NAFTA replacement pact

US metal tariffs could stall NAFTA replacement pact

Mexico and Canada reportedly withholding signatures until U.S. lifts steel and aluminum tariffs.

October 31, 2018

A trade envoy from Mexico has reportedly stated his nation is not prepared to sign the new trade accord among the United States, Mexico and Canada until the U.S. government lifts steel and aluminum import tariffs placed against Mexico. The statement aligns Mexico and Canada against the U.S. on the issue.

An online report from the Canada-based CBC broadcasting organization quotes Juan Carlos Baker, a Mexican undersecretary for foreign trade, as saying in late October that the three countries “need to solve that issue” before the signing of the new U.S.-Mexico-Canada Agreement (USMCA) can take place. The USMCA has been negotiated to take the place of the current North American Free Trade Agreement (NAFTA).

While a USMCA signing ceremony could take place before the end of November, the Mexican and Canadian governments have indicated they would like to see the U.S. 10 percent and 25 percent tariffs on Canadian and Mexican steel and aluminum lifted quickly, rather than relying either on World Trade Organization (WTO) arbitration or on counter-tariffs issued by Mexico and Canada.

Baker’s comments seem to indicate that neither Mexico nor Canada want to anticipate the U.S. will lift its Section 232 (national defense) tariffs after the signing ceremony, but instead want the issue settled prior to signing.

Both governments also are indicating they are not favorable toward quotas on steel and aluminum export volumes to the U.S. as a worthwhile trade-off to have tariffs removed, as has been agreed to by Brazil and South Korea.

The CBC article also indicates that while Canada and Mexico see the U.S. metal tariffs as common ground between them, they also have a dispute of their own involving targeted steel tariffs placed by the Canadian government on Mexican tube steel and wire rod.