‘Three Amigas’ Meet in Cancun to Review Ongoing Trade Agreement Between Canada, Mexico, US

Canada's Trade Minister Mary Ng gives a press conference with Canada's Prime Minister (unseen) during the Asia-Pacific Economic Cooperation (APEC) summit in Bangkok on Nov. 18, 2022. Jack Taylor/AFP via Getty Images

Three government representatives from North America’s trading partners are in Cancun, Mexico, for two days to discuss trade agreements.

Canada’s International Trade Minister Mary Ng is meeting with Mexico’s Economy Secretary Raquel Buenrostro and U.S. Trade Representative Katherine Tai to review the last three years of the U.S.–Mexico–Canada Agreement (CUSMA), a trade agreement between all three North American countries.

Ms. Ng calls the group of women “the three amigas.” While meeting female business owners in Mexico City on July 5, she said that CUSMA, which the United States refers to as USMCA, is “the most successful in the world.”

“This agreement, as negotiated, provides both predictability and stability for 16 years, to 2036. These regular check-in points, including the one in 2026, are an opportunity to create even more certainty to extend the agreement beyond 2036,” she said.

According to the U.S. Department of Commerce, North American exports contributed to 2.1 million jobs in 2021. The United States also said it exported almost US$790 billion in goods and services under the trade agreement in 2022, a 31 increase from 2012.

The CUSMA has a six-year review clause, which means all three countries must undertake a review of the deal by June 2026. Ms. Ng said that rather than view the review date as a deadline, she would like to see Mexico and the United States in favour of extending the deal into the future.

Ms. Ng also said that a tribunal ruling regarding how the United States classifies foreign automotive content has been “on the top of my desk” for months and that all parties have to abide by the terms for the agreement to be successful.

“The rules that underpin all of us through this agreement are rules that we all value, and that we all must respect,” she said.

“We are also all working to fight climate change—and the auto sector has a really important part to that, which is electric vehicles—and making sure that we are creating stability and certainty for the sector.”

The tribunal ruling, released in January following the North American Leader’s Summit, rejected the American interpretation of foreign content rules for automobiles as “inconsistent” with the terms of CUSMA. The tribunal was established as part of dispute resolution regulations in CUSMA.

Under the terms of the trade deal, the allowed “regional value content” for automotive parts was raised from 62 percent to 75 percent, so that all three countries would have a larger investment in the auto manufacturing sector in all three countries. There are complex rules about the percentage of core parts that have to originate in one of the three countries, with flexible methods for calculating these parts.

Part of the tribunal decision impacts how vehicles are designated duty-free. At a certain level, vehicles can be considered as having 100 percent North American origins if regional thresholds of various elements can be demonstrated.

The panel ruled that the American requirements for calculating regional value content for passenger vehicles and light trucks breached the trade agreement. Basically, the United States was not allowing automotive manufacturers to apply roll-up rules that considered a core part made of 85 percent North American components, for example, as being 100 percentNorth American in the calculation as to whether tariffs and duties would apply.

The United States has not released a statement following the decision of the tribunal, and a spokesperson for Ms. Tai’s office said: “We are engaging with Mexico and Canada on finding a positive solution. We want to find one that will benefit all the parties and stakeholders by enhancing North American motor vehicle production and jobs.”

Two points of disagreement between the countries include Mexico’s production of genetically modified corn, and Canada’s strict rules on dairy export quotas. Each has a mechanism for separate dispute resolution efforts.

Ms. Tai said on July 6 that some progress had been made with regard to a U.S–Mexico energy dispute, according to a report in Reuters, but the U.S. official said that dispute resolution would help resolve the issue.

She was quoted as saying, “If we are not able to make more progress, the next step in the formal toolkit would be the request for a dispute settlement panel.”