logo logo

US trade czar: Don’t get ’too comfortable’ North American trade pact will stay as is

CBC | 6 March 2024

US trade czar: Don’t get ’too comfortable’ North American trade pact will stay as is

by Alexander Panetta

Don’t get too comfortable with the North American trade pact: that’s the warning from President Joe Biden’s top trade official as countries prepare to review the deal.

Katherine Tai made the comments as the agreement between Canada, the U.S. and Mexico, known in the U.S. as USMCA, passed the halfway point toward the six-year mark where countries will start discussing its renewal.

The agreement includes what’s referred to sometimes as a sunset clause: Once the renewal process starts, countries have a decade to agree to new terms – or else the pact disappears.

The U.S. ambassador to Canada has already told CBC News that officials in his country have begun discussing their priorities for renewal talks starting in 2026.

It’s worth noting that the renewal talks will only begin after the next U.S. election and it’s not clear whether, at that point, Joe Biden or Donald Trump will be president.

The former Trump administration was notorious for constantly threatening to rip up North America’s trade deal, something the current administration has never done.

But Tai urged the countries not to take things for granted. She suggested that negotiators will feel more pressure to improve the agreement if they’re worried about its future.

"You do not want that review to happen in a way that all three parties come to the conversation too comfortable," Tai told a forum organized Wednesday by the Brookings Institution, a Washington-based think-tank.

"The whole point is to maintain a certain level of discomfort – which may involve a certain level of uncertainty. To keep the parties motivated to do the really hard thing, which is to continue to re-evaluate our trade policies and trade programs ... That discomfort is actually a feature – not a bug."

Dairy dispute between U.S. and Canada

Tai elaborated on some of the things she hopes negotiators deal with. She said existing disputes, and dispute outcomes, must be part of renewal discussions.

She referred at Wednesday’s event to a dispute topic with Canada: dairy.

The U.S. has consistently alleged that Canada is cheating in implementing the deal, and limiting the liberalization it promised; the dispute involves how Canada allocates its import credits, and to whom.

The U.S. filed a complaint and won in 2022. Canada implemented some changes, which the U.S. deemed insufficient. The U.S. sued again, but lost late last year.

Tai said the U.S. isn’t alone in complaining about Canada’s practices. New Zealand has filed a similar complaint under the new trans-Pacific trade pact.

"We still do not have that access [we expected]," Tai said of dairy trade. "And frankly we’re not the only ones. ... We have a political conundrum. ... That is something for us to continue to work on and think through: How do we address that concern with Canada?"

Canada has its own complaints about implementation of the new agreement, originally reached between the North American governments while Donald Trump was president.

It involves autos. Canada and Mexico won a case challenging how the U.S. calculated what counts as a North American car part, eligible for trade without tariffs.

The Biden administration has not reacted to the findings.

But Trump has hinted that he would ignore the ruling, if he’s re-elected. Trump’s former trade czar, Tai’s predecessor Robert Lighthizer, has said it should be part of the review process.

Lighthizer writes that if the U.S. makes clear to car companies that Washington will demand these changes, it will send a signal to those companies not to rely on the current rules.

 source: CBC