The U.S., Canada and Mexico announced progress today at the conclusion of the seventh round of North American Free Trade Agreement talks in Mexico City, but it was the U.S. plan to levy steep tariffs on steel and aluminum imports that took center stage.
Canadian Minister of Foreign Affairs Chrystia Freeland highlighted some of the solid progress made by negotiators, but interrupted her closing remarks to slam the U.S. plan to charge a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum. Canada is the largest exporter of both to the U.S.
Freeland, who stood on a stage between U.S. Trade Representative Robert Lighthizer and Mexican Minister of Economy Ildefonso Guajardo Villarreal declared that “Canada would view any trade restriction on Canadian steel and aluminum as absolutely unacceptable.”
She then added if the U.S. followed through with the tariffs President Donald Trump first announced on Thursday, “Canada will take appropriate responsive measures to defend our trade interests and our workers.”
Trump made the announcement on the new tariffs Thursday and on Monday suggested that they would not be applied to Canada and Mexico if a new NAFTA deal was completed quickly.
“We have large trade deficits with Mexico and Canada,” Trump said on Twitter. “NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed. Also, Canada must ... treat our farmers much better.”
It wasn’t just steel and aluminum that weighed down the atmosphere on the stage in Mexico City. Lighthizer said he appreciated the difficulty and complexity of the talks, but stressed that the three countries “have not made the progress that many had hoped for in this round.”
Negotiators in Mexico City finalized three chapters in NAFTA, including the sanitary and phytosanitary category that farmers expect to help facilitate ag trade. Mexico’s Villarreal stressed the importance of the SPS agreement, which updates standards to improve food safety and protect countries against agricultural imports that could be contaminated with pests and diseases.
The agreement, he said, “guarantees certainty that our agricultural products are going to be traded … without artificial obstacles … and based on science.”
Despite the advancements in SPS language, virtually no progress was made on the major “rebalancing” issues that demand big policy changes from Canada and Mexico. These include contested U.S. proposals such as measures to boost the percentage of U.S. made parts in traded automobiles and to eliminate Canada’s dairy supply management system.
Lighthizer concluded his remarks today with a threat. If the U.S. can’t get a deal with two North American countries, it will take a deal with one, he said without any specifics.
“As President Trump has said, we hope for a successful completion of these talks, and we would prefer a three-way, tripartite agreement,” Lighthizer said. “If that proves impossible, we are prepared to move on a bilateral basis, if agreement can be made.”