US-Mexico-Canada Agreement Trade Disputes Remain Unresolved as 2024 Elections Approach
Talks between the US, Canada, and Mexico regarding two long-standing trade disputes have ended without much progress. Business leaders are frustrated as they witness the lack of respect for the regional trade pact. These disputes have been ongoing since 2021 and involve Mexico’s nationalist energy policies and protectionist motor industry rules in the United States. However, officials and experts following the talks believe that the upcoming presidential elections in both nations are to blame for the lack of progress.
The US has failed to comply with a January panel decision under the US-Mexico-Canada trade agreement (USMCA) that ruled in favor of Mexican and Canadian carmakers. Surprisingly, Mexico has not complained about the US’s failure to abide by the ruling, while the US has not pushed forward its dispute over Mexico’s nationalist energy policies. This decision by both governments to manage tensions until after the elections has weakened the strength of the USMCA.
Luis de la Calle, a former North American Free Trade Agreement (NAFTA) negotiator and trade expert, believes that the US is not abiding by the panel decision on car parts due to pressure from unions, such as the United Auto Workers, which is an important base for the Democrats. On the other hand, Mexico has no incentive to enforce the ruling due to its own energy dispute. The unresolved disputes have created uncertainty among investors in a region that conducts over $1 trillion of annual commerce under the three-year-old USMCA. This lack of adherence to trade dispute procedures sends the wrong message and undermines confidence in the agreement.
The reluctance of the Biden administration to push against Mexico’s nationalist energy policies is primarily driven by the need for Mexican cooperation in reducing illegal migration. Experts believe that if not for the migration issue, the US would be more aggressive in addressing the trade disputes. The impact of the upcoming US election is influencing numerous presidential decisions, making the administration more cautious.
While the US Office of the United States Trade Representative (USTR) and Mexico’s Economy Ministry did not respond to requests for comment, USTR officials have stated their commitment to finding a positive solution on cars that benefits all stakeholders. US officials also emphasize the success of the USMCA in protecting workers’ rights in Mexico.
The unresolved disputes over energy supply and the motor sector are expected to continue until new governments are in place. Mexico’s presidential and congressional elections are scheduled for June 2024, followed by the US elections in November. US business groups and Mexico’s car and truck sector have expressed frustration, as non-compliance sets a bad precedent and weakens the pact’s legal certainty. The future of the USMCA depends on who will be in office in both the US and Mexico.
The full implementation and enforcement of the USMCA agreement are crucial to maintaining broad political support for it. Failure to comply with commitments or delaying resolution until after the elections will harm the longer-term political support for the agreement.
Original Story at www.ft.com – 2023-07-10 10:00:32
Comments are closed.