The first meeting of deputies under the U.S.-Mexico-Canada Agreement (USMCA) took place in mid-January, with officials noting, “Though there have been challenges, progress continues to be made.”
“The meeting provided the deputies the opportunity to review progress on the implementation of the agreement since the inaugural meeting of the USMCA Free Trade Commission (FTC), convened by Ministers in May 2021,” the deputies said in a statement.
“The Parties reaffirmed their commitment to making North America a resilient, inclusive, and competitive economic region with trade policies that foster equitable growth, promote innovation, help protect our shared environment, and benefit our societies.”
Mexico Undersecretary for Foreign Trade Luz Marнa de la Mora, Deputy U.S. Trade Representative Jayme White and Canada Deputy Minister for International Trade David Morrison heard from committees regarding their work to resolve implementation issues.
The deputies also discussed four key issues: labor, environment, inclusive trade (including small- and medium-sized enterprises and their competitiveness) and state-owned enterprises (SOEs).
• Labor — The three nations reaffirmed their commitment to combat forced labor globally, build a truly fair and free trading system, and prohibit the importation of these goods.
• Environment — The Environment Committee shared progress in implementing USMCA’s environmental obligations. The deputies also discussed potential next steps to advance trade and environmental issues in the region, including through environmental law enforcement cooperation.
• Inclusive trade — The deputies discussed the importance of trade for all citizens, ensuring that underrepresented and underserved groups, such as women, youth and Indigenous peoples, have the opportunity to be included in, and can benefit from, USMCA. Deputies agreed to focus on regional workforce development to enhance the region’s competitiveness further and work on strategies to maintain North American supply chains’ resiliency in times of emergency.
• State-owned enterprises — The post-meeting statement said USMCA has “high standards and robust disciplines designed to address the trade distortions caused by the non-market-based activities of SOEs.”
While not mentioning challenges in their press release, trade cases have been brought under the pact, including Mexico’s challenge of the U.S. interpretation of automobile content rules. Canada announced they are joining Mexico, saying the U.S. interpretation was inconsistent with USMCA provisions. Under USMCA, 75 percent of a vehicle’s components must originate in North America to qualify for tax-free status. The two nations are also unhappy about proposed U.S. tax breaks for American-based manufacturers of electric vehicles.
In late December, a dispute settlement panel found Canada violated USMCA, with the nation’s practice of reserving tariff rate quotas on dairy products violating the treaty not to “limit access to an allocation to processors.” U.S. Trade Representative Katherine Tai said the “historic win will eliminate unjustified trade restrictions on American dairy products and will ensure that the U.S. dairy industry and its workers get the full benefit of the USMCA to market and sell U.S. products to Canadian consumers.”
The deputies agreed to advance regional economic recovery by strengthening North American integration and will follow up with their respective teams to give additional guidance and report progress later this year. — Charles Wallace, WLJ editor
