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WASHINGTON – A potential effort to ease President Trump's tariffs on metals in Mexico and Canada is complicated by pressure from his government to impose strict quotas on steel imported from both trading partners.
Canada and Mexico have called for the removal of Trump's 25% steel and 10% aluminum rights before the signing of the revised North American Free Trade Agreement this month at the summit meeting of the Group of 20 in Buenos Aires. While the three countries reached a new trade pact in September, metal prices remained in place and Canada and Mexico urge the White House to relax taxes before signing the US agreement. -Mexico Canada.
The White House could eventually lift aluminum tariffs, but the administration still wants to impose limits on foreign steel in order to prevent a flood of cheap metals in the United States according to people informed of the discussions. US negotiators propose a quota system that would limit the amount of steel that Canada and Mexico can export to the United States each year. Countries are also discussing an agreement that would strengthen anti-dumping efforts on cheap metals from China, anger for the three countries.
US trade officials have made progress in reaching an agreement with Mexico, which wants to eliminate the persistent threat that metal prices pose to its economy. But US and Canadian negotiators remain far behind on potential quotas, with Ottawa insisting on an upper limit and a more flexible system, according to several people informed of the ongoing talks.
Metals tariffs have been particularly frustrating for Canada, a military ally close to the United States who opposed the Trump government's rationale that foreign metals pose a threat to national security. Mr. Trump has imposed tariffs on steel and aluminum under section 232 of the Trade Expansion Act 1962, which gives the president the power to tax imports if they are considered to pose a risk to the country.
Chrystia Freeland, Canada's Foreign Minister, reiterated Tuesday that tariffs are "illegal and unjustified" and expressed the hope that they would be removed in a spirit of goodwill.
"The time has come to lift these absurd rates," Freeland told reporters in Ottawa. "We could do it this afternoon."
Prime Minister of Canada Justin Trudeau said the elimination of tariffs was his primary goal before the signing of the treaty. He addressed the issue in a polite but sharp exchange with the President at the meeting of the month in Paris during the commemorations celebrating the 100th anniversary. from the end of the first world war
"As I told President Trump, I hope we can solve the problem before we meet at the G-20 in Argentina," Trudeau told reporters after the two leaders declared.
Gerónimo Gutiérrez, Mexico's ambassador to the United States, said at a press briefing this week that he hoped the issue would be settled, expressing his optimism as to the conclusion of a fair agreement before President Enrique Peña Nieto leaves office.
"We expect that at the time of signing, either a solution or a very clear track that gives enough certainty that a solution is forthcoming," said Mr. Gutiérrez.
A Mexican official informed of the negotiations, however, said that US officials were trying to introduce rigid quotas in the agreement, a prerequisite for the elimination of tariffs.
One of Mexico's top negotiators, Juan Carlos Baker Pineda, has lobbied Washington to relax quotas to avoid the kind of strict provisions included in a recently signed South Korean trade pact, the official said. who requested anonymity because he was not allowed to speak. publicly. In March, South Korea has agreed to adhere to a quota of 2.68 million tons of steel exports to the United States a year, about the equivalent of 70% of its annual average sent in the United States between 2015 and 2017. In exchange, South Korea was exempted. steel prices.
US officials are more optimistic about their ability to enter into an agreement with Mexico rather than with Canada, which is a major supplier of metals to the US military and has negotiated more aggressively with Robert E. Lighthizer, US Trade Representative, requiring a permanent position. suspension of tariffs.
Staff from the US Trade Representative's Office, the Treasury Department and the Commerce Department met on Monday to discuss the latest tentative agreement before the summit meeting, which would include removing customs duties in exchange for a form of quotas. But the negotiators were still unsure of the outcome, citing differences on specific details such as the size and conditions of the quotas, as well as the conditions for their removal, according to an informed leader of the meeting.
Emily Davis, a spokeswoman for the US Trade Representative's Office, said, "We have no announcements or comments on this yet."
US manufacturers and powerful unions have pushed the president to lift tariffs, which has increased costs for companies using foreign metals, such as automakers and food producers. Several of Trump's advisers also insisted that taxes be lifted, including Steven Mnuchin, Treasury Secretary and Larry Kudlow, Director of the National Economic Council.
Canada and Mexico are still expected to sign the agreement even if they do not reach an agreement on the elimination of tariffs, but they want the issue resolved in advance as a gesture of goodwill.
The imminent signing of the US-Mexico-Canada agreement does not mean that the new trade pact is final or will come into effect. The Trump administration still has to get the agreement through the new Democratic majority in the House of Representatives, an arduous process that could take months.
Representative Nancy Pelosi, the California Democrat who hopes to lead the House, said she would not vote in favor of the treaty if it did not significantly strengthen the protection of American workers and provided for a control mechanism. allowing Mexican automakers to meet their commitments to raise wages, making it harder for them to undermine American work.
Republicans are worried about the prospect of resistance from the Democrats. Tuesday, a dozen Republican senators sent a letter to Mr. Trump expressing his concern and urging him to speed up the voting process during the lame duck session, before Democrats take control of the House, by providing Congress with the full text of the agreement.
But a new challenge to the treaty also arises right: a group of 38 conservative Republicans have raised objections to the wording of the agreement that would protect workers in the three countries from "gender-based discrimination, including the Sexual orientation and discrimination. " gender identity. This wording was inserted at the request of Canadian negotiators and approved by US negotiators.
"It is particularly inappropriate and insulting for our sovereignty to unnecessarily subject ourselves to social policies that the US Congress has so far explicitly refused to accept," wrote the members in a letter to Mr. Trump on Tuesday. November 16th. the administration to comply with the directives of the Ministry of Justice which considerably limited the application of anti-discrimination measures by narrowly defining the gender.
The group, which included many members of the House Freedom Caucus, said the wording went against the "coherent program of administration on policies on sexual orientation and gender identity".
Mr. Trump did not immediately respond to the letter. And it is not clear if the Conservatives would be willing – or even able – to block the NAFTA overhaul to make their point.
When asked if Canada would consider renegotiating the trade pact if this provision breached the agreement reached with US lawmakers, Ms. Freeland responded that it was "the only way to do this." a question of domestic policy "for the United States.
