US, Mexico set three rounds of trade deal talks without Canada

By David Lawder

MEXICO CITY, May 27 (Reuters) – The Trump administration’s trade agency said on Wednesday it will kick off the first of three negotiating rounds with Mexico this week to revamp the North American trade agreement, but made no mention of any talks with Canada.

The U.S. Trade Representative’s office said in a statement that Deputy U.S. Trade Representative Jeffrey Goettman will lead bilateral talks in Mexico City on Thursday and Friday focused on “economic security and rules of origin for key industrial goods.”

USTR Jamieson Greer stayed in Washington to attend a White House cabinet meeting on Thursday.

USTR said the U.S. and Mexico will hold a second round of negotiations in Washington June 16 to 17, focused on agriculture and “a level playing field,” with a third set of talks in Mexico City scheduled for the week of July 20.

“The negotiations will focus on ensuring that the USMCA benefits U.S. manufacturers, farmers, ranchers, workers, and service suppliers, and businesses of all sizes, including our small and medium-sized enterprises,” USTR said in its statement on the United States-Mexico-Canada Agreement. 

Mexican Economy Minister Marcelo Ebrard told reporters that Greer’s absence was not a hindrance to this week’s talks, as he meets regularly with USTR staff who traveled to Mexico City.

He added that the forward schedule into July was a sign that U.S.-Mexico talks were “advancing.”

WHERE’S CANADA?

The first Trump administration held trilateral negotiating rounds with Mexico and Canada to create the USMCA, which replaced the 1994 North American Free Trade Agreement in 2020.

But USTR’s statement made no mention of bilateral talks with Canada. There have been few discussions between Greer and his Canadian counterpart, Canada-U.S. Trade Minister Dominic LeBlanc, since early March, and no formal launch of a U.S.-Canada negotiating process.

Greer said on Tuesday in Washington that the U.S. has “significant” differences with Ottawa on trade that will be difficult to resolve, notably that Canada has failed to accept U.S. President Donald Trump’s imposition of tariffs on Canadian vehicles, steel and aluminum and to negotiate trade concessions like other major trading partners Japan, South Korea, Taiwan, Britain and the European Union.

Greer chided Canada for retaliating against the U.S. with its own tariffs on U.S. vehicles, steel and aluminum, saying only Canada and China had retaliated against U.S. tariffs. Several Canadian provinces have pulled U.S. liquor from store shelves.

On Wednesday, Canadian Prime Minister Mark Carney said Canada’s military was negotiating to buy Swedish early warning radar aircraft from Saab rather than buying from U.S.-based Boeing.

SOME TARIFFS TO STAY, GREER SAYS

Greer said the U.S. intended to maintain some level of tariffs on both Mexican and Canadian goods under USMCA, which, along with NAFTA, created a North American tariff-free zone for more than three decades that underpinned nearly $1.6 trillion in trilateral trade.

But he said the two countries could receive preferential treatment if deals can be struck to protect the North American region from external goods, including from China, with higher tariffs and stricter rules of origin for autos and industrial goods.

Greer said the rules of origin would be aimed at encouraging more production, without providing specific details on U.S. demands.

“I think that over the course of these negotiations, we are going to be talking about rules of origin in a way that enhances U.S. content in these goods,” Greer said of the Mexico talks.

Ebrard said the 50% tariff on steel and aluminum “seems unsustainable to us” and added that tariffs on the automotive sector needed to be considered as part of a “systemic approach” to the industry that includes regional content rules.

That echoes the views of some industry officials who want to ensure that tougher rules of origin do not compromise North American business competitiveness.

“It’s critical that we ensure further changes to automotive rules of origin do not undermine the sector’s competitiveness, especially considering that these rules were changed significantly during the last negotiation,” said Brad Wood, senior director of trade and innovation policy at the Washington-based National Foreign Trade Council, which represents companies on trade matters, including automakers.

“A final agreement must acknowledge manufacturing and global supply chain realities, mitigate unintended consequences, and include appropriate phase-in periods,” he added.

(Reporting by David Lawder, additional reporting by Emily Green in Mexico City; Editing by Paul Simao, Rod Nickel)