The three governments want to take advantage of a new trade deal known as the United States-Mexico-Canada Agreement (USMCA) to deepen supply chains, but that push has been clouded by months of wrangling over disputes in the auto industry.
Canada and Mexico are at odds with US over the interpretation of regional content rules for auto sector
U.S. President Joe Biden, his Mexican counterpart Andres Manuel Lopez Obrador, and Canadian Prime Minister Justin Trudeau meet for talks in Washington on Thursday for the first summit between leaders of the three countries in more than five years. Economic cooperation, climate change, immigration and the coronavirus pandemic are likely to feature prominently. What follows are some of the issues that could dictate the flavor of talks.
The three governments want to take advantage of a new trade deal known as the United States-Mexico-Canada Agreement (USMCA) to deepen supply chains, but that push has been clouded by months of wrangling over disputes in the auto industry. Canada and Mexico complain the Biden administration is trying to skew the market for electric vehicles (EV) with tax credits, and both are also at odds with Washington over the interpretation of regional content rules for the auto sector.
Mexico’s economy minister said U.S. protectionism even threatened to aggravate its migration challenges. A joint statement on Wednesday from top business lobbies of the three countries noted the private sectors of Mexico and Canada were worried the U.S. interpretation of automotive content rules posed “risks for our integrated supply chains.”
Mexico, meanwhile, has alarmed officials and business groups in both the United States and Canada by seeking to change the rules that govern its electricity market to favor the country’s state-run power utility over private investors. The U.S. government has leant on Lopez Obrador to resolve those concerns and the business lobbies’ statement said the U.S. and Canadian private sectors were “very worried” by Mexico’s efforts to reduce competition in the energy sector. Besides EV tax credits, Trudeau is expected to raise with Biden Enbridge Inc’s Line 5 pipeline, which the U.S. state of Michigan wants to close on environmental grounds.
Biden is under domestic pressure to curb a sharp increase in illegal crossings at the U.S. southern border, and Lopez Obrador has urged Washington to help stem the flow of people by investing in Central America and Mexico’s poorer south. Washington’s efforts to help fund alternatives to mass migration have been hindered by allegations of corruption and authoritarianism dogging governments in Central American countries that send many of the migrants north.
The perilous trek undertaken by migrants during the COVID-19 pandemic has also stirred warnings of a humanitarian crisis as well as encouraging calls to tighten borders. The surge in migration has created business for organized crime, officials say, but security cooperation is still recovering from the anger sparked in Mexico by the U.S. arrest of a former Mexican defense minister last year.
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