Senators Urge Biden on Mexico, Canada Trade Compliance

Eric Martin
Thu, January 26, 2023



(Bloomberg) -- The top senators on the committee that deals with trade urged President Joe Biden to pursue enforcement action against Canada and Mexico in areas where the nations aren’t complying with rules in their free-trade agreement especially around energy and agriculture policies.

“The Office of the United States Trade Representative must continue to pursue full implementation and, where necessary, robust enforcement” of the US-Mexico-Canada Agreement, Ron Wyden and Mike Crapo, the leading Democrat and Republican on the Senate Finance Committee, wrote in a letter to the USTR Thursday seen by Bloomberg News. The pact’s “full potential remains unrealized,” they said.

The senators said the USTR “must ensure that the United States gets what it bargained for” and asked trade chief Katherine Tai to take “decisive action to ensure full compliance” with every chapter of the pact.

Wyden and Crapo highlighted Washington’s dispute with Mexico over the southern neighbor’s nationalist energy policy, as well as compliance shortcomings by Canada over tariff-rate quotas on dairy products, among other issues.

The letter comes a day after Deputy US Trade Representative Jayme White met with his Mexican and Canadian counterparts in San Diego and emphasized the the importance of making meaningful progress in the ongoing talks over Mexico’s energy policy under the USMCA that went into effect in 2020, replacing the two-decade-old Nafta.

The US has repeatedly urged Mexico and Canada to follow through on their commitments under the USMCA, including through the Rapid Response Labor Mechanism to enforce workers’ rights in Mexico and by requesting dispute consultations with Canada over its dairy policies, a USTR spokesperson said in a statement. The agency continues to seek resolution on those issues, including through White’s meeting this week, and will continue to implement the USMCA, the spokesperson said.

Discussions between the US and Mexico on energy have largely stalled due to the departures of negotiators from the Latin American nation’s side and its reluctance to make concessions, people familiar with the matter said in December.

President Andres Manuel Lopez Obrador’s policy privileges Mexican state-owned oil producer Petroleos Mexicanos and the electricity provider known as CFE over private companies in areas including natural gas distribution and power generation, including wind and solar companies. The US says this violates the USMCA, treats American companies unfairly, hurts US economic interests and discourages investment by clean-energy companies.

Lopez Obrador denies that his policies violate the pact, saying that the US must respect Mexico’s sovereignty. If a panel were to rule against Mexico, it might have to pay tariffs on as much as $30 billion in exports. The US first lodged the complaint in July, with Canada also protesting Mexico’s electricity policy.

“USTR must use the USMCA dispute-settlement process to push Mexico to abandon these discriminatory policies,” Wyden and Crapo said.

On the long-running dairy issue with Canada, the US in December requested dispute-settlement consultations for a third time over Ottawa’s quotas that many American producers say shuts them out of the Canadian market, saying it has found more areas of “deep concern” and that the nation’s measures are inconsistent with its obligations under the trade pact.

Wyden and Crapo commended Tai’s office for the follow-up and asked it to monitor Canada’s compliance.

The senators also pushed the USTR for resolution on Mexico’s imposition of export tariffs on white corn, environmental, and digital-trade issues.