[Rushtalk] No NAFTA 2.0 signing before steel tariffs end, Mexico says

Carl Spitzer cwsiv at juno.com
Mon Nov 5 07:30:43 MST 2018

No NAFTA 2.0 signing before steel tariffs end, Mexico says

Mexican negotiator won't rule out retaliatory tariffs against Canada for
steel surtax imposed Thursday

Janyce McGregor · CBC News · Posted:    Oct 26, 2018 2:10 PM ET | Last
Updated: October 26

Juan Carlos Baker, Mexico's deputy minister for foreign trade, is seen
here in a file photo. He met with reporters in Ottawa Friday following
meetings to discuss reforms to the World Trade Organization earlier in
the week. (Martin Acosta/Reuters) 

A senior Mexican trade negotiator is holding firm to his government's
position that American steel and aluminum tariffs must end before the
new U.S.-Mexico-Canada Agreement (USMCA) is signed.

Juan Carlos Baker, the current undersecretary for foreign trade in
Mexico's economy ministry, told reporters in Ottawa Friday he is
"working every day" on this issue. The Mexican government changes hands

"We need to solve that issue before the signing takes place," Baker
said. Mexico has "exchanged some ideas" with the Americans, he said, but
they were "not concrete."

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An USMCA signing ceremony is expected on Nov. 29 or 30, the earliest
dates allowed by the fast-track requirements of the U.S.. Congress.

Like Canada, Mexico strenuously objects to the U.S. tariffs imposed on
it on "national security" grounds, particularly given the integration of
North American manufacturing supply chains.

Mexico, Canada and other countries have gone to the World Trade
Organization for arbitration, arguing the tariffs have little to do with
national security and are meant to shield U.S. steelmakers from

Mexico, like Canada and the European Union, brought in retaliatory
tariffs on U.S. products. The U.S. is challenging this retaliation at
the WTO, arguing it's also against the rules.

Retaliation put pressure on U.S.

Mexico's retaliatory tariffs put political heat on the Trump
administration. They target sensitive agricultural products like pork
and cheese, for example.

The U.S. farm community is increasingly angry and anxious, demanding a
solution to damaging tariffs against the agriculture sector that are
significantly hurting U.S. exports.

Baker said the U.S. had an "appealing reason to withdraw" its tariffs,
since Mexico would then withdraw its retaliation.

However, no formal negotiations have taken place on the American
tariffs, Baker said.

Mexico's Secretary-designate of Foreign Affairs, Marcelo Ebrard, met
with Foreign Affairs Minister Chrystia Freeland in Ottawa Monday. Ebrard
told reporters he thought U.S. steel tariffs would lift when the USMCA
is signed. (Adrian Wyld/Canadian Press)
During a visit to Ottawa Monday, the incoming foreign minister for
Mexico's next government, Marcelo Ebrard, said that the U.S. steel
tariffs would lift when the USMCA is signed.

At the same press conference, his Canadian counterpart, Chrystia
Freeland, did not speculate on when the tariffs would end, although she
said Canada is ready to lift its tariffs when the U.S. does.

Prime Minister Justin Trudeau spoke to incoming Mexican president Andres
Manuel Lopez Obrador by telephone Thursday. A readout from the Prime
Minister's Office said the pair "shared views on the U.S. section 232
steel and aluminum tariffs in effect on exports."

Quotas on the table?

Baker was asked whether Mexico would give in to a U.S. demand for export
quotas on future steel production in return for an exemption from
national security tariffs, as South Korea and Brazil did.

"That's what they did with their particular reality, given the
circumstances that those countries had at the moment when they spoke
with the U.S.," he said. "In our case, we will see how that discussion
takes place on the moment it takes place."

The terms Mexico agreed to for its automotive industry in the USMCA
included export restrictions under specified conditions.

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Baker said there might be "several ways" to end the tariffs. He didn't
reject quotas out of hand.

"We want to solve the issue. There might be several elements that help
solve the issue. We need to get these tariffs lifted," he said.

Freeland appeared to rule out accepting quotas for Canadian steel
exports in a recent interview with CBC Radio. She met with steelworkers
in Saskatchewan Friday afternoon, although the event was closed to

Foreign Affairs Minister Chrystia Freeland toured Tree Island Steel, in
Richmond, B.C. in late August. Cabinet ministers have held frequent
photo ops at Canadian steel mills over the last year. (Darryl
Dyck/Canadian Press)
While the Mexicans are communicating with Canada, Baker said no formal
talks have been held between all three countries to lift the tariffs.

'Disappointed' about Canada's steel surtax

Mexico is upset with Canada over a different tariff issue. Emergency
safeguard measures have been applied to two types of Mexican steel —
energy tubular products (like the ones pipelines use) and wire rod.

As of Thursday, Canada is adding a surtax of 25 per cent on those
Mexican imports, although other types of Mexican steel products are

The two taxed products represent 20 per cent of Mexico's global steel
exports, according to recent statements by Mexico's economy minister.

Canada's emergency safeguards target seven kinds of foreign steel
overall. Finance Minister Bill Morneau said his unusual move would
protect Canada's domestic steelmakers from a sudden influx of foreign
steel displaced from the U.S. by its new tariff measures.

Basically, Canada's extended the Trump administration's tariff wall
farther north.

Even before the U.S. tariffs kicked in, global steel production was
exceeding demand.

But Canada's construction industry, as well as other domestic
manufacturers who need steel, warn of supply shortages and severe damage
to their businesses if Morneau doesn't reconsider. Canada's domestic
mills will not meet their needs, they say.

Finance Minister Bill Morneau, seen here during an announcement about
his emergency steel safeguards at the ArcelorMittal Dofasco mill in
Hamilton last summer, went ahead with a 25 per cent surtax on specified
foreign steel products Thursday. (Peter Power/Canadian Press)
"We do not disagree with Canada's objective," Baker said, "which is the
overcapacity issue that affects everyone, including Mexico.

"What we disagree with Canada is that Mexico is the source of such
excess capacity. We are disappointed that we were not excluded from this

Retaliation not ruled out

Morneau's measure is temporary. Mexico has already filed to argue
against a permanent steel surtax when the Canadian International Trade
Tribunal hears the case in January.

Baker said he expects Mexico eventually to be excluded.

Some advocates for Canada's domestic industries suggest Canada was under
pressure from the U.S. to take more measures to keep foreign steel out
of North America, but it's unclear why these two kinds of Mexican steel
would be problematic — especially when the pipeline products are in
short supply in Canada.

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"I cannot speculate on the reasons Canada did what it did," Baker said.
"The measures that Canada is applying will have some effects in the
region, that is without question. That's just basic trade integration

Morneau told a House of Commons committee earlier this month that he was
not expecting any retaliation over the safeguard measures.

But Baker told reporters Friday that Mexico is considering "every
option" to push Canada to lift the surtax.

"Nothing is ruled out as of now," including retaliatory tariffs or an
additional WTO case against Canada, he said.

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