The breakdown in trade discussions between Ottawa and Washington may prompt U.S. negotiators to aggressively pursue a favorable outcome with Mexico in their ongoing bilateral negotiations, according to a former Mexican trade negotiator. Kenneth Smith Ramos, Mexico’s previous chief technical negotiator during the original 2017 to 2019 Canada-U.S.-Mexico Agreement (CUSMA) talks, anticipates that the U.S. will aim to establish a preliminary agreement with Mexico before the year-end, postponing resolutions on more contentious issues, such as potential restrictions on Mexican agricultural exports, to a later date.
Smith Ramos, a partner at Agon, a corporate consulting and legal services firm in Mexico City, expressed in an interview with CBC News the likelihood of the U.S. unveiling a framework agreement in upcoming negotiation rounds for political reasons, similar to their approach with the European Union. Both Canada and Mexico have been individually engaging with the U.S. to address tariff and other specific trade disputes in the hopes of finalizing agreements before engaging in trilateral discussions to amend and extend CUSMA.
Following the collapse of talks between Canada and the U.S. on August 21, Canadian Prime Minister Mark Carney recalled negotiators to Ottawa citing last-minute American demands on cultural, automotive, and sovereignty issues that were unacceptable to Canada. The talks aimed to prevent the imposition of 50% tariffs on a significant portion of Canadian products, affecting about $27 billion in Canadian goods. In response, Canada has implemented counter-tariffs on over 700 U.S. imports, effective from September 8.
The impasse between Canada and the U.S. has indefinitely delayed trilateral discussions to advance CUSMA, as highlighted by Smith Ramos. The U.S. announced on July 1 that it would not extend the CUSMA agreement, opting instead to renegotiate its terms, contrary to the desires of Canada and Mexico, who believe the trilateral trade agreement benefits all three nations.
Mexican Secretary of Economy Marcelo Ebrard emphasized the importance of finding common ground between Canada and the U.S. to benefit Mexico and the North American region overall. Ebrard, set to engage in further bilateral talks in Washington, D.C., acknowledged the proximity to an agreement just days before the breakdown in negotiations.
The escalating trade tensions have prompted cautious responses from Mexican President Claudia Sheinbaum and the Mexican government, aiming to navigate their own trade issues with the U.S. independently from the Canada-U.S. discord. Solange Marquez, vice-president of policy at the Canadian Council for the Americas, noted Mexico’s efforts to shield its interests while avoiding antagonizing U.S. authorities following Canada’s exit from negotiations.
Marquez and Mexican journalist Alex González Ormerod highlighted the shifting dynamics in North American trade, indicating a departure from traditional free trade agreements towards more complex tariff negotiations. González Ormerod suggested that CUSMA could evolve into a complex arrangement where Mexico and Canada strategically opt out of certain provisions imposed by the U.S. Both experts emphasized the need for Canada and Mexico to strengthen their bilateral trade ties independently of their ties with the U.S., to unlock the full potential of their partnership.
