Steel and aluminum makers in Canada and Mexico are calling on NAFTA negotiators to ensure that tariffs on steel and aluminum imposed by the United States are eliminated in a new deal − a provision the Mexicans failed to win in their bilateral agreement with the Americans.
Tariffs of 25 per cent on steel and 10 per cent on aluminum imported into the United States were slapped on Canada and Mexico this spring as the talks on a new North American free-trade agreement got bogged down.
The tariffs were levied under the obscure national-security provisions of Section 232 of the 1962 U.S. Trade Expansion Act and U.S. President Donald Trump has threatened several times to extend them to motor vehicles and auto parts if Canada does not open its market to more U.S. dairy products and make other concessions in the NAFTA talks.
“From an industry perspective, we view this as a vital opportunity to have a constructive dialogue with the U.S.,” Joseph Galimberti, president of the Canadian Steel Producers Association, said on Thursday.
“We have to be realistic about our opportunities to constructively engage the U.S., and from a negotiating perspective, this is an opportunity to do away with barriers,” Mr. Galimberti said.
Jean Simard, president of the Aluminum Association of Canada, was blunt: “Canada should not sign a negotiated agreement without having gotten rid of the 232 [tariffs],” Mr. Simard said in an e-mail on Thursday.
A new NAFTA that does not eliminate the U.S. steel and aluminum tariffs runs counter to the whole purpose of the trade agreement, said Maximo Vedoya, president of the Camara Nacional de la Industria del Hierro y del Acero (Canacero) of Mexico.
The Canadian and Mexican steel associations issued a joint statement on the issue as Foreign Affairs Minister Chrystia Freeland and U.S. Trade Representative Robert Lighthizer met again to negotiate whether Canada will be part of the U.S.-Mexico deal.
Ms. Freeland told reporters in Washington on Thursday the tariffs would be discussed separately from the trade pact, even though Mr. Trump and U.S. Commerce Secretary Wilbur Ross have long held that the steel and aluminium tariffs were dependent on the renegotiation of NAFTA.
“The 232 tariffs and the NAFTA negotiations are entirely separate. 232 is a national-security consideration; it is not part of a trade negotiation. It ought not to be,” she said after a 3½-hour meeting at Mr. Lighthizer’s Washington office. “Canada’s position on the 232 tariffs is unchanged: These tariffs are unjustified and illegal. It was really in sorrow, not in anger, that we responded very appropriately in a measured, dollar-for-dollar way. We continue to very strongly make the case that the best outcome for Canada for the United States would be to lift the tariffs on both sides.”
New rules obliging the continental auto industry to use a specific percentage of North American steel in their vehicles was seen by some sources as the route to pleasing the Trump administration and getting the levies lifted.
Daniel Ujczo, a Dickinson Wright trade lawyer who represents clients in the steel and auto industries, said Mexican and U.S. negotiators discussed the tariffs, but couldn’t reach a conclusion.
Mr. Ujczo said they could yet be lifted as part of a NAFTA deal, however. After Canada and the United States conclude talks, trilateral negotiations could return to the subject.
“They ran out of time. They’ll likely deal with it when the three parties meet,” he said.
Eliminating the tariffs as part of NAFTA is complicated by the fact the U.S. Commerce Department imposed the tariffs, while the USTR is in charge of the NAFTA talks, said Laura Dawson, director of the Canada Institute at the Wilson Center, a Washington think tank.
“The question for Canada is whether they are going to hold out for 232 relief as a condition for NAFTA settlement or, as Mexico did, hope that one naturally follows the other,” said Ms. Dawson, who has been following the negotiations closely. “I think political pushback in the U.S. as a result of higher costs for U.S. industry suggests that the 232s are not sustainable in the long term.”
Canada and other countries have said the tariffs are illegal under World Trade Organization rules and have asked the global trade body to overturn them.