Business leaders are urging Justin Trudeau and his U.S. and Mexican counterparts to adopt more of a “Team North America” approach when they meet in Mexico City this week: to move beyond a growing list of disputes including energy, autos and dairy, and craft a continental plan for industries such as electric vehicles.
The Prime Minister, U.S. President Joe Biden and Mexican President Andres Manuel Lopez Obrador will get together for the North American Leaders’ Summit on Tuesday to talk about boosting trade and investment and building a better supply chain to fuel the continent’s electric-vehicle production. It’s the 10th such meeting – also known as the Three Amigos summit – since they began in 2005.
Global economic growth is expected to slow in 2023 and the fallout from Russia’s war on Ukraine continues to inflict pain on world markets. Meanwhile, protectionism is growing as countries retreat into different trading blocs.
Goldy Hyder, president of the Business Council of Canada, said Canada, Mexico and the United States need to start working together better.
“In North America, we function through what I would call a ‘Me, myself and I’ model,” Mr. Hyder said. “We need to elevate ourselves from the ground-floor debates about trade irritants. We’re operating in an environment in which trade is on trial, in many places. Globalization is on trial in many places. We need to make a case for trade and how it benefits people.”
An open letter to the three leaders from the Business Council of Canada, the U.S. Chamber of Commerce and Mexico’s Consejo Co-ordinador Empresarial said North America can become the world’s leading producer of electric vehicles. However, this will only succeed if all three countries work to “overcome shortages of key raw materials, encourage investment in new manufacturing capacity, and make it easier for consumers to purchase electric vehicles.”
It’s been less than three years since a new NAFTA deal, known as the United States-Mexico-Canada Agreement (USMCA), took effect and disputes have proliferated. These include access to Canada’s protectionist dairy system, regional trade rules for the auto industry, and whether Mexico is discriminating against Canadian and American investors by giving preferential treatment in its energy market to its state oil company and a national power utility. Another dispute is brewing over Mr. Lopez Obrador’s plan to ban imports of genetically modified corn in 2024.
Mr. Trudeau said Friday that Canada and the United States will tell Mr. Obrador that resolving a dispute over measures that favour Mexican energy companies would help draw more foreign investment to Mexico.
Canadian government sources say that Canada and the United States are also making progress in a long-running dispute over the popular Nexus trusted-travel program that allows citizens of both countries to cross the border more quickly. Two sources said the countries are getting close to a resolution that could be reached as early as this month.
A leading player in this country’s auto-parts industry says the ambitious targets that Canada and the U.S. have set for zero-emission vehicle sales will benefit Chinese battery and car manufacturers this decade – unless North American leaders can work out a plan to give the U.S. and Mexico preferred access to Canadian lithium supplies.
Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, said the leaders’ summit should be crafting a continental critical-mineral extraction plan to ensure that North American car makers gain faster access to lithium for electric-vehicle batteries.
Mr. Volpe said there is not yet sufficient infrastructure in place – lithium production and battery production – to meet the earliest targets for zero emissions without buying from China.
“If we’re actually going to meet those targets, we’re gonna meet them with Chinese batteries. Maybe Chinese vehicles,” he said.
“We are pressurizing the market to have consumers look real hard at EVs, and right now the easy solutions that are available are, for the most part foreign. Their batteries are almost completely Chinese.”
Canada announced regulations in December requiring at least 20 per cent of new vehicles sold in this country to be zero emission by 2026, with rising targets in later years. The White House under Mr. Biden signed an executive order mandating that half of all vehicles sold in the United States as of 2030 must be zero-emission vehicles.
Also hanging over this Mexico City meeting is the mandated review of the USMCA that was baked into the agreement, which means all parties must agree to extend the deal by 2026. Failure to do so will create uncertainty because of annual reviews for the final 10 years or until all parties agree to extend the deal for another 16-year term.
Immigration and border-security matters between the United States and Mexico appear set to dominate the agenda this week. Mr. Trudeau, who will meet with businesspeople from all three countries on Monday, has a bilateral meeting with Mr. Biden on Tuesday and a one-on-one meeting with Mr. Lopez Obrador on Wednesday.
Kirsten Hillman, Canada’s ambassador to the United States, said Ottawa’s message to its USMCA partners is that there is “a really strong value proposition here in North America.” The ambassador said: “There is a lot going on in the world that is very disruptive” but North American trade is doing well. “So let’s not hinder that. This kind of success needs constant tending to.”
Canadian exports to the United States hit a record in 2021 and exports to Mexico posted the third-fastest rate of growth out of all foreign destinations.
With reports from Reuters