Business leaders urge Three Amigos to move past trade disputes and embrace ‘Team North America’ approach

Business leaders are urging Justin Trudeau and his US and Mexican counterparts to take a more “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 devise a continental plan for industries such as electric vehicles.

The prime minister, US President Joe Biden and Mexican President Andres Manuel Lopez Obrador will meet on Tuesday at a summit of North American leaders to discuss boosting trade and investment and building a better supply chain to boost electric vehicle production on the continent. This is the 10th such meeting – also known as the Three Friends Summit – since they started in 2005.

Global economic growth is expected to slow in 2023, and the fallout from Russia’s war against Ukraine continues to hurt global markets. Meanwhile, protectionism is rising 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 better together.

“In North America, we operate through what I would call a ‘Me, Me and Me’ model,” Mr. Hyder said. “We must rise above the mundane discussions of trade irritants. We operate in an environment where commerce is tested, in many places. Globalization is being tested in many places. We have to make the case for trade and how it benefits people.”

An open letter to three leaders from the Business Council of Canada, the US Chamber of Commerce and Mexico’s Consejo Co-ordinator Empresarial states that North America can become the world’s leading manufacturer of electric vehicles. However, this will only work if all three countries work to “overcome shortages of key raw materials, encourage investment in new production capacity and make it easier for consumers to buy electric vehicles.”

It’s been less than three years since the new NAFTA agreement, known as the United States-Mexico-Canada Agreement (USMCA), went into effect, and disputes have multiplied. These include access to Canada’s protectionist dairy system, regional trade rules for the auto industry and whether Mexico discriminates against Canadian and American investors by giving preferential treatment in its energy market to its state oil company and national power company. 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 would tell Mr. Obrador that resolving a dispute over measures favoring Mexican energy companies would help attract more foreign investment to Mexico.

Canadian government sources say Canada and the United States are also making progress in a long-running dispute over the popular Nexus Trusted Travel program, which allows citizens of both countries to cross the border more quickly. Two sources said the countries were moving closer to a resolution that could be reached as early as this month.

A major player in the country’s auto parts industry says ambitious goals set by Canada and the U.S. to sell zero-emission vehicles will benefit Chinese battery and car makers this decade — unless North American leaders come up with a plan to give the U.S. a Mexico preferred access to Canadian lithium supplies.

Flavio Volpe, president of the Canadian Auto Parts Manufacturers Association, said the leaders’ summit should create a continental plan for the extraction of critical minerals to ensure North American automakers get faster access to lithium for electric vehicle batteries.

Mr Volpe said that sufficient infrastructure – lithium production and battery production – was not yet in place to meet the earliest zero-emissions targets without buying from China.

“If we really want to meet those goals, we will meet them with Chinese batteries. Maybe Chinese vehicles,” he said.

“We’re putting pressure on the market to get consumers to look hard at electric vehicles, and there are currently simple solutions available from most parties. Their batteries are almost entirely Chinese.”

In December, Canada announced regulations requiring at least 20 percent of new vehicles sold in the 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 by 2030 must be zero-emission vehicles.

Also hanging over this meeting in Mexico City is a mandatory review of the USMCA included in the agreement, meaning all parties must agree to extend the contract until 2026. Failure to do so will create uncertainty over annual reviews for the next 10 years or until if all parties do not agree on extending the contract for another 16 years.

Issues of immigration and border security between the United States and Mexico look set to dominate the agenda this week. Mr. Trudeau, who will meet with businessmen 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 destructive,” but North American trade is doing well. “So let’s not disturb it. This kind of success requires constant care.”

Canadian exports to the United States hit a record in 2021, and exports to Mexico saw the third-fastest growth rate of any foreign destination.

With reports from Reuters