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Canada cheers USMCA win as Trudeau wraps Mexico visit singing praises of free trade

MEXICO CITY — Canada and Mexico basked Wednesday in the glow of a major trade win over the United States as Prime Minister Justin Trudeau wrapped up a trilateral summit aimed at charting a course for North American excellence.
Mexican President Andres Manuel Lopez Obrador walks with Prime Minister Justin Trudeau as he arrives at the National Palace for the North American Leaders Summit Tuesday, January 10, 2023 in Mexico City, Mexico. THE CANADIAN PRESS/Adrian Wyld

MEXICO CITY — Canada and Mexico basked Wednesday in the glow of a major trade win over the United States as Prime Minister Justin Trudeau wrapped up a trilateral summit aimed at charting a course for North American excellence. 

The dispute panel's decision, telegraphed for months but only released once the summit was over, declared the American interpretation of foreign content rules for autos "inconsistent" with the terms of the U.S.-Mexico-Canada Agreement. 

The ruling put a bow on Trudeau's final day in the bustling Mexican capital, which happened to be all about shoring up Canada's economic and diplomatic ties with Mexico, a relationship too often obscured by the country that separates them.

"We're going to look forward to working with the United States — that's what this dispute settlement process is all about," said International Trade Minister Mary Ng, who was among those travelling with Trudeau.

The USMCA, the successor to NAFTA known in Canada as CUSMA, increased the allowed "regional value content" for automotive parts to 75 per cent, up from 62 per cent — a rule designed to give all three countries a bigger piece of each other's auto manufacturing sector. 

"This was all about being able to create and produce more automobile part contents in North America," Ng said.

"This panel decision is about ... the interpretation of how this was calculated, so we're pleased with the panel's finding because it is consistent with Canada's understanding, and we're going to work with the Americans." 

Flavio Volpe, president of Canada's Automotive Parts Manufacturers' Association, cheered the decision as an affirmation of what the hard-fought concessions in the agreement were meant to represent. 

"The decision is important for the substance of the matter — that the automotive rules we agreed upon after three years of hard negotiation will stand," Volpe said. 

"It demonstrates that the dispute resolution mechanism of the USMCA does not bend to politics or leverage." 

Even the U.S. Chamber of Commerce cheered the ruling for providing a measure of certainty to the deeply integrated auto sector. The U.S. Trade Representative's office, however, did not immediately respond to media queries Wednesday. 

Trudeau, who spoke before the decision was officially released, did not address it directly. But he did channel the spirit of trilateral co-operation when asked about Joe Biden's persistent protectionist streak, something that seems to vanish whenever the U.S. president finds himself on an international stage. 

"There is no contradiction between looking out for the well-being of workers in their own country and working closely with friends and allies like Mexico and Canada," Trudeau said. 

"If there actually was a contradiction between sticking up for America first and working with your friends, the previous president would have succeeded in scrapping NAFTA. But he didn't."

That, of course, was Donald Trump, whose fiercely protectionist approach never seemed far from Trudeau's mind throughout the three days of the summit. 

On Monday, Trudeau bluntly acknowledged how close the former president came to ending the free-trade era in North America. And on Wednesday, he portrayed Canada not only as an original architect of the agreement, but also its principal guardian. 

As the world struggles to recover from the COVID-19 pandemic and its sweeping, residual economic effects, he called on would-be foreign investors to take a leap of faith similar to the one the NAFTA pioneers did in the early 1990s. 

"Let's think like people did back when they signed the original NAFTA," he told executives and academics earlier in the day during a keynote speech organized by Invest in Canada, a federal government offshoot aimed at drumming up foreign direct investment. 

"They couldn’t know all the changes and challenges we would face. But they knew that growing our economies, and deepening our ties, would give us all the stability and certainty we needed to weather any storm." 

They also knew that an integrated continental economy would bring any and all opportunities that much closer, he said — "including those they couldn’t even imagine yet."

In the dark days of the Trump era, he added, it was Canada and Mexico who ensured that North American trade lived to see another day. 

"Motivated by protectionist, isolationist, nativist politics, (the Trump administration was) willing to put millions of jobs at stake in each of our countries. Our historic trade deal was in peril, so we reopened it," Trudeau said. 

"In the negotiations, the U.S. repeatedly tried to play off Canada and Mexico against each other. But Canada always believed that our greatest strength was in all three parties negotiating in unison. We understood that North American free trade was about good and fair integration, across the continent." 

Biden departed the summit late Tuesday, clearing the stage for Trudeau and Mexican President Andrés Manuel López Obrador to extol the virtues of stronger ties between their two countries. 

They presided together over the signing ceremony for a bilateral declaration on Indigenous co-operation, and spent several hours meeting face to face on new ways to fortify their relationship. 

Their new "Canada-Mexico Action Plan" aims to strengthen commercial and investment ties, buttress supply chains, advance gender equality and take a shared approach to Indigenous reconciliation. 

"We are sister nations that are very close," López Obrador said in Spanish at the outset of the summit. 

"We belong to North America, we have many things in common and, most importantly, a very good relationship of co-operation and friendship."

On Tuesday, Trudeau and Biden tied up a pair of loose ends, including a workaround for the imperilled Nexus trusted-traveller program — currently creaking under a backlog of more than 220,000 applications — and plans for the president to visit Canada in March. 

But while the U.S. continued to press Canada to take a leadership role in helping to quell rampant gangs and lawlessness in Haiti, Trudeau managed all week to avoid making any firm commitments beyond expanded sanctions. 

"We're all very aware that things could get worse in Haiti, and that's why Canada and partners including the United States are preparing various scenarios if it does start to get worse," Trudeau said. 

"Right now, what is effective is empowerment of the Haitian National Police to solve the situation themselves, and support for the Haitian people ... while at the same time holding the political and economic class to account." 

This report by The Canadian Press was first published Jan. 11, 2023.

James McCarten, The Canadian Press