U.S., Mexico deal with ‘last issues’ in CUSMA deal, facing new steel demand

Mexico's Deputy Foreign Minister for North America, Jesus Seade, reacts during the delivery of the United States-Mexico-Canada Agreement (USMCA) deal at the Senate building in Mexico City, Mexico May 30, 2019. REUTERS/Henry Romero

Mexico’s deputy foreign minister for North America, Jesus Seade, said on Friday that negotiators were dealing with the “last issues” that remain in the United States-Mexico-Canada Agreement (USMCA) trade deal negotiation.

When asked about a possible delay in the talks due to disagreements around steel, Seade, who is in Washington for the talks, said “everything can be resolved.”

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Mexico approved the USMCA this year, but U.S. ratification has been held up by Democratic lawmakers, who have voiced concerns over the enforcement of labour and environmental provisions.

U.S. Trade Representative Robert Lighthizer has made a last-minute demand for a tighter definition of what would constitute North American steel under automotive rules of origin, calling for steel to be “melted and poured” in North America, according to industry sources familiar with the demand.

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USMCA’s auto rules of origin call for 70 per cent of the value of steel and aluminum used in North American autos to come from the region.

But the new version of the rules would allow imported slabs, for example from Brazil or China, to meet the standard after being rolled and processed in North America.

The proposal would benefit U.S. and Canadian producers that operate integrated mills making steel from iron ore.

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However, the inclusion of this demand could slow down the negotiations, said one person familiar with the talks, adding: “This is something that could prove contentious for Mexico and Canada.”

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A spokesman for the U.S. Trade Representative’s office could not immediately be reached for comment.

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