Canada to Join Mexico in USMCA Auto Dispute; Trudeau Directs Ministers to Combat U.S. Protectionism

Trade Update • DECEMBER 30, 2021

Canada plans to formally join Mexico in calling for an arbitration panel to resolve a dispute with the United States over how to interpret rules governing the origin of vehicle parts, according a Bloomberg report last week.

Having already launched “consultations” this past summer that failed to produce a resolution, the two countries are now expected to request in early January the creation of a tribunal of experts to rule on the matter as allowed for in the United States-Mexico-Canada Agreement.

At issue in the dispute (as previously covered here) are differing methodologies for calculating the regional value content of vehicles for purposes of origin, the requirements of which are more stringent than those of the North American Free Trade Agreement.

Trudeau Government Mandates

Responding to pressure from business leaders and opposition critics to take a more aggressive stance against mounting U.S. trade protectionism, Prime Minister Justin Trudeau last week directed key Cabinet ministers to address concerns about the Biden administration’s problematic “Buy American” policies.

In an updated set of ministerial mandate letters, Trudeau assigned International Trade Minister Mary Ng to “lead Canada’s efforts to combat protectionism, unfair trade practices, and economic coercion around the world.”

“You will also engage the United States to address bilateral trade issues and protectionist measures, including with respect to government procurement and in the automotive, energy, and agricultural sectors,” the letter instructs.

Trudeau also called on Deputy PM and Minister of Finance Chrystia Freeland to “protect Canadian supply chains and ensure that Canada’s trading relationships are mutually beneficial economic relationships” and in this regard directed her to work with Ng “to introduce a reciprocal procurement policy that will ensure goods and services are procured from countries that grant Canadian businesses a similar level of market access.”