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Will Mexico have better luck in U.S. trade talks than Canada · INSIGHT TODAY

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  Speaker 1: While U.S. President Donald Trump says Canada is the hardest
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  Speaker 1: country to deal with, could Mexico have better luck? With
• 0:06
  Speaker 1: Canada's trade talks off, Mexico is looking for their own
• 0:09
  Speaker 1: deal with the United States. Mexico is now into their
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  Speaker 1: fourth round of Kuzma talks with the Americans, as they
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  Speaker 1: also face down U.S. auto and steel tariffs. So where
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  Speaker 1: does Canada, where does that leave Canada in the future
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  Speaker 1: of that continental trade deal? Joining me now is someone
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  Speaker 1: with some insight into negotiating a trade deal with the
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  Speaker 1: Trump administration after helping to negotiate NAFTA 2.0 on behalf
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  Speaker 1: of Mexico. Ken Smith-Ramos was Mexico's chief negotiator for the
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  Speaker 1: modernization of NAFTA, and he's a partner at Agon. Nice
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  Speaker 1: to see you, sir. Thanks for coming in.
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  Speaker 2: Thank you very much, JP, for the invitation. It's a
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  Speaker 2: pleasure to be here.
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  Speaker 1: So Mexican President Claudia Scheinbaum has sort of downplayed this
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  Speaker 1: rupture between Canada and the U.S., describing it as simply
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  Speaker 1: a disagreement. I think the Canadians would say it's perhaps
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  Speaker 1: more than that. How do you explain Shane Baum's sort
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  Speaker 1: of muted response to what's gone on between President Trump
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  Speaker 1: and our prime minister?
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  Speaker 3: Well, I think it's part of the strategy that the
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  Speaker 3: Mexican government has taken for a few months now in
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  Speaker 3: terms of not engaging directly.
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  Speaker 2: In the discussions that the U.S.
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  Speaker 3: And Canada are having bilaterally, trying to concentrate on the U.S.-Mexico
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  Speaker 3: bilateral discussions, but at the same time having a fluid
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  Speaker 3: communication with Prime Minister Carney on the goals of increasing
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  Speaker 3: trade and investment in between Mexico and Canada. There's a
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  Speaker 3: strong action plan that has been established between both countries.
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  Speaker 3: So things are advancing bilaterally that way. And when they
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  Speaker 3: have spoken, both heads of state have talked about the
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  Speaker 3: importance of maintaining, at the end of this USMCA review process,
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  Speaker 3: a trilateral agreement. So It's likely that the Mexican government
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  Speaker 3: will not opine actively on the status of U.S.-Canada negotiations
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  Speaker 3: and will concentrate on the U.S.-Mexico bilateral negotiations that, as
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  Speaker 3: you know, are ongoing.
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  Speaker 1: Yeah, I guess because we know how volatile Trump can
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  Speaker 1: be sometimes. Is that why you think President Scheinbaum is
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  Speaker 1: not really saying much? She's not injecting herself into this conversation.
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  Speaker 1: She doesn't want the Americans to think that Canada and
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  Speaker 1: Mexico are taking a common front against the Americans right now.
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  Speaker 2: That's correct.
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  Speaker 3: And what I understand is that at the technical level,
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  Speaker 3: the technical negotiators who speak regularly with USTR are also
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  Speaker 3: speaking regularly with Canadian officials and negotiators. I think it's
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  Speaker 3: very important for Mexico and Canada to understand each other's
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  Speaker 3: positions in these negotiations with the U.S., to understand especially trade.
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  Speaker 3: What are the red lines, those points where countries, both
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  Speaker 3: Mexico and Canada, would not be willing to accept? Because
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  Speaker 3: even though in the bilateral discussions with the U.S., there's,
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  Speaker 3: of course, a lot of discussion around bilateral trade issues
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  Speaker 3: that don't have to do with a third partner in
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  Speaker 3: the USMCA. Some of the issues that have to be
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  Speaker 3: resolved in these discussions are trilateral in nature. For example,
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  Speaker 3: the tariff relief that the U.S. will apply to Mexico
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  Speaker 3: and Canada eventually should be the same because we are
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  Speaker 3: an integrated region, as well as the types of rules
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  Speaker 3: of origin in key sectors like automotive, aerospace, and advanced
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  Speaker 3: manufacturing sectors.
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  Speaker 2: Those are trilateral issues.
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  Speaker 3: So we both, Mexico and Canada, need to know exactly
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  Speaker 3: how far we're willing to go and what is the U.S.
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  Speaker 2: Willing to provide in terms of tariff relief.
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  Speaker 1: Let's talk about autos, because one reason Canada walked away
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  Speaker 1: from this agreement last week with the Americans, or I
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  Speaker 1: guess it was two weeks ago now, isn't it? Time's
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  Speaker 1: flying by. One reason they walked away is because of autos,
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  Speaker 1: because there were different tariff rates set to be put
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  Speaker 1: in place for medium and heavy duty trucks. And that
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  Speaker 1: would have been hugely problematic for this country because General
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  Speaker 1: Motors makes a Chevy Silverado in Oshawa. Ford is retooling
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  Speaker 1: its plant in Oakville to produce the F-250, the F-350,
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  Speaker 1: the F-450. So Canada could not really live with what
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  Speaker 1: the Americans were proposing. Could Mexico live with what was
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  Speaker 1: potentially on the table for Canada, and that was a
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  Speaker 1: 15% tariff on autos? Is that something that would be
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  Speaker 1: suitable for Mexico?
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  Speaker 2: Well, I'll give you my personal opinion.
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  Speaker 3: Based on the original USMCA negotiations and discussions with the
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  Speaker 3: Mexican automotive sector, we need to make sure that we
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  Speaker 3: either eliminate the tariffs that are hitting the automotive sector
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  Speaker 3: or reduce it.
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  Speaker 2: To the lowest level possible. And that means lowest level possible.
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  Speaker 3: It means to the lowest level that any country that
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  Speaker 3: is trading with the U.S. is facing in terms of
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  Speaker 3: a tariff. And as you know, as part of the
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  Speaker 3: bilateral deals.
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  Speaker 2: That the U.S. is negotiating with the European Union, with
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  Speaker 2: the U.K. and Japan.
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  Speaker 3: Part of Mexico's complaint is that, you know, these countries
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  Speaker 3: are getting a better deal when it comes to automotive
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  Speaker 3: goods because they're getting a 15 percent tariff, but they
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  Speaker 3: don't have all of the requirements in terms of the
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  Speaker 3: rules of origin that Mexico or Canada have to comply with.
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  Speaker 3: And in the case of the UK, there's even a
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  Speaker 3: specific quotas for a reduced tariff on, I believe it's
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  Speaker 3: almost 100,000 vehicles. So at the end of the day,
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  Speaker 3: what we need to have in this negotiation is a
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  Speaker 3: landing zone, a package that makes sense from the point
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  Speaker 3: of view of what the U.S.
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  Speaker 2: Is demanding of Mexico and of Canada. But also, this
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  Speaker 2: has to be.
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  Speaker 3: Linked with tariff relief that either eliminates the tariffs, because
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  Speaker 3: it really makes no sense to have obstacles in terms
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  Speaker 3: of tariffs or non-tariff barriers.
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  Speaker 2: Between Mexico, Canada, and the U.S. in the auto sector.
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  Speaker 3: So either eliminating the tariffs or bringing them down to
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  Speaker 3: a much lower level. That would be my personal position.
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  Speaker 3: Right now, the governments are discussing between the U.S. and
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  Speaker 3: Mexico what those tariffs should be. But we do understand that,
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  Speaker 3: especially for the province of Ontario, it was a problem
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  Speaker 3: when the U.S. was trying to exclude from the tariffs
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  Speaker 3: any tariff relief on pickup trucks.
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  Speaker 2: And that would be a problem for Mexico as well.
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  Speaker 1: Yeah, I imagine it would be. And that's the reason why, frankly,
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  Speaker 1: most Canadians agree with the Prime Minister's decision to walk
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  Speaker 1: away from the table. We were looking at some recent polling,
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  Speaker 1: and it seems like 70% plus of Canadians polled in
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  Speaker 1: recent surveys think that the Prime Minister... was right to
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  Speaker 1: kind of reject a deal like this that could have
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  Speaker 1: stymied economic growth in this country, destroyed a key economic sector.
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  Speaker 1: What is public opinion like in Mexico on the trade issue?
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  Speaker 1: Is there pressure on Scheinbaum to cut a deal to
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  Speaker 1: accept and submit to some of the U.S. demands?
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  Speaker 3: Well, I think in general, in the Mexican private sector,
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  Speaker 3: there's a sense that a deal that makes sense, a
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  Speaker 3: deal that would be good for Mexico, should be struck,
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  Speaker 3: but not one that has terms that would cause a permanent,
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  Speaker 3: long-term structural damage to the USMCA and to our trade
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  Speaker 3: relationship with.
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  Speaker 2: The United States.
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  Speaker 3: In fact, the president of the Mexican Business Council, which
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  Speaker 3: is a counterpart to the Business Council of Canada— recently
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  Speaker 3: stated in a speech that Mexico should try to go
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  Speaker 3: for the best deal possible, but that we shouldn't rush things,
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  Speaker 3: that we should strike a deal when a deal is ready,
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  Speaker 3: when a deal makes sense for Mexico.
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  Speaker 2: And I would add to that that it's.
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  Speaker 3: Very important to realize that we're wasting a lot of
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  Speaker 3: time here in North America fighting amongst each other because
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  Speaker 3: of these tariffs.
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  Speaker 2: That the U.S. has imposed.
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  Speaker 3: And we should be concentrating rather on eliminating all barriers
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  Speaker 3: between the North American countries, because that is the only way.
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  Speaker 2: We're going to be able to compete successfully with China
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  Speaker 2: in the long term.
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  Speaker 3: So in general, the opinion in Mexico is we should
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  Speaker 3: try to have a deal with the U.S., we should
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  Speaker 3: make sure that the deal is trilateral, but not at
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  Speaker 3: any cost. And that's why I think the negotiation could
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  Speaker 3: be delayed at least for a few months more.
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  Speaker 1: Just quickly, we've been talking about tariffs, but there's also CUSMA,
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  Speaker 1: or T-MEC as it's called in Mexico. Those negotiations are
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  Speaker 1: underway between Mexican officials and the United States. You've had
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  Speaker 1: a few more rounds of talks than we have here
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  Speaker 1: in Canada with our American counterparts. Are you hopeful that
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  Speaker 1: this deal can be salvaged? We've heard some harsh rhetoric
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  Speaker 1: from the White House about whether they want to see
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  Speaker 1: this deal renewed.
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  Speaker 3: Yeah, as you say, there's been some harsh words from
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  Speaker 3: the White House, but when you talk to USTR officials
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  Speaker 3: or what you see what Ambassador Greer, the USTR, is
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  Speaker 3: promoting or putting on the table, the US is talking
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  Speaker 3: about making changes to rules of origin to try to
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  Speaker 3: align economic security interests in North America, which is code
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  Speaker 3: word for containing China. It's talking about a lot of things,
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  Speaker 3: but it's not talking about pulling out of the agreement.
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  Speaker 3: So the US is not going to try... to disassemble
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  Speaker 3: the USMCA and strike a new deal, because they know
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  Speaker 3: that they would have to take that to the U.S.
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  Speaker 3: Congress for approval. And the Trump administration has been trying
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  Speaker 3: to avoid that. So there's a sense in Mexico that
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  Speaker 3: we can successfully maintain the trilateral nature of the agreement,
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  Speaker 3: not change that trilateral architecture.
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  Speaker 2: But to try to figure out.
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  Speaker 3: Bilateral protocols or bilateral deals, which deal primarily with bilateral
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  Speaker 3: trade irritants, which Mexico has been cooperating with the U.S.
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  Speaker 2: To resolve.
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  Speaker 3: As you know, with Mexico, there's a separate conversation and
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  Speaker 3: cooperation on security, which is advancing. but we haven't seen
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  Speaker 3: a reduction in tariffs as of yet. So I do
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  Speaker 3: believe at the end of the day, we will have
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  Speaker 3: a USMCA. We will have to make sure, as I
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  Speaker 3: mentioned at the beginning, that in striking a bilateral deal
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  Speaker 3: with the U.S., we don't cause long-term damage to all
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  Speaker 3: those other chapters in the USMCA that have nothing to
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  Speaker 3: do with tariffs, you know, protection of investment, an efficient
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  Speaker 3: and effective dispute settlement mechanism, et cetera. I mean, there's
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  Speaker 3: 33 chapters there, which are the rules that Mexico, Canada,
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  Speaker 3: and the U.S.
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  Speaker 2: Have followed for the last 30 years.
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  Speaker 3: And that are essential for facilitating trade and investment in
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  Speaker 3: North America.
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  Speaker 1: All right, let's leave it there. Ken Smith Ramos was
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  Speaker 1: Mexico's former chief negotiator for the modernization of NAFTA. Nice
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  Speaker 1: to see you, sir. Thanks for coming on.