Canada seeks USMCA renewal for 16 years, sector tariff discussions in free trade talks

Canada sent a letter to the United States and Mexico on Tuesday outlining its recommendations to renew a trilateral trade agreement for 16 years while seeking parallel talks on sectoral tariffs ahead of a meeting between Canadian and U.S. trade negotiators later in the day. Canada's minister responsible for ‌Canada-U.S. trade, Dominic LeBlanc, will meet U.S. Trade Representative Jamieson Greer, after Canada was left out of bilateral trade talks between the U.S. and Mexico last week.

Canada sent a letter to the United States and Mexico on Tuesday outlining its recommendations to renew a trilateral trade agreement for 16 years while seeking parallel talks on sectoral tariffs ahead of a meeting between Canadian and U.S. trade negotiators later in the day.

Canada's minister responsible for ‌Canada-U.S. trade, Dominic LeBlanc, will meet U.S. Trade Representative Jamieson Greer, after Canada was left out of bilateral trade talks between the U.S. and Mexico last week. The country's chief trade negotiator to the United States, Janice Charette, will accompany him. Prime Minister Mark Carney has tried to diversify trade and make new global alliances, but Canada's economy remains heavily dependent on the U.S., with nearly 70% of its exports heading south of the border.

"The Joint Review process provides us an opportunity to review the ‌Agreement to assess whether there are ways to strengthen it and consider where improvements may be warranted to keep up with evolving economic conditions," the letter said. The letter also noted that, in parallel with reviewing the United States-Mexico-Canada ‌Agreement, addressing sectoral tariffs will be essential.

The U.S. imposed tariffs on steel, aluminum and autos that have hurt Canada's economy. As part of talks with Mexico last week, the U.S. Trade Representative's office revealed that it wants all North American-built cars and trucks to contain 50% U.S. content by value, bringing the regional total to 82%. But there was no provision for counting Canadian automotive content, people familiar with the proposal told Reuters.

The U.S. and Mexico have scheduled two more negotiating rounds in June and July, but no plans for bilateral or trilateral talks with Canada have been ⁠announced. Canada sent the ​letter one day after Mexico's economy minister reiterated the country's support ⁠for extending the trilateral trade agreement, underscoring the importance of "providing certainty to investors who seek the strength of our market."

Mexico’s position is to "pursue arrangements that benefit all three nations with mutual respect and consensus," Marcelo Ebrard wrote in a letter to Greer and LeBlanc that is widely seen ⁠as supporting Canada's inclusion in the talks. BUSINESSES CRITICIZE SLOWNESS

This will be LeBlanc's second meeting with Greer after their first meeting in March, although they have spoken occasionally over the phone, including last week, the government has said. Greer said last week that the U.S. ​has "significant" differences with Ottawa on trade that will be difficult to resolve, notably that Canada has retaliated with tariffs on U.S. vehicles and metals.

Businesses have criticized Canada for being slow to begin the USMCA review process — ⁠which must officially be completed by July 1 — while Mexico has been more proactively engaging with the U.S. administration. Trump suspended all talks with Canada late last year after the province of Ontario aired an advertisement featuring former President Ronald Reagan warning that tariffs lead to trade wars.

"In terms of the ⁠discussions ​with the U.S., there is a series of technical issues that they have with Mexico, they have with us, which is why there is a bifurcated discussion," Prime Minister Mark Carney told reporters on Tuesday. During a speech in New York last week, Carney said a stronger Canadian economy would support growth in the United States, too.

"Canada Strong will help make America great again," he said, earning rare praise from the U.S. ambassador to Canada. The United States and ⁠Mexico concluded their first round of bilateral talks on revising the USMCA last week, discussing automotive rules of origin, steel and aluminum trade and economic security, the U.S. Trade Representative's office said.

If all three countries do not agree ⁠to extend it, the pact would move to annual reviews ⁠until 2036. Greer has indicated Canada may have to accept some tariffs if it wants to engage with the U.S. on reviewing the agreement.

Greer has also said the revised deal should include stricter automotive rules of origin and provide greater access to Canadian markets for U.S. businesses, such as in dairy. Canadian provinces' restrictions on selling U.S.-made liquor have also ‌been a source of friction with ‌the U.S. administration.