March 2, 2020

Canada Still Working Through Aluminum Industry’s Concerns About USMCA

While no votes have yet been taken, Canada’s House of Commons Standing Committee on International Trade has started hearings on passage of the United States-Mexico-Canada Agreement, or USMCA. Canada is the last of the three nations to take up the trade pact, which would replace the North American Free Trade Agreement.

Prime Minister Justin Trudeau appears happy with the action by Parliament so far. On social media last week, he said, “We are one step closer to ratifying the new NAFTA. In Quebec, this agreement preserves more than $50 billion in exports to the United States, protects the cultural exemption, and is a net gain for our aluminum industry. It’s good news for Quebecers and for all Canadians.”

Despite the progress, some members of Canada’s Parliament continue to express anxiety about how the UMSCA will impact the country’s aluminum sector. (As Connecting the Dots has reported, the Canadian aluminum industry opposes a USMCA provision that requires that steel be melted and poured in Canada, Mexico, or the United States, but says nothing about aluminum.) A

ccording to Politico both the Mexican government and members of Trudeau’s team have tried to reassure those individuals. Steve Verheul, Canada’s chief USMCA negotiator, assured a parliamentary committee last week that Canada is ready to respond should the North American market be undercut by aluminum imports from China or elsewhere. Meanwhile, Mexican Undersecretary for North America Jesús Seade said Mexico will “have to continue to import aluminum raw from the rest of North America, Brazil and other parts — but more [North America] because of the conditions in USMCA.”

Meanwhile, an executive panel at Fastmarkets AMM’s Mexican Steel Forum last week said regional content requirements in the USMCA “will benefit Mexico’s steel industry and could help make room for the significant new steel mill capacity targeting the region.” (Under the agreement, automobiles produced in Mexico will have to source 75 percent of their content within North America, up from 62.5% under the North American Free Trade Agreement that it replaces.) Click here to read Fastmarkets’ full article, which is available to subscribers.

As a reminder, the Canadian Manufacturing Coalition (CMC), which MSCI is a part of, issued a statement calling for Parliament to quickly ratify the trade pact. The CMC said, “ Free trade is essential to Canadian manufacturing. That is why the CMC worked closely with the government throughout the NAFTA renegotiations to ensure that integrated manufacturing not only remained unharmed but strengthened. CUSMA achieved that objective and is a win-win-win for all three countries. … [Ratification] will enable manufacturers to maintain critical access to the American and Mexican markets and put an end to trade uncertainty.”