Canada will participate in discussions between the U.S. and Mexico over rules governing the trade of automobiles at a time of heightened tensions among the North American partners.
Canada will join the talks as an "interested third party," avoiding confrontation with the U.S. government ahead of elections next month while still showing concern about America’s increasingly protectionist position on vehicle trade.
Mexico requested formal consultations with the U.S. to settle a disagreement over how to measure regional content for cars to trade duty-free. The U.S. insists on a stricter method than Mexico and Canada believe they agreed to for counting the origin of certain core parts including engines, transmissions and steering systems in the overall calculation.
The U.S. position could push automakers to abandon the North American region due to cumbersome and costly content requirements, say some automotive analysts. Mexico, Canada and major automakers are aligned against the Biden administration on the rules.
However, with Canada in an election campaign, Prime Minister Justin Trudeau’s government has officially entered “caretaker mode” and will not get directly involved in the negotiations between the U.S. and Mexico.
The Trudeau administration’s decision on how to participate in the automotive disagreement is indicative of his broader approach to Canada’s relationship with the U.S., the nation’s most important ally.
Trudeau’s Liberal government prefer a cautious approach to disputes with the U.S. in an effort to maintain good relations with Canada’s southern neighbor and minimize any damage to the country’s economy.
While relations with U.S. President Joe Biden’s administration are smoother than under President Donald Trump, Trudeau has complained publicly about the U.S. cancellation of a permit for a large pipeline project, as well as a strengthening of the country’s "Buy America" procurement policy.
