Canada to complain about US auto move in latest sign of trade tensions

OTTAWA, Jan. 13 (Reuters) – Canada to sign lawsuit against the United States over its interpretation of how free trade should apply to the mainland auto industry, another sign of deteriorating ties between the two neighbors.

Trade Minister Mary Ng said on Thursday that Canada would join Mexico in requesting a dispute settlement panel under the United States-Mexico-Canada trade agreement (USMCA).

The two countries want to dispel disagreements over how to apply the auto sector’s content requirements under the treaty, which came into effect in July 2020, replacing the North American Free Trade Agreement (NAFTA).

Register now for FREE and unlimited access to


Mexico and Canada are also unhappy with the tax breaks offered in the United States for American manufacturers of electric vehicles. This, they say, could undermine the highly integrated North American auto industry. Read more

The USMCA says 75% of a vehicle’s components must come from all three countries to gain tax-exempt status, compared to 62.5% under NAFTA.

Mexico and Canada favor a more flexible interpretation of the regulations than Washington, which called for an overhaul of NAFTA when Donald Trump was president in order to protect American manufacturing jobs.

“The interpretation that the United States has adopted … is inconsistent with the USMCA and the understanding shared by parties and stakeholders throughout the negotiations,” Ng said in a statement.

Mexican Economy Minister Tatiana Clouthier welcomed Canada’s decision, tweeting that “the regional industry which has developed for a long time must be defended”.

No one was immediately available for comment at the U.S. Trade Representative’s office.

The election of Joe Biden as president did little to improve the trade tensions with Ottawa that had been simmering under Trump. A USMCA panel said last week that Canada’s dairy practices violate the agreement, and last month Ottawa launched a challenge against U.S. softwood lumber duties.

Washington is also unhappy with a proposed Canadian digital services tax and reiterated its complaints on Wednesday. Read more

Register now for FREE and unlimited access to


Reporting by David Ljungrren; additional reporting by Dave Graham in Mexico City and David Shepardson in Washington; edited by Jonathan Oatis

Our Standards: Thomson Reuters Trust Principles.

Previous Generational Equity Advises Applied Payment Systems in its Sale to VeriCheck
Next Reducing Nighttime Checks Is Safe and Helps Patients Sleep