Mexico says it is close to U.S. metals tariff deal, waiting for Canada

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WASHINGTON (Reuters) – Mexico is close to resolving its dispute with the United States over steel and aluminum tariffs without quotas but hopes Canada can reach a similar agreement before completing it, a senior Mexican official said on Wednesday.

FILE PHOTO: Undersecretary for North America Jesus Seade gestures during the 14th Mexican Financial Summit in Mexico City, Mexico, April 30, 2019. REUTERS/Edgard Garrido/File Photo

Jesus Seade, Mexican deputy foreign minister for North America, told Reuters by telephone that a deal to remove the so-called Section 232 tariffs was “very close” but he wanted Canada to be in the same position in its negotiations with Washington.

“What we’ve been talking about for a week,” he said, “is eliminating the 232 without any quotas,” noting that it was “very possible” Canada could sign up to a “similar” deal.

Sudden movements in future trade could be handled via a “consultation and monitoring system,” he added, noting Mexico still had the option of sealing a deal without Canada.

U.S. Treasury Secretary Steven Mnuchin also expressed optimism about a resolution to the steel dispute, but a top Canadian official avoided direct comment on that possibility.

“I think we are close to an understanding with Mexico and Canada,” on resolving the tariffs, Mnuchin said at a U.S. Senate Appropriations subcommittee hearing. He did not provide any details about the potential agreement.

Canadian Foreign Minister Chrystia Freeland said she discussed the tariffs on Canadian metals with U.S. Trade Representative Robert Lighthizer on Wednesday, but declined to say whether the two countries were close to a deal.

“We made the case as we have been doing for some time that the best outcome for both Canadians and Americans would be to lift those tariffs and to have free trade between our two countries who have this fantastic trading relationship in place,” she told reporters after the meeting in Washington.

A USTR spokeswoman declined comment on the meeting.

Asked about prospects for a deal, Freeland said she would not discuss Canada’s negotiating strategy. She added that if Washington kept the tariffs in place, it would be “very, very problematic” for Canadian ratification of the new U.S.-Mexico-Canada Agreement trade deal (USMCA).

TRADE DEAL VOTE

Canada, Mexico and some U.S. lawmakers see lifting the tariffs imposed last year as imperative for ratifying USMCA, which would replace the 25-year-old North American Free Trade Agreement. None of the three countries’ legislatures has ratified USMCA.

Canada has been trying to impress on the Trump administration that time is running out to ratify USMCA this year, a Canadian government source told Reuters.

A bill to ratify the deal would need approval by Canada’s House of Commons, which adjourns for the summer on June 21 ahead of an October general election. It will not reconvene until December.

Lighthizer met later with Democratic U.S. House of Representatives Speaker Nancy Pelosi to discuss the path forward on a potential USMCA vote. A Pelosi aide called the meeting productive, but offered few details.

“Democrats continued to express our interest in working with the USTR to get to yes, and will be planning more discussions with the USTR on the key questions about the USMCA proposal,” the aide said.

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Mexico and Canada imposed tariffs against a range of U.S. products in retaliation for Trump’s metals duties to put pressure on Washington to repeal them.

Mexico says it has prepared a revised list of products to spread the pain to different sectors of the U.S. economy if necessary, but has yet to apply them.

In a sign of thawing tension, Mexico’s Seade said it was not the right time to target new products. “It’s not necessary because I think the top priority is to get a deal first.”

Reporting by David Lawder and Susan Heavey in Washington, David Ljunggren in Ottawa, Frank Jack Daniel and Dave Graham in Mexico City; Editing by Lisa Shumaker and Peter Cooney

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