Cancun Conclave Yields Little for USTR

As tensions simmer over issues ranging from Mexico's biotech corn and energy policies to Canadian dairy access, US Trade Representative Katherine Tai joined North American trade partners for a summit in Cancun this week. However, the thorny issues were not directly addressed, according to readouts from the meetings.

The US-Mexico-Canada Agreement (USMCA) Free Trade Commission’s annual meeting is mandated under the trade pact rules, necessitating discussions related to the agreement. In attendance were Tai, Mexican Economy Secretary Raquel Buenrostro, and Canadian Minister of International Trade Mary Ng.

The USMCA, which replaced the North American Free Trade Agreement in 2020, is due for a significant review and potential updates in 2026. A key point of discussion in this year’s meeting will be the ongoing implementation of USMCA, a USTR official told Reuters.

The senior official clarified that the disputes concerning the use of genetically modified corn, Canadian dairy import quotas, and Mexican energy policies, which could ultimately lead to punitive US import duties, are being addressed through separate channels. These issue-specific consultations were initiated under the USMCA dispute settlement rules.

"Those are obviously very important issues that remain important on all levels, so they're on the top list of priorities," the official stated, emphasizing that such issues are best addressed in the actual consultations.

Moreover, this week’s Cancun summit will address the "rapid response mechanism" for labor rights violations at specific factories. The United States has cited 11 cases under the mechanism since the launch of the USMCA, including investigations  at a Goodyear Tire & Rubber plant and a Levi Strauss & Co denim plant, both in Mexico. 

However, as the countries grapple with labor and energy disputes, an additional conflict has emerged over Mexico's plan to limit the use of genetically modified (GM) corn. Tai, before the Cancun meeting, revealed that trade dispute settlement consultations over GM corn had begun last week. If a resolution isn't reached within 75 days, the US can request a dispute panel.

Mexico's plan aims to ban GM corn for human consumption, particularly in tortillas, and substitute GM yellow corn used for livestock feed. Mexico argues that biotech corn harms native varieties and may have potential adverse health effects. The US, however, asserts the safety of its agricultural products, vowing to continue pursuing its rights and interests.

The tension between trade and regulations was further highlighted by Tai's emphasis on Mexico's monitoring of steel and aluminum exports to the U.S., echoing a 2019 agreement between the countries to avoid unfair dumping. Mexico's economy ministry responded later on Thursday, calling for the good faith implementation of the measures to solve labor disputes under the agreement and insisting that any alleged violation should be well reasoned.

Despite these disagreements, the senior USTR official underscored the importance of enhancing North American motor vehicle production and jobs, following a USMCA dispute settlement panel ruling in January siding with Mexico and Canada against a stricter US interpretation of the trade pact's automotive rules of origin.