U.S. trade czar: Don't get 'too comfortable' North American trade pact will stay as is

Don't get too comfortable with the North American trade pact: that's the warn‐ ing from President Joe Biden's top trade official as countries prepare to re‐ view the deal.

Katherine Tai made the comments as the agreement between Canada, the U.S. and Mexico, known in the U.S. as USMCA, passed the halfway point toward the sixyear mark where countries will start discussing its re‐ newal.

The agreement includes what's referred to sometimes as a sunset clause: Once the renewal process starts, coun‐ tries have a decade to agree to new terms - or else the pact disappears.

The U.S. ambassador to Canada has already told CBC News that officials in his country have begun dis‐ cussing their priorities for re‐ newal talks starting in 2026.

It's worth noting that the renewal talks will only begin after the next U.S. election and it's not clear whether, at that point, Joe Biden or Don‐ ald Trump will be president.

The former Trump admin‐ istration was notorious for constantly threatening to rip up North America's trade deal, something the current administration has never done.

But Tai urged the coun‐ tries not to take things for granted. She suggested that negotiators will feel more pressure to improve the agreement if they're worried about its future.

"You do not want that re‐ view to happen in a way that all three parties come to the conversation too comfort‐ able," Tai told a forum orga‐ nized Wednesday by the Brookings Institution, a Washington-based thinktank.

"The whole point is to maintain a certain level of discomfort - which may in‐ volve a certain level of uncer‐ tainty. To keep the parties motivated to do the really hard thing, which is to contin‐ ue to re-evaluate our trade policies and trade programs ... That discomfort is actually a feature - not a bug."

Dairy dispute between U.S. and Canada

Tai elaborated on some of the things she hopes negotia‐ tors deal with. She said ex‐ isting disputes, and dispute outcomes, must be part of renewal discussions.

She referred at Wednes‐ day's event to a dispute topic with Canada: dairy.

The U.S. has consistently alleged that Canada is cheat‐ ing in implementing the deal, and limiting the liberalization it promised; the dispute in‐ volves how Canada allocates its import credits, and to whom.

The U.S. filed a complaint and won in 2022. Canada im‐ plemented some changes, which the U.S. deemed insuf‐ ficient. The U.S. sued again, but lost late last year.

Tai said the U.S. isn't alone in complaining about Canada's practices. New

Zealand has filed a similar complaint under the new trans-Pacific trade pact.

"We still do not have that access [we expected]," Tai said of dairy trade. "And fran‐ kly we're not the only ones . ... We have a political conun‐ drum . ... That is something for us to continue to work on and think through: How do we address that concern with Canada?"

WATCH | How strong is the Canada-U.S. trade rela‐ tionship?

Canada has its own com‐ plaints about implementa‐ tion of the new agreement, originally reached between the North American govern‐ ments while Donald Trump was president.

It involves autos. Canada and Mexico won a case chal‐ lenging how the U.S. calcu‐ lated what counts as a North American car part, eligible for trade without tariffs.

The Biden administration has not reacted to the find‐ ings.

But Trump has hinted that he would ignore the ruling, if he's re-elected. Trump's former trade czar, Tai's pre‐ decessor Robert Lighthizer, has said it should be part of the review process.

Lighthizer writes that if the U.S. makes clear to car companies that Washington will demand these changes, it will send a signal to those companies not to rely on the current rules.