USMCA Review: Good neighbors, better rules

As the required six-year review of the agreement gets under way, it is worth noting that the agreement is designed to remain in place for another decade. With no imminent threat of losing the current USMCA, we urge all three countries to stay focused on solutions and figure out how we can make it better. After all, there is significant room for improvement. The agreement should be modified to apply melt-and-pour requirements immediately, strengthen automotive rules of origin with respect to steel content, and eliminate exemption programs that allow companies to evade duties.

Also, it is absolutely imperative that we foster a much higher level of transparency and cooperation throughout the entirety of North America, as this will significantly enhance our collective economic stability and security. By implementing more robust import monitoring systems across all the nations that are part of the USMCA agreement — particularly with a keen focus on precisely tracking the processes of where imported steel is being melted and poured — alongside a stronger alignment of customs operations, we will be in a much better position to detect and prevent issues such as transshipment, misclassification, and evasion that can undermine our trade integrity.

Just last week, for instance, the US Department of Justice (DOJ) announced that two Canadian steel companies had agreed to pay a $19-million fine after knowingly misrepresenting the origin of steel they shipped to the United States. The steel was from China, Indonesia, Vietnam, and other countries, according to the DOJ announcement, but the companies indicated that the steel had been made in Canada and the United States. The lesson, as we see it, is that both Canada and Mexico must do more to keep unfairly traded steel out of North America. Doing so will help drive steel production and demand across the region.

To be sure, Mexico and Canada have taken steps to combat market-distorting excess steel capacity from China and elsewhere. We welcomed the news in May that Mexico had imposed a tariff on Chinese steel imports, and we applauded Canada for implementing a surtax on imported Chinese steel. Those measures are paving the way for stronger steel industries on both countries while helping to secure brighter futures for manufacturing across the USMCA region. We urge both countries to continue strengthening those measures while also addressing the growing imports of steel-intensive products coming from China, which of course are steel imports in disguise.

In the meantime, safeguarding the strength of the US domestic steel industry and the broader American manufacturing base will require the United States to maintain strong trade defenses such as the Section 232 program, which has been remarkably effective in supporting the American steel industry, and it should not be negotiated as part of the USMCA review.

Mexico and Canada are our largest and most valuable trading partners, and our supply chains and economies are stronger when our trading relationship is strong and fair. SMA looks forward to supporting efforts to strengthen USMCA and ensure fair trade in North America. An improved USMCA could play a major role in supporting the steel industry in the USMCA region, ensuring that North American steel trade does not remain a conduit for global overcapacity to flood the U.S. market.