The breakdown of trade discussions between Ottawa and Washington may lead U.S. negotiators to pursue a more assertive approach in securing a deal with Mexico, according to a former Mexican trade negotiator. Kenneth Smith Ramos, Mexico’s former chief technical negotiator during the initial Canada-U.S.-Mexico Agreement (CUSMA) talks from 2017 to 2019, anticipates that the U.S. might aim to establish a preliminary agreement with Mexico soon, deferring resolution of more contentious issues to a later date, such as potential restrictions on Mexican agricultural exports.

Smith Ramos, now a partner at the Mexico City-based consulting firm Agon, suggested that the U.S. could follow a similar approach to what it did with the European Union by announcing a framework agreement in the near future for political reasons. This scenario, according to him, is a plausible outcome in the upcoming negotiation rounds.

Both Canada and Mexico have been separately engaging with the U.S. to address specific trade issues and tariffs, with the goal of resolving these matters before engaging in trilateral discussions to amend and extend CUSMA. Talks between Canada and the U.S. collapsed on August 21, following last-minute demands from the U.S. related to cultural, automotive, and sovereignty issues that Canada found unacceptable.

The stalled negotiations have prompted retaliatory measures from Canada, including counter-tariffs on a variety of U.S. imports. Consequently, any prospects for trilateral discussions on CUSMA enhancements have been put on hold indefinitely.

Mexico’s Secretary of Economy, Marcelo Ebrard, emphasized the importance of finding common ground between Canada and the U.S., highlighting the necessity for North American cooperation and integration. Ebrard expressed optimism for a resolution but acknowledged the challenges in predicting when it might materialize.

Regarding the trade tensions, Mexican President Claudia Sheinbaum and her administration have been cautious in managing their dialogue with the U.S. amid their own ongoing trade negotiations. Solange Marquez, Vice-President of Policy at the Canadian Council for the Americas, noted the delicate balancing act Mexico is undertaking to avoid complications in their discussions with the U.S. post the Canada-U.S. fallout.

The current state of trade dynamics in North America has shifted away from traditional free trade agreements, as observed by Marquez. Negotiations are now centered on tariff arrangements and new trade agreements, deviating from the principles of free trade. Alex González Ormerod, an executive director and journalist, described the evolving CUSMA as a complex arrangement where Mexico and Canada may opt out of certain provisions imposed by the U.S.

To strengthen their trade ties, Marquez and González Ormerod suggested that Canada and Mexico should focus on bolstering their bilateral relationships outside the shadow of the U.S., which has historically influenced their trade dynamics. They emphasized the need for a more balanced and independent partnership between the two countries, irrespective of their ties with the U.S.