May 17, 2019 / 10:22 PM / a month ago

Tensions with China help U.S. see importance of North American trade -Mexican official

MEXICO CITY (Reuters) - Tense U.S.-China relations are helping the United States understand the importance of a North American trade bloc, a senior Mexican diplomat said on Friday, after negotiating a deal that ended steel tariffs in the region.

FILE PHOTO: Jesus Seade, Andres Manuel Lopez Obrador's pick for NAFTA negotiator, gestures during an interview in Mexico City, Mexico July 2, 2018. Picture taken July 2, 2018. REUTERS/Edgard Garrido

The United States struck deals on Friday to lift tariffs on steel and aluminium imports from Canada and Mexico, the three governments said, removing a major obstacle to legislative approval of a new North American trade pact.

Mexico’s deputy foreign minister for North America, Jesus Seade, said the U.S.-China trade war was helping the case for a strong partnership between neighbours.

“There is a general climate, in which the United States is in a long-term difficult relationship with China and it understands that the big economy the United States has needs to be accompanied by the big North American economic region,” Seade told Reuters in a phone interview.

Seade helped lead negotiations last year for the new United States–Mexico–Canada Agreement (USMCA) after U.S. President Donald Trump insisted on reworking the quarter-century-old North American Free Trade Agreement (NAFTA). Seade said Friday’s tariff breakthrough would help the broad agreement’s passage through U.S. Congress.

China struck a more aggressive tone in the trade war on Friday, suggesting a resumption of talks between the world’s two largest economies would be meaningless unless Washington changed course. That capped a week in which Beijing unveiled fresh retaliatory tariffs and the U.S. levelled a blow against one of China’s biggest and most successful companies, Huawei Technologies Co Ltd.

Seade said such friction made North America look more attractive.

“That is why they are negotiating a good deal, and are now treating Mexico and Canada incredibly differently from (South) Korea, which has quotas,” he said.

When negotiations over the tariffs started a month ago, Seade said, U.S. Trade Representative Robert Lighthizer had pushed Mexico to accept a quota on metal imports. In the end the deal that was struck allows free trade of the metals in the region.

South Korea scored an exemption from steel tariffs in March, 2018, but only in return for a quota a third below the previous years’ volumes, severely crimping the Asian country’s industry.

Reporting by Frank Jack Daniel; Editing by Stefanie Eschenbacher and Richard Chang

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