The Mexican Institute for Competitiveness (IMCO) suggested that Mexico could propose regulations addressing unfair competition by third countries. This would take place during the review of the United States-Mexico-Canada Agreement (USMCA).

IMCO is a think tank that promotes competitiveness through evidence-based public policies. It is funded by the Mexican Business Council, international agencies (such as USAID), and private foundations (such as Hewlett).

Unfair competition by third countries

One of the central themes of the USMCA review is the participation of economies accused of unfair trade practices. These practices affect key value chains for North American industries, such as steel and aluminum.

According to IMCO, one way to address this challenge would be to utilize Chapter 10 of the Agreement, which deals with trade remedies. This would incorporate regional coordination mechanisms to address dumping. Dumping is defined as the export of a product at a price lower than that at which it is sold in the domestic market.

In an ambitious scenario considered by IMCO, the three countries could agree to eliminate anti-dumping cases among themselves. This would prevent these instruments from being used as non-tariff barriers within the region. Furthermore, they could replace them with principles of economic competition that recognize North America as a single relevant market. Trade defense measures against third countries would also be consolidated.

Anti-dumping Cases

A more viable, albeit limited, alternative would be to establish anti-dumping coordination schemes for critical sectors agreed upon by the parties. For example, they could start with sensitive industries such as steel and aluminum.

Similarly, according to IMCO, an agreement could be reached to explicitly exempt MSMEs from anti-dumping measures, as well as from other types of tariffs (Sections 122 and 232, for example). This is based on the premise that a small business has neither the incentive nor the market power to artificially lower the price of an exported good.

This would require strict controls to prevent abuse of such an exemption.  And this can be achieved through adjustments to existing guidelines regarding investigations under Section 232 of the Trade Expansion Act of 1962.

Competition with these economies, which are accused of unfair practices, must be addressed as a regional challenge—not just a U.S. one—due to the risk of transshipment through third countries to circumvent tariffs. The implementation of this provision regarding steel and aluminum, for example, could be accompanied by measures that ensure the interoperability of electronic mill certificates via blockchain to enable real-time coordination among the three countries.