USMCA important for North American steel industry but all countries need to meet expectations: SMA, MSCI

The US-Mexico-Canada Agreement is critically important to the North American steel industry, but all three countries need to meet the expectations set forth in the agreement in order for it to be successful, leadership of the Steel Manufacturers Association and Metals Service Center Institute said.

Calling the USMCA a "landmark piece of legislation," Philip Bell, president of the SMA, said the agreement which entered force on July 2, 2020, serves as a template for how other free trade agreements can work. But with the USMCA up for review in July 2026, allowing for any country involved to opt out if they see fit, 2024 is a critical year for the trade pact due to presidential elections in the US and Mexico.

"I am extremely hopeful that all the parties that are involved in the USMCA continue to live up to the spirit of it and continue to do what they can to serve as a united front against transshipment, unfairly traded imports and excess steel capacity," Bell said during a press conference June 3 at the 2024 SMA annual members conference in Scottsdale, Arizona, held in conjunction with the annual meeting of the MSCI.

Mexico on June 2 elected leftist Claudia Sheinbaum as its next president, with the new leader set to take office Oct. 1, while the US will elect its next president in November.

The presidential elections come as trade representatives from the US and Mexico continue negotiations on enhancing Mexico's monitoring of steel and aluminum exports amid allegations of import surges and that third countries are using Mexico as a "backdoor" for the transshipment of tariff-free steel into the US as Section 232 tariffs were dropped for both Mexico and Canada as part of a 2019 agreement to secure the USMCA.

"For Mexico, I think what we would like them to understand is...they're part of the USMCA," Bell said. "We are a very formidable trading bloc and you have to live up to the spirit of the agreement."

To do that requires two things, Bell said: "you cannot be a haven for transshipment and also, you yourself cannot be engaging in import surges of certain products."

From a service center perspective, free and fair trade within North America is essential, said Bob Weidner, CEO of MSCI.

"We have members moving product back and forth across the borders all the time so ease of doing business for our members is critical as they move from one facility to the next, as well as their customers," he said.

Like the steel industry itself, service centers also are concerned about nonmarket economies circumventing and breaking trade rules by bringing products in through Canada or Mexico, as well as excess steel capacity, Weidner said.

To improve the current dynamic between the three trading partners, the USMCA region needs to have a "melt and pour" standard, Bell said.

Canada in February said it will begin requiring(opens in a new tab) importers to report country melt and pour information beginning in November to increase transparency in the collection and publication of data related to steel imports, mirroring a similar system adopted by the US in September 2020. Mexico in April established a new registry for steel importers that would require "Automatic Import Notices" for steel products, including the collection of melt and pour data.

But along with the collection of data, transparency needs to be increased to strengthen import monitoring in North America, Bell said.

"We've been negotiating this for a long time," he said. "I think we're making steady progress, but we need to make more and we need to make it faster."