November 29, 2022

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All the shocks about electric cars and oil between the US, Canada and Mexico

Biden’s three Amigos summit aims to strengthen the alliance between the United States, Canada and Mexico. However the tension was not resolved. All details

Yesterday, US President Joe Biden met with the political leaders of the two countries on the US border in Washington: Canadian Prime Minister Justin Trudeau and Mexican President Andres Manuel Lpez Obrador (AMLO).

The tradition of Three friends – is the informal nickname given to the summit – by George W. Bush in 2005 in Waco, Texas. Bush was born on the farm. It was interrupted in 2016: Donald Trump’s decree began in 2017, when he adopted a more aggressive rhetorical and business approach against his North American allies.

North America against China

With yesterday’s summit, Biden aimed to repair the rifts opened by his predecessor. Canada and Mexico are not only the two geographical neighbors of the United States, but also its two most important political allies and its key economic partners: the tripartite exchange of goods and services desired by the USMCA Free Trade Agreement. One and a half billion dollars a year.

At this point in the energy-industry transformation and the restructuring of important supply chains, then, theIntegration Electric vehicles, batteries, semiconductors, devices for renewable sources: North America will benefit from the Biden administration’s plans to win the race with China over production “sustainability”.

Tensions

Therefore, Biden’s ultimate goal is to soften the conflict with Mexico and Canada in order to narrow North America over to the challenge with Beijing. However the goal was not fully achieved. Rhetoric has certainly changed a lot since the Trump years, it has become friendly, but there are differences in vision and tensions.

Immigration – a thorny issue, with an increase in immigration to the Mexican border, mainly from Central America – has not emerged from the debate. No major agreements have been reached even on business issues that divide the “three friends”.

The problem with electric cars

Canada in particular is very interested in politics Buy American Given its deep economic and trade ties with Washington, Biden is seen by Ottawa as protectionist and detrimental to its interests, with the aim of encouraging the purchase of US-made goods.

In particular, the Trudeau administration opposes a provision in Biden’s spending plan that includes a $ 7,500 tax credit for the purchase of electric vehicles assembled in the United States. If the car was built in a US factory where the collective labor agreement negotiated by the unions is in effect, the debt would increase to $ 12,500.

The Deputy Prime Minister of Canada, Christiaan Freeland, said the incentive was in violation of USMCA regulations. ஆக The “issue of dominance” in relations between Ottawa and Washington.

To understand the Canadian opposition, it is important to consider that the automotive industry is a symbol of North American business integration: cars and trucks are the only highly traded goods between the area; But some parts that make up vehicles cross the U.S., Mexican and Canadian borders up to eight times and are added to their final shape. The Trudeau government fears that Biden’s tax credit will benefit vehicles Made in the United States In front of the domestic consumer, it will be detrimental to Canadian automakers.

Justin Trudeau addressed the issue with Biden during a bilateral meeting at the White House ahead of a three-party summit. But the US president, in essence, is Postponed Decisions on the inclusion of pro-Canada clauses when this measure is approved by Congress.

Mexico, another key partner of the US auto industry, has also made reservations about politics Buy American By Biden. Economy Minister Tatiana Clouthier said the Biden administration should focus Buy North American: “If we do not consider ourselves a region, we will not be able to face the challenges of the world”.

Line 5 Oil pipe

Canada opposes Michigan authorities’ desire to close the pipeline Line 5 For environmental risk issues. The pipeline carries up to 540,000 barrels of crude oil and natural gas per day from the US state of Wisconsin to the Canadian state of Ontario via Michigan.

Unlike the Keystone XL, which was canceled by Pitan, Line 5 is very important to Canada: this pipeline meets 45 percent of Ontario’s oil demand and supplies 40-50 percent of the crude oil used in refineries in Canada. Line 5 contains all the jet fuel used at Toronto-Pearson International Airport.

In fact, line 5 is useful for the United States: 55 percent of Michigan’s propane needs go through it, and more than half Aviation fuel Detroit Airport.

The Biden administration has not yet made a decision on line 5, but it should be made soon. It will not be an easy decision: if he supports the closure of Michigan, there is a risk that he will actually compromise relations with Canada; If he defends Ottawa’s interests and keeps them active, the president will oust the Democrats and its ally, Gretchen Widmer, as well as disparage environmental groups.

What has been achieved

However, the summit of the three Amigos produced definitive results (beyond that, less certain, linked to the potentially larger compromise between Biden, Trudeau and AMLO). An agreement has been reached to donate coronavirus vaccines to Latin America and the Caribbean; Contracted to reduce powerful greenhouse gas emissions methane; Planned investments to mitigate immigration to Central America and southern Mexico; Formed a coordinating committee on supply chains and procurement of important goods.

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