By David Lawder

WASHINGTON U.S. Trade Representative Katherine Tai's meetings with North American trade partners Canada and Mexico this week will not delve deeply into major disputes over Mexico's biotech corn and energy policies nor Canadian dairy access, a senior USTR official said on Wednesday.

The annual meeting of the U.S.-Mexico-Canada Agreement (USMCA) Free Trade Commission will take place on Thursday and Friday in the Mexican resort city of Cancun, with participation from Tai, Mexican Economy Secretary Raquel Buenrostro and Canadian Minister of International Trade Mary Ng.

The meeting is required under the rules of the USMCA, which replaced the North American Free Trade Agreement in 2020, for the trading partners to discuss issues related to the trade pact.

A senior USTR official, briefing reporters on condition of anonymity, said the three ministers will discuss the ongoing implementation of USMCA, which is scheduled for a major review and potential updates in 2026. A new subcommittee created last year on competitiveness and supply chains also will meet to update officials on work to facilitate trade flows during crisis situations and prevent disruptions, the official added.

The official said North American trade irritants that are in dispute consultations or arbitration - and which could ultimately lead to punitive U.S. import duties - are being handled through separate channels. The "primary place" to discuss these issues are in issue-specific consultations started under USMCA dispute settlement rules, the official added.

These issues include U.S. complaints over Mexican policies to limit use of genetically modified corn imported from the United States, and over Canada's allocation of dairy import quotas that U.S. officials have said hurts American producers. These disputes also include the USTR's long-running consultations with Mexico over its energy policies that fail to meet commitments to open its energy market to outside competitors.

"Those are obviously very important issues that remain important on all levels, so they're on the top list of priorities," the official said. "I wouldn't say that they're walled off, but certainly the primary space for discussing them is in the actual consultations."

After a USMCA dispute settlement panel ruled in January against the stricter U.S. interpretation of the trade pact's automotive rules of origin, siding with Mexico and Canada, the United States was working separately with its two partners to find a solution for "enhancing North American motor vehicle production and jobs," the official said.

The Cancun meeting also will include discussions on USMCA's "rapid response mechanism" for labor rights violations at specific factories. The United States has invoked 11 cases under the mechanism since USMCA was launched, including an investigation at a Goodyear Tire & Rubber Co plant in Mexico that is the sixth this year.

The official said that the USTR has brought good cooperation from Mexico on the mechanism, which is aimed at improving labor rights at Mexican factories. A senior U.S. labor official separately told Reuters that Mexico needs stronger institutions to protect workers as companies shift supply chains to the southern U.S. neighbor.

(This story has been corrected to fix the spelling of the Mexican economy secretary's last name in paragraph 2)

(Reporting by David Lawder in Washington; Additional reporting by Daina Beth Solomon in Mexico City; Editing by Will Dunham)