With help from Doug Palmer

— The United States launched a joint action plan with Mexico as part of ongoing efforts to make North America a hub for advanced semiconductor technology despite escalating division over Mexico’s energy and agricultural policies.

— GOP lawmakers wrote a letter to the Department of Homeland Security accusing a Chinese auto-parts maker of evading U.S. tariffs — the latest sign of growing pressure in Washington to derail China’s influence over the global auto market.

— The Biden administration’s trade agenda will proceed uninterrupted through at least Nov. 17, after Congress temporarily averted a government shutdown in a whirlwind weekend on Capitol Hill.

It’s Monday, Oct. 2. Welcome to Morning Trade! Hopefully you all in the District had a chance to check out Art All Night over the weekend, featuring late night installations, concerts and vendor markets. My favorite part was hearing blues playing live in Cleveland Park, which, apparently, our secretary of state has quite the knack for! Send us your trade news at: [email protected], [email protected] and [email protected]. You can also follow us on X: arihawkins, @gavinbade and @tradereporter.

U.S., MEXICO HOLD HIGH-LEVEL ECON TALKS: U.S. Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo and U.S. Trade Representative Katherine Tai hosted Foreign Secretary Alicia Bárcena and Mexican Economy Minister Raquel Buenrostro on Friday at this year’s U.S.-Mexico High-Level Economic Dialogue.

During the summit, Blinken touted a new joint action plan on semiconductors, as well as efforts to improve wait times for goods crossing the border and address the root causes of soaring migration. The exchanges come as Washington moves to reduce dependency on adversarial nations like China on critical technology.

Reminder: President Joe Biden and Mexican President Andrés Manuel López Obrador relaunched the bilateral forum in 2021 to advance shared strategic economic and commercial priorities in areas that include the deployment of advanced technologies and regulatory compatibility and risk mitigation in sectors such as information and communication technologies, networks, cybersecurity, telecom and infrastructure.

Talks continued: U.S. Attorney General Merrick Garland and Blinken are traveling to Mexico this week for a high-level security dialogue, which a senior administration official said would set “the scaffolding” for economic and security cooperation between the countries.

Keep in mind: Mexico recently eclipsed China as the largest U.S. trading partner, last year exchanging an all time high of more than $860 billion in goods and services.

The meeting comes after USTR escalated its objections to Mexico’s curbs on genetically modified corn. Washington has also consistently argued that Mexico’s protectionist energy policies discriminate against foreign companies.

No backing down: Mexico has a three-pronged strategy for reducing imports of genetically-modified yellow corn from the United States, Víctor Suárez Carrera, Mexican undersecretary for agriculture, said in a newly published interview with the Institute for Agriculture and Trade Policy.

The strategy includes encouraging more production of non-GM yellow corn in Mexico; encouraging more production of vegetables, such as the cassava tuber and fodder beets, that can replace corn in animal feed; and encouraging Mexican buyers to sign contracts to buy non-GM corn from the United States instead of GM corn, he said.

Not hot and bothered: Suárez Carrera downplayed the recent U.S. request for a dispute settlement panel to determine whether López Obrador’s biotech corn policies violate Mexico’s commitments under the USMCA.

“Mexico … will demonstrate that the decree has not caused significant losses to U.S. exporters because it does not restrict imports, only the use of GM corn in masa and tortillas,” Suárez Carrera said. “And it will demonstrate that scientific studies point to health and environmental risks for a country with such a diversity of corn and such a high consumption of minimally-processed corn. We have the right to protect public health and the environment.”

GOP CALLS FOR TARIFF FRAUD PROBE: Members of the House Select Committee on China are urging Department of Homeland Security Secretary Alejandro Mayorkas to investigate a Chinese auto-parts maker in the latest signal of rising pressure in Washington to clamp down on China’s prevalence in the auto industry.

“Reviews of Qingdao Sunsong’s public disclosures lay out a case of blatant trade fraud that is having a catastrophic impact on American manufacturers,” wrote Chair Mike Gallagher (R-Wisc.) and Rep. Darin LaHood (R-Ill.).

“We respectfully request that you provide the Select Committee with a briefing on how the Department is investigating and seeking redress from these perpetrators as soon as possible but no later than October 13, 2023.”

The lawmakers accused manufacturer Qingdao Sunsong of rerouting shipments of rubber-hose products through Thailand in order to skirt a 25 percent tariff imposed on its U.S. unit.

“One American company has been compelled to accumulate significant debt, divest itself of two business divisions and most recently lay off one-quarter of its workforce due to Sunsong’s trade fraud,” the pair added, without identifying the firm.

Part of a trend: Ford Motor Company announced last week that it had paused its partnership, after the chairs of three House committees demanded it turn over documents related to its relationship with the Chinese battery company CATL.

Meanwhile: The United Auto Workers union blasted the decision as a “barely-veiled threat” to cut jobs during their ongoing strike against the Big Three automakers. Ford is scaling back electric vehicle production plans as sales growth stagnates.

Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories.

TRADE AGENCIES BREATH RELIEF: The Office of the U.S. Trade Representative and the Department of Commerce will get a chance to move forward with their agenda after the president signed a stopgap funding bill Saturday to avert a shutdown and keep the government open for 45 days.

The news is a relief to USTR, Commerce, the Export-Import Bank of the U.S. and the Department of Homeland Security, which all released contingency plans in preparation for a shutdown. USTR expected to whittle the agency’s 268 full-time employees down to just 78 people needed to help President Joe Biden carry out his constitutional duties and powers, while the Department of Commerce prepared to furlough tens of thousands of employees.

Delayed, not averted: The final measure included $16 billion in disaster relief and avoided deep cuts to domestic programs that had been proposed in the past few days, per one White House official. But the stopgap did not include funding for Ukraine, teeing up conflict over a top Democratic priority.

A shutdown could derail the Biden administration’s entire trade agenda, including negotiations over a steel and aluminum agreement with the European Union, economic talks with 13 countries across Asia and preparations for Biden to host the annual Asia-Pacific Economic Cooperation forum in November.

CHINA MOVES TO SPUR INBOUND TRAVEL: China’s State Council unveiled a plan to boost the country’s sluggish tourism industry and attract more foreign investment as the country prepares for nearly 900 million domestic trips taken by mainland Chinese travelers in the eight-day National Day Golden Week holiday that kicked off Sunday.

The document outlined broad efforts to boost visa-free travel to China. The action comes after the country reopened in January after closing itself off to the world for three years because of the Covid-19 pandemic.

— Katherine Tai will join the White House Competition Council, Joe Biden’s panel aimed at enhancing economic competition, according to an announcement from USTR and the National Economic Council.

— Mark Lambert will serve as the Biden administration’s deputy assistant secretary for China and Taiwan, and will oversee the Office of China Coordination, per a release from the State Department.

— Republican presidential candidate Nikki Haley doubled down on her criticism of fellow candidate Vivek Ramaswamy for his use of China-controlled TikTok, which was a flashpoint in the most recent GOP debate, reports David Cohen.

— Former German Chancellor Angela Merkel’s economic adviser was adamant his country wasn’t in the wrong to secure massive gas supplies by working with Russian President Vladimir Putin, reports Stuart Lau.

— Germany said it will continue supporting a Chinese state-backed development bank despite Canada’s decision to freeze ties due to Beijing’s influence, also per Stuart.

— The director of the Office of Management and Budget expressed confidence that Congress would continue providing funding to Ukraine, even though the 45-day stopgap funding bill passed this weekend left aid to the invaded country in jeopardy, per Kelly Garrity.

— Officials from Paraguay and the United States agreed to extend a 2019 agreement through 2025 designed to shore up bilateral exchange of agricultural products, per MercoPress.

— The Bureau of Industry and Security hopes to publish the final version of last year’s chip controls this month, according to the agency’s senior adviser for international policy, per Export Compliance Daily.

THAT’S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: [email protected], [email protected] and [email protected]. Follow us @POLITICOPro and @Morning_Trade.