The three parties to the United States β Mexico β Canada Agreement USMCA are beginning domestic consultations ahead of the scheduled joint review, which could lead to changes in the agreement. Under a novel provision in USMCA Article 34, the review also starts a year clock for expiration of the free trade agreement. To prevent expiration in , the parties must submit notifications at or after the review approving the renewal of the USMCA for another year term. For the United States, the Trump administration will likely withhold US renewal approval to compel a partial renegotiation of certain commitments through the joint review.
The full scope of the US plan has not yet been developed, but initiatives under discussion in Washington include modifications to the automotive industry rules of origin, strengthened forced labor import prohibitions, new restrictions on Chinese companies in North America, and resolutions to ongoing USMCA implementation disputes.
Article The six-year review in is the first opportunity for the parties to notify that they approve or oppose renewal of the agreement in The exact procedure for conducting the review remains undecided and there is no precedent to follow. If the parties decide to make amendments to the text of the agreement, Article The United States would likely be the primary force behind any changes to the USMCA during the review, because the United States was the party that originally proposed the review system.
Officials from the first Trump administration which negotiated the USMCA saw the review system as an action-forcing event the United States could leverage to obtain desired updates to the agreement. A key question for negotiators would be how far they want to push the review and renegotiation, as investor confidence depends on the parties maintaining a credible commitment to renewing the agreement by While negotiators could win some improvements to the agreement, a prolonged dispute could generate concerns among investors about the possibility of renewal failure.
Additionally, an extended renegotiation process could result in different political parties taking power by the time the negotiation concludes, potentially motivating the current leadership to seek a swift resolution. The United States will conduct an internal policy review in , the year preceding the USMCA review, to help formulate and articulate its position.
