North America’s trading partners have convened in Cancun for a two-day meeting to assess the progress made under the U.S.-Mexico-Canada Agreement (USMCA) over the past three years. International Trade Minister Mary Ng is engaging in discussions with U.S. Trade Representative Katherine Tai and Mexico’s economy secretary Raquel Buenrostro, affectionately known as the “three amigas” by Ng.
According to Tai’s office, the U.S. experienced a significant increase in exports of goods and services, reaching nearly US$790 billion in 2022, a growth of 31% compared to 2012. The U.S. Department of Commerce estimates that North American exports supported approximately 2.1 million jobs in 2021.
One key topic of conversation during the meetings will likely be the agreement’s six-year review clause, which necessitates a comprehensive evaluation of the deal by June 2026. Ng, however, hopes that instead of perceiving this as a countdown, both Mexico and the U.S. will seize the opportunity to ensure the longevity of the agreement well beyond 2036.
Ng describes the USMCA, known as CUSMA in Canada, as “the most successful in the world.” She emphasizes the predictability and stability it provides for 16 years, until 2036, and suggests that the periodic review points, including the one in 2026, present an opportunity to establish even greater certainty and extend the agreement beyond 2036.
Both Canada and Mexico are interested in learning whether the U.S. will adhere to a tribunal ruling earlier this year that overturned its classification of foreign automotive content. Ng has been closely monitoring this matter for months and underscores the importance of all parties honoring the terms of the international trade agreement. She stresses the significance of adhering to the rules that underpin the agreement and highlights the auto sector’s role in fighting climate change through the promotion of electric vehicles.
The dispute panel’s decision in January declared the U.S. interpretation of foreign content rules for autos as “inconsistent” with the agreement’s terms. The USMCA raised the allowed “regional value content” for automotive parts to 75%, aiming to increase each country’s share of the auto manufacturing sector.
Determining whether a component like an engine meets the regional threshold for North American origins is crucial in assessing duty-free status for vehicles. The U.S. had argued for a stricter interpretation of the agreement’s language, but the panel outright rejected this position. Since then, the U.S. has remained largely silent about its intended response, leaving uncertainty surrounding the outcome of these meetings.
Officials from Tai’s office did not provide any hints during a recent briefing on whether the discussions would bring clarity to the situation. They expressed a commitment to finding a positive solution that benefits all parties and stakeholders by enhancing North American motor vehicle production and creating jobs.
Other contentious areas, such as Mexico’s production of genetically modified corn and Canada’s inflexibility regarding dairy export quotas, also remain high on the priority list. However, these issues are subject to separate dispute resolution mechanisms, which remain the primary means of addressing them.
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