U.S. Pursues Separate Protocols with Canada, Mexico as USMCA Talks Extend

The United States is moving forward with separate trade protocols involving Canada and Mexico amid ongoing discussions about the United States-Mexico-Canada Agreement (USMCA). U.S. Trade Representative Jamieson Greer has indicated that these protocols will be layered onto the existing agreement as negotiations extend beyond the anticipated review date of July 1.

Background on USMCA Negotiations

The USMCA, which governs trade among the U.S., Canada, and Mexico, came into effect in 2020. As the formal review approaches, a pivotal question has arisen: will the agreement remain a trilateral pact, or will it split into two bilateral agreements? Greer emphasized the need for changes, recognizing that each country has unique trade dynamics.

Key Considerations for Bilateral Agreements

Greer highlighted that each country has different import-export profiles and labor situations, which necessitates two separate protocols. He stated, “There are a bunch of load-bearing pillars in the agreement that function well.” These foundational aspects will be preserved while allowing room for addressing specific bilateral issues.

Timeline and Expectations

• The U.S. began engaging in technical discussions with Mexico last month.
• No formal USMCA discussions between the U.S. and Canada have started as of yet.
• On July 1, the partners can either renew the deal for 16 years or initiate annual reviews for 10 years.
• Any partner can withdraw with six months’ notice, but Greer anticipates the U.S. may announce intentions for alterations rather than a simple renewal.

Greer must submit a report to Congress by June 1, outlining the U.S.’s stance ahead of the review.

Issues on the Table

Both Canada and Mexico wish to maintain the trilateral structure of the USMCA, despite acknowledging the necessity of addressing bilateral issues. Canadian Trade Minister Dominic LeBlanc confirmed that both bilateral and trilateral discussions would take place.

U.S. Trade Concerns

• For Canada, concerns include dairy quotas, digital streaming rules, and provincial restrictions on U.S. liquor.
• Recent complaints also focus on Canada’s sovereign cloud infrastructure and procurement limitations.
• For Mexico, U.S. grievances involve labor law enforcement and restrictions on energy sector investment.

Greer is advocating for structural changes applicable to all three nations, focusing on tighter rules of origin and more cohesive external tariffs. He aims to increase U.S. manufacturing content in products produced within North America and curb unwanted imports from China via Canadian and Mexican networks.

Impact of Tariffs and Future Directions

The Trump administration’s decision to implement tariffs across multiple sectors has posed challenges in the context of USMCA compliance. The fate of these tariffs will significantly influence the upcoming negotiations. Achieving favorable outcomes for the U.S. will remain a primary goal as talks progress.

As the July 1 deadline approaches, the focus will intensify on whether the USMCA will adapt to meet the distinct needs of the countries involved through these proposed protocols.