To Be or Not to Be, Is that the Question for USMCA?

Jun. 17, 2024
By: Hannah B. Kreinik

Unlike most other trade agreements, USMCA (CUSMA to our friends in Canada) was negotiated with a requirement that the parties review the agreement after five years. The discussion about how that review will be approached and what issues must be addressed has begun in Canada, with the Canadian government being clear that they intend to review, rather than renegotiate, the agreement.

As the agreement’s review draws near, Canada’s Minister of Export Promotion, International Trade and Economic Development Mary Ng insists that the country views this as an opportunity to ensure that the deal continues to support Canada’s interests in the region. Even though Canada’s stance seems clear on the issue, external pressures and global developments are providing pushback to fuel re-negotiations among the parties.

The USMCA became effective in 2020, as the updated version of the North American Free Trade Agreement (“NAFTA”) from 1994 including the United States, Canada, and Mexico. The purpose behind the agreement was to strengthen ties among the countries and provide positive trade relationships to benefit all three parties. Now that the 2026 review is coming up, the parties will be able to make changes, and determine whether the agreement should continue for another 16 years or let it go after another decade.

Although the US and Canada seem generally aligned on the review of the agreement, recent developments in the climate change and electric vehicle battery sectors have made for possible interesting points of discussion for the review. In addition, Canada and the United States have long standing conflicts regarding the treatment of softwood lumber from Canada, the regulation of the dairy industry in Canada, as well as the United States interpretation of certain automotive rules of origin under USMCA.

As each of the countries begins the public process of discussing their interests in the reviews we expect to see issues, both old and new, discussed. Companies that trade in North America would be wise to keep an eye on those discussions. For more information on how your company may benefit from the USMCA/CUSMA, please reach out to any Barnes Richardson attorney.