US refuses to extend USMCA trade pact

Washington, July 1 (IANS) The Trump administration on Wednesday refused to renew the United States-Mexico-Canada Agreement (USMCA), opening negotiations to rewrite key parts of President Donald Trump’s signature North American trade pact while insisting it remains in force during the review process.

The decision came after representatives of the United States, Mexico and Canada held the first mandatory six-year joint review of the agreement, which entered into force in 2020. While Washington declined to support a fresh 16-year extension, officials stressed that the pact remains operational as the three countries continue negotiations.

“The United States did not agree to renew the USMCA in its current form. As a result, the USMCA is not renewed,” US Trade Representative Ambassador Jamieson Greer said in a statement issued after the meeting.

“The United States will continue to engage with Mexico and Canada to address the Agreement’s shortcomings and our trade deficits with these countries. However, the Agreement remains in force pending resolution of these issues or until the Agreement’s termination.”

A senior administration official later told reporters that the review mechanism was intentionally built into the agreement to ensure it would not continue indefinitely without reassessment.

“The idea was to make sure that any agreement between Mexico, Canada and the United States always put America first rather than let a trade deal persist on autopilot over decades as had happened with NAFTA,” the official said.

The administration concluded that the agreement had succeeded in modernising North American trade rules but had failed to achieve one of its principal objectives, the official noted.

“The primary issues that the president’s been focused on… is our trade deficit,” the official said. “We believe that the USMCA did not operate to control the deficit as the president intended.”

Pointing to unresolved market access issues involving Canada’s dairy sector, and disputes over US energy and agricultural exports to Mexico, the official said the administration views these as persistent trade imbalances with both countries.

Under USMCA, the failure of all three parties to agree on an extension does not terminate the pact, but it begins a review period during which the agreement remains in force while negotiations continue. The official noted that President Trump also retains the authority under US law to withdraw from the agreement before that process concludes.

The United States will hold a third round of bilateral negotiations with Mexico during the week of July 20. The senior administration official said the talks would focus on strengthening rules of origin, enhancing North American economic security, improving labour and environmental compliance, and expanding intellectual property protections.

“What we don’t want is a situation where… everyone says, fine, I’m just gonna move everything to Mexico and import to the US duty-free,” the official said. The administration is seeking stronger US content requirements in manufactured goods to encourage more production within the United States.

The official said discussions with Canada would also continue, while criticising Ottawa’s retaliation against US tariff measures and what the administration considers unresolved non-tariff trade barriers.

The USMCA replaced the North American Free Trade Agreement (NAFTA) on July 1, 2020, after years of negotiations led by President Trump during his first term. It modernised rules governing digital trade, labour standards, automotive manufacturing and intellectual property, while introducing a mandatory joint review every six years.

–IANS

lkj/dan