US Declines to Renew North American Trade Pact as It Stands

(WASHINGTON) – The United States will not renew the United States Mexico Canada Agreement in its current form, triggering a ten year process that could gradually wind down the North American free trade zone that has operated for 32 years and reshaped continental commerce watched closely by emerging trade blocs including those in East Africa.

The Trump administration is seeking changes to the pact to restore manufacturing jobs in the United States and cut the trade deficit with its neighbours. The decision, announced after a six year review of the North American free trade framework, keeps the agreement in force for another 10 years with annual reviews until expiry, unless the three countries agree to renew it with amendments.

“America did not agree to renew USMCA as it stands today. America will continue to work with Mexico and Canada to address the deal’s shortcomings and reduce the trade deficit with these countries,” said United States Trade Representative Jamieson Greer.

Bilateral talks with Mexico on USMCA are scheduled to take place after 20 July in Mexico City. They will focus on tightening rules of origin for automobiles and other industrial goods, as well as on economic security to prevent other countries, including China, from exploiting access under the agreement.

Mexico’s Economy Minister Marcelo Ebrard said Mexico City wants to help address Washington’s concerns about job losses and the trade deficit. “I cannot identify any difference between Mexico, the United States and Canada that is so big we cannot resolve it,” Ebrard said.

On Wednesday he held online talks with Greer and Canadian Minister Dominic LeBlanc, who is responsible for trade relations with the US. LeBlanc said Canada will keep working to resolve the question of American tariffs on Canadian steel, aluminium, automobiles and timber.

“We agreed on the importance of continuing our talks and finding ways to ensure that the trade and investment framework between Canada, the United States and Mexico continues to support prosperity and competitiveness in North America,” he said.

Mexican President Claudia Sheinbaum, speaking before Washington’s formal announcement, said renewal of USMCA could happen at any point over the next decade if the parties reach agreement. “Joint work continues. This does not mean everything ends today,” she said.

The USMCA was agreed by the first Trump administration to strengthen the 1994 North American Free Trade Agreement and sits at the heart of a highly integrated regional economy with annual three way trade of about 1.6 trillion dollars.