As the July 1 deadline for deciding on renewal of the United States-Mexico-Canada Agreement nears, some key industry groups are marshalling their forces to lobby for extension and strengthening of the pact.
Their action appears to be an attempt to get ahead of what could prove to be either a smooth renewal or a contentious, drawn-out battle — the outcome largely depending on the mood of President Donald Trump.
In March of this year, the U.S. and Mexico kicked off bilateral technical discussions, focusing on issues pertaining to the two nations’ manufacturing industries, and a desire to tighten up country-of-origin rules under the USMCA. Canada wasn’t part of those initial talks — it’s currently on the diplomatic outs with President Donald Trump, although was expected to engage at a later date.
A provision of the USMCA, which officially replaced the North American Free Agreement (NAFTA) on July 1, 2020, requires the three parties to decide by July 1, 2026 whether to extend it for another 16 years. If any of them object, the agreement automatically becomes subject to a series of annual reviews, with a final expiration date of 2036. Should everyone agree on renewal this year, the next decision on extending the USMCA would occur in 2032.
Electrical manufacturers across North America are especially invested in seeing the USMCA renewed. In a joint letter to the trade ministers of the three countries, issued in early April, the U.S.-based National Electrical Manufacturers Association (NEMA) joined with Mexico’s La Cámara Nacional de Manufacturas Eléctricas (CANAME) and Canada’s Electro-Federation Canada (EFC) in urging negotiators “to finally unleash the USMCA’s potential.”
The signatories called the USMCA “a cornerstone of North American economic competitiveness for electrical manufacturers.” They added that the agreement “has strengthened regional supply chains and created clear rules of origin, dispute resolution mechanisms, and an agenda that facilitates trade.
“Decisive action to renew the USMCA is critical in the face of global competition, including state-subsidized firms in Asia,” the letter said.
Patrick Lozada, NEMA’s senior director of global policy, says the USMCA “has been essential to North American electrical manufacturers.” Mexico and Canada account for more than 40% of U.S. exports in that sector, and Mexico is the United States’ largest import partner, he adds.
The trade groups aren’t just asking for renewal of the agreement in its current form, however. They’re calling for strengthening the USMCA in three areas:
- Harmonizing technical standards. Lozada says Mexico’s electrical code hasn’t been updated in 14 years, while the U.S. and Canada do so every three years. The disparity hinders access to the Mexican market and creates numerous technical barriers to trade, he says.
- Consulting with industry on changes to rules of origin. The letter urged adoption of rules that “reflect the reality of North American supply chains, incorporate reasonable methodologies and valuing content, and leverage industry standards and certifications.” Critics say Chinese manufacturers in particular have exercised unfair advantage by transshipping products into North America under the agreement’s duty-free provisions.
- Preserving the agreement’s trilateral structure. “If the USMCA is fractured into bilateral agreements, it would significantly disrupt these value chains, leading to higher costs for both manufacturers and consumers,” the joint letter said. In the face of mounting trade tensions between the U.S. and Canada, President Trump has threatened to pursue a separate trade agreement with Mexico, or even scrap the USMCA altogether, if he doesn’t obtain certain concessions from Canada.
Trump’s confrontational approach to all U.S. trade negotiations, and those with Canada in particular, are casting doubt on the prospect of a smooth renewal of the USMCA. “A clean, early extension by July 1 now appears unlikely,” according to commentary published in March by the Center for Strategic and International Studies (CSIS).
NEMA and its counterparts in Mexico and Canada are nevertheless “urging governments across North America to come to the table and have serious discussions to extend this agreement,” Lozada says. Granting the USMCA another 16 years would be “the ideal outcome,” he adds, arguing that an annual regulatory review cycle “creates additional uncertainty for business.”
The implications of a failed or weakened USMCA extend well beyond electrical manufacturers. Lozada says NEMA has endorsed similar letters of support for renewal by the National Foreign Trade Council and U.S. Chamber of Commerce, representing all major industries in the region that benefit from close trade ties among North American countries.
“It’s essential that we get this review right,” says Lozada, “and have long-term stability.”