The objectives of the USMCA are being met, according to the Progressive Policy Institute (PPI) on the first day of hearings at the Office of the U.S. Trade Representative (USTR) in Washington.
The hearings, which will be held from December 3 to 5, will feature approximately 100 witnesses.
Objectives of the USMCA
At the hearing, Edward Gresser, vice president of the PPI, commented that the USMCA “is working reasonably well.”
The agreement, which replaced NAFTA, entered into force on July 1, 2020. In addition, Congress approved in 2019 that its Final Provisions chapter include a relevant clause. This clause requires the governments of the United States, Mexico, and Canada to conduct a review after six years, i.e., in July 2026, to decide whether to modify the agreement.
It is a broad agreement. It covers multiple industries and applies to nearly $2 trillion in U.S. trade in goods and services. However, like all human endeavors, the USMCA is imperfect by definition.
Even so, for the IPP, it meets its main objectives. It facilitates trade in agriculture, services, energy, and manufacturing. It also helps keep digital channels open and encourages cooperation on wildlife trafficking and ocean health. On the other hand, it offers Americans reliable consumer goods and industrial supplies at low cost. Finally, it introduces a novel approach to addressing labor issues. Finally, it introduces a novel approach to addressing labor issues.
Crisis
Meanwhile, Gresser warned that serious problems unrelated to the agreement have arisen. These affect U.S. trade in general and, in particular, relations with Canada and Mexico.
Since last February, the Trump administration has imposed tariffs in a manner that Gresser considers “excessive.” In addition, it has issued direct threats against both trading partners. This has triggered “real crises.” Among them, he highlighted the damage to the constitutional separation of powers, the erosion of key national security relationships, and growing economic deterioration. In his view, tariffs raise the cost of living for families, slow growth, and reduce U.S. agricultural and industrial competitiveness.
The review clause in the Final Chapter establishes an evaluation, not mandatory action. In another context, it would be useful to examine adjustments to refine the agreement. However, Gresser believed that under the conditions envisaged for 2025 and 2026, policy toward Mexico and Canada should focus on curbing these self-generated crises and mitigating their effects.
Tariffs
If the administration decides to move forward with revisions to the agreement, that process should only take place after three key steps, Gresser said.
First, Congress would have to pass legislation to end “emergency” and “national security” tariff decrees under laws such as IEEPA, Section 232, and Section 301. It should also require votes on any future imposition of tariffs or other import restrictions, with limited and clearly defined exceptions.
Next, security in North America would need to be stabilized. This requires restoring trust, mutual respect, and shared interest as the basis for U.S. policy toward Mexico and Canada.
Next, a policy-making process consistent with the Constitution would need to be restored. Congress would then set negotiation objectives for any relevant changes to the USMCA and decide by vote whether to approve the resulting agreements.
Once these steps have been taken, it would be appropriate to study the USMCA in detail. It could even be useful if there were broad consensus for improvements. Otherwise, the implementation of this program would not be appropriate for now.