The United States Decides Not to Renew the USMCA, Will Continue Negotiations with Canada and Mexico

On Wednesday, July 1, the U.S. government announced it would not renew the United States-Mexico-Canada Agreement (USMCA) on schedule, but stated it will continue negotiations with Canada and Mexico to amend and improve the agreement.

This agreement was signed by President Trump during his first term and came into effect in 2020, replacing the North American Free Trade Agreement (NAFTA). According to the terms, the three countries were required to decide by July 1 whether to renew the agreement, which would extend its validity for another 16 years upon renewal.

Due to the U.S. decision not to renew, the agreement will transition into an annual review mechanism and may remain in effect for up to 10 more years, unless any one of the three countries decides unilaterally to withdraw, in which case it would not immediately lapse.

Before the U.S. announcement, the three nations held a video conference on Wednesday but failed to reach a consensus on renewal.

After the meeting, Mexican Minister of Economy Arabela Carrera said that all parties are currently maintaining the status quo. Attendees also included Canadian Minister Dominic LeBlanc, responsible for trade relations between Canada and the U.S., and U.S. Trade Representative Katherine Tai.

In a statement, Tai said: “The United States does not agree to renew the USMCA in its current form, therefore the agreement will not be extended.”

However, Tai emphasized that the U.S. will continue negotiating with Canada and Mexico to address shortcomings in the agreement as well as issues related to trade deficits between the U.S. and these two countries. She added that the USMCA will remain in force until these issues are resolved or the agreement is ultimately terminated.

A senior U.S. government official told media outlets that several key differences still exist, including Canada’s restrictions on dairy market access and U.S. concerns over Mexico’s corn policy.

Earlier this month, Trump stated he had no intention of renewing the USMCA in its current form. Meanwhile, the U.S. has already initiated bilateral negotiations separately with both Mexico and Canada.

The next round of U.S.-Mexico talks is scheduled for July 20, while no date has yet been announced for renewed negotiations with Canada.

The U.S. decision not to renew the agreement means the three countries will enter a new negotiation cycle. The talks could last several months or even years, with up to 10 years available to reach a new agreement.

Mexican Minister of Economy Arabela Carrera said he believes the agreement can be reached relatively quickly, noting there are “no major, insurmountable differences” visible at present. He pointed out that the number of disputed issues between Mexico and the U.S. has dropped from 54 last year to just 14.

Analysts note that the U.S. decision will not immediately change how businesses operate under the USMCA, but the resulting uncertainty may dampen investment.

Source: rfi

Original: toutiao.com/article/1869557004503051/

Disclaimer: This article represents the personal views of the author