The United States confirmed on Wednesday it would not renew its North American trade pact, its trade chief blaming Canada’s pursuit of Chinese investment.
US Trade Representative Jamieson Greer said the three governments met virtually and that Washington would not endorse the United States-Mexico-Canada Agreement (USMCA) in its current form.
“The United States did not agree to renew the USMCA in its current form. As a result, the USMCA is not renewed,” Greer said in a statement.
The refusal did not tear up the pact, which stays in force while the three governments begin annual reviews that could run until it expires in 2036.
A renewal on Wednesday would have reset that clock to 2042 and spared businesses a decade of recurring uncertainty.
The agreement replaced the North American Free Trade Agreement in 2020 and covers a market worth about US$1.8 trillion a year. It supports an estimated 17 million jobs and allows parts and products to cross the three borders without tariffs.
Its rules reach deep into industry, requiring 75 per cent of a vehicle’s content to originate in North America to move duty-free. That binds together supply chains in which parts cross the borders repeatedly before a finished car is sold.
A third round of bilateral negotiations with Mexico was set for the week of July 20, with Canada left off that track.
Although the notice said nothing about China, Greer placed Beijing at the heart of Washington’s grievances in a separate interview with Bloomberg.
China looms over a deal among three Western economies because of the access the pact provides.
Tariff-free flows within the bloc mean that Chinese goods or investment entering Mexico or Canada can reach the United States.
Washington has pushed its two neighbours to screen Chinese capital and keep Chinese parts out of North American cars.
US trade chief accuses Canada of sending mixed messages
Greer accused Canada of sending mixed messages, pledging one day to help reindustrialise the United States and the next courting Chinese capital.
“One day they’ll say, ‘We want to help America reindustrialise, we want to help make America great again,’” Greer said. “Then the next day they’ll talk about bringing in Chinese investment.”
Chinese carmakers gaining ground outside the United States had hardened Washington’s demands on autos, Greer said. He wanted a higher threshold of American-made parts and tighter content rules to block Chinese parts routed through the two neighbours.
Greer said the pact carried “substantial issues” and that several changes were needed to correct trade imbalances.
The refusal marked a turn for US President Donald Trump, who signed the pact in his first term and once called it his best trade deal.
Mexican President Claudia Sheinbaum said the same day the agreement would remain valid until 2036. Economy Secretary Marcelo Ebrard said he would meet US and Canadian counterparts to map out next steps.
“We have these ongoing negotiations, and we don’t know exactly when they will end,” said Patrick Childress, who co-leads the USMCA team at law firm Holland & Knight. “That creates some uncertainty for companies.”
Diego Marroquin Bitar, a fellow with the Americas Programme at the Centre for Strategic and International Studies in Washington, who works on its USMCA initiative, said Greer’s complaint pointed to a recent thaw between Ottawa and Beijing rather than a broad realignment.
Canada had moved to restore access for its canola in the Chinese market. It won agricultural concessions and, in return, secured a limited quota for Chinese electric vehicles, judging the trade-off too small to reshape its industrial base.
“It’s not that Canada was fully aligning with China,” Marroquin Bitar explained. “It was something very specific in the electric vehicles and in agriculture.”
US government unsure of curbs to enforce on China
In his view, neither neighbour could recalibrate its China policy while Washington’s own approach remained unsettled. Washington had yet to decide whether it wanted broad curbs on Chinese capital or narrower limits tied to a few critical industries.
“It doesn’t make sense to build a fortress North America against non-market economies if the partners in that fortress don’t have full access to the US market,” Marroquin Bitar added.
He cast China less as putting a wedge between the countries and more as likely to draw the three governments together, since each faced Chinese economic pressure to varying degrees.
Screening Chinese investment offered an easier alternative.
“Let’s find consensus as to which investments we want to welcome into the region and which investments may become a risk for national security,” he said.
“That’s perhaps an easier conversation.” -- SOUTH CHINA MORNING POST
