Make the Deal Work: Rethinking USMCA for a Competitive Future | Global Investors' Symposium MX City

Review vs. Renegotiation Consensus: All three panelists agree the upcoming 2026 USMCA review will be substantive but ideally narrow, focusing on adjustments rather than a full treaty overhaul.

• Ambassador Moctezuma (Mexico) characterizes it as a "review" to address changes like AI and energy since the original treaty's inception.
• Ambassador McKay (Canada) explicitly desires a "narrow and targeted" review to avoid "unscrambling the omelet" of integrated North American supply chains.
• Kimberly Breyer (Covington & Burling) notes that while the process is currently underway, the U.S. administration has framed it as a renegotiation, creating a "high risk moment" for the agreement.

Key Drivers for Revision: The panel identified specific structural and geopolitical shifts requiring attention within the next 16-year cycle.

• Technology & AI: The absence of Artificial Intelligence provisions in the original 2018 text is a primary driver for modernization.
• Supply Chain Resilience: Post-pandemic realities have highlighted the need for stable, secure, and resilient North American supply chains.
• Labor Standards: Mexico reports increased minimum wages and worker benefits, aiming to align with U.S. and Canadian expectations for a level playing field.
• Energy Transition: The intersection of AI energy demands and differing national energy approaches is cited as a critical area for alignment.

The "China Factor": China is identified as the "elephant in the room," though the panelists differ on the immediate impact of China-Mexico relations.

• Robert Lighthizer's description of China as a central negotiation variable was acknowledged by all three experts.
• Ambassador Moctezuma countered the narrative by stating China's share of Mexico's foreign investment is only 0.8%, arguing the geopolitical risk is overstated.
• Canada and Mexico both emphasized the need for an aligned North American front to compete with or cooperate with China on issues like climate change and commodities.

Negotiation Format & Dynamics:

• Bilateral vs. Trilateral: Breyer confirmed that the first USMCA term utilized "dual-bilateral" negotiations (U.S. with Mexico, then U.S. with Canada) but predicted a trilateral outcome is inevitable due to deep industrial integration.
• Mexico's Strategy: President Sheinbaum's administration is prioritizing understanding U.S. needs first, particularly regarding immigration and security, which have seen progress outside the trade text.
• Canada's Strategy: Canada is consulting domestic stakeholders (business, labor, civil society) to define a narrow outcome that reduces unpredictability caused by existing Section 232 investigations and tariffs on steel, aluminum, and pharmaceuticals.

Canada-Mexico Bilateral Relations: Recent diplomatic engagement, including the meeting between Prime Minister Carney and President Sheinbaum, aims to strengthen the second-tier partnership.

• Trade Volume: Current bilateral goods trade stands at $56 billion, with $46 billion in investment, which panelists describe as "underperforming" relative to both nations' GDPs ($2.4T for Canada, $2.1T for Mexico).
• Future Action: A "Team Canada" trade mission led by the Trade Minister is scheduled for February to boost bilateral commerce and address security issues like organized crime.

U.S. Election Year Context: The negotiation timeline coincides with the U.S. election cycle, influencing the approach.

• Breyer theorized that tariff intensity may be a "first-year" strategy that could sunset as inflation becomes a central midterm issue.
• The panelists anticipate that the desire for economic certainty will ultimately drive all three parties toward an agreement before the June termination window.

Desired Outcomes for a Revised Agreement:

• Certainty & Stability: All three experts prioritized predictability for businesses to reduce the volatility seen in recent years.
• Political Buy-in: Breyer emphasized that a successful deal requires "broad-based political buy-in" similar to the original USMCA's bipartisan support.
• Regional Competitiveness: The ultimate goal is to strengthen North America as a competitive bastion against global rivals while maintaining high labor and environmental standards.
• Modernization: Proposed updates include new chapters on critical minerals, technology, and mechanisms to prevent China from using Mexico as a transshipment point for goods entering the U.S. market.