Panel
Make the Deal Work: Rethinking USMCA for a Competitive Future | Global Investors' Symposium MX City
- The USMCA review is projected to terminate by next June, described by various officials as a necessary update driven by global shifts like AI and technology rather than a full renovation or total renegotiation.
- Participants anticipate distinct national approaches: the US may implement fairly significant changes characterized as a renegotiation, Canada aims for a narrow, targeted review to preserve economic integration, and Mexico views the process as healthy based on US demand for agricultural, construction, and hospitality visas.
- Despite discussions potentially evolving into dual bilateral negotiations, the final outcome is expected to result in a trilateral agreement due to deep supply chain integration and the goal of maintaining an integrated North American economy.
- The review aims to consolidate North America as a competitive bastion against China, with expectations that China's foreign investment in Mexico remains low (approx. 0.8%) and that the region will align measures with the North American view to manage Chinese economic influence constructively over the long run.
- A period of intense dialogue is expected between now and June covering specific Mexican reforms, including judicial, energy, and Amparo reforms, alongside the creation of stability against current unpredictability from tariffs and 232 investigations.
- Canada anticipates clarity on desired outcomes within the coming couple of months following consultations with business, civil society, and labor unions, while also planning a trade mission in February to intensify Canada-Mexico trading beyond current levels.
- Goals include substituting Asian imports, increasing trade between Mexico and Canada to reduce deficits, and pursuing import substitution in Mexico to address poverty and prevent goods from China passing through the country.
- Potential outcomes involve "tweaking" the agreement with minor changes to enhance resilience, competition, and dynamism, while seeking broad bipartisan political support to modernize the pact for a stronger, more integrated, and resilient North America.
- Inflation and midterm elections in the US are identified as significant variables that may influence the timing of the final agreement, with a target of June or potentially later, though the process is acknowledged as difficult and the exact duration uncertain.
- Officials express hope that a successful review will provide immediate certainty and guarantee the agreement's continuation for another 16 years, serving as a foundation for economic competition and prosperity.