USMCA Trade Pact Review Unlikely to Add AI Rules
The upcoming review of the US-Mexico-Canada Agreement (USMCA) is unlikely to formalize new rules for technology by its 2026 deadline, according to market analysis. While the core agreement provides trade stability through 2036, ambitious goals to add chapters on AI and cross-border data flows may be delayed. This leaves continued regulatory ambiguity for companies operating across North America.
- The USMCA includes a "sunset clause" that mandates a joint review by all three member countries every six years, with the first one scheduled for July 1, 2026. Following this review, the nations must agree to extend the pact for another 16-year term; otherwise, the agreement could expire in 2036. - The current agreement, which replaced NAFTA in 2020, already contains a comprehensive Digital Trade chapter (Chapter 19), something its predecessor lacked. This chapter prohibits customs duties on digital products like software and e-books, limits governments from forcing companies to store data within their borders, and protects proprietary source code from forced disclosure. - The formal process for the 2026 review begins well before the deadline. The U.S. Trade Representative (USTR) is required to launch public consultations around October 2025 and must report its assessment and recommendations to Congress by January 2026. - A primary challenge in adding AI rules is the risk of "regulatory fragmentation," where differing domestic AI regulations in the U.S., Mexico, and Canada could inadvertently create new barriers to trade. There are also fundamental policy gaps to address, such as defining whether AI is a "good" or a "service" under trade law and establishing intellectual property rights for AI-generated works. - Proponents of adding an AI chapter aim to establish shared principles for its governance, including standards for ethics, transparency, and interoperability. This effort is seen as a way to enhance North American competitiveness and create a model for future digital trade agreements globally. - If the three countries cannot unanimously agree to extend the agreement during the 2026 review, the USMCA enters a period of annual reviews. This creates a decade-long window to resolve concerns, but if no consensus is reached, the trade pact will terminate in 2036.
