USMCA talks turn combative

Canada publicly hardened its stance in the North American trade review this week, with Prime Minister Mark Carney saying Ottawa will not let Washington set the terms. (usnews.com) Carney said on April 22 that a new understanding with the United States “will take some time” and that Canada is “not a supplicant” in the review of the United States-Mexico-Canada Agreement, the trade pact that replaced the North American Free Trade Agreement in 2020. (ca.finance.yahoo.com) The timing is tight. Article 34.7 of the agreement calls for the first joint review on July 1, 2026, the sixth anniversary of USMCA’s entry into force, and the U.S. Trade Representative has already begun the formal review process. (congress.gov) (ustr.gov) Mexico is already further along than Canada. The United States and Mexico announced bilateral discussions on March 5, and Reuters reported that Mexico has held two rounds of talks with Washington and plans a first formal negotiating round next month. (ustr.gov) (ca.finance.yahoo.com) This review is not a routine check-in. Under USMCA, the three governments must decide at the six-year mark whether to extend the pact, and if they do not all agree, the agreement can face annual reviews before its 16-year term runs out. (congress.gov) The fight is likely to center on rules of origin, the tests companies use to prove a product is North American enough to qualify for duty-free treatment. Congress’s research arm says autos are one of the most sensitive areas in the 2026 review because USMCA already imposes stricter content rules than older trade deals. (congress.gov) For manufacturers, tougher bargaining can mean more paperwork as much as higher tariffs. U.S. and Canadian trade specialists say companies may face closer scrutiny of supplier records, certificates of origin, and the calculations used to show regional content in vehicles and parts. (gao.gov) (www.steptoe.com) The U.S. side has signaled it wants a broad review. In a Federal Register notice, the Office of the U.S. Trade Representative asked for recommendations on balanced trade, market access, economic security alignment, and the investment climate across North America. (public-inspection.federalregister.gov) That leaves Canada trying to protect market access while avoiding a negotiation in which Washington and Mexico set the pace first. Carney’s message on April 22 was that Ottawa intends to enter the July 1 review as an equal party, even if that means a slower and more combative path to a deal. (usnews.com)