Thank you very much for this opportunity to testify this morning, as the U.S. Trade Representative Office considers the functioning of the U.S.-Mexico-Canada Agreement over the past six years in preparation for next July’s scheduled “review.”
By way of introduction, I am Vice President of the Progressive Policy Institute (PPI) in Washington, D.C., a 501(c)(3) nonprofit research institution established in 1989, which publishes a wide range of public policy topics. In this position, I oversee PPI’s research and publications on trade and global economy matters. Before joining PPI, I served at USTR from 2015 to 2021 as Assistant U.S. Trade Representative for Trade Policy and Economics, with responsibility for overseeing USTR’s economic research and use of trade data, interagency policy coordination, including chairing the interagency Trade Policy Staff Committee, and administration of the Generalized System of Preferences.
The U.S.-Mexico-Canada Agreement, successor to the North American Free Trade Agreement, has been in force since July 1, 2020. As approved by Congress in 2019, its Final Provisions chapter includes a clause directing the U.S., Mexican, and Canadian governments to conduct a “review” after six years — that is, by July 2026 — and decide whether changes to the Agreement might be useful.
Our core view is that USMCA is working reasonably well. It is a very large agreement, spanning many different industries and applying to nearly $2 trillion in U.S. goods and services trade. And like any large human creation, USMCA is by definition imperfect. But it is accomplishing its main goals — facilitating trade in agriculture, services, energy, and manufacturing, helping digital trade channels stay open, encouraging joint work on wildlife trafficking and ocean health, providing Americans with reliable and low-cost consumer goods and industrial supplies, and experimenting with a novel approach to labor issues.
Meanwhile, and quite recently, very large problems unrelated to the agreement have emerged in U.S. trade, generally, and in relations with Canada and Mexico specifically. Since this past February, the Trump administration’s profligate imposition of tariffs, and accompanying threats against Canada and Mexico, have caused a series of genuine crises: damage to the Constitutional separation of powers; erosion of relationships at the core of U.S. national security; and a deteriorating economy as tariffs raise the cost of living for families, sap growth, and diminish the competitiveness of U.S. farming and manufacturing.
The Final Chapter “review” clause entails assessment rather than requiring any particular action. And while in different circumstances it might be useful to look in detail at ways to bring the agreement closer to perfection, in the actual circumstances of 2025 and 2026, policy vis-à-vis Mexico and Canada should focus on ending these self-created crises and mitigating their effects.
If the administration nonetheless wants to proceed with revisions to the agreement, our view is that such a program should come only after three steps:
With these done, it would be appropriate, and might be useful, to look closely at the USMCA and see whether broad consensus exists for changes that would improve it. Absent them, we do not believe such a program is currently appropriate.
