This week, US Trade Representative (USTR) Jamieson Greer briefed lawmakers on Capitol Hill regarding the Administration's current views of the operation of the US-Mexico-Canada Agreement (USMCA), issues between the three countries, and whether it will extend the terms of the Agreement as part of the July 1 Joint Review. In short, USTR described stakeholder views as being mostly supportive of the USMCA but that improvements are needed. USTR outlined a number of key issues that it believes must be addressed by Canada, by Mexico, and trilaterally before USTR will recommend to the President that the USMCA be extended for another 16-year term.

USTR briefs Capitol Hill on operation of USMCA and plans for review

On December 16 and 17, Ambassador Greer briefed the House Ways and Means Committee and the Senate Finance Committee, respectively, on the operation of the USMCA and the Administration's plan for the July 1, 2026, review. The briefing served as USTR's report to Congress required by the USMCA Implementation Act (Pub. L. No. 116-113). The Act specifically requires USTR to report to Congress assessing the operation of the USMCA; recommendations for actions to be proposed at the review; previous efforts, if any, to address any concerns that underly USTR's recommendations; and the views of the advisory committees.

As a reminder, Article 34.7 of the USMCA introduces a formal review process, requiring the US, Canada, and Mexico to periodically assess the functioning of the agreement. The initial USMCA review is scheduled for July 1, 2026 — six years after the agreement's entry into force. If each party agrees to extend the terms of the agreement, then subsequent reviews will take place at the next six-year interval. If, as part of the six-year review, a party does not agree to extend the term of the USMCA for another 16-year period, then an annual joint review will take place annually until the expiration of the agreement. If a party does not agree to extend the USMCA during the joint review, it can opt to do so at any time before the agreement expires (currently, July 1, 2036).

While many on Capitol Hill expected USTR to produce a written report, the Administration has taken the view that the Act does not require the report to be in writing. However, USTR posted Ambassador Greer's opening remarks on its website. The substantive remarks provide an important glimpse into the Administration's current views of the USMCA, as well as a preliminary assessment of the operation of the Agreement and summaries of some stakeholder input. The remarks also outline key issues the Administration believes must be addressed bilaterally with Mexico and Canada, as well as issues that must be addressed trilaterally before the US will extend the Agreement.

USTR says most stakeholder support USMCA, but some improvements are needed

In his remarks, Ambassador Greer summarized input received from a broad range of stakeholders during the public comment and hearing process. He noted that many "expressed support for the USMCA" and "explicitly called for the Agreement to be extended." However, he emphasized that "virtually all stakeholders also called for some sort of improvement to the Agreement," and [s]ome commentators indicated that they supported extension only if certain improvements were made."

Ambassador Greer also highlighted that "many industrial stakeholders" raised rules of origin in their comments, "especially the idea that the rules need to change to better ensure that the United States and our USMCA partners primarily benefit from the Agreement's preferential tariff treatment."

USTR also received numerous comments related to economic security and the need for the US, Canada, and Mexico "to address the distorting effects of non-market policies and practices, such as industrial overcapacity, on the USMCA free trade area."

In addition, a number of comments highlighted USMCA's labor obligations but diverged on whether and how to improve the Rapid Response Mechanism (RRM), as well as on whether and how to strengthen the USMCA's environmental commitments.

In summarizing the public hearing, which took place from December 3-5, Ambassador Greer noted that most witnesses "highlighted the importance to them of maintaining key benefits of the Agreement," and "[n]early all witnesses acknowledged the USMCA's improvements over the NAFTA" (North American Free Trade Agreement). He shared examples of testimony related to digital trade, customs and trade facilitation, environmental provisions, and cooperation on export controls and foreign investment screening.

USTR believes USMCA has been "successful to a degree," but it has shortcomings

Ambassador Greer acknowledged that there is strong support for the USMCA among stakeholders and that "USMCA has been successful to a degree." He highlighted some of the successes of the Agreement, including the certainty it provides for North American trade, increased US exports to Canada and Mexico, and increased wages in Mexico that create a more level playing field for American workers. But Ambassador Greer emphasized shortcomings of the Agreement, including as it relates to Canada and Mexico's implementation of its commitments, as well as the Agreement's inability — in its current form — "to address the surge of investment from companies domiciled in non-market economies in the region or the effects of industrial overcapacity on the three economies."

"USTR will keep the President's options open" and identified key issues to be addressed before it will recommend extending the USMCA

With all of this in mind, Ambassador Greer indicated that the US would not automatically extend the terms of the USMCA. Instead, "USTR will keep the President's options open, negotiating firmly to resolve the issues identified, but only recommending renewal if resolution can be achieved." While the Ambassador's remarks did not elaborate on these "options," it could include an annual review process until issues are resolved to the Administration's satisfaction; moving the Agreement into two bilateral arrangements; or withdrawing from the Agreement. That said, the Ambassador's remarks are silent on intentions to move USMCA into bilateral arrangements or to withdraw from the Agreement.

Instead, USTR indicated a seriousness towards addressing core issues in the operation of the Agreement, as well as improvements that need to be made. USTR indicated that it has already been engaging with Canada and Mexico on bilateral issues, and acknowledged that issues such as "rules of origin, critical minerals, or economic security alignment" may require a trilateral approach.

For Mexico, USTR identified a range of issues that must be addressed, including its "policies that promote the use of third-country content and erode U.S. supply chains"; improvements to its labor law and environmental law enforcement; concerns related to its energy policies and practices; geographic indicators; calculations of an annual spectrum use fee; "[e]qual treatment for U.S. electronic payment service suppliers"; "[r]estrictions on Mexican customs brokers"; and the impact of its "seasonal produce on U.S. growers."

For Canada, USTR identified several issues, including dairy access for US products; Canada's Online Streaming and Online News Acts; and several provincial-related issues.

In terms of trilateral discussions, USTR again identified the need to strengthen "the rules of origin for non-automotive industrial goods"; "[e]nhanc[e] economic security alignment on tariffs, export controls, and investment screening"; "[develop] mechanisms to penalize offshoring of U.S. production to Mexico or Canada as a result of regulatory and other arbitrages"; "[develop] a Critical Minerals Marketplace"; and "[i]mprov[e] implementation of Canada and Mexico's "forced labor import bans."

Ambassador Greer noted how the Administration has been engaging with Canada and Mexico ahead of the Joint Review, and that in several cases, progress has been made on some of these core issues. He also said that both Canada and Mexico "have expressed an interest in taking action on economic security issues."

Next steps on the USMCA review

There are few statutory requirements detailing a process ahead of the July 1 Joint Review. According to Greer's opening remarks, he indicated that, "USTR will engage with Mexico and Canada to determine which shortcomings can be addressed on a bilateral basis and which require trilateral resolution." While the structure of the negotiations and the role of Congress in the review process remain unclear, it is anticipated that these negotiations between the US, Canada, and Mexico will begin early in 2026 and continue until at least July 2026.