U.S. Exit From USMCA Starts Decade Long Countdown

The United States is set to formally decline extending the U.S. Mexico Canada Agreement, starting a countdown that could unwind the 32 year old North American free trade zone unless the three countries hash out a deal on contested issues like auto content rules and Chinese trade protections.

At a Glance

• Trade officials from the U.S., Mexico and Canada were set to meet virtually on June 30 to address the extension question
• Declining to extend triggers a six year review process built into the pact's sunset clause
• If no deal is reached, annual reviews continue until USMCA would expire on July 1, 2036
• U.S. Trade Representative Jamieson Greer has scheduled a third round of talks with Mexico for the week of July 20
• The review process is separate from a termination clause any of the three leaders could invoke to exit within six months

Why the Deadline Matters

USMCA came with a built in expiration mechanism when Trump's first administration negotiated it to replace NAFTA back in 1994. Every six years, the three governments have to say whether they want to keep the agreement going for another 16 years. That vote was due by July 1, and all signs point to Washington passing on it.

Skipping the extension doesn't kill the deal outright. Instead, it opens a ten year stretch of annual check ins among the U.S., Mexico and Canada while they try to iron out disagreements. If nothing gets resolved during that decade, the pact would simply expire in 2036. Greta Peisch, a former general counsel at the U.S. Trade Representative's office who now works as a trade partner at Wiley Rein in Washington, said the outcome was largely expected.