Mexico | USMCA review: most likely outcome Is that the agreement remains in force

Summary

This year, the trade agreement between Mexico, the United States, and Canada (USMCA) enters its review process. It is worth recalling that the agreement is in force until 2036, but it includes a review mechanism beginning July 1 that could lead to different scenarios.

Key points

• Key points:
• The first possibility is that the agreement is terminated. This is always possible, as any of the parties can withdraw from it with six months’ notice.
• The second is that the parties decide to extend its duration by an additional 16 years, setting a new expiration date in 2042.
• The third is that the treaty remains in force without an immediate extension, with the annual review mechanism continuing until the parties eventually agree to renew it for another 16 years before 2036.
• In any case, the most plausible outcome is that the agreement remains in force with annual reviews. This is not a bad scenario for Mexico: it allows the country to maintain tariff-free access to the U.S. market for a large share of its exports.
• Moreover, in the context of the ongoing relocation of production chains, this strengthens the country’s attractiveness as an investment destination.

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