As the month of July arrives, a critical review period begins for the United States/Mexico/Canada Agreement (USMCA) trade deal.
This is something all three countries have been preparing for, so it’s no surprise. But what comes out of it could be critical to the entire continent and certainly to those in the logistics field.
The USMCA review provides the opportunity for all three countries to renegotiate items that are important to them. That could involve the seeking of greater access for a certain industry, or stricter requirements for certain industries on matters like labor or environmental standards.
Anything that one of the three countries wants can be on the table for renegotiation.
The review opportunity also provides the chance for any of the three countries to enact a sunset clause to dissolve the agreement. If someone does enact the sunset clause, the dismantling of the agreement would not be complete until 2036.
Earlier this year we interviewed Melissa Miller of the World Trade Council of Kansas City on our Cargo Café broadcast. She urged any company involved with international trade to start preparing for the USMCA review period, which is the first since USMCA replaced NAFTA in 2020.
“If you wait too long, you might be scrambling and find yourself behind the 8-ball,” Miller said. “It’s going to cost you time and money to course-correct. You could face compliance issues and fines, which nobody wants, and you could face competitive disadvantages if your competitors are already preparing for this.”
Miller especially urged companies that have international legal teams to get them involved with the process.
WTC Kansas City is a member of the Greater Kansas City Chamber of Commerce, and takes an active role in shaping policy positions that the Chamber will advocate.
“In general with lobbying, any association that you’re part of is going to have a lobbying voice in D.C., and they’re always great to funnel that information up to,” Miller said.
Critical issues for the business community to monitor in the USMCA review talks include digital trade and technology, AI governance, cybersecurity and data localization.
Within the agriculture industry, Miller said to expect a focus on the right to repair – which involves the right of farmers to fix their own equipment rather than having to take it to a John Deere dealership or something else along those lines.
Labor and environmental standards should also be a major topic of focus, and stricter standards in these areas could impact manufacturing costs.
“One of the things companies should definitely be doing is performing an audit on your international trade procedures,” Miller said. “Identify your issues and how they can be fixed. For example, are you relying on a single supplier that could go out of business? And do you have a contingency plan for that?”
She also urged companies to implement digital tools that can help with compliance and record keeping, especially if – as expected – U.S. Customs and Border Protection starts requesting more data.
“Be prepared to defend yourself,” Miller said. “You could be audited at any time. Customs could flag something and suddenly you’re under an audit. As you’re looking at your processes, you’re building legally defensible positions for the process in your supply chain, and you have to show data that you’ve been compliant.”
The USMCA review period begins on Wednesday, July 1. Keep an eye on this space for updates as they become available.
