Cross-border trade interests in New York’s North Country weren’t surprised last week when President Donald Trump announced the US-Mexico-Canada Agreement, or USMCA, would not be renewed. But, they also aren’t pleased with the federal decision that now means annual reviews of the trade pact will occur until it expires in 10 years.
The USMCA was negotiated during the first Trump Administration to replace the North American Free Trade Agreement, or NAFTA. In January 2020, the president called the new agreement “the fairest, most balanced, and beneficial trade agreement we have ever signed into law. It’s the best agreement we’ve ever made...” But the administration is now concerned about trade deficits between the trading partners and has refused to renew the pact.
North Country Chamber of Commerce President and CEO Garry Douglas says the move by the U.S. was expected.
“We knew, because of the state of negotiations particularly with Canada, that this would be the interim result, triggering a 10-year period during which the agreement remains in effect but with annual reviews. The USMCA governs over 90% of goods going back and forth between the US and Canada, so for that nothing has changed. The negative thing in all of this has been and continues to be uncertainty.”
SUNY Plattsburgh Center for the Study of Canada Director Christopher Kirkey is not surprised either because there has been no formal negotiations between the U.S. and Canada regarding renewal.
“This was expected. When he sort-of telegraphed this some months ago informally it was a bit of a shocker. But the truth is it’s expected because they just know the mercurial nature, the sort of transactional nature, of the American White House right now. And as such, now they’re just preparing to negotiate on an annual basis.”
Kirkey adds that annual reviews create a greater degree of uncertainty for regional trade.
“We’re going to be sitting here on an annual basis while negotiators work out a revised USMCA and we’re not quite certain until that is in fact agreed upon what it’s going to look like for cross-border trade. So that creates a little bit, particularly for the business community, a degree of unhealthy uncertainty.”
A.N. Deringer is one of the largest customs brokerage and trade compliance consulting firms in the U.S. Director of Customs Affairs and Compliance Amy Magnus notes that since the NAFTA trade agreement was signed in the 1990s, complex trading systems have been established between the countries.
“To remove USMCA it’s going to disrupt well-established trading patterns where there has been trade back-and-forth between these countries sort of in an unfettered way over all these many years. In my own opinion I see that we have more to lose than gain.”
Emphasizing that point, Magnus points out that Canada has been preparing for a possible end to the tri-national trade pact.
“The Canadians are savvy traders. They rely on trade and they know they rely on trade. And they have been preparing for this eventuality for a few years now. And trade deals, good, lasting trade deals, take a long time to negotiate. These aren’t things that you just establish in a few weeks. And I think that they, the Canadians, have spent some time seeking other trading partners upon whom they can rely. They have thought long term and have been gearing up for the worst.”
Douglas says because the economies of Canada and the U.S. are deeply intertwined the USMCA must continue.
“That uncertainty about not getting to a final new updated agreement does have a hard-to-measure impact of stalling things that otherwise would have been happening. Truck traffic at Champlain between the US and Canada has remained very steady. But what we know as economic developers is that there are postponements of cross-border investments. So there is a cost to uncertainty.”
The USMCA expires in July 2036 unless a new agreement is reached.
