Opening Remarks to the USTR (as prepared for delivery)
Who: Neil Herrington, Senior Vice President, Americas, U.S. Chamber of Commerce
Hearing: Operation of the Agreement Between the United States of America, the United Mexican States, and Canada
Distinguished members of the panel, the Chamber is appreciative of this opportunity to testify in response to USTR’s important request to inform the joint review of the United States, Mexico, Canada Agreement (USMCA).
Upon signing the USMCA in January 2020, President Trump called the agreement a “colossal victory for our farmers, ranchers, energy workers, factory workers, and American workers in all 50 states.”
The U.S. Chamber believes the ensuing five plus years have proven the President to be exactly right.
And it’s a reason why more than 500 state and local chambers of commerce and business associations from all 50 states wrote to Ambassador Greer this week urging the U.S. to maintain the agreement.
More than 13 million American jobs depend on trade with Canada and Mexico, and the USMCA has fostered U.S. economic growth in a manner that supports many additional high-wage positions.
U.S. manufacturers export more made-in-America goods to Canada and Mexico than they do to the next 12 largest U.S. export markets combined, and our North American neighbors also purchase one-third of all U.S. agricultural exports.
Canada and Mexico are the top export destinations for more than 100,000 small- and medium-sized American businesses, which benefit from USMCA’s first-of-its-kind provisions catering specifically to the SMEs that serve as our economy’s primary engine of job creation.
Our North American neighbors are also the source of critical imports essential to the competitiveness of U.S. industry and manufacturing, many of which are unavailable from domestic sources at reasonable prices or in sufficient quantities.
Three Chamber Priorities for the Review
For these and innumerable other reasons, the Chamber and its members are unabashed supporters of the USMCA and we encourage the administration to focus on the following three objectives to ensure a seamless joint review that can help make an already indispensable agreement even stronger:
First, we ask the administration to maintain and strengthen the trilateral rules of the USMCA that have been so integral to supporting U.S. jobs and enhancing our industries’ global competitiveness.
In addition to the aforementioned export opportunities the USMCA affords American farmers, manufacturers and service providers, the agreement’s trilateral attributes facilitate co-production in agriculture and in areas of manufacturing such as the automotive, aerospace and medical goods sectors.
Second, we urge the administration to work with Canada and Mexico to secure a renewed commitment to full compliance with the terms of the USMCA, along with a commitment to enforce those terms when compliance falls short.
The Chamber has long argued that a trade agreement isn’t worth the paper it’s printed on without meaningful compliance and enforcement, and we believe all three countries are failing to adhere to key USMCA obligations:
- Canada is falling short on USMCA compliance and/or implementation in areas such as dairy market access, intellectual property protection, healthcare and digital trade.
- Mexico is failing to adhere to its obligations in areas including agriculture, digital trade, energy, financial services, government procurement, intellectual property, spectrum competition and trade facilitation;
- And in imposing tariffs on Canada and Mexico, the U.S. is in clear violation of the USMCA’s core commitment to maintain tariff-free trade within North America.
Third, we urge the administration to provide confidence and certainty to investors by working with Canada and Mexico to ensure a transparent, expeditious and orderly joint review.
While the Chamber offers recommendations in its longform submission for modest updates that could be made to the USMCA, the key objective for negotiators must be to complete the joint review in 2026 so as to ensure stability and predictability in our two most consequential trade relationships.
North American Investment Climate Challenges
The deterioration of the investment climate in any one of our three countries harms the collective economic security of North America and undermines the USMCA, so we appreciate USTR’s consideration of these challenges in the joint review.
Mexico’s recent constitutional reforms pose significant impediments to judicial independence and regulatory autonomy, as well as threaten to undermine transparency, impartiality and protections for U.S. investors.
U.S. companies across sectors are also increasingly subject to coercive and abusive practices of Mexico’s tax authority, the SAT; practices that are inconsistent both with Mexican law and with international best practices.
In Canada, U.S. investors face concerns around government procurement and proposed “Buy Canada” policies, which aren’t covered under the USMCA and may exclude American companies.
In the U.S., permitting challenges and unpredictable policy fluctuation between administrations has significantly undermined investment certainty in cross-border energy projects with both Canada and Mexico.
Conclusion
I’ll conclude my remarks where I began because, for the business community, it bears repeating:
A joint review process that proves expeditious, ensures that the USMCA remains trilateral, and addresses investment climate and compliance challenges will make an already indispensable agreement even stronger.
Compliance means ensuring a restoration of the USMCA’s duty-free access, which would include removing all Section 232 tariffs currently in place on goods from Canada and Mexico.
Doing so would mark a positive step forward in mitigating rising U.S. energy, transportation, construction, and other costs, without jeopardizing national security.
I again appreciate this opportunity to testify and look forward to your questions.
