Mexico’s manufacturing exports have not only surpassed pre-COVID levels but have also reached historic levels, reaching $44.8 billion in June 2022. The country’s total exports represent more than one-third of its GDP, and they, therefore, play a key role in growth and job creation. Two-thirds of manufacturing exports are from the automotive industry.
CUSMA/USMCA/T-MEC Sunset Clause and 2026 Review
- Unlike other trade agreements, USMCA has a termination date:
- The Agreement “shall terminate 16 years after the date of its entry into force, unless each
Party confirms it wishes to continue this Agreement for a new 16-year term” according to
some procedures (Article 34.7: Review and Term Extension) - Procedures for joint review and extension in 2026:
- On the sixth anniversary of the entry into force of this Agreement, the [Free Trade] Commissions shall meet to conduct a joint review of the operation of this Agreement, review any recommendations for action submitted by a Party, and decide on any appropriate actions.
- Each Party shall confirm, in writing, through its head of government, if it wishes to extend the term of this Agreement for another 16-year period…
- The Commission shall conduct a joint review and consider an extension of this Agreement term no later than at the end of the next six-year period.
- If, as part of a six-year review, a Party does not confirm its wish to extend the term of this Agreement for another 16-year period, the Commission shall meet to conduct a joint review every year for the remainder of the term of this Agreement. If one or more Parties did not confirm their desire to extend this Agreement for another 16-year term at the conclusion of a given joint review, at any time between the conclusion of that review and expiry of this Agreement, the Parties may automatically extend the term of this Agreement for another 16-years by confirming in writing, through their respective head of government, their wish to extend this Agreement for another 16-year period.
A joint review does not lead to a renegotiation, unless the three
Parties agreed to such an action ( Article 34.3: Amendments). - The joint review refers to a survey, critical evaluation or a report on
the operation of the USMCA. The review by itself is not a
renegotiation. - In the Spanish language “revision” can be either review or revise in the
sense of to examine to amend something, to improve it or to update it.
This has created confusion as the use of “revisión” is sometimes
interpreted as implying reopening and renegotiation. Lost in
translation. - Any renegotiation of the USMCA would only occur -if at all- if the
Parties agree to do it at any time, regardless of the joint review.
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Further Reading: