Trade lawyer William Pellerin of McMillan LLP outlined the files likely to shape the next round of North American trade talks, as Canada, the United States, and Mexico edge closer to the scheduled CUSMA review. He pointed to issues in autos, agriculture, labor, and digital trade that could define negotiations and test political ties across the continent.
Signed in 2020 to replace NAFTA, the Canada-United States-Mexico Agreement includes a six-year review. Preparations are under way as governments canvass industry and labor groups for priorities. Business groups see a chance to reduce friction. Organized labor and farmers want stronger enforcement and clearer market access rules.
Why This Review Matters
CUSMA underpins trade that reaches into the trillions of dollars each year. Supply chains link auto plants, farms, and warehouses across the three countries. Any change can ripple through jobs, prices, and investments.
Since 2020, the deal has been tested by cases on dairy market access, auto rules of origin, and labor enforcement. Policymakers now face an economy reshaped by inflation, supply chain shocks, and rapid shifts in clean energy and digital services.
Autos and Rules of Origin
The auto chapter remains a core pressure point. Automakers seek clarity on how to calculate regional value content. Parts suppliers want rules that reflect real production patterns. Governments weigh domestic employment goals against the need for flexible sourcing.
Industry analysts warn that tighter rules can raise costs if companies cannot meet content thresholds. Looser rules might weaken regional production incentives. Negotiators will try to land between cost control and job protection.
Dairy, Agriculture, and Market Access
Canada’s dairy tariff-rate quotas continue to draw scrutiny from U.S. producers. Farm groups in Canada and Mexico also seek stable access and predictable inspections at the border. Disputes over quotas and grading rules are likely to return in the review.
Producers stress that recurring litigation creates uncertainty. Clearer allocation methods and stronger consultations could reduce flashpoints, according to trade practitioners.
Labor and the Rapid Response Mechanism
Labor enforcement has reshaped compliance in factories, especially in Mexico. The rapid response mechanism targets specific facilities when workers face freedom of association issues. Unions want tougher follow-up and faster remedies. Some employers raise concerns about due process and timing.
Expect debates over transparency, timelines, and the threshold for action. Stronger enforcement could support wages and standards. Poorly designed steps could disrupt production with little warning.
Digital Trade, E-Commerce, and Data
Digital rules have moved to the center of trade policy. Companies seek certainty on cross-border data flows and limits on data localization. Consumer advocates push for privacy and online safety. Retailers highlight the de minimis threshold for duty-free shipments, which affects small parcels and shipping costs.
Changes here would affect logistics, customs operations, and small businesses selling across borders. Clear, simple rules can lower costs. Mismatched rules can create delays and confusion at the border.
Dispute Settlement and Certainty
Dispute panels help resolve technical questions before they widen into larger conflicts. Businesses value predictable timelines and clear remedies. Governments weigh sovereignty against the benefits of neutral review.
Trade counsel focus on whether panel access remains dependable and whether remedies are implemented in full. Predictability lowers risk premiums on cross-border investments.
Energy, Environment, and Industrial Policy
Clean energy incentives and content rules are reshaping supply chains for batteries, solar components, and critical minerals. Each country is promoting domestic production with different tools. That creates overlap and occasional conflict.
Negotiators may explore coordination on subsidies, emissions reporting, and permitting. Alignment can speed projects and attract capital. Poor coordination can strand investments and raise costs.
What Stakeholders Are Watching
- Clarity on auto content rules and certification.
- Stable dairy quota administration and border procedures.
- Efficient labor enforcement with due process.
- Predictable digital trade rules and de minimis levels.
- Reliable dispute settlement timelines and outcomes.
- Alignment on clean energy incentives and supply chains.
Politics and Timing
Election cycles in the United States and Mexico, and a minority government context in Canada, add uncertainty. Domestic politics can harden positions on sectoral interests. That makes early technical work and stakeholder outreach important.
Businesses are already mapping scenarios. Many seek contingency plans for the next two years, including supply diversification and contract clauses that address tariff risk.
Pellerin’s overview points to a practical agenda: reduce friction where possible, tighten enforcement where needed, and protect certainty for investors. The next phase will depend on how quickly the three countries agree on auto content, dairy administration, labor procedures, and digital rules. Readers should watch for early signals from stakeholder consultations, panel outcomes that close existing disputes, and any joint statements on energy and critical minerals. Those clues will show whether the review delivers clearer rules or a fresh round of trade fights.
