Growing, strengthening, and innovating North America together

Lab scientists look through a microscope
Editor's note:

This viewpoint is part of USMCA Forward 2024.

Now, more than ever, U.S. companies like Otis rely on the certainty the United States-Mexico-Canada Agreement (USMCA) provides as we plan for the future. Business Roundtable members across industries depend on the North American economy’s stability and integration to drive our competitiveness. To that end, Business Roundtable partnered with all three governments, as well as CEOs from all three countries, to ensure that USMCA negotiations succeeded, and together, we continue to build strong bipartisan and stakeholder support for the agreement.

USMCA took effect when it was needed the most

When USMCA was signed, and the legislation implementing the agreement in the United States passed the U.S. Congress with historic bipartisan support, no one could have known how important North America’s strong and stable trade and investment ties would become. USMCA became effective in July 2020, only a few months after the onset of the COVID-19 pandemic. As supply chain disruptions from the pandemic and geopolitical conflict intensified, USMCA helped buttress the North American economy and contribute to the resilience of all three countries. USMCA negotiations and implementation efforts deepened trilateral government-to-government ties, which helped North America navigate these disruptions with a united front. The agreement also enabled policy cooperation on forward-looking efforts to enhance supply chain diversification and resilience. For example, through the innovative USMCA Competitiveness Committee, all three countries reached an agreement in February 2023 to better position North America to navigate future supply chain disruptions through enhanced coordination.

USMCA partners invest, integrate, and innovate together

The broad, bipartisan support for USMCA demonstrates that the case for comprehensive free trade agreements can still be made in the U.S. Congress. Furthermore, the increased trilateral trade and investment that has flowed from USMCA—and the North American Free Trade Agreement (NAFTA) before it—demonstrate that trade agreements should remain at the heart of U.S. international economic policy. Trade with Canada and Mexico collectively accounts for approximately 26% of total U.S. trade—larger than any other trading bloc—and trading activity in North America continues to accelerate faster than U.S. trade with the rest of the world. From 2019, the last full year before USMCA went into effect, through the first half of 2023, U.S.’ two-way trade in goods and services with Canada and Mexico grew 28% to $1.8 trillion, outpacing the 21% growth in U.S. trade with the rest of the world during the same timeframe.

Investment ties have also grown stronger. U.S. foreign investment in Canada and Mexico grew 21% from 2019 to 2022, reaching $569 billion, while Canadian and Mexican investment in the United States grew 34% during that same period to $623 billion. As with the trading relationship, investment between the United States and our North American neighbors has outpaced U.S. outward and inward investment when compared with the rest of the world.

In all three countries, USMCA is needed to incentivize further economic integration and development of sectoral supply chain ecosystems to strengthen the competitiveness of manufacturing in North America.

USMCA contains important updates to NAFTA on chapters governing trade facilitation, digital trade, dispute settlement, regulatory practice, and market access, as well as higher and more easily enforceable labor and environmental standards. However, the full benefits of the agreement will not be realized unless all USMCA commitments are honored and enforced. In addition, with the enactment and ongoing implementation of domestic manufacturing and supply chain programs in all three countries, USMCA is needed to incentivize further economic integration and development of sectoral supply chain ecosystems to strengthen the competitiveness of manufacturing in North America. Across key sectors, such as critical minerals, clean energy technologies, semiconductors, and pharmaceuticals, pairing USMCA with domestic legislative and policy initiatives, such as regulatory reforms to streamline project approvals, fiscal incentives to support technology modernization, and workforce development programs, can accelerate trilateral economic integration, innovation leadership, and job opportunities.

USMCA needs vocal business community champions in upcoming elections and the first USMCA sunset review

Business leaders must continue to champion the importance of USMCA during the upcoming elections in all three countries and the first sunset review of the agreement in 2026. In the face of ongoing and evolving global economic, climate, and technological disruptions, U.S. global competitiveness, innovation leadership, and supply chain diversification efforts depend on USMCA’s framework for North American economic integration. Sustaining political and stakeholder support for USMCA will require business leaders and supporters to raise awareness about the depth and importance of trade, investment, and supply chain integration in North America. Business Roundtable members will continue to partner with our CEO counterparts in Mexico and Canada to tout the agreement’s benefits with policymakers and to ensure a smooth extension of the agreement in 2026.