National Electric Manufacturers Association calls for stronger enforcement, predictability in upcoming USMCA review

Last week, the Office of the United States Trade Representative held a public hearing focused on the operation of the United States Mexico Canada Agreement (USMCA), with the first six-year review of the agreement scheduled for July 1, 2025.

The USMCA agreement went into effect on January 29, 2020, during President Trump’s first term in the White House, which replaced its predecessor, the North American Free Trade Agreement.

USMCA, in various ways, is actually based on the same rules and procedures and most of the same products, as NAFTA, which took effect in 1994. Analysts say that there are some strong environmental and labor regulation improvements, and it incentivizes domestic production of cars and trucks. It’s also the first free trade agreement that has ever included intellectual property protections, which are very timely given the current trade wars that were triggered by the alleged theft of American intellectual property by China and other nations.

Representing the National Electric Manufacturers Association (NEMA) at the USTR hearing, Patrick Lozada, NEMA Senior Director of Global Policy, made the case for the USTR to move forward with what he called a swift review and renewal of the USMCA, coupled with key modifications addressing enforcement in Mexico of USMCA provisions that eliminate technical barriers to trade. And he also called for a need to “stamp out fraudulent activity” actions by countries not in USMCA, specifically China, while noting that having the overall trade framework USMCA provides is essential for the electrical manufacturing industry and for American workers to thrive and succeed.  

NEMA represents 300 companies manufacturing electrical equipment in the U.S., comprising 580,000 workers and more than 12,500 facilities across the U.S., with the electrical manufacturing industry being the second-largest exporter of manufactured goods, with nearly half of that going to Canada and Mexico.

In an interview with LM, Lozada said that USMCA remains essential for the electrical industry, in that its stakeholders need a stable, modernized framework that has Mexico really fully implementing its commitments under the USMCA, and that really maintains certainty for the industry as it makes these really long-term investments in U.S. manufacturing.

And he added that going back to the initial establishment of USMCA in 2018, USMCA has provided North American shippers with various benefits.

“It gives U.S.-based manufacturers an opportunity to address a larger market and being able not just to sell in the US, but also on competitive terms to Canada and Mexico, as well as to source inputs and products from those economies helps us manufacture in the United States,” said Lozada. “There is a tremendous need for electrical products in the U.S. NEMA anticipates that there is going to be a 50% increase in electricity demand by 2050, so we need a real, tremendous investment in our grid right now to meet those needs. And that's not going to be all just from products made in the United States. That said, we are investing heavily in the United States. Our members have invested $185 billion since 2018 on manufacturing in the United States. We think it's tremendously important to have this trade agreement, both to meet the needs of our grid and to support U.S. manufacturing.”

Factors driving the anticipated 50% increase in electricity demand by 2050 include: the growth of AI and related data centers, which NEMA said is expected to see 300% projected growth over the next 10 years; 9000% projected growth in E-mobility power consumption through 2050; and electricity is projected to grow from 21% of final energy use to around 32% by 2050. Lozada added that manufacturing is also a big driver, with U.S. manufacturing accounting for 14% of energy demand, making the case for a grid supporting that as well.

As for ways in which China’s impact on the electrical manufacturing sector can be countered, Lozada explained that addressing transshipment activity is a critical step in that front, calling it a challenging task that spans all three USMCA-member economies. Given the issues in both Mexico and Canada, he said there is a great opportunity for the USTR to make headway in pushing those economies to implement and drive progress, as it relates to enforcing transshipment. In his testimony, he said that where examples of transshipment are found, CBP should address them in a manner consistent with U.S. law.

He also made the case for enforcing the USMCA’s technical barriers to trade, also know as TBT provisions, which he said are essential to minimizing barriers to exports created by divergent standards and conformity-assessment procedures. As for Mexico, he said in his testimony that Mexico has not fully implemented these commitments, in turn, reducing U.S. exports and undermining the regulatory predictability USMCA was designed to provide.  

In addition to TBT provisions and transshipment, Lozada outlined the following as priorities for the 2026 Joint Review, including:

• Swift review and renewal of the agreement. North American supply chains are foundational to U.S. manufacturing and the reliability of the grid;
• Preserving existing tariff commitments. Companies have made long-term investments based on the duty levels outlined in the agreement. These baseline duties ensure that consumers can access innovative, cost-effective products; and they ultimately support U.S. manufacturing; and
• Policy predictability. A stable trade framework will unlock long-term investments in American manufacturing. In furtherance of this, w [NEMA] encourages all sides to use mechanisms within the agreement to settle disputes, and to ensure that private sector voices are included in all stages of the USMCA review and implementation process

Looking ahead Lozada said the USMCA review process is going to be ongoing for a long period of time.

“This is ultimately an ongoing relationship, and that's something that we anticipate the three sides are going to continue to talk about for the foreseeable future,” he said. “We think it's important, and we appreciate the that the USTR is having this conversation to engage the private sector and understand what the opportunities are and what the challenges are.”