The United States–Mexico–Canada Agreement (USMCA) is a comprehensive trade agreement that covers almost every aspect of the trade relations of the three countries, and it is currently facing serious challenges regarding investment reviews. This agreement, which is two months behind its scheduled review, has addressed issues such as agriculture, financial services, and rules of origin, but has not given adequate attention to coordination in investment reviews.
Lack of Standard Mechanism for Investment Review
One of the main weaknesses of USMCA is the absence of a standard mechanism for reviewing foreign direct investment (FDI). None of the chapters of this agreement obligate the United States, Mexico, and Canada to establish a coordinated system for investment reviews. This deficiency became more apparent after the COVID-19 pandemic and the exposure of vulnerabilities in the global supply chain, highlighting the need for greater attention to this issue.
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Efforts to Improve Investment Review
Since 2023, U.S. officials have begun efforts to utilize the 2026 USMCA review to fill this gap. In this context, a memorandum of intent (MOI) was issued in December 2023 to establish a bilateral working group to develop investment review mechanisms. Additionally, in 2025, the "Protecting USMCA from Harmful Chinese Investments Act" and the "CFIUSMCA Act" were introduced to the U.S. Congress to establish "strong investment review mechanisms" within USMCA.
Modern trade agreements typically include robust protocols regarding foreign investment, but USMCA has limited protections for foreign investors compared to the previous NAFTA agreement. This situation comes at a time when geopolitical competition between the United States and China has increased scrutiny over foreign investments.
Mexico has also taken steps in this direction. On August 28, 2026, President Shindaom presented a proposal to the Mexican Senate that creates a framework for national security reviews of foreign investments. If these reforms are approved, the CNIE (National Commission of Foreign Investments) will be responsible for reviewing transactions in strategic sectors.
Ultimately, given the current developments and the need for greater coordination in investment reviews, USMCA is expected to become a stronger and safer trade agreement for the three countries. This could help strengthen economic security in the region and foster closer cooperation among the United States, Mexico, and Canada.
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