Harmonizing USMCA: Enhancing  customs to facilitate US-Mexico competitiveness  

The moment: USMCA negotiation is underway

USMCA negotiations between Mexico and the United States are well underway. This review period presents a critical opportunity to make the agreement work even better for North America. Inaugurated by a meeting between US Trade Representative (USTR) Jamieson Greer and Mexican President Claudia Sheinbaum in Mexico City on April 20, an intense, short-term calendar of technical negotiating rounds was established and finally launched on May 28 in Mexico City.  

The priorities for the USTR and Mexico’s secretary of economy are no surprise: rules of origin in the auto industry, steel and aluminum, and overall economic security. Less discussed, however, are the customs mechanisms and systems that drive trade and directly enable faster, more reliable trade flows. During its second convening, the Binational Task Force on Economic Security and Competitiveness coalesced around new suggestions to enhance customs harmonization and inoperability, highlighting how a shared US–Mexico security framework should start from a core premise: security and trade facilitation are mutually reinforcing goals. Addressing the numerous existing on-the ground barriers to trade would strengthen USMCA as the cornerstone of North American competitiveness and make the trade both safer and more efficient.  

The world’s largest bilateral trade relationship deserves better border management

In 2025, US–Mexico trade reached $872  billion, making it the world’s largest bilateral trade relationship. $2.3 billion in goods crosses the border every single day, carried by more than 21,000 trucks transiting from Mexico to the United States with some estimates of 35,000 trucks crossing the border (traveling in either direction) with produce, minerals, vehicles, auto parts, electronics, pharmaceuticals, and energy products. This trade sustains an estimated ten million jobs across both economies. 

Yet the border is not performing at the level this relationship demands. Atlantic Council research shows that extended wait times at commercial crossings generate transaction costs that producers and consumers on both sides ultimately absorb. Security pressures—narcotics and fentanyl trafficking, firearms smuggling, and USMCA origin-compliance violations—have added operational complexity without a corresponding investment in modern infrastructure or technology. Underinvestment in cargo examination systems has constrained both US Customs and Border Protection (CBP) and Mexico’s National Customs Agency (ANAM) now when throughput demands are highest. 

Customs administrations carry two core responsibilities: ensuring only compliant goods cross the border, and processing growing trade volumes efficiently. These objectives are mutually reinforcing since the stronger customs agencies’ risk management and targeting capabilities enable better segregation of low-risk shipments, with quicker release to proceed toward delivery. The weaker those capabilities, the more they must rely on time-consuming physical inspections applied broadly. Modern trade facilitation is, at its core, facilitation of compliance. Efficient US-Mexico border management hinges on regulatory alignment and bilateral exchange of single-window data: mutual recognition of licenses, permits, and certificates (LPCs) issued by counterpart authorities, and harmonization of the underlying data elements.  

Past programs offering a path forward for success 

The path forward to strengthen customs harmonization and interoperability is already outlined by USMCA Chapter 7 (Customs Administration and Trade Facilitation), which establishes the legal framework for an ambitious binational customs agenda.  

Under Article 7.21, the United States and Mexico committed to coordinated, simultaneous inspections conducted by different agencies at a single location. Six years after USMCA’s entry into force, many crossings still require traders to move shipments between separate agency facilities with repeated cargo unloading. This issue stems from a lack of political will and implementation prioritization rather than from resource scarcity. Under Article 7.23, before USMCA’s entry into force, substantial progress had been made: Thirteen ports were conducting joint inspection programs, all cargo manifest data requirements across all modes had been harmonized and were being exchanged, and the Otay Mesa II–Mesa de Otay 2 crossing, which connects Tijuana and San Diego, was under joint development.  

Successful programs for identifying illicit financial flows through the border have been developed, such as a joint mechanism of US Immigration and Customs Enforcement and Mexico’s Tax Administration Service (SAT) that used cargo manifest and customs declaration data to detect trade-based money laundering and customs fraud, coordinated under the Customs Mutual Assistance Agreement (CMAA) and the Trade Transparency Unit (TTU).  Similarly, joint risk management and targeting programs have enabled SAT and CBP analysts to work in each other’s facilities and successfully interdict drugs and counterfeit goods. 

These cooperation programs have been either weakened, interrupted, or suspended, resulting from a restructuring of customs enforcement in Mexico and domestic political shifts, including the change from the General Customs Administration (AGA) to the current ANAM, causing an unnecessary loss of operational capability; while Otay Mesa II has progressed since 2020, full joint operations are pending infrastructure completion by 2029. In the five years since the TTU data exchange was suspended: An estimated $50 billion in annual cross-border trade transactions have been processed without the bilateral customs intelligence layer previously in place. The cost of reinstatement is far lower than the cost of continued absence. 

Addressing the security side of the equation through more efficient inspections

The bilateral relationship is embedded in a broader supply chain security challenge. A growing share of illicit goods—fentanyl precursors, counterfeit components, and transshipped steel—enter North America through third-country seaports before reaching the land border. Addressing these flows requires extending bilateral cooperation to both countries’ perametric borders beyond land and including key Pacific and Gulf seaports. This means implementing joint inspection programs at Manzanillo and Lázaro Cárdenas (Mexico’s busiest Pacific ports, through which Chinese-origin goods are the primary flow) and Long Beach/Los Angeles on the US side. It also means harmonizing import/export standards and requirements for goods arriving from countries outside of USMCA and aligning external tariff policies where feasible to limit arbitrage opportunities and other disloyal trade practices.

Illegal transshipment—routing goods through Mexico or the United States to disguise their true country of origin and avoid applicable tariffs or USMCA rules of origin—is a persistent and growing vulnerability. Electronic data-exchange mechanisms specifically designed to detect these practices were developed jointly by CBP and SAT; they are no longer operational. Blockchain and verifiable-credential technologies, which CBP has been piloting in targeted sectors, offer a path toward end-to-end cargo traceability from manufacturer to final importer. CBP and ANAM should develop and deploy this infrastructure jointly, establishing a USMCA mutual-recognition framework that provides enhanced clearance benefits for verified-origin material and triggers enhanced scrutiny on unverified flows.

Regulatory pathways: Recommendations from the task force

Customs enforcement and trade facilitation remain a weak link in North America’s economic security architecture. As the technical negotiating teams on both sides of the border head for the second round of conversations scheduled for July 16–17 in Washington, customs harmonization and interoperability should be front of mind. The following recommendations from the task force outline practical steps to address major gaps in this area. 

1. Reinstate/strengthen bilateral enforcement programs under the Customs Mutual Assistance Agreement

Restore the automatic sharing of shipping records and customs declarations across all types of cargo movement, including goods that are still in transit or moving under bond, whether that data is exchanged in real time or on a periodic schedule. Reactivate the Trade Transparency Unit, the joint analytical body that cross-checks trade data from both sides of the border to detect smuggling, fraud, and money laundering. Reinstate joint cargo inspection programs and shared enforcement teams at ports of entry, which reduce redundant checks, speed up legitimate shipments, and make it harder for illicit goods to slip through.

2. Reform border infrastructure

Streamline approval processes for the construction and expansion of border facilities to develop a more robust inventory of technology equipment to pursue noninvasive inspections of products. This can significantly reduce waiting times at the border. The implementation of artificial intelligence—like blockchain—can be a useful tool in tracking data flows and identifying vulnerabilities in the trade-monitoring architecture.  

3. Advance regulatory and procedural alignment

Align the rules and standards that govern how goods cross the border, especially licenses, permits, and certificates required to import or export regulated products, the fees and duties applied to traded goods where practical, and the rules for shipments that are still in transit or moving under customs bond. When the United States and Mexico operate under different or inconsistent requirements, legitimate businesses face delays, duplicate costs, and compliance uncertainty. Establish a formal agreement under which CBP and Mexico’s customs authority mutually recognize each other’s LPC so that approval from one country is honored by the other, thus eliminating redundant processes and closing loopholes that criminal networks currently use to move illicit goods. Publish a joint road map for regulatory alignment with concrete deadlines that both sides are committed to meeting. 

4. Implement bilateral single-window data exchange

Exchange data collected through both single window systems —i.e. Mexico’s Ventanilla Unica de Comercio Exterior, and the US interagency program, the International Trade Data System. Digital portals for customs paperwork filing can improve bilateral risk targeting, reduce duplicative filing requirements, and deter noncompliant submissions. This is explicitly called for under USMCA Article 7.10.

5. Elevate AEO/CTPAT mutual recognition to the supply-chain level

The existing mutual recognition agreement already certifies and prevets individual companies as trusted actors. In Mexico, the program is called Authorized Economic Operators; in the United States, it’s the Customs Trade Partnership Against Terrorism. Expanding those certifications to entire supply chains presents an opportunity for increased efficiency and ease in identifying bad actors. Each participant (e.g., producer, exporter, warehouse operator, carrier, freight forwarder, customs broker, and importer) should be jointly certified under agreed rules. They should be offered meaningful, differentiated facilitation benefits to fully certified chains to create private-sector demand for participation. 

6. Allocate customs responsibilities under a single agency in Mexico

The diluted responsibilities of SAT and ANAM generate inefficiencies that prompt this call for enabling customs programs to be fully coordinated, ideally by Mexico’s customs authority, ANAM. The AEO/CTPAT program could be moved from the fiscal authority, SAT, to ANAM to ensure risk mitigation and configuration of highly compliant supply chains. This would allow better coordination with US counterparts. Additionally, a clear line of command needs to be established among ANAM, Mexico’s Secretariat of the Navy, and its Secretariat of National Defense at border ports of entry, assigning coordination of customs responsibilities to ANAM. Conduct regular training programs for customs officers and companies on the requirements and procedures to secure AEO certification.

7. Fully implement USMCA Chapter 7—without modifications

The existing legal framework is adequate. Implementation is not. Both governments should publish a joint Chapter 7 implementation status report and commit to binding timelines for outstanding obligations, including Article 7.21 (simultaneous inspections), Article 7.23 (joint port development and joint cargo inspections), and Article 7.10 (single-window data exchange). Importantly, both governments need to reactivate regular meetings of the Trade Facilitation Committee and the Sub-Committee on Customs Enforcement, ensuring the participation of appropriate government officials to address technical matters. 

8. Develop a North American security perimeter and trade compliance strategy

Exchange cargo traceability data derived from blockchain and/or verifiable-credential infrastructure. Implement joint inspection programs at Manzanillo, Lázaro Cárdenas, and Long Beach/Los Angeles. Extend the AEO/CTPAT mutual recognition framework to cover goods arriving from third countries through certified seaport operators. 

9. Promote private-sector engagement

• Allow public-private partnerships to accelerate infrastructure investment, particularly at high-volume commercial crossings where capacity constraints impose the highest costs. 
• USMCA Articles 7.3 and 7.24 encourage traders’ involvement in the customs administrations’ decision-making processes, especially in those related to customs procedures and other emerging issues. These provisions are not intended to limit traders’ involvement to local border crossing committees but rather to also formally include private-sector representatives’ participation in relevant Trade Facilitation Committee discussions.  
• The Specialized Committee on Customs (Comite Especializado en Materia Aduanera), implemented by ANAM, should be strengthened to allow significant participation by the private sector, including in areas and cases where companies can provide support to government activities considering the principles for combating corruption set out in the 1993 World Customs Organization’s Arusha Declaration, which was revised in 2003. 

Conclusion

As the United States and Mexico continue to hold negotiation rounds regarding USMCA, authorities should think not only of crucial content requirements and rules of origin but also of the mechanisms and systems that underpin North American trade infrastructure. Fully applying Article 7 of USMCA and homologizing LPC processes can go a long way in upholding and consolidating economic security across the region and in bridging the gap between trade facilitation and security even more.  

The US–Mexico Binational Task Force on Economic Security and Competitiveness focuses on strengthening supply chains and promoting long-term economic resilience across North America.

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Image: A drone view shows containers at the Manzanillo seaport, in Manzanillo, Mexico, December 14, 2023. REUTERS/Daniel Becerril/File Photo