Protecting the USMCA from Harmful Chinese Investment Act

Bill Number

S. 2861

Origin Chamber

Senate

Congress

119th Congress, Session 1

Policy Area

Foreign Trade and International Finance

Status

Introduced

Latest Action

2025-09-18: Read twice and referred to the Committee on Finance.

Last Updated

2025-11-19T21:45:58Z

AI-Generated Summary

Purpose

This legislation aims to strengthen North American economic security by directing the United States Trade Representative (USTR) to prioritize coordination among the United States, Mexico, and Canada on reviewing foreign investments for national security risks. It focuses on countering threats from investments by nonmarket economy countries, such as China, during the next joint review of the United States-Mexico-Canada Agreement (USMCA), a trade deal that supports integrated supply chains and jobs across the region.

Key Provisions

• Sense of Congress: Expresses that Canada and Mexico are major U.S. trading partners (with over $1 trillion in annual trade each in 2024), and the USMCA bolsters North American supply chains and jobs. It highlights the need for all three countries to adopt strong investment review systems—similar to the U.S. Committee on Foreign Investment in the United States (CFIUS), which assesses foreign deals for security risks—to protect against threats from nonmarket economies like China. Such alignment would enhance collective national security and coordination on critical sectors and infrastructure.

• Negotiation Objectives for USTR: During the first USMCA joint review after enactment (required every six years under the agreement), the USTR must push for:
• Each USMCA country to create laws and regulations for reviewing foreign investments on national security grounds, modeled after the U.S. framework in the Defense Production Act.
• A new mechanism for the three countries to collaborate on addressing shared investment risks from nonmarket economies.

• Technical Assistance: The USTR must work with the Secretary of the Treasury and Secretary of State to offer support to Mexico and Canada, including expert advisors, training programs, grants, nonprofit services, and study tours to help build these investment review systems.

• Definitions: Clarifies terms like "joint review" (the periodic USMCA evaluation), "nonmarket economy country" (based on U.S. trade law criteria, often applying to China), "technical assistance" (various forms of aid), and references to USMCA parties.

Significant Changes to Existing Law

This bill does not amend existing statutes directly but adds a specific policy directive to the USTR's role under the USMCA Implementation Act. It introduces new negotiation priorities for the upcoming joint review and mandates interagency coordination for technical assistance, building on but not altering the core USMCA framework or CFIUS processes.

Potential Impacts

• Government Agencies: Increases responsibilities for the USTR, Treasury, and State Departments in negotiations and aid provision, potentially requiring additional resources for technical support programs.

• Citizens and Economy: Could safeguard U.S. jobs and supply chains by reducing security risks in key industries, benefiting workers in manufacturing and critical infrastructure sectors across North America.

• International Relations: Promotes closer U.S.-Canada-Mexico alignment on security issues, fostering trilateral cooperation under USMCA. It may heighten tensions with China by targeting its investments, influencing broader trade and investment flows in the region.

Main Stakeholders Affected

• U.S. Government Agencies: USTR (leads negotiations), Treasury (oversees CFIUS), and State Department (handles foreign aid and diplomacy).
• USMCA Partner Countries: Canada and Mexico, which may need to adopt new investment review laws, affecting their governments, regulators, and businesses.
• Businesses and Investors: North American companies in strategic sectors (e.g., technology, energy) gain protection from risky foreign takeovers; investors from nonmarket economies like China face heightened scrutiny and barriers.
• U.S. Workers and Economy: Millions employed in USMCA-related trade, as stronger safeguards could preserve domestic jobs and supply chain stability.

Notable Legal, Constitutional, or Political Implications

• Legal: Reinforces USTR's authority under trade implementation laws without conflicting with constitutional separation of powers, as it directs executive actions in international negotiations. The focus on "national security" aligns with existing CFIUS precedents but extends them regionally via trade mechanisms.

• Constitutional: No direct challenges, but it underscores Congress's role in shaping foreign commerce and security policy through directives to the executive branch.

• Political: Signals bipartisan concern (introduced by Sens. McCormick and Cortez Masto) over Chinese economic influence, potentially advancing U.S. strategic priorities in North America amid global competition. It could set a precedent for linking trade reviews to security pacts, influencing future USMCA updates or similar agreements.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. McCormick, David [R-PA]

Cosponsors (1)

Sen. Cortez Masto, Catherine [D-NV]

Recent Actions

• 2025-09-18: Read twice and referred to the Committee on Finance.
• 2025-09-18: Introduced in Senate

Bill Versions

• Protecting the USMCA from Harmful Chinese Investment Act — issued 2025-09-18 — PDF (6 pages)