Dominik A. Leusder:

Right. Let’s assume that the current administration actually reduces the fiscal deficit. What happens to the trade deficit?

Michael Pettis:

Let’s say Donald Trump reduces the American fiscal deficit. What most American economists will tell you — because I think Americans don’t really believe that foreigners have agency — is that if the US fiscal deficit goes down, then savings go up by definition. If savings go up, the US trade account contracts. This assumes that net foreign inflows into the United States will also contract.

But if you were a Chinese or British or Swiss or Malaysian investor, or a Belgian dentist or the central bank of Korea, would a reduction of fiscal deficits make you less likely or more likely to invest your surpluses in the United States?

I would say you’re probably more likely to invest in the United States, because suddenly American debt has become much more valuable and much safer. In that case, you could actually see the trade deficit rise. So the question is: Is the American trade deficit driven by low American savings or by high foreign savings? If it really is all about low American savings, then I agree that raising the American savings rate and the trade deficit will come down. But if it’s driven by foreigners, then reducing the American fiscal deficit will probably be balanced by a rise in unemployment, not a reduction in foreign inflows.

This idea that trade imbalances are "driven by foreigners" is, I think, fundamental to his view. The high savings of foreigners, he argues, are the cause of imbalances, and relatively low American savings are of less interest to him (you may think this is all about China, but he tends to bring in Germany, Japan, South Korea, among others, as well). Consequently, his proposals for changes to the system involve new rules for the high savings/trade surplus countries only (from the perspective of a low savings/trade deficit country such as the U.S., this would mean only foreigners are subject to any new constraints):

I would argue that the most efficient way to do this is to have a new global Customs Union along the lines that Keynes proposed at Bretton Woods, in which you penalize countries that run deep and persistent imbalances. Keynes’s argument was: I don’t want to tell you how to run your economy. You can be communist, capitalist, fascist, socialist, whatever you like, but whatever your domestic problems are, you cannot externalize them through the trade account. So we will not allow you to create persistent imbalances. That would be the best solution — a new form of globalization.

We don’t want a world in which real economies must adjust to hot money flows. So anything that reduces them is good for the global economy.

Many people say this can’t be done: at Bretton Woods everybody hated everybody, and the United States ruled the world. Back then only one country needed to be convinced, now it’s many. But I think that’s a little pessimistic. If you include the United States, Canada, England, and a few other developing countries with deficits, such as Mexico or Colombia, then you’ve got 80 percent of global deficits. If you create a Custom Union that says “if you trade with us, you cannot run surpluses,” that will force the whole world to adjust.

To me, one of the biggest problems with the Pettis approach is that he seems to be looking for one side to blame here, in effect asking the question: "Is the American trade deficit driven by low American savings or by high foreign savings?" In his mind, it has to be one or the other – either the Americans or the foreigners are to blame. He then decides to put the blame for imbalances on the foreign surplus countries that have high savings, with low-savings deficit countries such as the U.S. being innocent victims. The surplus countries save too much, he says, and that's the source of all the troubles.

As I see it, however, explaining the existence of imbalances requires more than just looking for one side to blame. The trade imbalances at issue here are more accurately described as resulting from differences in savings levels (both government and private), rather than coming just from the savings behavior of one side. There is no particular savings level that is the objectively correct one. With government savings, there is disagreement about what constitutes an appropriate fiscal policy; and with private savings, my sense is that the role of cultural factors is pretty strong (and that Pettis and others underestimate it). Thus, it doesn't make sense to blame the countries with high savings rates for trade imbalances (or, for that matter, to blame the countries with low savings rates). The issue is simply that differences in savings rates can have an impact on the trade balance, especially when governments have policies that get in the way of the currency adjustments that could help bring things into balance.

Relatedly, I think this is part of why the Pettis view appeals to many people across the political spectrum in the U.S.: They can use his arguments to put the blame for U.S. trade deficits on foreigners. However, if someone is genuinely concerned (for whatever reason) about trade imbalances, I think it's important to emphasize the differences in savings levels, in combination with factors such as policies that affect the exchange rate, as the explanation. That's not likely to be a popular approach among U.S. politicians, but it seems to me that it's the right way to think about the issue.

There is a growing trend toward using tariff increases and modifications of concessions to address structural issues. While these may serve as short-term tools to protect specific domestic industries, they risk triggering a chain reaction of retaliatory actions.

Korean then made the case for "collective restraint" here:

If this trend is not managed early, such measures could become normalized as a routine policy instrument, thereby weakening the rules-based system. Korea emphasizes that collective restraint and a cautious approach are necessary to prevent an uncoordinated expansion of trade barriers.

What would Korea do instead of tariffs?

Korea believes that responses should not rely primarily on tariffs. Instead, we must focus on direct and sustainable solutions, such as enhancing transparency of subsidies and tackling root causes. We should prioritize these discussions within WTO reform and other relevant bodies to ensure a level playing field.

It then reiterated its concerns with tariffs, noting that "the proliferation of tariff-based responses risks undermining decades of trade liberalization."

We'll get the full rundown of Member comments on this issue when the meeting minutes are published in a few weeks. China is never mentioned by name, but of course this is about China. When we get the meeting minutes, I'll be curious what China has to say here, as well as other countries caught in the middle of the China-U.S. rivalry. [UPDATE: As someone pointed out in the comments, China's statement is here]

In the meantime, though, we have the U.S. and EU views, as these governments post their statements to the General Council online. Let's see what they had to say.

First up, in its statement at the meeting, the U.S. responded that "[w]e think this view misjudges the serious and urgent situation that many Members face." The trading system, it says, "has been severely undermined by the beggar-thy-neighbor policies driving persistent overcapacity in steel and other industrial sectors, not by the actions Members are forced to take to address the crisis." It further stated: "The idea that the countries damaged by persistent overcapacity should resign themselves to 'collective restraint' fails to grasp the gravity of the situation."

In the view of the U.S., "[o]ver the past few decades, we have seen increasing global imbalances caused in part by persistent structural excess capacity in steel and other industrial sectors." In response, the U.S. said, "[w]e tried to work within the international trading system to correct these challenges," but "the current system has proven too inflexible, slow-moving, and ineffective." Systemic issues "have persisted and even worsened over time, leading the United States to conclude that a new approach is needed to properly account for and protect our market from the global market distortions emanating from sources of excess capacity."

As for the EU, its statement argued that "the current WTO rulebook was not designed to address the challenge of structural overcapacity." It further stated:

Non-market overcapacity is one of the pressing realities that remain unaddressed because of gaps in WTO rules. Its root causes are State interventions that artificially sustain or expand production beyond market demand. This gap undermines the predictability and fairness of global trade. 

It then called for an expansion of the existing rules: "we believe that WTO Members should work together as part of the WTO reform work to address the shortcomings in the rules related to State intervention in support of industrial sectors in the WTO rulebook." It later noted that "we do believe that the rules need to be updated and completed."

The EU also emphasized that its own tariff actions are within the rules, which is a fair point:

The republic of Korea has referred to modification of concessions and has asked that Members exercise maximum restraint and try to calibrate the measures they take. The European Union is taking measures within the boundaries of the WTO rule book. The proposed EU steel regulation aims at tackling the negative trade-related effects of global overcapacity on the EU steel market.

This is something that the rules-based international trading system allows protecting, and this is why the EU is exercising its right of modification of concessions under Article XXVIII of the GATT 1994.

By using Article XXVIII, the EU is demonstrating its respect for the multilateral trading system and giving other WTO Members the opportunity to engage on this matter and to exercise their GATT rights in this respect.

In reaction to all this, I have a couple thoughts.

First, while overcapacity, on the one hand, and non-market policies and practices, on the other, may be tied together, non-market policies and practices are the underlying problem here and those should be the focus. (The EU describes these as "State interventions that artificially sustain or expand production beyond market demand"; the U.S. talks about "beggar-thy-neighbor policies".) Generally speaking, WTO rules can discipline state actions better than they can directly influence production capacity.

Second, something that I feel is missing from this debate is a discussion of how existing WTO rules apply to the non-market policies and practices at issue. There may be some "gaps" and "shortcomings" in "the current WTO rulebook," and it's certainly worth considering tweaks to these rules or adding new rules (or "updating and completing" the rules, as the EU put it), but I think people are underestimating the scope and potential of existing rules. For example, there are some good arguments that rules such as the SCM Agreement Article 5 "adverse effects" provisions could have an impact on these practices; and then in the context of China specifically, Accession Protocol rules such as paragraph 46 of its Working Party report, addressing the behavior of state-owned enterprises, could play an important role. How much progress could the existing rules achieve? We won't know for sure until we have tested the boundaries by trying to enforce them.

Third, the focus of the debate above between the governments seems to be on collective restraint versus unilateral action. But what about some kind of collective action? Mona Paulsen and Dan Ciuriak used that term here, arguing for a situation complaint in the context of recent U.S. trade policy moves, but I'm thinking of WTO complaints brought jointly by multiple Members against China based on the obligations noted earlier. The U.S. says it "tried to work within the international trading system to correct these challenges" but that did not produce results. However, that effort mostly involved domestic trade remedy cases or other unilateral tariffs, and, in my view, that approach is not likely to achieve long-term solutions.

Korea's communication mentions "tackling root causes." Does that encompass my suggestions for WTO complaints? I'm not sure what Korea had in mind, but I think it could.

Finally, let me throw in a related point here, as I came across something I wanted to comment on but I'm not sure it merits a separate post. In a new piece for The Wire, Bob Davis says the following about the proposed "Board of Trade" that has been mentioned in the context of U.S.-China economic relations:

But for Washington, the plan, if sealed, would pack a broader message: The United States has given up trying to change China’s economy through outside pressure or inducements. Instead, the U.S. accepts the state-dominated Chinese system as it is, and will from now on look to cut trade deals within the new framework. 

The “Board of Trade” plan reflects the frustration of many U.S. administrations that pressing China to liberalize its system, so that it can focus more on domestic consumer demand and less on subsidized exports, hasn’t worked. After decades of hectoring by the U.S. and others, China still relies on an undervalued currency and subsidies to power an export sector that has ravaged many U.S. industries and deepened voter cynicism that Washington can meet the Chinese challenge.

A lot of what is said here feels like the current conventional wisdom, but I think the conventional wisdom is a bit off.

First of all, pressuring China to "focus more on domestic consumer demand and less on subsidized exports" links two things that are not as closely related as people seem to think. China does have lower consumer demand than other industrialized countries; and it does have subsidies that benefit exports. But these are two very different issues. Maybe people have in mind that if China would stop providing subsidies at such high levels, consumer demand would then somehow shoot up, but I don't think that's likely to be the case. Keep in mind that complaints about foreign countries not consuming enough go way back, and this isn't a China-specific issue. From what I can tell, China's consumption levels are mainly a function of things other than its subsidies. (To be clear, I do think China should reduce its subsidies, an issue I'll get to next; I just don't think doing so will necessarily lead to much of an increase in consumer demand in China.)

Second, turning to those subsidies, I think people overestimate the "outside pressure or inducements" to liberalize that the U.S. has undertaken. Over the years, there have been U.S.-China dialogues and there have been unilateral actions by the U.S. But it has always seemed to me that neither approach was likely to accomplish much in terms of change in China. In my view, as noted above in the context of the General Council meeting, if the goal is to pressure China to change its economic policies, these are weaker alternatives to the approach that did have an impact when used, which was WTO complaints. My sense is that these weaker approaches may have been chosen in part because the priority was something other than pressuring China to change, but I'm not totally sure about that. If we ever do decide to make pressuring China to be more market-oriented a priority, however, we could actually see some progress.

Introduction

The Section 301 Investigation on forced labor has reached the stage of the public hearings. Between April 28th and 29th, around 60 representatives of countries, business associations and non-governmental organizations offered their input to inform the United States Trade Representative’s (USTR) determination following the initiation notice published early in March. As already highlighted by Desiree LeClercq’s post, among the new surge of Section 301 investigations following the International Emergency Economic Powers Act (IEEPA) Supreme Court Ruling, in this case the USTR is investigating “acts, policies and practices of certain countries related to the failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor”. In other words, this investigation aims to determine whether the absence or non-implementation of import bans for products made with forced labor in 59 countries, plus the European Union, negatively affects U.S. commerce, on the basis that U.S. exports end up unfairly competing with goods tainted with forced labor in those markets. The crux of the matter is therefore not to ascertain whether these economies produce, or export goods made with forced labor, but rather whether they have an adequate system in place to prevent such goods from being imported into their territory.

I reviewed the publicly available hearing transcripts to see how the public testimony addressed some of the questions set out by USTR in the initiation notice. Here are a few reflections on notable trends and issues that emerge from the discussion.

1)          Whether any economy subject to the investigations maintains or is in the process of establishing a forced labor import prohibition, and whether any such import prohibition is being effectively enforced

On the first question, the hearings confirm many concerns raised by civil society on the design and potential effectiveness of forced labor import bans, but they also contain relevant information about countries’ recent developments on this issue. The U.S., unsurprisingly, emerges as the only country where forced labor import prohibitions operate in a relatively structured way, while to date a limited number of countries formally have, or are moving towards, the adoption of import bans. While Canada and Mexico adopted import bans in accordance with their USMCA commitments (art. 23.6 USMCA), some testimonies pointed out that these mechanisms have so far delivered limited results, with Mexico in particular posing persistent issues of transparency and evidentiary burden, despite regulatory updates in late 2025 (see pp. 42-43 Day 1 and pp. 66 -70 Day 2).

Beyond the USMCA bloc, several country representatives affirmed that they are at different stages in developing forced labor import prohibitions: some noted that import prohibitions are already introduced in principle, but still await implementing regulations (Pakistan and Indonesia); others referred to legislative proposals that are expected to be discussed and adopted in the near future (Ecuador and Peru); others indicated that such mechanisms are being considered, with policy discussions still ongoing (Guatemala). There is no doubt that some of these legislative efforts are, in large part, a response to commitments undertaken in recent trade deals with the U.S. (on this point, see Simon Lester’s post). While there was no representative of the European Union sitting at the hearings, the forthcoming EU Forced Labour Regulation was mentioned by some testimonies – mainly to stress potential design gaps, such as the absence of a rebuttable presumption and unclear evidentiary threshold (see pp. 81-82 Day 1).

Beyond determining which country has in place an import prohibition, an interesting point that emerges from the hearings is how testimonies understood “effective enforcement”. The discussion did not just revolve around how many countries have an import ban in place and the number of import restrictions imposed. Several comments emphasized that the mere existence of an import prohibition of goods made with forced labor is only the tip of the iceberg. What matters is whether countries have the tools, resources, and institutional capacity to make it work in practice (see p. 33 Day 1). This includes financial resources, data systems, specialized customs units, and investigative capabilities, as well as access to technical assistance and capacity-building programmes (see pp. 16-17, 33-34, 60-61 Day 1). Due to regulatory complexity, time also emerged as a key factor, with a number of interventions suggesting that a cooperative approach and phased implementation framework were preferable (see pp. 17, 21-22 Day 1).

Within this broader perspective, U.S. actions themselves came under scrutiny. Some testimonies stressed that the U.S. needs to ensure more consistent enforcement of its own import ban regime if it aims to provide a credible example for other countries, especially considering that Uyghur Forced Labor Prevention Act (UFLPA) and Section 307 investigations appear to have declined in recent months (see p. 22, 57 Day 1); and second, it should act as a partner by sharing information, expertise, and best practices (but see LeClercq’s post for a critique on this), including by strengthening, rather than stepping back from, multilateral cooperation through the International Labour Organization (see p. 23 Day 1).

Against this background, several testimonies suggested that using tariffs or other trade restrictions to push countries to adopt import bans may be ineffective or even counterproductive. Where such measures are introduced only formally, without the necessary political commitment and resources, they risk remaining on paper only and failing to deliver meaningful enforcement in practice.

2.          The extent to which the failure of any economy to establish and effectively enforce a forced labor import prohibition is unreasonable, discriminates against U.S. goods, or constitutes a persistent pattern of conduct that permits any form of forced or compulsory labor

With this question we enter the core of the investigation. In order to take action against the countries listed in the initiation notice, USTR must determine that the acts, policies, or practices of a foreign country are unreasonable. Under Section 301(d)(B) of the Trade Act of 1974, such unreasonableness may arise in several circumstances. Based on the initiation notice, two appear particularly relevant in this case, namely when a foreign country’s acts, policies, or practices (i) deny fair and equitable market opportunities for U.S. goods by tolerating systematic anticompetitive activities by enterprises (§301(d)(B)(i)(IV)) or (ii) constitute a persistent pattern of conduct that permits any form of forced or compulsory labor (§301(d)(B)(iii)(III)).

In the first case, the testimonies were asked to provide evidence that U.S. goods are competing with products made with forced labor in foreign markets, and to assess the extent to which this restricts their market opportunities. The positions emerging from the hearings are polarized on this point. On the one hand, private-sector testimonies - particularly from the steel, aluminum, polysilicon, chemicals, and wood sectors - consistently argue that forced labor operates as a hidden subsidy. By artificially lowering production costs, forced labor is considered to confer a structural competitive advantage on foreign producers, enabling them to undercut U.S. goods in markets that lack an import ban. What is striking, however, is that across the two days of hearings this claim is repeatedly asserted rather than substantiated (see, for instance, pp. 125, 186, 224 Day 1, pp. 22-23, 38-39 Day 2). For example, one testimony notes that “Chinese polysilicon sells for roughly 4 to 5 dollars per kilogram, compared with 18 to 20 dollars for non-Chinese supply. China’s forced labor permeates the entire solar supply chain” (p. 123 Day 1). Yet, like many similar statements, this testimony does not provide a clear basis for establishing if, and isolating how much of, these price differences are actually attributable to forced labor, as opposed to other potential factors (pp. 174, 213 Day 1). On the other hand, other testimonies, such as those concerning tobacco/cigars or oil and gas, point in a different direction: when repeatedly asked in follow-up questions whether their products compete against imported goods produced with forced labor in third markets, they tended to exclude that this was the case (pp. 178-180, 285-286 Day 1).

The second case, that is, whether the absence of an import ban constitutes a persistent pattern of conduct that permits any form of forced or compulsory labor, received less attention during the hearings, but two relevant testimonies engaged with it from a pure legal perspective. Professor Nedumpara, speaking as the representative of India, made a clear point: a persistent pattern of conduct “implies that the conduct of the state should be continuous and must result from wilful action or inaction to do something…only within the territory where its effects are felt” (pp. 113-114 Day 2). This means that the mere absence of an import ban on goods made with forced labor cannot be equated with permitting forced labor elsewhere. Professor Zang, in her capacity as a representative of the China Chamber of International Commerce, stressed that there is no international obligation to adopt an import ban of this sort, but it represents a U.S. policy choice which cannot represent a (global) “baseline for fairness and equity”. (pp. 95-96 Day 2).

3. What actions should be taken, and, in the event they are, the level and scope of duties or import restrictions

The positions emerging from the hearings are again divided, although a significant number of testimonies, for different reasons, do not support the use of tariffs. On the one hand, civil society actors consistently emphasized that, if the objective is to encourage the adoption and effective implementation of import bans, priority should be given to technical assistance and capacity-building in order to foster rather than undermine cooperation in this field (see pp. 104, 108, 192 Day 1). On the other hand, several private-sector testimonies highlighted that additional tariffs would risk harming U.S. industries, without necessarily addressing forced labor concerns (pp. 104, 160, 163, 207 Day 1; Day 2, p. 26). At the same time, anticipating possible action by USTR, many of these actors suggested narrowly targeted measures, rather than generalized tariffs, accompanied by phase-in periods and specific exemptions. These include, for example, exemptions for USMCA goods, for countries engaged in cooperative frameworks with the U.S., or for inputs that are not readily available on the U.S. market (pp. 144–148 Day 1; pp. 27–28, 51, 54 Day 2).

At the same time, other testimonies, particularly in sectors such as polysilicon and chemicals, expressed support for the imposition of tariffs. However, these were primarily viewed as means to offset the alleged competitive disadvantages that U.S. products face on the U.S. market, instead of as tools to exercise economic pressure on other countries to adopt import bans that would ensure fair competition in foreign markets (pp. 126, 201, 223, 227 Day 1; pp. 47, 53, 60, 63 Day 2).

Some final thoughts

It is no mystery that Section 301 is being used as a possible substitute for IEEPA tariffs, but in this case, it seems unlikely that the USTR has obtained sufficient evidence to take action. Regardless of the outcome, there is a risk that the strategic, yet arguably pretextual, use of this Section 301 investigation will reduce or distort the debate on how trade and policy instruments can contribute to making global supply chains more just. If framed in protectionist terms, this debate risks losing sight of the legitimate role that such instruments can play. As several civil society actors noted during the hearings, import bans on goods made with forced labor have the potential, among a wider set of legal and policy instruments, to address this serious problem.

The need for a more developed debate is illustrated by the fact that, for instance, throughout the hearings forced labor is never defined. Testimonies proceed as if there were a shared understanding of what constitutes forced labor and which elements are required for a situation to qualify as such. Yet, in many cases, the term seems to be used loosely, referring to broader labor violations or problematic working conditions that may not meet the international legal threshold of forced labor. This suggests that further research is needed to clarify how forced labor is understood and interpreted in the trade context.

Finally, one aspect that only emerges indirectly from the hearings, but is central in practice, is the role of human rights due diligence frameworks. Effective enforcement of these import bans ultimately depends on private businesses’ ability to trace their entire supply chains, audit production processes, identify risks, and implement mitigation measures. By investigating whether countries have such systems in place and, indirectly, encouraging their development, the U.S. might turn into an unintended driver of mandatory human rights due diligence frameworks, a development that can be seen as positive but that is actually, in its own way, somewhat ironic, considering the resistance shown towards the EU Corporate Sustainability Due Diligence Directive by the U.S. government only last year.

Perhaps it is never too late to change course.

The data provided in monthly BEA trade data releases only goes back two years, so to get a fuller picture through a three year comparison, I took the March 2026 and March 2024 releases and then integrated the data from Exhibit 7: U.S. Exports of Goods by End-Use Category and Commodity in each release to create the table at the bottom of this post – scroll down to see it. (Producing a readable table on this blog platform was a challenge. I'll try to do better next time! An Excel spreadsheet I created with the data is here, if that makes things easier for people).

The table shows exports for the period from January-March, broken down by product category, for the years 2024 through 2026, and then indicates the change (positive or negative) from 2024 to 2026. From this data, you can see that it is true, as U.S. Trade Rep. Greer noted recently, that overall exports are up. However, the breakdown for specific goods categories shows some interesting things:

• Foods, feeds, and beverages are slightly down, with soybeans dropping the most and corn rising the most
• Industrial supplies and materials are up, with most of the increase being in non-monetary gold and precious metals
• Capital goods, except automotive are up, with most of the increase being in computers, computer accessories, and semiconductors
• Automotive vehicles, parts, and engines are down
• Consumer goods are slightly down

When going through those bullet points, and especially after looking at the figures in the table below, you may ask what I did: What is "non-monetary gold" and why are its exports up so much (representing more than a third of the total increase in exports from 2024 to 2026)? On this issue, a website called Investopedia had this to say back in January:

Exports of non-monetary gold and other precious metals surged by more than $10 billion in October, offsetting declines elsewhere and accounting for more than the total $7.1 billion rise in exports that month. The spike came as gold hit a then-record high on Oct. 20, part of a recent trend of investors piling into the safe-haven asset. 

I'm not sure what to make of that, or whether the increase in exports of these products will continue. Regardless, I don't get the sense this is what the pro-trade members of Congress had in mind for export growth.

On the other noticeable shifts, I'll just speculate a bit: Maybe the increase in exports of computers, computer accessories, and semiconductors is due to the AI boom? And maybe the fall in auto exports is due to the recent decrease in Tesla sales in many markets?

As I said, I haven't worked with data much recently, so please feel free to point out any errors you see or make suggestions!

U.S. Exports of Goods by End-Use Category and Commodity (in millions of dollars), January - March, by year 2024-2026

Source: Data derived from Bureau of Economic Analysis trade data

Recall that USMCA Article 34.7 says:

3. As part of the Commission’s joint review, each Party shall confirm, in writing, through its head of government, if it wishes to extend the term of this Agreement for another 16-year period. If each Party confirms its desire to extend this Agreement, the term of this Agreement shall be automatically extended for another 16 years and the Commission shall conduct a joint review and consider extension of this Agreement term no later than at the end of the next six-year period.

(emphasis added)

The "through its head of government" language is interesting. The drafters could have put the head of government more at the center of the process of confirming. For example, the provision could have said "the head of government of each Party shall confirm in writing if the party wishes to extend the term of this Agreement for another 16-year period." But they used more indirect language instead, with the party confirming "through" its head of government.

"Through," as I think of it based on its use in memos, could mean that the sender is keeping the "through" person informed of developments, or looking for comments from the "through" person, or seeking the "through" person's approval. What if, in the context of the decision on whether to extend the agreement, Congress treated it like the first meaning, and passed a concurrent resolution saying something like "we confirm that the United States wishes to extend the term of the USMCA, and that this decision is to be communicated through the President"? Would that action constitute a U.S. "wish" or "desire," for the purposes of Article 34.7.3, to extend the agreement?

To be clear, I'm not saying that I think such an action is likely at the moment, in particular given the current Republican control of Congress. But note that paragraph 4 includes a similar provision that would apply later in the review process:

4. If, as part of a six-year review, a Party does not confirm its wish to extend the term of this Agreement for another 16-year period, the Commission shall meet to conduct a joint review every year for the remainder of the term of this Agreement. If one or more Parties did not confirm their desire to extend this Agreement for another 16-year term at the conclusion of a given joint review, at any time between the conclusion of that review and expiry of this Agreement, the Parties may automatically extend the term of this Agreement for another 16 years by confirming in writing, through their respective head of government, their wish to extend this Agreement for another 16-year period.

So, just for fun, let's say the USMCA does not get renewed in July, and then in November the Democrats win the midterms and take control of Congress. In January, could a Democratic-controlled Congress pass a resolution of the kind I described above, in an effort to extend the USMCA? It would certainly be an interesting exercise in relation to establishing the balance of Congressional-Executive power over trade policy, as the Trump administration is likely to push back! (Of course, there are plenty of Democrats who want changes to the USMCA, or don't like it in general, so it may not happen after the midterms either.)

As a final point here, let's look at whether the Congressional committee reports on the USMCA Implementation Act help clarify any of this (the Act itself does not include the "through its head of government" language). Here's a passage from the Senate Finance Committee report that discusses the joint review provision:

The Committee notes that stability in North American trade is critical to the health of our economy, and the Committee does not believe that this provision was necessary, particularly because, like all trade agreements, USMCA provides for withdrawal at any time with six months' notice. This provision does not change the constitutional structure of the United States with respect to the conduct of trade policy. Specifically, the Committee notes that Article 34.7.3 provides that each Party shall confirm in writing through its head of government whether it wishes to extend the term of USMCA. The provision thus only dictates how the communication regarding term extension should be made to the other Parties; it does not address how the decision itself is made within a Party. Further, the United States cannot withdraw from a congressionally approved trade agreement without the consent of Congress.

To me, the overall tone here suggests that the Senate believed Congress has an important say in the extension decision. And by distinguishing between the extension decision, on the one hand, and the communication of that decision to the other USMCA parties "through its head of government," on the other, the following sentence could be taken to mean that the Senate did not believe the head of government in the U.S. makes the decision alone: "The provision thus only dictates how the communication regarding term extension should be made to the other Parties; it does not address how the decision itself is made within a Party." Thus, arguably, while the communication comes through the President, nothing in the USMCA (or the implementing act) precludes Congress from making the extension decision. (And as noted above, the use of "through" may even give Congress the flexibility to do the communicating itself.)