Mexico is being locked out of North American AI trade deals because it hasn't finished writing its own AI rulebook. While Canada sits on the US Commerce Department's list of 18 countries cleared for preferential access to advanced artificial intelligence chips and export licenses, Mexico is absent. The reason, according to analysts tracking trade policy closely, is straightforward: Mexico's technology regulatory framework hasn't caught up to what Washington now treats as a prerequisite for trust in AI governance.

This gap has transformed AI regulation from a domestic policy conversation into a trade negotiation problem, and the timing couldn't be worse. The United States, Mexico, and Canada are in the middle of renegotiating the USMCA (United States-Mexico-Canada Agreement), the massive trade deal that has governed North American commerce since 2020. On July 1, 2026, the three countries convened the first mandatory joint review of the agreement, a checkpoint written into the deal six years ago. This year, nobody treated it as a formality. US Trade Representative Jamieson Greer told the other two governments that Washington would not renew the agreement in its current form, and the deal now shifts into an annual review cycle that will run until 2036 unless the countries agree to extend it.

Why Is Mexico's AI Governance Vacuum Suddenly a Trade Issue?

Chapter 19 of USMCA, the digital trade section, was considered the most advanced digital trade framework any government had signed when it was negotiated in 2018. It allows Mexican companies to store customer data on servers north of the border without building local data centers, stops governments from forcing companies to hand over source code, and treats software crossing a border the same way it treats a container of auto parts. But it was not built with artificial intelligence in mind, and everyone close to the review knows it needs updating.

The problem is that Mexico has no comprehensive AI law to bring to the negotiating table. A Senate commission spent the spring preparing a framework, and in April a separate bill landed in the Chamber of Deputies proposing to amend Article 73 of the constitution, the provision that would give Congress the authority to pass a national AI statute. Neither made it to a floor vote before the legislative session closed. Senator Karina Ruiz introduced her own version in February, which would create a national AI agency with real enforcement teeth, including fines tied to the harm caused and the benefit gained by whoever broke the rules. That bill is still sitting in committee.

What exists instead is a patchwork. Reforms to federal labor law and copyright law touching AI use took effect in May. Data protection rules now require companies to disclose when they are using automated decision systems and give people the right to ask for human review. But none of it adds up to the kind of framework that lets Mexico walk into a trade negotiation and claim a credible seat at the table on AI governance.

How Far Behind Is Mexico on AI Adoption?

The gap between Mexico's regulatory readiness and its actual AI adoption tells a troubling story. A study built on Mexico's 2024 economic census found that only 4.8% of Mexican manufacturing companies with more than 10 employees use AI in any form. Across every sector, the average sits at 8%. The OECD (Organisation for Economic Co-operation and Development) average is 19.1%, meaning Mexico is using AI at less than half the rate of other developed economies.

A separate study commissioned by Amazon Web Services released this year found something closer to half of Mexican companies, 48%, now use AI in some capacity, up sharply from 38% the year before. The gap between those two figures tells its own story: adoption is climbing fast in services and finance, while manufacturing, the sector that nearshoring was supposed to supercharge, is barely moving. Of the companies that have adopted AI at all, nearly two-thirds are still stuck running chatbots and basic document automation, which is nowhere close to the agentic systems already handling entire workflows elsewhere.

What Are the Key Regulatory Proposals on the Table?

Researchers and policy groups have proposed several paths forward for Mexico's AI governance within the USMCA context:

• CSIS Approach: The Center for Strategic and International Studies argues the chapter's core provisions have aged well and should not be reopened wholesale. Their preferred fix is narrower: attach a separate AI protocol to the agreement, a side letter that would set shared definitions of AI risk, mutual recognition of safety standards between the three countries, and a standing working group to keep the rules current as the technology moves.
• Inter-American Dialogue Proposal: This task force has run its own analysis since last year and landed in a similar place, recommending a protocol-based approach rather than wholesale renegotiation of Chapter 19.
• ITIF Recommendation: A policy group called ITIF has gone further still, proposing Chapter 19 be renamed entirely, from a digital trade chapter to a digital economy and security chapter, built explicitly to cover AI and to align export controls against China.
• Mexico's Offensive Strategy: IMCO, Mexico's most respected competitiveness think tank, has argued Mexico should use the review to go on offense: build what it calls a regional economic security agenda, one that ties technology cooperation, modern border infrastructure, and supply chain resilience into a single strategic pitch rather than reacting country by country to whatever Washington proposes next.

The challenge is that every one of these proposals assumes Mexico shows up to the table with something to negotiate. Right now, it does not.

Steps Mexico Could Take to Strengthen Its AI Governance Position

Industry voices and policy experts have outlined several approaches Mexico could pursue to move forward without rushing into a poorly designed framework:

• Sector-by-Sector Approach: Mexico's tech trade association AMITI has pushed back gently against copying the European Union's rigid risk tiers and heavy compliance costs, arguing a sector-by-sector, risk-based approach can work better for an economy at Mexico's stage of development.
• Accelerate Existing Proposals: Move Senator Karina Ruiz's bill creating a national AI agency with enforcement teeth out of committee and to a floor vote, establishing clear fines tied to harm and benefit rather than generic penalties.
• Constitutional Amendment: Fast-track the Chamber of Deputies bill proposing to amend Article 73 of the constitution, which would give Congress the actual authority to pass a national AI statute in the first place.
• Integrate Trade and Governance: Use the USMCA review as a deadline to build a regional economic security agenda that ties technology cooperation, border infrastructure, and supply chain resilience into a single strategic pitch, rather than reacting piecemeal to US proposals.

There is a real argument for moving carefully. Rushing a single sweeping law modeled on the European Union's approach could easily backfire on a country where small and midsized companies still do most of the hiring. But caution and paralysis are not the same thing, and paralysis now has a deadline it didn't have six months ago.

The stakes are concrete. If you run a company that depends on cross-border data rules, those rules are being renegotiated right now. The European Union's AI Act enters its mandatory deepfake labeling phase this August, which means any Mexican exporter with European customers now has to comply with European AI rules while their own government still hasn't decided what its rules will even be. Meanwhile, bilateral talks between the United States and Mexico have already run three rounds this year, in May, June, and July, working through automotive rules of origin, steel and aluminum, and what negotiators keep calling economic security, which in practice means keeping Chinese capital and Chinese technology out of the regional supply chain.

A fourth US-Mexico round is already scheduled for Washington in September. Mexico's window to show up with its own governance framework is closing fast.