Mexico, Canada, US to Strengthen Supply Chains in the Region

Mexico, Canada and the US announced an agreement to strengthen their production chains, allowing them to prepare for future emergencies with new and more advanced measures. 

The three countries explained that the pandemic showed that global value chains lacked adequate forecasts and the right criteria to attend emergency situations.  Through the agreement, the countries aim to implement a trinational subcommittee to guarantee the resilience of supply chains during contingencies of different types based on decision number 5 of the Free Commission of the USMCA. 

The three countries agreed that their operations are highly interdependent so a single uncoordinated link could paralyze the rest of the region’s production chain. At a global level, disruptions affected economic activities and employment levels severely, as prices on food, medicines and medical equipment skyrocketed, explained Mexico’s Ministry of Economy (SE) via a press release.

The USMCA’s Decision 5 indicates that coordination and consultation on North American trade flows in emergency situations must be resolved with a commission that addresses the challenges. It also states that each party should prepare domestic procedures to: coordinate its central government with actions of the selected agencies, coordinate the central and regional governments and consult industries and other non-governmental stakeholders, according to the USMCA. 

“Starting from the premise that above any economic factor is the health and safety of workers, the governments of Mexico, the US and Canada established worktables in recent months to agree on protocols and adopt a standardized definition on which productive sectors are critical or essential. All this, so that the supply chains of the region are better prepared and coordinated for any eventuality,” says SE. 

The three countries explained that North America is one of most interconnected commercial regions in the world and connections are expected to intensify due to business relocation and the regionalization of production chains. SE explained that the relocation aims to reduce risks and argued that standardizing criteria and establishing protocols will strengthen the region while attracting new investments.