NAFTA, Boosting the Economic Potential of the Region

The renegotiation of the North American Free Trade Agreement (NAFTA) has sparked a heated debate amid those in favor and against. Despite US reservations about the treaty, José Zozaya, President of Kansas City Southern Mexico (KCSM), highlighted its crucial role in the development of the region as a whole and of each country involved, during his presentation at the Mexico Infrastructure & Sustainability Summit 2017 in Mexico City on Tuesday.

The treaty represents 25 percent of the global GDP, in which Mexico plays a crucial role. “Every year, Mexico and the US trade over a billion dollars in goods and services,” Zozaya said. “This implies US$1 million of trade every minute and of each dollar spent on Mexican products, 40 cents go toward supporting jobs in the US.”

NAFTA has many benefits for the region such as the amount of importation and exportation among the three countries. “Mexico is one of the three largest suppliers of the US and is its second-most relevant client,” he said. “The treaty also offers a unique conflict resolution method that can be used between the countries.”

Addressing the renegotiation itself, Zozaya promotes the modernization of the treaty as the traded goods and the people that manage them are not the same as 20 years ago. “A new, more dynamic NAFTA should be created to create more certainty amid the changes in the flow of trade between the countries,” he told the audience at the Hotel Sheraton Maria Isabel. “Mexico is interested in making sure that the negotiation has a positive impact on the country and the region.”

The economic growth of the three participating countries – Mexico, the US and Canada – not only impacts the flow of trade but the efficiency of the railroad system as well. “Velocity, volume and distance are key to the success of railroad systems,” Zozaya said. “Economic development is interconnected to railroad systems and for this reason Kansas City is greatly involved in the new NAFTA treaty.”

Zozaya believes that borders should not be used as a brake for trade between countries but as a facilitator for all legal goods and services. And when it comes to international collaboration, Mexico has been a pioneer. “The country has one of the highest number of international treaties, which is significant considering it was once a quite closed country. The openness allows the country to take advantage of investment opportunities,” he said. “Considering the geographical position of Mexico, the country should strive to not only be an important regional hub for logistics but a global one.” KCSM is optimistic about the future of Mexico and trusts in the development and growth of region, Zozaya said.