USMCA, Pacific Alliance: Keys to Grow International Trade
Home > Trade & Investment > Article

USMCA, Pacific Alliance: Keys to Grow International Trade

Photo by:   Andrew Butler, Unsplash
Share it!
Sofía Hanna By Sofía Hanna | Journalist and Industry Analyst - Mon, 12/05/2022 - 12:50

During the 28th Mexican Foreign Trade Congress, celebrated yesterday, experts discussed the regional foreign trade panorama, the new provisions of the USMCA, opportunities in foreign direct investment, the relocation of companies to Mexico and e-commerce. Mexico’s foreign trade is fundamental to its economic development since practically 40 percent of the country’s GDP depends on exports. 

 

“The world has great expectations of Mexico, which we have not seen for a long time. We are evolving with gigantic and increasingly ambitious operations, which shows how confident the world is in Mexico’s economy. We see Mexico’s foreign trade expansion and its enormous potential in the coming years,” said Marcelo Ebrard, Mexico’s Minister of Foreign Affairs, during the Mexican Business Council of Foreign Trade, Investment and Technology (COMCE’s) Foreign Trade Congress. Ebrard added that the Mexican Government is making great efforts to welcome foreign companies into the country. One step that must be taken is the possibility of improving and expanding the country’s labor force, given that although talent scarcity is not a problem yet, more specialized talent will be required as the country grows.

 

Although Mexico has several trade agreements, it is still very dependent on the US so the key is to take advantage of the other trade agreements and facilitate trade as a region, said Francisco de Rosenzweig Mendialdua, Executive Partner, White & Case. 

 

As regional markets are strengthened, some are worried about a step back on globalization but this is unlikely to be the case, said Sergio Contreras, Executive Vice President, COMCE, and Sherpa, CEAP Mexico Chapter. “I do not see a retraction of globalization, there is movement in the markets and we continue to be interdependent. It is normal for there to be changes in relations and for new opportunities to come from them. The regional part will have a new relevance, but the international part will continue to be important and is here to stay,” said Contreras.

 

To strengthen its connection to regional markets, Mexico can leverage the USMCA and the Pacific Alliance trade agreements. The Pacific Alliance, for example, “ is not just a trade agreement; it is a strategy in the region to have a much greater regional integration,” said Contreras. Although the alliance has yet to have the expected results, it is working, but there continues to be a process of integration that generates high expectations for great results. 

 

The USMCA has been essential to Mexico’s economy. In terms of trade and investment, trade in the USMCA region brought US$495 billion in the first eight months of 2022, said Kenneth Smith, Former Chief Negotiator of the USMCA for Mexico, and Partner, Agon-Economia. The current sectors with the greatest potential for attracting investment are automotive, aerospace, machinery and equipment. Key factors to get the most out of it are stricter rules of origin, nearshoring and national security, said Smith. However, failure to adhere to the agreement could spell out trouble for Mexico. “It will not be possible to attract future investments and become a semiconductor-generating country, without an industrial policy supported by a budget. It will be up to us to take advantage of nearshoring opportunities and maximize the benefits of the USMCA,” said Smith. 

Photo by:   Andrew Butler, Unsplash

You May Like

Most popular

Newsletter