In the context of the economic crisis generated by COVID-19, the entry into force of the USMCA opens up opportunities at Mexico’s northern border, creating value chains with higher resilience and long-term certainty.
According to Luz María de la Mora, Mexico’s Minister for Foreign Trade, the USMCA has strict rules for Mexico which will undoubtedly cause difficulties; but they are not unattainable.
She also stressed that the USMCA is an opportunity to attract Foreign Direct Investment to the country, which totaled 589,356 billion dollars from 1999 to March this year.
The Minister for Foreign Trade explained that, of the 34 chapters of the USMCA, 24 were already part of NAFTA. However, new rules of origin for vehicles that are assembled in each country made up one of the 10 new chapters, specifying that 75% of the content must be of national origin after three years of its entry into force.
In view of the above, there is an alternative transition regime so that assembly companies can request more time to comply with regional content, created through a request to the three countries involved in the trade agreement.
Mexico’s northern border is expected to continue being an assembly platform, but with a potential for added value. To achieve this, the government and businesspeople need to create a national strategy to establish manufacturing operations in sectors such as steel, aluminum and the automotive sector, that allows the capitalization of new experience in regional content.
Foreign investment carries risk, and proper coordinated cooperation between public and private administration becomes indispensable to ensure success.
In addition, it is of utmost importance to strengthen domestic consumption to drive development.
Although Mexico is considered one of the most industrialized countries in the world, it still has a lot to do in order to develop the potential of its local manufacturing companies, despite having the talent, infrastructure, raw materials and national supply chain for any product.
Oradel Industrial Center in Nuevo Laredo, Tamaulipas seeks to attract Foreign Direct Investment by providing industrial facilities to national and international companies looking to establish their manufacturing operations in Mexico in order to generate foreign trade to the United States.