USMCA Updates
Back in June 2020, when the USMCA was implemented between the North American nations of the United States, Mexico, and Canada, changes were being felt beyond the borders. The USMCA, a close cousin to its predecessor NAFTA (North American Free Trade Agreement), made it so that a strong learning curve wouldn’t be necessary, keeping processes flowing and issues at a minimum by following the key points on rules of origin and the nine data elements necessary to create a Certificate of Origin.
It was less of a scrapping and redo of NAFTA and more of a finessing of fairness between nations to protect the interests of workers, farmers, and cross-border commodities. Desperately needed updates to digital rights, technological advances, and the balance of a continent where interests are wildly varied among their citizenry.
While going into the detailed differences between NAFTA and the USMCA, the new agreement could help with the near-shoring prospect coming up more often since trade with China turned precarious. Near-shoring would bring work that was outsourced to Asia back to countries that shared borders with the US. With Mexico being the largest trading partner of the US, it was ripe for near-shoring opportunities, especially by those looking to avoid the coastal US ports, and trans-Pacific transit-related delays as well.
Considering the speed of technology, finance, and global changes that we’ve witnessed over the last two decades, there was no way NAFTA could keep up. The world was different in 1993 and trade is best served with an updated approach to protect the interests of either side. When NAFTA was implemented there were a great number of speculators who decried the agreement as crushing the American manufacturing industry (it went to China, not Mexico). It is interesting that part of the success of the USMCA is because of near-shoring opportunities to bring American manufacturing to Mexico to protect the interests of the supply chain and avoid delays and costly tariffs. Other benefits include the benefits of trade jobs, 15% increase in pay rates for logistics jobs related to NAFTA, and the creation of inland ports where millions of people work.
Moving manufacturing to Mexico could be a valuable opportunity for factories that need to be closer to the US and want to capitalize on the flourishing USMCA market. The oversight that is included, worker’s rights that must be adhered to, and ease of border crossing for manufactured goods that are assembled in Mexico for return to the US have created a very inviting atmosphere and contributed to a flourishing North American Economy.
SecurCapital takes a long look at trends to see how these regulations impact the people behind the goods. It’s important to consider the human, ecological, financial, and worldwide impacts of these issues before a determination is made. The USMCA will hopefully continue to provide new opportunities for growing trade in North America..