WITH THE NEW USMCA, MEXICAN EXPORTS WILL REPUNCH



The update of the North American Free Trade Agreement (NAFTA), which will now be called the United States-Mexico-Canada Agreement (USMCA, for its acronym in English), brings up to date many of the trade issues in need of updating by the pass of the time.

It is a robust, modern and agile agreement that will multiply trade between the three countries, as highlighted by the president of the Business Coordinating Council, Juan Pablo Castañón, who has agreed with the Secretary of the Treasury, José Antonio González Anaya, that the agreement It will give greater certainty to the country's exporters, consumers and investors.

Likewise, it will favor the growth of Mexican exports by around 50% in the next 10 years, thanks to our integration into markets with greater demand potential, while allowing consumers greater access to goods and services at a lower price. Another great advantage, without a doubt, will be the generation of jobs.

According to the Undersecretary of Industry and Commerce of the Ministry of Economy, the new trade agreement brings tranquility to the national economy, as well as certainty to the legal part of investments.

The sectors with particular potential for expansion are: agro-industrial, automotive, aerospace, energy and telecommunications, with great benefits for small and medium-sized manufacturing companies that are integrated into their production chains.

Differences between NAFTA and USMCA

Cars

The new treaty will require that 75% of vehicle parts be made in Canada, Mexico and the United States, about 12 percentage points more than under current NAFTA, in order to export them without tariffs.

The United States established that between 40% and 45% of the car must be manufactured by workers who earn at least US $ 16 per hour. This seeks to avoid the relocation of factories to low-cost areas such as Mexico.

Canadian dairy market

On a highly controversial issue, the United States wins a victory by getting Canada to open part of the dairy market to Canadian farmers. In the original NAFTA, Canada limited the amount of milk and cheese, as well as other dairy products, that could enter the country from the United States.

Canada will establish new quotas, giving US dairy farmers access to 3.5% of its domestic dairy market, of approximately US $ 16 billion a year.

Electronic commerce

The new pact includes electronic commerce, which barely existed when the previous agreement was signed. Customs duties are prohibited for digitally distributed products such as software, games, e-books, music, and movies.

Labor rights

The new agreement commits the parties to adopt labor standards and practices in accordance with the provisions of the International Labor Organization, to enforce them and not to eliminate them from their legislation.

Exchange rates

It was also agreed to maintain the exchange rates determined by the market to avoid incurring in exchange manipulation and to combat corruption.

Periodic revision

The agreement will last for 16 years, but will be reviewed every six years.

A historic year for Mexico in terms of international trade

The Mexican negotiating team of the Ministry of Economy, in collaboration with officials from other agencies and the private initiative involved in the trade negotiations, achieved something historic: holding three trade negotiations in parallel and closing them in the same year.

They were negotiated simultaneously:

The Free Trade Agreement between Mexico and the European Union (TLCUEM).

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), signed by eleven nations: Australia, Brunei, Canada, Chile, Japan, Malaysia, New Zealand, Peru, Singapore, Vietnam and Mexico.

The North American Free Trade Agreement (NAFTA), now USMCA.

These recently negotiated trade agreements, in addition to others that our country has signed, reflect the relevance of our economy and the fact that Mexico continues to be a very attractive place to invest.

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