Mexico’s priorities for USMCA in 2022

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Editor's note:

Below is a viewpoint from the USMCA Forward 2022 report, which examines key priorities to build a more competitive, inclusive, and sustainable North American economy.

USMCA Forward 2022On July 1, 2020, North America opened a new era of integration, which built on the North American Free Trade Agreement and was renewed to include a deeper and wider integration that puts people at the center of our region.

The new USMCA enables Mexico to deepen its productive integration in North America and to benefit from the opportunities it offers to promote trade and investment, which are essential to our economic growth, job creation and above all, to help us reduce long-term regional and income inequalities.

Mexico belongs to North America, and its economy has become intertwined with the United States and Canada’s economy as we trade and produce together for our regional market and the world.  Today, the U.S. and Canada are Mexico’s first and fifth largest trading partner, respectively, while the U.S. is the number one foreign investor and Canada ranks third. Likewise, in 2021, Mexico has been the U.S.’ number one trading partner and Canada´s third. These numbers reflect that our nations have built an integrated production platform in a diverse number of industries including automobiles, electronics, household appliances, medical devices, machinery, and equipment, among others, as well as in agriculture, which allows the three to complement each other and ensure food security in the region.

The COVID-19 pandemic has posed unforeseen challenges to our regional integration as a result of confinements and disruptions in supply chains and put tremendous pressure on all walks of life. The pandemic made us realize how integrated we have become, how dependent on each other we have grown, and the urgency to work together in a coordinated fashion to overcome this major challenge.

The pandemic, however, has also unleashed protectionist trends as an apparently easy way out to reduce the vulnerabilities of supply chains and build more resilient economies. However, this is a wrong premise for the world and certainly for North America. Protectionism is an ill-advised trade policy at this moment. Today, we need closer collaboration and deeper integration, more coordination and more dialogue. The region does not need unilateral solutions or isolationist measures. This is why Mexico voiced its deep concern about a recent protectionist proposal introduced in the U.S. Congress that wrongly aims at diverting electric vehicle production to the U.S. by offering discriminatory tax incentives. Such policy proposal is deeply troubling because it directly contradicts the spirit of the USMCA as it intends to divert investment and production of these types of vehicles to the U.S. while it would in fact disarticulate the North American automobile supply chain. Such a move would have dramatic consequences not only for the Mexican auto industry but also for the U.S. since it would reduce the ability of U.S. manufacturing to produce with its most important trading partners, at a very high cost to the U.S. and to North America. The way for North America to be competitive vis-à-vis other regions is by deepening our integration, not by isolating our economies.

Our USMCA partnership provides the ideal framework to enhance cooperation to face current and future challenges and to ensure that North America remains as one of the most dynamic and competitive regions in the world.

In 2022, Mexico will continue to work with its North American partners to build a strong, resilient, and competitive region. In this way, we will make sure that we offer the prosperity that our people deserve.