usmca trade agreement

Oct 2020

How the USMCA Trade Agreement Benefits American Entrepreneurs

usmca trade agreement
usmca trade agreement

Impact of the United States–Mexico–Canada Agreement (USMCA)

The original North American Free Trade Agreement (NAFTA) was in place for 26 years. The United States-Mexico-Canada Agreement (USMCA) replaced it. It became law on July 1, 2020. This new trade agreement stays in effect until 2036. 

Companies all over North America have wondered about the impact of the USMCA. Would it disrupt existing nearshore operations? We finally have answers and review them for you in this article. 

USMCA is a great deal for all three countries because it solves NAFTA’s many mistakes. It has opened new markets by reducing trade barriers with the US. Experts say it will bring all three nations closer together. 

Impact of the United States–Mexico–Canada Agreement (USMCA)

The original North American Free Trade Agreement (NAFTA) was in place for 26 years. The United States-Mexico-Canada Agreement (USMCA) replaced it. It became law on July 1, 2020. This new trade agreement stays in effect until 2036. 

Companies all over North America have wondered about the impact of the USMCA. Would it disrupt existing nearshore operations? We finally have answers and review them for you in this article. 

USMCA is a great deal for all three countries because it solves NAFTA’s many mistakes. It has opened new markets by reducing trade barriers with the US. Experts say it will bring all three nations closer together. 

Benefits of the USMCA affect trade with Mexico

First, we know that companies already outsourcing to Mexico support it. Those that waited for results have received encouragement to move forward. 

Positive impacts from USMCA on trade with Mexico include:

  1. Increased Productivity
  2. Greater Transparency
  3. Advanced IP Protection
  4. Improved Logistics 

Let’s explore areas of the agreement that actually impact outsourcing to Mexico. 

Labor Laws

As per the USMCA, new labor laws meant government action to stay in compliance. The agreement includes: 

  • Inspection transparency & more trained inspectors 
  • Defined regulations supported by stricter enforcement. Violation discovery through unscheduled on-site inspections. It compels officials to act. Investigation requests of alleged violations of its labor laws must get reviewed.
  • Application of appropriate sanctions or remedies for infractions of defined labor laws.

Specific reporting details are still being evaluated. But the outcome of the labor law updates ensures productivity gains for Mexico. 

Increased Productivity

Labor Federation President Richard Trumka announced, “For the first time, there truly will be enforceable labor standards including a process that allows for the inspections of factories and facilities that are not living up to their obligations.”

These updates improve working conditions. They also promote a fair wage for factory workers. This, in turn, helps to raise performance in the workplace.

Compliance & Transparency

The most successful parts of the USMCA promote transparency. The goals of upholding the rule of law are to promote openness. Additionally, it strengthens industrial competition and improves accountability. Now maintaining compliance is a top priority for manufacturers due to USMCA requirements.

Intellectual Property Rights

The updates to the intellectual property rights of the USCMA centers on key areas. Widely scoped, it includes internet service providers (ISPs), trademarks, trade secrets, and enforcement. Details are as follows:

  • Extends ISP copyright liability.
  • Expands trademark protection to audio and “collective marks” and enables expedient enforcement. 
  • Requires criminal procedures and punishments for trade secret theft, including cyber theft. Clarifies that state-owned enterprises must protect trade secrets. 
  • Extends IPR enforcement to the digital environment.

IP protection is a key factor when exploring manufacturing solutions. Having these additional Intellectual Property requirements brings Mexico into the modern era.

Auto Industry

Per the amendments to the USMCA, a higher percentage of cars must be made in North America. Moreover, 40% of manufactured automobiles must be in factories paying $16/hour minimum. This perpetuates an already competitive workforce in Mexico. 

Boosting Mexico’s Logistics

The country’s logistics continues to develop on both the import and export side of the business. The growth in Mexican foreign trade has created opportunities in the transportation sector. For example, there’s an increase in merchandise arriving at Mexican ports, going to the US.

Trade success has allowed Mexico to modernize roads, airports, ports, and railways. Current projected economic growth is supporting the development of various transportation infrastructure projects.

To help you take advantage of these opportunities, WITREK offers logistic services. Our solutions include shipping by freight, air, and maritime modes.

Trade Performance

Mexico’s trade with only the US was $614.5 billion in 2019. This was a .48% increase over its 2018 number. Keeping in mind, this got accomplished in a year when US trade declined. In 2020, Mexico became the #1 US trade partner for the first time. It is in the top 10 largest trading nations globally and the first in Latin America.

Conclusion: USMCA Successful for Mexico

The media is reporting on trade conflicts between the U.S. and China. These tiffs have continued for the past two years. 

Nervous manufacturing companies have already begun to explore alternatives. Now the USMCA gives industry leaders an increased incentive to change locations. We expect to see many US businesses move their operations from China to Mexico. 

Contact WITREK to discover why Mexico could be the clear choice for you.

Do you agree that USMCA helps American businesses by improving the US-Mexico trade relationship? Share your opinion about why (or why not!) in the comments!

Benefits of the USMCA affect trade with Mexico

First, we know that companies already outsourcing to Mexico support it. Those that waited for results have received encouragement to move forward. 

Positive impacts from USMCA on trade with Mexico include:

  1. Increased Productivity
  2. Greater Transparency
  3. Advanced IP Protection
  4. Improved Logistics 

Let’s explore areas of the agreement that actually impact outsourcing to Mexico. 

Labor Laws

As per the USMCA, new labor laws meant government action to stay in compliance. The agreement includes: 

  • Inspection transparency & more trained inspectors 
  • Defined regulations supported by stricter enforcement. Violation discovery through unscheduled on-site inspections. It compels officials to act. Investigation requests of alleged violations of its labor laws must get reviewed.
  • Application of appropriate sanctions or remedies for infractions of defined labor laws.

Specific reporting details are still being evaluated. But the outcome of the labor law updates ensures productivity gains for Mexico. 

Increased Productivity

Labor Federation President Richard Trumka announced, “For the first time, there truly will be enforceable labor standards including a process that allows for the inspections of factories and facilities that are not living up to their obligations.”

These updates improve working conditions. They also promote a fair wage for factory workers. This, in turn, helps to raise performance in the workplace.

Compliance & Transparency

The most successful parts of the USMCA promote transparency. The goals of upholding the rule of law are to promote openness. Additionally, it strengthens industrial competition and improves accountability. Now maintaining compliance is a top priority for manufacturers due to USMCA requirements.

Intellectual Property Rights

The updates to the intellectual property rights of the USCMA centers on key areas. Widely scoped, it includes internet service providers (ISPs), trademarks, trade secrets, and enforcement. Details are as follows:

  • Extends ISP copyright liability.
  • Expands trademark protection to audio and “collective marks” and enables expedient enforcement. 
  • Requires criminal procedures and punishments for trade secret theft, including cyber theft. Clarifies that state-owned enterprises must protect trade secrets. 
  • Extends IPR enforcement to the digital environment.

IP protection is a key factor when exploring manufacturing solutions. Having these additional Intellectual Property requirements brings Mexico into the modern era.

Auto Industry

Per the amendments to the USMCA, a higher percentage of cars must be made in North America. Moreover, 40% of manufactured automobiles must be in factories paying $16/hour minimum. This perpetuates an already competitive workforce in Mexico. 

Boosting Mexico’s Logistics

The country’s logistics continues to develop on both the import and export side of the business. The growth in Mexican foreign trade has created opportunities in the transportation sector. For example, there’s an increase in merchandise arriving at Mexican ports, going to the US.

Trade success has allowed Mexico to modernize roads, airports, ports, and railways. Current projected economic growth is supporting the development of various transportation infrastructure projects.

To help you take advantage of these opportunities, WITREK offers logistic services. Our solutions include shipping by freight, air, and maritime modes.

Trade Performance

Mexico’s trade with only the US was $614.5 billion in 2019. This was a .48% increase over its 2018 number. Keeping in mind, this got accomplished in a year when US trade declined. In 2020, Mexico became the #1 US trade partner for the first time. It is in the top 10 largest trading nations globally and the first in Latin America.

Conclusion: USMCA Successful for Mexico

The media is reporting on trade conflicts between the U.S. and China. These tiffs have continued for the past two years. 

Nervous manufacturing companies have already begun to explore alternatives. Now the USMCA gives industry leaders an increased incentive to change locations. We expect to see many US businesses move their operations from China to Mexico. 

Contact WITREK to discover why Mexico could be the clear choice for you.

Do you agree that USMCA helps American businesses by improving the US-Mexico trade relationship? Share your opinion about why (or why not!) in the comments!

Share

Leave a Reply

Your email address will not be published. Required fields are marked *