Written by: Francisco de la Torre Galindo, Consul General of Mexico in Dallas.
Recently, Canada, Mexico and the United States agreed on a new Trilateral Trade Agreement. Each country has now submitted this new version to their respective Congress. If the legislative processes are accomplished, we would be able to continue developing the most competitive region in the world.
When NAFTA was being negotiated, more than 25 years ago, it was a new paradigm of regional integration; innovative and without precedent for the time.
The treaty was both criticized and defended for different reasons. With the benefit of hindsight, and judging from the numbers and the growth it’s generated in North America, we can say that, while perfectible, it was the right treaty to sign.
Today, NAFTA is a reference of multilateral trade and a cornerstone of the globalization and growth of our countries. NAFTA eliminated tariffs and reduced trade barriers that allowed for a better trading environment in the region. For example, North America is the most extensive free trade zone in the world: it is close to 5 times the size of the European Union, which represents more than 25% of the global GDP. In addition to this, trade between Mexico and the United States has increased more than 600% and has increased 575% with Canada since 1994. Because of this, the announcement that we are one step closer to signing a similar treaty brings certainty to the relationship between our countries.
This is of utmost importance for Texas, because Mexico is the largest trading partner to the Lone Star State. In 2017, trade between Mexico and Texas surpassed $187 billion, which represents 40% of Texas exports worldwide. Our border (1254 miles) binds us more than what it separates us. More than 75% of all the U.S.-Mexico land trade crosses the Texan border. Canada is a formidable partner too. With $35 billion traded in 2017, Canada is a key player in the equation for growth.
Inter-regional trade accounts for almost half of the exports from NAFTA countries. It is across our borders that we have found the best way to integrate our production chains seamlessly: Currently, a car produced in North America crosses a border 8 times in average before its completion. This will probably suffer some readjustments with the new treaty, but I am convinced that we will find the right equilibrium that will benefit most people.
The benefits of NAFTA were not limited to big trade operations. Close to 5 million jobs in the U.S. depend on trade with Mexico. Our trade generates almost 400,000 jobs in Texas, and Mexican investment also supports thousands of jobs in the Lone Star state, positively impacting families, and helping drive Texan growth. In fact, today Mexico accounts for two out of every five dollars that Texas earns in export revenue, and nearly half a million jobs in the state are dependent on this relationship. These jobs are usually located in small and medium-sized Texas businesses, effectively helping to diminish income inequality. It is a very big victory to know that these jobs will be protected if this new treaty is signed in the three countries.
The new treaty has some key changes, but the spirit of cooperation that drove NAFTA is still present. Modernization was a must. The main idea is, not to trade with each other, but to grow together as a region. Opportunities to build bridges and strengthen cooperation still stand.
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