The Texas-Mexico Center recently participated in an event hosted by El Colegio de Veracruz, a Mexican research institution, where, backed by our findings, we spoke about why USMCA has been so crucial to both Texas and the United States.
We presented data on how Texas is both Mexico’s top trading partner, as well as the U.S.’s main exporter globally. This has meant that USMCA, and before that NAFTA, has always been important for Texas.
We highlighted Dr. Eduardo Mendoza’s research that says that thanks to NAFTA, trade between the three countries went from $347.5 billion in 1994 to $1.1 trillion in 2017. Additionally, we spoke about Dr. Raymond Robertson’s research, which found that the U.S. and Mexico work as a single production unit, and that Mexican workers complement American workers. These were key reasons that helped Texas to be very vocal about the importance of renegotiating our free trade agreement.
What were some of the major changes from NAFTA to USMCA? The main one includes the creation of a digital trade chapter (something that was not mainstream during the NAFTA negotiation), including protection mechanisms for foreign investors (a crucial aspect for the United States, particularly for the energy industry) and the labor chapter. The labor provisions were particularly important for the automotive industry, since the new requirements included that companies should pay their workers at least $16 per hour. This was challenging for Mexico, where wages have traditionally been much lower. Mexico agreed and the next part of the process will be to reach an agreement on a mechanism to oversee its implementation.
Another point that we highlighted from our research was how USMCA creates an opportunity to strengthen North America, particularly for its supply chains. Since 2020, the world has been experiencing a disruption in global supply chains, mostly due to COVID-19. We concluded our presentation with the same policy recommendations our research projects produced: continuing to eliminate trade barriers between Texas and Mexico and the U.S. and Mexico will also continue to bring further economic prosperity to the North American region.
You can watch the event here (Spanish only): https://fb.watch/7VXoH3bzO1/