July 1 marked the dawn of a new economic era in North America as the trade deal known as USMCA took effect, cementing the relationships and advancing the common interests of the United States, Mexico and Canada.
While the U.S. International Trade Commission estimated the USMCA would result in $28 billion in new U.S. auto purchases and create 76,000 U.S. auto jobs, the new agreement is beneficial to all parties. It was so important to Mexico – where it won overwhelming approval in the Mexican Senate – that President Andrés Manuel López Obrador traveled to Washington on Wednesday to meet with President Donald Trump in celebration of the deal.
It was López Obrador’s first trip outside Mexico since his election two years ago, and in a display of statesmanship he focused on the future and the positives rather than some of Trump’s past derogatory remarks about Mexico and its people. “Instead of remembering the insults, things like that … we have received from you President Trump an understanding and respect,” López Obrador said. “Some people thought ideological differences would inevitably lead to confrontations.”
For his part, Trump called Mexico a cherished partner and said the two countries’ “economic and security relationship was reaching new heights.”
The deal replaces the old North American Free Trade Agreement (NAFTA). Mexico is the largest U.S. trading partner in goods, and during the COVID-19 pandemic the two nations have worked closely to keep supply chains going so plants in both countries could remain open. Trade with Mexico fuels thousands of jobs in New Mexico.
And now that – we fervently hope – both political parties have learned the lesson that having so many key products like medicines, rare earth minerals key to technology and even PPE produced in China was a monumental strategic mistake, this North American partnership will be crucial as we move to “reshore” that production.
“The Borderplex region will play a leading role in the inevitable reshoring of jobs from China and other parts of Asia,” Borderplex Alliance CEO Jon Barela said in a statement on the presidential meeting. And Jerry Pacheco, executive director of the International Business Accelerator and a Journal columnist, said reshoring Chinese production back to North America will create jobs regardless of where plants are located. “For every 10 jobs created in Juárez we get three in the U.S., either in distribution or supply,” he said.
Pacheco said despite the economic trauma caused by the pandemic and lockdowns, N.M. exports to Mexico are up by 11%. “What we are building here are meat-and-potato industries that go on despite the pandemic.” And he said there is “a group here, we call it the Magnificent Seven, of companies interested in reshoring to the New Mexico-Mexico border.”
Pacheco said the fact López Obrador, a populist, made this his first international trip shows ” Mexico wants to be a good neighbor and is willing to let bygones be bygones and build the economy.” He went on to say that from a “purely logical standpoint Mexico needs the U.S. and the U.S. needs Mexico. If we can’t put aside our differences, we are going to be in trouble from an economic standpoint.”
And for companies engaged in border trade, “there is a collective sigh of relief that we have a roadmap and a set of rules we can follow and conduct our business,” Pacheco said. “Now, we can go back to recruiting investment and creating jobs.”
That’s good news for both nations.
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.