Home Feature Mexico, the biggest looser in the USMCA

Mexico, the biggest looser in the USMCA

by Yucatan Times
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The U.S. daily The Washington Post noted in a publication the ‘winners and losers’ after the signing of the protocol amending the Treaty of Mexico, United States and Canada.

The newspaper pointed out that Mexico was one of the big losers after the agreement because of how much it had to give up more in the negotiations. “Its economy is technically in recession now, they made the best possible deal, but the USMCA clearly seeks to make it more difficult for U.S. and Canadian companies to close their factories and move completely to Mexico (especially in the automotive industry), where labor costs are cheaper” notes the U.S. publication.

Other “losers” highlighted by The Washington Post were: China, pharmaceuticals, U.S. car buyers and, in general, the new way of making trade agreements in the world.

As for the media’s appreciation of Mexico, Gustavo Flores-Macías, professor at Cornell University, said in an interview with the Mexican newspaper “El Financiero” that he agrees with that appreciation, since in the United States there is a perception that the concessions were made to favor that country.

“The big question is whether Mexico could have done better, although from my point of view, before the end of the USMCA negotiations in Peña Nieto’s administration, there was a mistake in taking the decision to negotiate bilaterally with the United States and leave Canada a little to the side, as they were able to push together the demands of the neighboring country”. The academic considered that Mexico had little room for maneuver after the change of administration.

The expert estimated that the benefits for the U.S. are more political than economic, since the impact of the USMCA on GDP would be just .35 percent over the next six years, while it would only generate about 176,000 jobs, and for the world’s largest economy is very little. “But for Mexico it would have been much more important to obtain a better agreement, since little more than 80 percent of its exports go to U.S. territory,” he explained.

The positive for Mexico
The country will enter a period of some stability, which will bring confidence in investors and could lead to a resumption of stalled projects, Cornell University professor said.

“Given that Trump already has a big victory in trade before the 2020 presidential election, there is now less pressure for it to make a deal with China, and the 10-year protection period for biotech drugs was eliminated, which will hit hard on pharmaceutical companies that wanted more years to be able to charge higher prices” the article said.

Regarding the automotive sector, economists and automotive sector experts believe that the USMCA (T-MEC in Mexico) will cause car prices to rise in the United States, especially in small cars produced in Mexico.

On Tuesday, negotiating delegations from the three countries signed in the National Palace the protocol amending the USMCA / T-MEC, after reaching an agreement on the implementation of the treaty, and thus, the trade agreement would be ready for ratification.

Led by Mexican President Andres Manuel Lopez Obrador, the firm was attended by Canadian Deputy Prime Minister Chrystia Freeland; U.S. Trade Representative Robert Lighthizer; and Jared Kushner, son in law and advisor to Donald Trump.

After signature, the treaty must be approved by the Congresses of the three countries for subsequent ratification.


The Yucatan Times


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