USMCA Agreement Benefits the Nearshore Industry in Mexico

USMCA Agreement Benefits the Nearshore Industry in Mexico

 Following an eternity of uncertainty, the new and improved NAFTA agreement, USMCA, has finally arrived, and it’s looking very positive for Nearshore Mexico.

From preferential access, to digital trade liberalization, the USMCA agreement will let the Nearshore industry in Mexico grow fast and this will turn into a positive development. Here are some key takeaways from a recent Nearshore Americas article:

“The USMCA provides three major incentives for nearshoring, the first is that Mexico and the Americas have become much more appealing compared to Asia because of their preferential access to the US. Secondly, new digital trade liberalization rules mean no customs tariffs or trade barriers on digital services. And third, the renewed relationship between the US and Mexico is a positive tonal shift on the topic of security and migration.” said Daniel Ujczo, Of Counsel and Cross-Border Business Development Director at Dickinson Wright PLLC.

 

Both Canada and Mexico have numerous trade deals in place, largely because NAFTA was used by other countries to get into the US as a “back door”. One part of the new deal, the non-market economy provision, says that USMCA countries must share information and notify each other before negotiating on trade deals with “non-market economies”, making it more difficult for other countries – primarily China – to exploit the old back door.

 

“This is going to create an incentive for more nearshoring opportunities, particularly with Mexico,” said Ujczo. “A lot of the work that is being done in non-market economies can be brought into Mexico to take advantage of similar wage differentials. The United States has achieved its number one priority, which was closing the back door to North America through Canada and Mexico.”

 

“The US has basically told people that if they want low-wage production or services, Mexico is the only place that will have preferential access,” Ujczo continued. “To me, that’s a big win for Mexico, as it has just emerged as the most cost-effective provider of services to the US in terms of wage differentials.”

 

It positions the industry to grow faster and further than before, especially in comparison to Asia. It’s certainly a positive development when compared to the rest of the world’s more territorial approach to digital trade.

 

The USMCA will be complemented by committees to periodically review and modernize the agreement to ensure that modernization does take place when new technologies or digital business trends demand it. For now, the digital services model is a safe bet for Nearshore, and will continue to be until the first major USMCA review.

 

Read the full article at Nearshore Americas: USMCA Agreement a “Big Win”, both for Mexico and the Nearshore Industry

 

Call Center Services International helps US companies establish high-performance nearshore Contact Centers in Mexico, providing a World-Class Bilingual Workforce, State-Of-The-Art Infrastructure, and Proximity to U.S. (minutes from the San Diego border or in Mexico City). Contact us to learn more.


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