By Ambassador Esteban Moctezuma, Ambassador Extraordinary and Plenipotentiary of Mexico to the United States of America
The pandemic generated by COVID-19 represented one of the biggest global challenges we’ve had to face in our lifetimes. The worst economic crisis since the Great Depression emerged during the most virulent health emergency in the last 100 years, which compounded its effect on our countries.
Spanish philosopher María Zambrano said that a catastrophe is only catastrophic if nothing redeeming comes of it. For the U.S.-Mexico bilateral relationship, the crisis revealed the strength of our ties like never before.
The U.S., Canada and Mexico constitute one of the world’s largest free trade regions encompassing more than 490 million people, with more than $1.3 trillion worth of trade. In the most difficult of times, the resilience of supply chains in North America kept essential industries running. For example, it helped get medical devices and food to people who needed them most, while other regions shut down completely. In the face of this critical juncture, we need to transform these successes into knowledge in the service of a stronger and more prosperous North American region.
No one can predict the future with absolute certainty, we can’t know what challenges we’re going to face down the road but we can prepare for the unexpected and make our collective institutions as resilient and as prepared as possible. This is the guiding principle behind the United States–Mexico– Canada Agreement (USMCA) that will give us the ability to navigate a fast-changing world and work, side by side, to usher in a new era for the U.S.- Mexico bilateral relationship.
To put it in perspective, the USMCA represents 28 percent of the world’s GDP ($24.4 trillion in 2019); more than 15 percent of the world’s trade originates in North America. One year after the agreement entered into force, we can already attest to its success through notable examples:
1. The U.S.-Mexico bilateral trade increased 19 percent between January 2021 and April 2021, compared with the same period in 2020.
2. USMCA has proven to be a solid framework to improve labor conditions and guarantee democratic unions; and
3. It established a dispute settlement system that is both fair and strong.
Commercial disputes used to be solved only through political means. Today, we have an objective and balanced forum to find the right solutions. The question we need to answer now, as historical partners, is how do we move forward together?
Mexico is the main U.S. trading partner and the implementation of the USMCA represents new opportunities to strengthen North American regional value chains. Mexico is one of the top three trading partners for 39 U.S. states; in other words, more than three fourths of all U.S. states’ economies depend on trade with Mexico.
How do we maximize these new opportunities? The primordial action has been to align our essential sectors and emergency procedures for any unforeseen event. Industrial transformations that will affect trade and commerce are taking place before our eyes. The automotive industry, for example, is shifting to electric vehicles that will transform its entire supply chain. These rapid changes require us to adapt along with them.
We have a once-in-a-lifetime opportunity to create new regional value chains by attracting investment in strategic sectors from other regions, particularly Asia. We learned the hard way that North America cannot rely on faraway regions for strategic components such as medical devices, batteries or semiconductors. Mexico can help by consolidating itself as the supplier of those goods for North America. We have both the infrastructure and the industrial base to do it.
We believe this idea is compatible with creating a business environment conducive to inclusive and sustainable development. There is a path to strengthen existing supply chains with a vision for a green future with clean energies.
Economic progress depends on strong political ties, and political progress depends on strong economic ties. The negotiation of the USMCA and the reactivation of the High-Level Economic Dialogue (HLED) are part of a renewed bilateral dialogue signaling that we are no longer the distant neighbors of the past. Today, President Lopez Obrador and President Joe Biden recognize that we’re safer when we work together.
Let’s use the power of our trade to deliver on our common goal of reducing poverty and inequalities across the three North American countries. We want to work together for a brighter future and use the USMCA as the motor for the competitiveness and continued prosperity of North America in the twenty-first century.
