News, Insights and Best Practices for Manufacturing in Mexico

U.S. and Mexico discuss new trade agreement

19 Feb 2014

Category: Labor & Economics, Politics & Regulations

President Obama has traveled to Mexico to discuss a new trade agreement between Mexico, Canada and the U.S. known as the Trans-Pacific Partnership (TPP), according to the New York Times.

The plan is to use the TPP is a way to add an additional dimension to North American trade beyond the North American Free Trade Agreement (NAFTA).

"And that's exactly what we're doing [with the] TPP, upgrading our trading relationships not only with Mexico and Canada but with nine other countries as well," Michael B. Froman, the president's trade representative, said in a speech.

President Enrique Peña Nieto of Mexico wants to use this meeting to inspire Obama to remember the importance of Mexico as a partner that bolsters the U.S. economy.

"[Nieto] wants the idea of North America to be relaunched," said Gustavo Vega, an expert on United States-Mexican relations at the Colegio de México in Mexico City to the NY Times.

NAFTA has been a major benefit to the three economies, according to Carla A. Hills, a trade representative who helped put the agreement together.

"As a result of the market openings created by the NAFTA, economic activity among the three nations exploded," Carla Hills said to the NY Times.

NAFTA turns 20
NAFTA recently turned 20 years old, and many of the fears that it first fostered when President Bill Clinton signed it into existence have not come to pass, according to PBS. American jobs did not all disappear into Mexico, and trade expanded by 111 percent between the three countries. In 1994, trade was valued at $539.7 billion, and in 2013 it was $1.139 trillion. It has also promoted Mexican manufacturing, according to PBS. It has likely promoted American companies that manufacture in Mexico as well.

NAFTA can help U.S. companies interested in expanding to Mexico. NAFTA virtually eliminates the tariffs on goods going between the two countries, saving an enormous amount in supply chain expenses. Manufacturing in Mexico is cheap and efficient, and its closeness to the U.S. makes checking up on factories easy.

 

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