This year has been a year full of surprises for the United States of America. With the US elections 2020 just a day away, as the writing of this article, American citizens face a great decision. Deciding who will lead the country could refresh the economic relationship between the States and Mexico.
A long history of foreign direct investment and trades.
The US elections 2020 could also impact Mexico. This is because the country is currently the largest trading partner the United States has. A total of $614.5 billion USD goods was traded (two ways) during 2019. Mexican exports to the States were around $358.0 billion USD, while American exports consisted of $289.5 billion USD.
Furthermore, both countries have a good Foreign Direct Investment (FDI) practice between each other. American FDI in Mexican stock was $100.9 billion USD in 2019. This represented a 5.2% increase from the previous year. U.S. direct investment in Mexico is led by manufacturing, finance and insurance, and nonbank holding companies.
Nevertheless, Mexican FDI in the United States was around $21.5 billion USD in 2019. A 2.3% increase from the previous year. This is all evidence of a strong, long lasting economic relationship between The United States of America and Mexico.
Amongst the top imported Mexican products categories in 2019 were: vehicles with an estimated total of $101 billion USD, machinery with $66 billion USD, electrical machinery reaching nearly $64 billion USD, optical and medical instruments with close to $16 billion USD, and mineral fuels reaching $13 billion USD.
Plus, Mexico was the biggest agricultural exporter to the United States in 2019, reaching $28 billion USD. This included products such as fresh fruit, estimating $6.9 billion USD, fresh vegetables reaching $6.3 billion USD, wine and beer with a value of $4.0 billion USD, snack foods totaling $2.3 billion USD, and processed fruit & vegetables with $1.8 billion USD.
Moreover, this great economic relationship is supported by the USMCA, as it is the gateway to an open economic border between Mexico and the United States.
To talk about the possible consequences of the outcome of US elections 2020 on the USMCA, first we need to know that this FTA is.
What is the USMCA trade agreement?
The USMCA is the new version of NAFTA and one of the many Free Trade Agreements Mexico has. This iteration aims to bring free trade and relationships with all parties to the 21st century. According to the US Government, it is a modern trade deal that will completely transform the trade relationship this country has with Canada and Mexico.
This agreement has been applauded by the President of the United States of America. It is seen as the best deal the USA, Mexico, and Canada have made.
“The USMCA is the largest, most significant, modern, and balanced trade agreement in history. All of our countries will benefit greatly.” stated US President Donald J. Trump when asked about his opinion.
Moreover, the USMCA also includes a chapter on digital trade, which aims to foster economic growth and innovation for all parties. This is of importance for e-commerce, a market that is taking a bigger place in consumers habits.
This Free Trade Agreement brings benefits to all the countries involved. Exactly how?
How does the USMCA benefit us?
The USMCA benefits all North America. Not only does it open economic borders, it also prohibits unfair currency practices and reinforces exchange rate stability. Plus, getting rid of tarifs promotes the creation of regional supply chains which can improve the local economy.
This free trade agreement is also very green forward. It includes the strongest environmental standards of any trade agreement in North American history. This means that the USMCA has the potential to bring eco innovation to all three parties.
According to the information given by the US government, these standards are fully enforceable. They will help prevent companies from avoiding environmental rules that could damage local flora and fauna.
US elections 2020 could have a further positive impact on foreign relations with Mexico. Mostly, both parties have incentives in the form of the FDIs and trade to keep up with a good spirit. Plus, a new revision of the USMCA is not needed, as the current one is beneficial for all the countries involved.
The US elections 2020 are right around the corner. This is the perfect time to bring your company to Mexico as foreign relations with North America heading to a prosperous future. Thus, here at VYNMSA we would like to assist you in settling in this country.
We are one of the leading industrial real estate developers in Mexico. Plus, we have over 30 years of experience and have delivered over 500 projects to fully satisfied customers. We are also fully equipped to assist you in developing your BTS projects. All while offering lease and sale solutions that always have a win-win approach.
We also have around 20 inventory buildings ready for immediate occupancy. This is a total space of 2 million SqFt across Northeast and Central Mexico (Bajio).
Contact us and bring your company to Mexico with VYNMSA and enjoy the benefits of the USMCA.
Source: Whitehouse, USTR
