In the coming months and years, the U.S.-Canada-Mexico Agreement will shape the region’s trade realities. Some rules may unleash investment, trade and better labor conditions, but they likely won’t be without additional hurdles.
In Mexico, the agreement will touch most parts of the country’s $1.15 trillion economy, but it will be felt most immediately and strongly in the overall investment climate, the automotive manufacturing sector, and in labor conditions.
While less tangible, the agreement’s biggest shift will take place at the macroeconomic level, as the USMCA solidifies trade rules and provides greater certainty for North American businesses operating across the continent. Ever since the USMCA’s negotiations began, the economic climate has been wracked by uncertainty, especially when specific issues threatened to derail the agreement or every time President Donald Trump threatened to pull out of the original North American Free Trade Agreement without any viable alternative. With the USMCA in place, Mexico has a stronger investment framework and more transparency, clarity and protections for businesses operating in the country.
However, USMCA alone cannot overcome all the hurdles to boosting investment in Mexico. Within Mexico, Andrés Manuel López Obrador’s administration has adopted a pragmatic course but also spooked investors with some of its changes. For example, in the country’s energy sector, the administration has halted planned energy auctions and renegotiated natural gas pipeline contracts,…