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Can Mexico lure investment from Asia, as USMCA North American trade deal takes effect?
- International firms based in Asia may consider relocating supply chains to Latin America after the US-Mexico-Canada trade agreement launched
- China and Asean countries are already facing competition from Mexico, Brazil and India, and the US-China trade war may also play a role
Reading Time:4 minutes
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As global trade is shaken by the coronavirus pandemic and US-China trade war, Mexico has expressed its desire to lure investment from international companies based in Asia.
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This follows the implementation of the US-Mexico-Canada trade agreement, known as USMCA, which took effect on July 1. It is an updated version of the nearly 25-year-old North American Free Trade Agreement (Nafta), featuring tougher content rules for the automobile, steel and aluminium industries.
But can Mexico match the conditions offered by Asian economies? Some observers say China and other Asian nations should brace for greater competition from Latin America, especially when it comes to the steel, automobile and textile industries.
Guanie Lim, a research fellow at the centre for public administration at the Nanyang Technological University (NTU) in Singapore, said American firms and other international companies based in Asia are likely to consider relocating their supply chains to countries such as Mexico.
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“As firms make better sense of how the [new trade agreement] rulings benefit their operations, some may eventually move over to Mexico,” Lim said.
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