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Agribusiness Stability and USMCA

July 8, 2020

Earlier this week on July 1, after 25 years the North American Free Trade Agreement, aka NAFTA, came to an end to be succeeded by the U.S.-Mexico-Canada Agreement, or USMCA. The new agreement was finalized after 3 years of renegotiations between the three nations.

 

USMCA does not have any major changes in regards to agriculture but it will create an even better trade relationship between the three neighbouring countries and it will strengthen the North American market. The United States Department of Agriculture Economic’s Research Service states “all agricultural products that had zero tariffs under NAFTA continue to have zero tariffs under USMCA.”

NAFTA  entered into force in January 1994, and it transformed North America’s trade economy. It allowed trade to become easier between Mexico, the United States and Canada centering on the textile, automotive manufacturing and agricultural sectors. According to the Canadian Government  thanks to NAFTA “trade in agriculture and agri-food products has nearly quadrupled in North America over the past 25 years.”

Victor Manuel Villalobos Arámbula, Mexico’s current Secretary of Agriculture and Rural Development, declared NAFTA created a boost in Mexico’s agriculture over the last decades and made it more competitive and efficient in North America’s market. As stated by the Council on Foreign Relations article “Regional trade increased sharply over the treaty’s first two decades, from roughly $290 billion in 1993 to more than $1.1 trillion in 2016. Cross-border investment also surged, with U.S. foreign direct investment (FDI) stock in Mexico increasing in that period from $15 billion to more than $100 billion. ”

Mexico’s Secretariat of Agriculture and Rural Development declared that during the first quarter of 2020 Mexico´s export increased by 5.6%, or USD$745 million, the highest reported since 1993. Some of the products which contributed to the increase include avocados, tomatoes, strawberries and honey. Now that the USMCA is in place those numbers are in high hopes of increasing. 

If your business is ready to optimize its resources and forge stronger business relations FGH can provide advice and counselling and increase sustainability. FGH International Agribusiness Consulting has a experienced, multicultural and multilingual team with experience in major agribusiness export-import in the USMCA area,

 

Now more than ever FGH is aware of the positive impacts USMCA will bring to North America’s trade therefore they have appointed Bernhard Friesen as General Director for all USMCA projects. From FGH headquarters in Chihuahua  Mr. Friesen will lead his team in all matters related to USMCA.The Chihuahua team have experienced and well acquainted with imports and exports of the region and the whole supply chain.We are ready to bring our expertise to businesses interested in investing in one of the most important zones in agribusiness worldwide. 
 

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