EL PASO, Texas (Border Report) — The new North American free trade deal will help border communities recover economically from the COVID-19 pandemic, area leaders say.
The United States-Mexico-Canada Agreement (USMCA) kicked in on Wednesday with broader labor protections, higher requirements for North American content on manufacturer products and new rules for e-commerce and pharmaceuticals.
USMCA replaces NAFTA (North American Free Trade Agreement), which in 1994 did away with many tariffs and set the rules for commerce between the three nations.
U.S. Rep. Will Hurd, R-Texas, says he expects the new treaty to create 176,000 jobs and bring in $68 billion in new investment to the United States. Half of the additional cash infusion will go to automotive plants, but sectors like farming will also benefit, he said.
“This trade deal will help Texas farmers, small businesses and manufacturers. […] This deal will also strengthen North American competitiveness, which will help the U.S. and our allies as we compete globally with China and other world powers,” said the Republican who represents a portion of El Paso.
Both Hurd and U.S. Rep. Xochitl Torres Small, D-New Mexico, trust the treaty will provide a spark to cities along the border that have taken a hit from coronavirus-related work stoppages, layoffs and diminished sales tax revenues.
“Even with the COVID-19 pandemic continuing to affect economies everywhere, our economy can and will recover, and USMCA will help us come out even stronger,” Torres Small said.
The treaty will boost New Mexico’s export industry — which is evidenced by the continued growth of the Santa Teresa port of entry and industrial park — as well as oil and gas workers, chile and pecan growers and most industries in the state, the Democrat said.
Despite having huge oil reserves, Mexico continues to import gas, gasoline and electricity from the United States while it develops its energy infrastructure.
El Paso Mayor Dee Margo also has high hopes for the positive economic fallout of USMCA.
“If you look at the international economy today with all that is going on with COVID-19 and other international issues, I think the future will bring resourcing back to the U.S. and the North American region,” he said.
A lot of U.S. companies temporarily lost supplies to make their products when the coronavirus paralyzed Chinese production. That and the Trump administration’s constant wrangling with Beijing have been a wake-up call for American manufacturers to procure suppliers closer to home. That could mean Mexico.
“We have over 50,000 jobs in El Paso tied to the maquiladoras. One out of four jobs here are related to jobs in Juarez, Mexico, so the more we can expand opportunities for manufacturing and distribution, the better the entire region will fare,” Margo told Border Report.
Maquiladoras are U.S.-run factories, which according to the Chihuahua state government employ more than 300,000 people in Juarez alone. Though most are assembly-type jobs, maquiladoras also employ tens of thousands of Mexican engineers and other professionals who usually do a lot of their shopping in the United States.
“We’ve been seeking opportunities for businesses to expand their warehouse and distribution operations here and continue to seek manufacturers. Our offer includes beneficial labor costs and better economic tax standards than many other places in the country,” the El Paso mayor said.
And, if the big U.S. companies pull out of China and opt to come to places like Juarez, El Paso will share in the boon, he says.
“I do see them relocating from China based on the geopolitical issues we’ve been seeing,” he said. “I think it’s an opportunity to bring back jobs (to North America), suppliers and distribution,” Margo said, adding that slightly higher labor costs in Mexico should be offset by the proximity to U.S. destinations.
“It’s a win-win situation,” he said.