The Benefits of USMCA: Increased market access, easier investment, and protection for investors.
United States of America – Mexico – Canada
The ratification of the U.S.-Mexico-Canada Agreement (USMCA) in 2020 marked a momentous occasion for economies around North America, and American investors saw tremendous potential to benefit from the new terms set in place. An updated version of its predecessor, NAFTA (North American Free Trade Agreement), USMCA became synonymous with modernized trade and greater opportunity for businesses across the continent — offering the unprecedented potential for growth and investment at home and abroad well. As investors become increasingly aware of what the newly ratified agreement can do, understanding how it affects their portfolios is invaluable knowledge that must be sought out and acted upon.
In this blog post, we’ll explore some key benefits of USMCA that could prove quite lucrative for savvy investors looking to make sound decisions about business expansion or investments internationally.
Investing in Mexico is more attractive than ever with the USMCA trade agreement coming into effect. Investors from both the U.S. and Canada gain strategic advantages and increased legal security through this:
- Increased access to the Mexican market: The USMCA eliminates most tariffs on goods traded between the three countries, making it easier for Canadians and Americans to export their goods to Mexico and invest in the Mexican market:
Stronger intellectual property protections: The USMCA strengthens protections for intellectual property, providing greater security for companies and individuals investing in Mexico.
Labor and environmental standards: The USMCA includes provisions that require Mexico to enforce higher labor and environmental standards, which can benefit workers and investors in Mexico.
Streamlined customs procedures: The USMCA reduces administrative barriers for companies seeking to import or export goods, making it easier and more cost-effective for Canadians and Americans to invest in Mexico.
Access to government procurement: The USMCA opens up government procurement contracts to companies from all three countries, providing Canadians and Americans with new business opportunities in Mexico.
Digital trade provisions: The USMCA includes new provisions that protect digital trade and cross-border data flows, which can benefit companies investing in the Mexican technology sector.
Tariff-free access to the automotive sector: The USMCA provides tariff-free access to the North American automotive market, which can benefit Canadian and American companies investing in Mexico’s growing automotive industry.
Investor-state dispute settlement: The USMCA includes an updated investor-state dispute settlement mechanism, which provides greater protection for Canadian and American investors in Mexico.
Agricultural trade provisions: The USMCA includes new provisions that promote greater trade in agricultural goods, benefiting farmers and agribusinesses investing in Mexico.
Greater market stability: The USMCA provides greater market stability and predictability for companies investing in Mexico, creating a more conducive environment for business and investment.
According to a 2019 survey by the Organization for Economic Cooperation and Development (OECD), investments from the United States and Canada are the largest foreign direct investment contributors to Mexico, accounting for approximately 71.6% of total foreign investments in Mexico.
So in the midst of 2023, with all these opportunities, why wouldn’t you?
