We’ve talked at length about a few different elements of CUSMA/USMCA/T-MEC and the impact of this “new NAFTA” agreement on Canadian importers. Today, we’re continuing that knowledge transfer to do a deeper dive at T-MEC, or the Mexico applications of this new FTA (free trade agreement).
Imports from Canada to Mexico have actually increased from a healthy 756359 USD THO to 866727 USD THO in September 2020. It is projected that these numbers will stay relatively stable into 2021. (Trade Economics)
The Federal Government’s Trade Commissioner Service (TCS) is also poised and ready to help Canadian importers navigate and benefit from growing their economic footprint in Mexico.
In July 2020, The Federal Government of Canada’s website published an article on trade opportunities in Mexico as a result of T-MEC:
“Signed on the margins of the G20 Leaders’ Summit in Buenos Aires in November 2018, CUSMA outcomes preserve key elements of the long-lasting trading relationship and incorporate new and updated provisions that seek to address 21st-century trade issues and promote opportunities for the nearly half a billion people who call North America home.”
It has been approximately 6 months since the agreement has been enacted. However, this has been a whirlwind year for the global market as the supply chain process adapted to COVID-19. That said, it’s likely that many importers are struggling to keep up and stay informed on regulatory changes and shifts in FTAs. Below, we’ll do a quick review of the “new NAFTA” and what you need to know!
First, there is a general overview of the main new elements of the new NAFTA. In a previous article, we outlined 5 general changes that importers must note:
1- Rules of Origin
2- Rules of Origin for Casual Goods
3- Tariff Relief Regulations
4- Amendment of Various Regulations and Orders Made Under the Customs Tariff (read more here.)
5- Order Repealing Certain Orders Made Under the Customs Tariff
It’s been made clear that CUSMA/USMCA/T-MEC will likely benefit many importers in Canada. The modifications to customs orders and regulations will certainly have a notable impact on the global supply chain. But for our purposes, we must note that the importer/exporter relationship must change to account for more communication and transparency.
Transitioning to CUSMA: A Toolkit for Importers – Toronto-based law firm Blake, Cassels, and Graydon released a tool kit for importers.
The Benefits of CUSMA for SMEs – Summarization of a piece published on the Supply Chain Brain, contributing author and Head of International Trade Affairs at DHL, Eugene Laney on ways to benefit from this FTA
The opportunity for Canadian importers to grow their business in Mexico shows no signs of slowing down. In fact, in 2019, we saw $44 billion in two-way commercial trade last year. Further, Mexico is Canada’s third largest trade partner, after the US and China.
Canadian trade and investment with Mexico is steadily growing, with over $44 billion in two-way merchandise trade in 2019. Mexico remains Canada’s third largest merchandise trading partner.
In a piece by the Canadian Embassy in Mexico on Canada-Mexico trade relations, they outline another exciting reason for trade between the nations:
“Mexico’s stability, growing consumer class and competitive labour continue to make it an attractive market for Canadian exports and investments. As a result, Mexico has been identified as a priority market for Export Development Canada (EDC), which has operated a regional office in Mexico since 2000, providing extensive financial services related to Canadian exports and investments in the country.”
So far, this agreement has proved itself as a great building block for preserving the health of the Canadian economy in these unsteady times i.e. in the context of a pandemic. The renegotiation of NAFTA has been a valuable asset for strengthening the economic relationship of Canada between the US and Mexico alike.
If you’d like to learn more about how you can leverage CUSMA/T-MEC to benefit from trade in Mexico, click here to consult with a customs expert.