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Mexico Trade Agreement With China

(Last Updated On: April 11, 2021)

In particular, work value requirements were introduced in the updated agreement: 40 per cent of automotive materials and 45 per cent of the contents for light trucks must be produced by regional companies that pay workers at least $16 an hour. Given that Mexican auto workers currently earn about $7.30 per hour for auto assembly and $3.40 for auto parts manufacturing, this new provision has the greatest impact on Mexico. [1] It is important to note that some of Mexico`s profits were in areas where China did not export to the United States. Thus, it appears that Mexican exports have benefited from trade diversion, but perhaps not as much as some had originally predicted. “We got trade peace,” said Mary Lovely, an economist who studies business at Syracuse University. For companies wishing to produce in Mexico, one of the country`s greatest advantages is access to free trade. In this article, we will examine some of the country`s most important free trade agreements and explore what makes them so important to conduct a successful production activity in Mexico. But overall, free trade has kept the promise of stronger growth for Latin America`s second-largest economy, he added. With a total of 14 Mexican free trade agreements in more than 50 countries, the country has access to more than 60% of the world`s gross domestic product. More broadly, it is not surprising that Mexico`s top ten trading partners receive exports under the terms of thought of at least one of the country`s free trade agreements without China.

As part of the so-called Phase 1 agreement, Trump rejected his plan to impose $160 billion in tariffs on Chinese imports and halved import taxes to an additional $110 billion. (The government still maintains tariffs on $360 billion worth of Chinese goods and Beijing has imposed retaliatory duties on U.S. exports.) In return, China expressed its readiness to do more to protect intellectual property and limit its practice of forcing foreign companies to obtain trade secrets as an admission price to the Chinese market. The negative effects of a changing and uncertain global trading environment on economic activity, trade and investment flows are not surprising. However, it is difficult to calculate the magnitude of this effect. Mexico, as an important trading partner of the United States, is, unsurprisingly, exposed to the cross currents of trade tensions between the United States and China. These effects are particularly important for Texas, which counts Mexico as its largest trading partner. Mexico`s free trade agreement with Central America began with an alliance along the Northern Triangle, with relations between the nations of El Salvador, Guatemala and Honduras.

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