The three countries in North America share an interconnected economy

news image

THE United States-Mexico-Canada Agreement (USMCA) is due to be signed on November 30th. In replacing NAFTA, which Donald Trump called “the single worst trade deal ever approved”, it will preserve a relationship that is more interdependent than many Americans realise. Mexico is the United States’ second-largest export market, behind only Canada. America’s exports to Mexico are worth more than its sales to Brazil, Russia, India and China combined. About 80% of Mexico’s exports go to the United States. Many of these goods contain American content heading back after processing. Intricate supply chains link the two countries. Under NAFTA, foreign direct investment (FDI) boomed: the stock of American investment in Mexico grew from $17bn in 1994 to $110bn in 2017. From a much lower base the stock of Mexican FDI in America rose more than eight-fold.

This blossoming trade has helped Mexico modernise, with big implications for another aspect of the relationship: migration. Illegal migrants crossing the border are no longer mainly Mexicans. In 2000, of the 1.6m migrants apprehended, 90% were Mexican. There were just 311,000 apprehensions in the year ending in September 2017; and well under half involved Mexicans. Greater economic opportunity at home means that fewer Mexicans are leaving, and more are now returning to Mexico than are coming to the United States illegally.

Read more in “Not-so-distant neighbours” in the Americas section

Read More

Leave a Reply

Your email address will not be published. Required fields are marked *