NAFTA is now USMCA – Advantages for German companies.
Read more about the benefits and challenges that faces the new agreement for German companies in Mexico.
NAFTA is now USMCA – Advantages for German companies
German Centre Mexico interviewed Johannes Hauser, Managing Director of AHK Mexiko (Camexa).
Which benefits will the new free trade agreement USMCA have for German companies in Mexico?
Since 1 July 2020, the new free trade agreement USMCA between USA, Canada and Mexico is in force. Johannes Hauser from CAMEXA, partner and tenant of the German Centre Mexico, explains, what the new regulations mean for German companies active in Mexico.
German Centre Mexico:
What influence does the USMCA have on German companies and Mexico?
Johannes Hauser: The new Agreement initially provides planning security. US President Trump had repeatedly threatened to end the previous NAFTA agreement without signing a new treatment. The fact that NAFTA 2.0 came about is initially positive for all companies in Mexico – including German ones, of course.
What are the advantages and disadvantages comparing to the NAFTA agreement?
Hauser: This will only become apparent when the new regulations come into force. It is normal for an agreement to be updated after so many years, to be adapted it to the changed reality. For example, e-commerce was not an issue when NAFTA was negotiated. Now the issue is of course considered.
The requirements for environmental protection are becoming stricter. This certainly holds potential for German providers of innovative technologies.
Which are the industries that benefit or are disadvantaged the most?
Hauser: The automotive industry will have to meet stricter requirements in the future. The proportion of regional production is increasing and must be proven in detail, which increases the bureaucratic effort. Because these requirements apply particularly to the core components of cars, supply chain will have to be readjusted. As a result, it is to be expected that further German suppliers will settle in Mexico or that the companies that are already here will expand their capacities.
The challenges in the next few years are great. But the alternative - namely no free trade agreement in North America at all – would be the much worse alternative.
Johannes Hauser, Managing Director of the German – Mexican Chamber of Industry and Commerce (AHK Mexico / CAMEXA)