USMCA_nearshoring
According to the Consejo Coordinador Empresarial (CCE), the United States-Mexico-Canada Agreement (USMCA and TMEC for Mexico) is a key tool for promoting prosperity and competitiveness in North America, while providing certainty for investments attracted by nearshoring.
The USMCA includes mechanisms to ensure compliance with trade, labor, and environmental obligations, with 19 committees and working groups responsible for monitoring the commitments, stated the CCE.
The business organization has promoted various initiatives to support and protect the USMCA, such as establishing a permanent representative office in the United States.
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Mexico is Canada’s third-largest trading partner in terms of goods, after the United States and China. In 2022, Canada’s direct investment in Mexico reached $3.78 billion.
What does this imply for nearshoring in Latin America?
- Business opportunities: The endorsement of the United States-Mexico-Canada Agreement (USMCA) by the Consejo Coordinador Empresarial (CCE) implies that nearshoring in Latin America, particularly in Mexico, will remain an attractive option for companies from the United States and Canada. This can create business opportunities for Latin American companies in sectors such as manufacturing, services, and technology.
- Increased certainty and stability: The USMCA provides mechanisms for compliance with trade and labor obligations, offering greater certainty and stability for investments related to nearshoring in the region. This can increase the confidence of foreign companies and promote a favorable environment for industry growth in Latin America.
- Boost to regional competitiveness: The focus on prosperity and competitiveness in North America, supported by the CCE, can drive improvements in infrastructure, innovation, and service quality in Latin America. This could strengthen the region’s position as an attractive destination for nearshoring, offering competitive advantages in terms of costs, talent, and geographical proximity to the markets of the United States and Canada.
What does this imply for venture capital in the region?
- Increased investment opportunities: The endorsement of the United States-Mexico-Canada Agreement (USMCA) by the Consejo Coordinador Empresarial (CCE) can generate an increase in investment opportunities for venture capital firms in the region. Strengthening competitiveness and attracting nearshoring-related investments can drive the creation and expansion of startups in Latin America, presenting potential appeal to risk capital investors.
- Greater confidence and stability: The USMCA provides a stable legal and commercial framework among participating countries, offering greater confidence and stability for venture capital firms looking to invest in the region. This can reduce risks and uncertainties associated with investments, potentially increasing the appetite of investors to support projects and emerging companies in Latin America.
- Access to international networks and collaborations: The CCE’s support for and promotion of the USMCA can open doors for venture capital firms in the region in terms of accessing international networks and collaboration opportunities. This can facilitate connections with investors, entrepreneurs, and experts from other countries, enriching the startup ecosystem and fostering the expansion and growth of companies supported by venture capital in Latin America.
For detailed information, visit: Forbes
