What USMCA Means to Texas and the World – Six Takeaways

Dave Moore, Staff Writer

Trade representatives from Texas, Mexico, and Canada recently lauded the reforms that took effect on July 1 with the adoption of the United States-Mexico-Canada Agreement (USMCA). Their statements occurred on Friday, Dec. 4, during a Dallas Regional Chamber virtual event, which was moderated by Matthew Rooney, Managing Director of the SMU Economic Growth Initiative at the George W. Bush Institute.

“Our relationship with Mexico and Canada is such a critical component to Texas’ recipe for success,” said Texas Secretary of State Ruth Hughs. “We wouldn’t be an economic powerhouse that we are without them.”

Hughs joined Consul General of Canada Rachel McCormick, and Consul General of Mexico Francisco de la Torre to discuss USMCA’s highlights.

View more video of the event on our YouTube channel.

Here are six takeaways on what the USMCA means to Texas and the world:

Trade with Canada and Mexico Employs 1 Million Texans

Texas’ trade relationship with Mexico and Canada employs roughly 1 million Texans, and results in $270 billion in trade annually (as of 2019), including the largest bakery in the world, Bimbo, which has major operations in the Dallas Region.

“[Mexican companies] come here for many reasons,” said de la Torre. “They’re convinced that with the border being closer, it’s easier to do business here. I’m sure these new trade rules will foster more Mexican investment to Texas.”

USMCA Modernized NAFTA

“USMCA is a modernization of NAFTA,” said McCormick. “It brought things in that we didn’t have to deal with 25 years ago; things like small- and medium-size enterprises, having a chapter dedicated to them was a really important addition.”

Canadian and Mexican Businesses Have Strong Texas Ties

Texas’ business landscape is dotted with Canadian and Mexican ties, including Interamerican Food Corporation – which, as part of La Moderna, was established in Texas in the 1980s. Mother Parkers Tea & Coffee, which started in Ontario, Canada, now has a U.S. headquarters in Fort Worth.

“When some of the folks are out on their Sea-Doo (personal watercraft) on a North Texas lake, they’re probably not thinking, ‘I’m so glad that USMCA was in place, so I could have this product,'” McCormick said, noting that Sea-Doo is a Quebec company manufactured in Mexico, and the bulk of the sales force and distribution of Sea-Doos is based in North Texas.

Trade Between Texas and Mexico Remains Strong

Despite the issue of Texas-Mexico border security, trade is as strong as ever between Texas and Mexico, said de la Torre. In fact, the U.S./Texas, Canada, and Mexico have grown into a regional powerhouse.

“We have a border, but it’s not something that should stop us (from doing business),” he said. “That’s how we see things, especially with the USMCA. It’s not just about trading with each other. It’s about being competitive against other regions in the world. Also, when NAFTA was signed decades ago, the energy market in Mexico was closed. I can tell you one thing: my country was a different one before NAFTA, it was a different one after NAFTA, and it will be a different one with USMCA.”

USMCA Accounts for Technological Updates

Aside from dealing with energy trade, USMCA’s updates include the questions of robotics, the digital economy, labor relations, and the origin of materials, Hughs, McCormick, and de la Torre said.

“It’s one thing to know where an engine was built, but it’s another to know where the iron was mined,” de la Torre said.

Texas Geography is Key to Trade Success

Texas’ geographic location puts the state in prime position for benefiting from trade.

“Texas is a top global destination for foreign direct investment,” Hughs said. “We have 32 foreign trade zones and more than 1,500 foreign corporations with ongoing operations in the state, making for one of the most diverse populations in the country.”

Hughs said Texas’ consular court represents about 90 nations, making the state a global trade powerhouse. Later, in discussing the cultural ties between Texas, Canada, and Mexico, she said: “For us in Texas, I think there’s a better understanding of the real relationship between Texas, Mexico, and Canada, in terms of friendship and collaboration that we value deeply. Certainly, our cultural exchange is a big part of that.”

“Cross-border trade has created 2.8 million jobs on both sides of the border,” she said, adding that USMCA’s Rules of Origin for manufactured goods – particularly for automobiles – might benefit Texas.

“Four (border) states in Mexico produce 47% of the auto parts exported to the U.S. Those parts come to the U.S. primarily through Texas,” Hughs said. “So, as companies decide what they need to do to meet the rules of origin… there’s great opportunity for Texas to benefit. That (Mexican) plant may choose to do business with another auto parts company here in Texas.”