With New Trade Deal Ratified, Texas Businesses Should Experience Less Uncertainty With Mexico

The United States-Mexico-Canada Agreement stipulates changes to Mexico’s labor laws, which could help Texas companies that rely on Mexican-built parts.

By Jill AmentDecember 11, 2019 12:46 pm,

On Tuesday, House Democrats and President Donald Trump agreed to ratify the latest trilateral North American trade agreement. The USMCA, which stands for the United States-Mexico-Canada Agreement, is a revision to what those countries agreed upon in the 1990s under the North American Free Trade Agreement, or NAFTA. They drafted the trade deal in 2018, but each country’s government has had to ratify it in order for the agreement to go into effect; Canada will be the last country to do so.

Raymond Robertson is director of the Mosbacher Institute for Trade, Economics and Public Policy at Texas A&M University. He says the USMCA is a boon for workers, especially in Mexico.

“It actually required a number of changes in Mexico’s labor law that went into effect earlier this year, that would protect union organizers and people trying to organize and collect or bargain,” Robertson says.

He says it is also a win for Trump because it shows successful collaboration between him, and Republicans and Democrats in Congress.

The USMCA is especially important for Texas because so much trade goes on between the state and Mexico. But businesses in Texas have faced uncertainty while they waited for the agreement to be ratified.

“We rely on Mexico for parts for our manufacturing. We also have migration issues as well,” Robertson says. “There’s more undocumented migration that comes in when the Mexican economy falters, and without this agreement there was a big risk of that.”

Much has changed in the years since NAFTA was drafted. Robertson says Texas and Mexico are much more intertwined now, especially when it comes to product production. Workers in both countries often produce different parts of the same product, like a car.

USMCA was agreed upon more swiftly than NAFTA, but it’s more restrictive.

“It doesn’t open up markets as much as NAFTA. It’s actually more ‘managed trade,’ and so we’d like to see free trade more than managed trade,” Robertson says.


Written by Caroline Covington.