By Dannie Suber *
On July 1, 2020 the U.S.-Mexico-Canada Agreement (USMCA) took effect, modernizing the NAFTA trade pact that had been in place since 1994. This agreement further strengthened the North American trading partnership- the largest free trading zone in the world. While USMCA maintains most of the core provisions of NAFTA, which were widely recognized as best practice, it also incorporates important new components responding to new trade trends and learnings from the past two decades. Despite its overall improvements, this trilateral trade bloc fails to address the need for enhanced coordination in response to a global crisis, as made evident in the onset of the Covid-19 pandemic. To better address a global crisis and reinvigorate collaboration within North America, it is pivotal to amend the current USMCA to include a harmonized definition of “critical and essential infrastructure”.
The U.S., Canada, and Mexico chose different responses to the pandemic, creating confusion in the business community and disrupting regional trade. Canada closed its borders on March 17, 2020 to most non-Canadian citizens and non-essential traffic and called for a national lockdown. However, trade continued on the U.S.-Canada border, since Prime Minister Trudeau understood the need for the free flow of goods to avoid supply chain disruptions and allow for a speedy restock of essential products.
The U.S. partially closed its borders to certain countries and issued restrictions for areas greatly affected by the virus. To help guide state and local policies, on March 19, 2020, the U.S. Cybersecurity and Infrastructure Security Agency (CISA) issued guidance that identified essential and critical infrastructure, supporting infrastructure operations across the United States. Such guidance informed state and local officials to craft policies allowing business owners and frontline workers access to their workplaces and priority in obtaining necessary protective equipment, Covid-19 testing resources, and access to vaccines. To mitigate trade risk, Canada quickly followed suit adopting the U.S. CISA guidance, issuing a decree to prioritize the same essential and critical workforce sectors.
While Canada responded in congruence with the definition of essential and critical infrastructure issued by the U.S., Mexico chose an entirely different response. It developed a color-coded classification system, based on the number of Covid-19 cases, to determine the level of risk per state. Mexican states classified as red recorded more deaths and infections than those marked yellow, for example.
However, regardless of the risk status, each Mexican state had complete discretion in declaring a state of emergency and responding to the pandemic, without any clear national guidance. As a result, Covid-19 restrictions varied significantly by state with similar levels or risk. Many suppliers servicing the health sector as well as other critical sectors were ordered to close, even if they took the appropriate health and safety measures.
The inconsistency also caused disruption to regional and global supply chains charged with delivering essential products and services around the world. Multinational companies that were deemed critical in the U.S. and Canada, supplying parts to critical infrastructure (i.e., motors for ventilators and compressors for Covid-19 vaccine refrigerators) were ordered to stop production and send employees home. Work stoppages caused great delays in manufacturing, stressing local supply chains, heavily impacting the entire region that depends on Mexico’s production, and caused dangerous delays in securing life-saving equipment.
During these trying times, cabinet members, ambassadors, and governors of all three countries were in frequent dialogue, but their exchanges did little to ameliorate the ongoing supply chain and trade issues. It was ultimately up to each country to decide its operating guidelines and determine which sectors received priority and could resume operations.
To make our regional supply chains more resilient to future global crises, we must learn from the challenges experienced during the Covid-19 pandemic and amend USMCA. Adopting a uniform definition of essential and critical infrastructure would bring greater certainty to the business community during a crisis, ensure key goods and services reach the public, and foster a faster regional economic recovery.
* Dannie Suber is Director of International Government Affairs at Emerson, a diversified global manufacturing and technology company based in St. Louis, Missouri. Dannie’s portfolio includes international trade policy, energy, cybersecurity, and workforce. She is also a member of the US-Mexico Foundation’s Youth Advisory Council. The US-Mexico Foundation is a binational non-profit organization dedicated to fostering bilateral cooperation and improving the understanding between the United States and Mexico by activating key people in the relationship that once were dormant. Twitter: @usmexicofound
