USMCA by the numbers:
The agricultural sector in North America is deeply integrated with extensive trade among USMCA partners.
•Over 95% of Kansas and Missouri’s corn exports are destined for Mexico.
•Mexico supplied 89% of avocados imported to the U.S. in 2021.
•Canola seed is Canada’s top export to Mexico—100% of Mexico’s canola seed imports came from Canada.
A deeper dive into the data:
• Agricultural trade supports jobs. Canada and Mexico are the second- and third-largest export markets for U.S. food and agricultural products, accounting for 29% of total U.S. agricultural exports and valued at US$50 billion in 2021. The U.S. Department of Agriculture estimates that every US$1 billion in exports creates 7,550 U.S. jobs.
• North American agricultural supply chains can boost food security. Mexico and Canada supply 41% of all U.S. agricultural imports—the largest share of any region, far greater than the European Union’s 17% share and South America’s 11%.
• Trade is set to grow under USMCA. Canada’s agri-food and seafood exports to the U.S. and Mexico grew to CAN$43 billion in June 2021—an increase of 9.4% over the previous year. Some of the fastest-growing exports include poultry meat products to Mexico (574.9%) and frozen crab to the U.S. (74%).
• A binational joint production platform is behind Mexico’s beer boom. Mexico leads the global beer market with 3 out of 10 beers exported globally being produced in the country. As Mexico’s main market, the United States imported over US$438 million worth of Mexican beer in 2021 (For every Mexican peso used to produce alcoholic beverages, 65 cents belong to beer production). To make this beer, Mexico became the #1 buyer of U.S. barley and malt with imports of 250,226 tons in the same year.
Dispute settlement updates:
See a detailed review of all trade-related disputes by visiting the USMCA Tracker.
•Labor. On July 21, 2022, the United States triggered USMCA’s Rapid Response Labor Mechanism (RRM) to review whether workers in Coahuila, Mexico, were being denied the rights of free association and collective bargaining. This was the fifth time the Biden Administration has turned to the RRM to address alleged breaches of labor standards by facilities in Mexico. On September 14, 2022, Mexico and the United States announced the resolution of said dispute.
5/5: All five labor disputes between Mexico and the United States have been resolved through USMCA’s Rapid Response Mechanism.
•Softwood lumber. On August 29, 2022, Canada filed a notice challenging the outcome of the U.S. Department of Commerce’s third administrative review of its anti-dumping and countervailing duty orders on softwood lumber from Canada (Chapter 10 of USMCA). Canada had previously filed a challenge against the Commerce Department’s second administrative review on December 2021. Canada’s softwood lumber industry employs 205,000 workers.
•Energy. On July 20, 2022, the United States requested dispute settlement consultations with Mexico regarding measures that favor Mexico’s state-owned electrical utility, the Comisión Federal de Electricidad (CFE), and state-owned oil and gas company, Petróleos Mexicanos (PEMEX), to the disadvantage of U.S. companies and U.S.-produced energy. On July 21, 2022, Canada also formally requested consultations with Mexico on these energy measures’ consistency with USMCA. On October 3, 2022, the parties announced they would extend the talks beyond the initial consultation-phase deadline, citing “positive momentum” in negotiations.
Recent developments:
•A departure. On October 6, 2022, Mexican Economy Minister Tatiana Clouthier resigned from her post. Secretary Clouthier was in charge of negotiations in the energy dispute with the United States. President López Obrador has since named Raquel Buenrostro, formerly head of the country’s tax authority, as economy minister. In this position, Buenrostro will play a key role in the ongoing energy dispute with the U.S. and Canada.
•U.S.-Mexico talks: On September 12, 2022, President López Obrador convened with senior government officials from the United States and Mexico for the annual meeting of the U.S-Mexico High-Level Economic Dialogue. Among the highlights, Mexico committed to invest $1.5 billion to strengthen border security. As part of the 2022 Supply Chain Ministerial Forum organized by the United States, Mexico also joined the collective goal of 50% production of zero-emission vehicles by 2030.
•Canada-Mexico talks: Trade Minister Mary Ng and (now former) Secretary of Economy Tatiana Clouthier launched the first edition of the Canada-Mexico High-Level Economic Dialogue on August 15, 2022. The dialogue will encompass three pillars: 1) strengthening competitiveness; 2) supporting equitable growth and bilateral trade;, and 3) strengthening investment climates.
Recommended reads and events:
•Opportunities to strengthen North American supply chains. The USMCA initiative at Brookings hosted a public event to discuss opportunities and challenges for expanding supply chains in North America. Watch the discussion moderated by Senior Fellow Joshua Meltzer and featuring experts Alan Bersin, Goldy Hyder, Juan S. Gonzalez, and Luz María de la Mora.
•The rise of exporters and importers in U.S. job growth. In this analysis for the Center for Economic and Policy Research, Kyle Handley, Fariha Kamal, and Wei Ouyang study the effects of trade participation on job growth using U.S. Census Bureau data. The authors conclude that protectionism can hinder U.S. competitiveness and adversely impact domestic job growth.
•Anchoring global value chains in Latin America and the Caribbean. In this World Bank book, Nadia Rocha and Michele Ruta make specific policy recommendations to guide Latin American and Caribbean countries in leveraging trade agreements to pursue greater international integration and economic growth. To improve the region’s participation in global supply chains, they identify four areas for deep integration: trade facilitation, regulatory cooperation, services, and state support.
•Kearney’s Nearshoring Index. Despite a positive and growing sentiment toward reshoring production (92%), the 2021 Kearney Nearshoring Index shows that manufacturing has not moved back from China to the United States, and instead has been offshored to other Asian economies. This report shows that a rise in manufacturing imports relative to U.S. gross domestic output resulted in a negative 2021 reshoring score.
* USMCA Insights is a newsletter that covers North American trade from a variety of angles. The newsletter is produced by the Brookings Institutions’ USMCA Initiative which works to measure the effectiveness and implementation of the United States-Mexico-Canada Agreement (USMCA) which came into effect in 2020. Something else catch your eye? Email Diego Marroquín: dmarroquin@brookings.edu
