Permanent link for USMCA Year Four: Analyzing Its Impact on Michigan's Labor Market and Future Trade Prospects on October 11, 2024

by Luke Notorangelo

The United States-Mexico-Canada Agreement (USMCA), which replaced NAFTA on July 1, 2020, aimed to modernize trade between the U.S., Canada, and Mexico, incorporating more flexibility and advanced technological strategies. The article Driving Capital underscores how the USMCA and the Inflation Reduction Act (IRA) have catalyzed job creation and investment in Michigan, especially in the automotive sector’s shift toward sustainability. The Wilson Center's analysis further highlights the USMCA's role in strengthening supply chains and addressing geopolitical challenges. Meanwhile, the Atlantic Council notes that upcoming elections in Mexico and the U.S. could significantly influence the Agreement's future. Collectively, these perspectives reveal the USMCA’s pivotal role in shaping economic resilience and sustainability across North America.

Impact on Michigan’s Labor Market

The USMCA has significantly impacted Michigan's labor market, particularly in the automotive industry, driving job creation and investment in electric vehicle manufacturing. The Agreement's requirement that a substantial portion of automotive content be produced by workers earning at least $16 per hour is a key step in raising wage standards and supporting labor rights. Mechanisms like the Rapid Response Labor Mechanism (RRLM) empower workers to report labor violations, enhancing protections.

However, there are challenges. Some Michigan companies have closed operations in Mexico due to compliance issues, raising concerns about job stability and competition. This underscores the delicate balance Michigan workers face as the automotive sector evolves.

With the IRA encouraging growth in Mexico’s automotive sector, Michigan’s labor market stands at a crossroads—facing both opportunities and uncertainties. The upcoming USMCA review in 2026 will likely shape the future for workers and businesses alike, offering a chance to critique and adjust the Agreement to ensure long-term benefits for North American trade.

Four Years of USMCA: Looking Ahead

Despite global supply chain challenges such as the COVID-19 pandemic, Russia’s invasion of Ukraine, and tensions with China, trade between the USMCA nations has surged by 50%. This growth underscores the strength of the Agreement in managing trade disputes and overcoming supply chain disruptions. Beyond economics, the USMCA reflects a broader shift in globalization, emphasizing sustainability, transparency, and resilience.

As the USMCA reaches its fourth anniversary, it’s clear that while much has been accomplished, unresolved disputes and future challenges remain. Elections in Mexico, the U.S., and Canada could introduce new policies that reshape the trade landscape. Monitoring these developments is essential to maximizing the Agreement’s potential and ensuring a successful 2026 review.

The 2026 USMCA Review: Why It Matters for Michigan Trade

The USMCA includes a unique review process, with a critical evaluation scheduled for July 1, 2026. This review will determine whether the Agreement will be extended for another 16 years or if periodic evaluations will occur. The review will focus on compliance in key areas like telecommunications and labor rights. As political debates intensify, particularly around migration and drug trafficking, Mexico must solidify its position as a reliable partner in North American trade to ensure a successful review.

USMCA in 2024: Notable Considerations

As we mark the fourth anniversary of the USMCA, it's evident that the Agreement is more than just a trade deal—it’s a vital support for Michigan's labor market and a symbol of resilience for North America’s economic future. Growth in the automotive sector and broader trade has positioned the region toward a more sustainable and equitable economy. Yet, upcoming reviews and elections could significantly reshape this framework, making it crucial for businesses, workers, and policymakers to stay engaged. Decisions made now will impact job stability and competition in Michigan, laying the foundation for a stronger North American economy.

Expand Your Knowledge of International Trade

Looking to deepen your understanding of The United States-Mexico-Canada Agreement (USMCA)? Join us at an October, Basics of USMCA training event! Learn valuable insights, expand your network, and discover how the Van Andel Global Trade Center can support your international growth. Register today to secure your spot!

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About the Contributor

Luke Notorangelo is currently a Marketing and Sales Student Assistant at the Van Andel Global Trade Center. Luke is a senior studying Business Administration with a concentration in Marketing at Grand Valley State University. He enjoys going to the gym, watching a good sports game, spending time with friends, and exploring new noteworthy restaurants in the area.

Categories: FTAs Mexico USMCA
Posted on Permanent link for USMCA Year Four: Analyzing Its Impact on Michigan's Labor Market and Future Trade Prospects on October 11, 2024.

Permanent link for Things to Consider When Doing Business in Mexico on August 12, 2024

by Natalie Bremmer 

When people think of exporting, they often picture sending their products halfway across the globe. Though this mentality is not necessarily wrong, it can oftentimes lead businesses astray from their greatest opportunity– their next-door neighbor, Mexico!

U.S. businesses would be doing themselves a grave disservice by overlooking the exporting opportunities Mexico has to offer. In 2019, the U.S. exported roughly 350,000 units of product to Mexico while simultaneously receiving 200,000 units of product in the same year– a huge opportunity while also being able to decrease shipping costs because of a much shorter travel distance.

However, as with any country, there are social and cultural norms that businesspersons should be aware of before attempting to strike a deal.

Here are the top cultural norms people should be aware of when doing business in Mexico:

Timing

Business hours typically don’t start until 9-10 a.m. at the earliest and sometimes end at 8 p.m. and have a much longer lunch break. With this, you can expect later meeting times as well as more small talk before diving right into the designated topic of the meeting.

Though it’s polite for the guests to arrive on time, it is culturally common for the hosting company to oftentimes be a bit late for meetings.

If you do have meetings over lunch or dinner at a restaurant, expect it to take even longer. Restaurant service in Mexico is usually at a much slower pace than it is in the US. Sit, enjoy the conversation, and do not rush the check.

Formalities

Always dress formally and professionally for the first meeting to make the best impression. In areas with a hotter climate, it is sometimes acceptable to dress more ‘business casual’ as it is usually too hot to wear a full suit.

Business cards are always welcome and are readily exchanged. It is best to have a business card in both English and Spanish (if applicable) for maximum outreach results.

Small gifts with your company’s logo on it are acceptable, but anything larger or of higher value may be considered as a sort of unwanted persuasion.

In addition to this, doing anything that could remotely be considered bribing or promising ‘favors’ is extremely disrespectful and is not tolerated. All final business decisions are made by those in positions of power; negotiating with anyone not in this position will achieve suboptimal results.

Also, it is not polite to perform the first initial business meeting over a meal. Meals are shared among people who are familiar and enjoy each other's company; they are typically not acceptable for people unfamiliar with each other.

Communication

When addressing someone, it is best to use their official title of Mr., Mrs., Ms., Dr. This conveys the upmost respect, tends to have the best social reaction, and is a much quicker way to build relationships.

With the presence of the Covid-19 pandemic, Americans have started to shift toward a preference of online and video call communication, but in Mexico, the preference is still face to face communication as it tends to have a more personal touch.

While communicating in person, body language is also very important to consider. Trying to seem as open and engaged as possible by not closing off your arms and nodding along to the conversation is a great starting point to have the most productive conversations.

Do not feel the need to rush into business right away, though. Business professionals in Mexico prefer to get to know their partners first by engaging in small talk to get a good assessment of their character.

Having some baseline understanding and conversational skills in Spanish is a must-have in this scenario. Your Mexican business partners might find this impressive and realize how serious your offer is, resulting in a better negotiation.

Learn More!

To expand your cultural awareness of the best business practices in Mexico, sign up to attend the Business Travelers Series: Navigating Mexico – Virtual event on August 14, 2024, at 9 am EST, this virtual event is sponsored by the Gerald R. Ford International Airport and the Michigan Economic Development Corporation.

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Natalie Bremmer was a Student Assistant at GVSU’s Van Andel Global Trade Center . She pursued an undergraduate degree in Finance, Human Resource Management, and General Management at Grand Valley State University. She enjoys lifting weights, getting lost in a good video game, spending time with friends, and going on long hikes.

Categories: Culture Mexico The Business Travelers Series
Posted on Permanent link for Things to Consider When Doing Business in Mexico on August 12, 2024.