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North American Integration 2023

By: Dr. Alejandro Diaz Bautista, Economist, and Research Professor.

North American integration is the process of economic and political integration in North America, particularly the integration of Canada, Mexico, and the United States.

The benefits of economic integration fall into three categories: trade benefits, job creation, and political cooperation between countries.

The start of the new USMCA trade agreement as of July 1, 2020, also marked the beginning of a new era in the economic and trade integration of North America. This region has a combined population of more than 490 million people, that is, a little less than 7% of the world population, but represents in economic terms 30% of the global gross domestic product.

Throughout the last decades there has been greater integration of global value chains in different sectors and North America is considered a pole of investment and innovation at the international level.

Since the entry into force of the North American Free Trade Agreement (NAFTA) 27 years ago, our country has built a solid and deep commercial relationship with the United States and Canada, which has made it possible to establish greater regional productive economic integration.

The USMCA treaty includes new rules of origin for manufacturers of automobiles and other textiles, chemical, and steel products, which will come into full operation as of 2023, and incorporates modifications to the chapters related to intellectual property, competition, or investments, which tries to increase the economic and commercial integration of the three countries.

Economic integration has been possible thanks to the commercial opening of Mexico, which has been strengthened with the entry into force on July 1, 2020, of the Treaty between Mexico, the United States and Canada.

In addition to maintaining the elimination of tariffs, the T-MEC includes innovative chapters that strengthen and deepen commercial exchange, which will lead us to the economic integration of a digital economy in North America and strengthen us to face the challenges of the 21st-century economy.

Mexico’s position as the main trading partner of the United States is a reflection of the deep economic and productive integration of the economies, which have built specialized regional supply chains in highly complex sectors such as the automotive, aerospace, electrical-electronic, and devices sectors. doctors, to name a few.

Economical and productive integration is also reflected in the agricultural sector whose bilateral trade continues to be one of the great success stories of NAFTA and now of the T-MEC in 2020 and 2021. The T-MEC is a fundamental element of trade policy, in addition, to being an instrument that will strengthen our country’s relationship with the United States and Canada; and deepen the economic integration of the 3 countries.

In addition to maintaining the elimination of tariffs, the T-MEC includes innovative chapters that strengthen and deepen commercial exchange, which will lead us to the economic integration of a digital economy in North America and strengthen us to face the challenges of the 21st-century economy.

Finally, when national economies agree to regional integration, trade barriers fall, and economic and political coordination increases. Academic specialists in this area of ​​economic integration define seven stages of economic integration: a preferential trade zone, a free trade zone, a customs union, a common market, an economic union, a monetary union, and full economic integration.

The final stage represents a full harmonization of fiscal policy and a complete monetary union. Taking these stages of integration into account, we can see that in North America we have moved into a second stage of regional economic integration.

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