A new trade pact between the U.S., Mexico and Canada begins on Wednesday with the top U.S. negotiator threatening litigation, investor distrust rife and supply chains tested by the COVID-19 pandemic.
By contrast, the U.S. Mexico and Canada Agreement which replaces it was forced into being by Trump. The U.S. president branded NAFTA the worst deal ever and vowed to pull out unless there were changes that would encourage companies to repatriate jobs from low-wage Mexico. The new trade pact also comes at a time when abrupt policy shifts from the Mexican president, especially those designed to favour state-run oil company Petróleos Mexicanos and utility The Comisión Federal de Electricidad , have triggered outrage from U.S. companies.
Christopher Landau, U.S. ambassador to Mexico Mexico’s changes to the rules in the electricity sector, penalizing renewables projects to favour the CFE, have triggered complaints and threats of arbitration. Investors are also upset over delays in issuing permits, for filling stations, fuel storage and imported fuel, for example.
Cross-border supply chains and a tightly intertwined North American manufacturing industry, in which components cross between the U.S., Mexico and Canada multiple times before winding up in a finished car, TV or other manufactured good, are the lifeblood of NAFTA and USMCA.