Opportunities and the importance of USMCA

The importance of trade between the USA and Mexico, exploring the Mexican statistics, the culture, the exports, and the USMCA.

U.S. goods and services trade with Mexico totaled an estimated $671.0 billion in 2018. Exports were $299.1 billion; imports were $371.9 billion. The U.S. goods and services trade deficit with Mexico was $72.7 billion in 2018.

Mexico is the United States’ 3rd largest trading partner and the 2nd largest goods export market.

22 American states depend on Mexico as their first or second destination for exports.  More than $1.8 billion a day is conducted in two-way trade. 

The textile and Apparel Industries account for 4.7% of Mexico’s manufacturing GDP (textiles 1.3%, apparel 2.5%).  These sectors account for nearly 20% of all manufacturing employment in Mexico.

Now that the minimum wage in Mexico is competitive with China, clothing manufacturers should be considering “nearshoring” their operations back to Mexico.

Mexico is a logical location for clothing manufacturing, given the buyers need to get the product to market quickly for each season and for just-in-time manufacturing practices.

Only Bangladesh and Sri Lanka are lower (5%) in monthly wages than Mexico.

Mexico is the number one Latin American supplier of apparel products to the U.S and the sixth worldwide exporter after China, Vietnam, Indonesia, India, and Bangladesh.

Culture

Personal relationships are at the heart of most business dealings. It is important to establish a personal relationship before the initial business is done.  It is recommended to refrain from using first names until invited to do so; titles are also important.

Most Mexican companies are hierarchical: key decisions are made by a small number of individuals at the top. It is wise to ensure that you are dealing with the right decision-maker.

Time is flexible; do not be surprised if your Mexican contact is not punctual.

Textiles

Mexico is a major textile producer, with an industry based on competitive labor costs and geographic proximity to the United States. 

The USA exports are much more than it imports from Mexico.

For textiles, Mexico is best known for the following products:

  • Synthetic fibers mixed with rayon, and other artificial fibers
  • Fabrics with textured polyester dyes
  • Taffeta fabrics with discontinuous dyes made of polyester fibers
  • Fabrics of upholstery
  • Industrial fabrics for the automotive industry
  • Other fine wool fabrics
  • Silk (for garments to be exported)
  • Textile machinery and equipment

Free Trade Agreement 

The proposed US-Mexico-Canada Free Trade Agreement (USMCA) is replacing the NAFTA agreement.

USCMA would update and replace the 25-year-old North American Free Trade Agreement (NAFTA). The NAFTA supply chain creates around US$ 20 billion in annual trilateral textiles and apparel trade, up from just US$ 7 billion prior to NAFTA; important to the continued growth of the industry.

The updated USMCA includes stronger rules of origin for sewing thread, pocketing, narrow elastics, and certain coating fabrics. In addition, it is designed to fix the Kissell Amendment loophole and ensure stronger customs enforcement.

Congressman Rice (South Carolina), a leader on trade and competitiveness issues that heavily impact the domestic textiles industry, participated in an executive roundtable hosted by Milliken & Company at its headquarters in Spartanburg, SC.

South Carolina is one of the most important centers of the Textile and Apparel industry in the United States.

“Milliken is honored to host Congressman Rice today to talk about innovation, competitiveness and the importance of passing USMCA,” said Jeff Price, EVP of Milliken Operations.

 “USMCA makes several key updates to NAFTA that will enable our trilateral trade to become stronger, which benefits this key industry in South Carolina. We greatly appreciate the Congressman being here today and appreciate his leadership.”

“Congressional passage of the USMCA trade agreement is one of our top legislative priorities this year,” said Leib Oehmig, Chairman of NCTO (National Council of Textile Organizations) and CEO of Glen Raven. “The new USMCA makes several important improvements that would benefit our industry and enhance our three-way trade. We look forward to continuing to work with Congressman Rice to help get this trade agreement over the finish line.”

Conclusion

It is important to explore trade opportunities and tradeshows that support business opportunities between the three countries of the USMCA.

The Apparel Textile Sourcing show is a leading venue that brings together buyers, suppliers, and industry professionals. You can check out their next tradeshow in Miami from May 27 – 29th, 2020.

Recommended For You