5 years of the TMEC: 3 keys to understand the megatado of free trade between Mexico, Canada and the US to which Trump guilt of the industrial decline of his country

Photo foot, Peña Nieto, Trump and Trudeau in the firm in 2018 of the TLC renewal.

- Author, Daniel Pardo
- Author's title, BBC World correspondent in Mexico
6 hours

It is the world's largest free trade agreement. He pioneered a scheme that changed the global economy. It had political, cultural, social effects.

The treaty between Mexico, the United States and Canada (TMEC, and USMCA) is probably one of the most important economic developments in the recent history of the world economy.

Its first version, known as NAFTA (and NAFTA in English), entered into force in 1994. An initiative of the 80s that was negotiated for years and responded to the needs of each country at the time and a favorable international context. It was one of the main triggers of the globalized and liberal economy under the command of the United States that operated in the world during the last three decades.

This Tuesday, July 1, 5 years have passed since the entry into force of the last renewal of the Treaty. And it is a critical moment, perhaps existential, for it, because the president of the United States, Donald Trump, says that the TMEC “was a disaster” for his country.

“We will need the support of the Congress to end that agreement, which is the worst in our history,” adds the president, who is responsible for the closure of up to 90,000 plants in his country.

And although it was he who in his first period signed his renewal, Trump seems decided at least to renegotiate with hard hand the agreement guidelines, which is scheduled for review in 2026, although everything indicates that he will advance.

“In terms of job creation, investment promotion and economic growth, the TMEC was very successful, but the parties failed to create complementary public policies that damp its effects and that made it become a lightning rod of all problems, especially in the US Georgetown, in Washington.

In the midst of the tariff war promoted by Trump, of which Mexico and Canada have been among the least affected thanks to the agreement, the TMEC is again the protagonist of a story with global implications.

These are three keys to understand it.

Carlos Salinas de Gortari, George Hw. Bush and Brian Mulroney. — Photo foot, Carlos Salinas de Gortari, George Hw. Bush and Brian Mulroney in 1992, in one of the first signatures of the treaty.

1. What were its effects?

Free trade treaties are a mechanism to give preferential access to markets between the parties eliminating tariffs and non -tariff barriers that prevent free trade of products.

With that, in theory, the diversity of consumer goods available in the markets involved is increased, prices are contained, sources of work for all are expanded and a commercial block of weight is consolidated to compete with the rest of the world.

The TMEC achieved a lot of that from the beginning: trade between countries was sexual and 12 million jobs were created in Mexico, 14 million in the US and 17 million in Canada, according to official figures.

But since the first years the treaty was seen with skepticism by many because, among other things, it threatened local industries, generated conditions for labor exploitation, had an impact on the environment and promoted inequality.

And some of all that happened.

“Complementary policies were required,” says Ortiz.

“In Mexico, rules on energy policy, regulation, social policy were missing and that generated a lot of uncertainty; and in the US, the market was left too much and the state collaboration was left for infrastructure, social and labor support issues.”

Toyota Mexico plant — Photo foot, The north of Mexico changed structurally after the signing of the treaty, thanks to the maquilas and the automotive industry.

2. Why do Trump hate?

When renewal was signed in 2018, 70% of Americans and 80% of Mexicans supported the treaty, according to surveys. But that figure has been going down in US territory.

“In the US, the treaty coincides with the rise of China's automation and entry into the world economy, things that did generate a job gathering, not reducing manufacturing, but employment in manufacturing, and that made the middle class feel that its perspectives were not attractive.”

“Many fell into a kind of poverty, the pandemic worsened the situation, and for politicians – both Republicans as Democrats – an easy target to explain that process was the TMEC,” says Ortiz.

One of those politicians is Trump, an enemy not only of the TMEC, but of free trade; Precursor of protectionism and supporter of tariffs since the 80s.

But he is not the only one: his opponent in the Kamala Harris elections, for example, was one of the 10 senators who voted against the treaty in 2020 and in campaign he used it to attack Trump – who had renewed it – because he made “very easy to demociate jobs abroad” and “affects the environment.”

Although for decades the treaty had a majority bipartisan support, in recent years it became a tension factor and an explanation, for many arbitrary, the increase in inequality, the weakening of the unions and the US industrial crisis.

In that rhetorical fight Trump had the most efficient message.

EEUU workers protest — Photo foot, There is no consensus on whether the industrial crisis in the US is due to the TMEC, but the crisis exists and the TMEC has been a good scapegoat.

3. How did Mexico benefit (already the other two partners)?

The protectionist model of the Mexican economy entered into crisis in 1982, when the non -payment of the debt coincided with the fall in the price of oil, the largest source of income in the country. Inflation shot, the weight devalued.

But attempts to open the economy, enter world -free market systems and make controls more flexible proved to be unsuccessful because the world's largest market, USA, was still inaccessible.

At the same time, for the US and Canada, which already had a current treaty, Mexico was an attractive market for exports and a less expensive investment space that could improve the competitiveness of their companies.

Protests on gasoline — Photo foot, 30 years ago criticism of the treaty came from the left in favor of workers. Today that protest is on the nationalist right.

On January 1, 1994, the treaty entered into force and with that Mexico, in these 30 years, tripled its agrarian exports, millions of jobs were created in the automotive industry and inflation was reduced.

The Mexican North was transformed: Factories were opened, thousands of migrants arrived in search of work, the economic structure changed and its cities were developed.

That allowed the central government to reduce debt, strengthen its fiscal regulation, stabilize inflation and increase foreign reserves.

But that did not prevent – despite the fact that causality in this is subject to innumerable debates – to increase inequality. And the gross growth of the economy never shot.

The results for the US are also subject to a lot of controversy, especially when it comes to employment generation, the stagnation of wages and the crisis of industries in the north of the country.

But economists agree that the treaty, allowing fluid supply chains, reduced products costs, increased productivity and improved US competitiveness – and the American block – in front of a Chinese growing.

Canada also overturned its economy to the exchange with its partners, so that employment in manufacturing remained stable for decades. However, the productive gap with the US remained, the economy did not diversify or grow much and the US dependence deepened.

The question now, with the emergence of Trumpist protectionism, is whether the American block will be strengthened: if not, there may be a deep crisis; And to do so, there are two options: North America can end up strengthening itself to the world, or it can be isolated and weakened by China's rise.