NAFTA or NAFTA 2.

0: Opportunities for Small and Medium Enterprises 1

Summary
NAFTA is a trade agreement to form a free trade zone between the United States,
Mexico and Canada. On 02/05/1991 negotiations began and on 12/17/1992 it was
signed. NAFTA began on 01/01/1994, some of the objectives of which are the
elimination of trade barriers and the free transit of goods and services in North America,
as well as accelerated and sustained economic growth in Mexico, and with it a reduction
in migration to the United States.
Competitiveness in Mexico has not increased with NAFTA, nor has it entered other
markets, in addition to there being few companies that managed to be competitive,
expand and acquire a positive effect on its economy. Others are stagnant in the local
market and are affected by strong competition from foreign products in their territory.
Small and Medium Enterprises (SMEs) have a high participation in the local market, but
with a limited number of workers and income.
NAFTA is important for the competitiveness of SMEs in Mexico, it brings advantages
and disadvantages, this agreement should bring many benefits for SMEs, since it
facilitates exports to the United States and Canada, free of tariffs and quotas, which
would lead them to compete in these large markets. Although sometimes the opposite
has happened, since many SMEs in Mexico have seen their growth and/or permanence
in the local market threatened by foreign companies that have established themselves
in their territory. Small and medium-sized businesses should understand how they can
take advantage of the benefits of NAFTA, as the expansion of SMEs into other markets
offers growth opportunities.
Keywords : NAFTA, SMEs, Mexico,
 NAFTA o TLCAN 2.0: Oportunidades para las Pequeñas y Medianas 2
NAFTA o TLCAN 2.0: Oportunidades para las Pequeñas y Medianas
Opportunities and threats for small and medium-sized businesses. Some may be
involved in the mentioned sectors, but many others (the majority) are found in sectors
such as commercial, services, education, tourism (mostly tertiary sector).
Opportunities
NAFTA or NAFTA 2.0 represents for SMEs in Mexico, greater facilities to
integrate into foreign trade, they can achieve the operation of a company on a global
scale, since they aim to lower production costs to have a product with the most
competitive price in new markets, among others to improve its competitiveness in the
North American region because administrative processes are adopted that facilitate
trade.
All of this represents great challenges since it is necessary to modernize their
industries, increase their capacity through accelerators and incubators and share
information with more efficient practices, as well as take advantage of the benefits
related to commercial operations, such as customs administration and trade
facilitation. .
On the other hand, the increase in electronic commerce, which is also known as e-
commerce, is encouraged and strengthens the protection of data and information of
clients/consumers.
Threats
NAFTA or NAFTA 2.0 brings great challenges for Mexican SMEs, since if they do
not work on improvements, they will reach new markets with high cost margins, it can
be difficult to reduce their productive expenses, which leads them to not have better
prices and are far from improving its competitiveness in this aspect.
Not only for SMEs, but for the Mexican market, there is a clause that conditions
signing new free trade agreements with nations that do not operate under free market
conditions, for which the TMEC partners would have to be notified. In the case of
Mexico, this could limit an FTA with China. In addition to the Sunset Clause, where there
is the possibility in the agreement that the USMCA ends within a period of 16 years or a
review period every 6 years, it can also be seen as a disadvantage.
 NAFTA o TLCAN 2.0: Oportunidades para las Pequeñas y Medianas 3
Finally, the minimum value for import taxes to be applied to an item was
increased from 50 US dollars to 117, increasing the variety of goods that can be
purchased in Mexico, coming from Canada and the United States, which would perhaps
stop being purchased. in the national territory, which can also generate negative effects.
Sectors that can take advantage of this new treaty
The sector with the greatest benefits is the automotive sector since imports of
aluminum and steel from Mexico will continue, although it will have stricter rules, this
could generate greater investment attraction to the country.
For this sector, a regional content of 75% was established, which will encourage
companies in the industry to look for more suppliers in these countries, which will
increase the demand for aluminum and steel. It is estimated that in 2022 Mexico will
stop importing steel. However, all raw materials must come from the US.
Are there winners or losers?
The pharmaceutical sector is one of the big losers, given that the barriers to
access (time) to generic medicines increased. Additionally, other sectors most affected
by this negotiation are food and IT for the development of medical equipment.
computing, because many SMEs also participate, who will not be able to protect
themselves from the enormous losses they will suffer from the tariffs and trade fees that
they would have to pay to be able to supply large exporting companies.
The different industries established in the Mexican territory, since with the
continuity of the commercial relationship with the United States, will generate benefits
such as sources of employment, attraction of investment and establishment.
NAFTA o TLCAN 2.0: Oportunidades para las Pequeñas y Medianas 4
References
Puyana, Alicia, 2005 The experiences of the Mexican agricultural sector
Article from the Externado de Colombia University “NAFTA 2.0 comes into force: a
paradigm shift for the resolution of disputes between investors and States?
https://reinoaduanero.mx/comercio-internacional/
https://mises.org/es/power-market/tlcan-20-libre-comercio-o-planificacion-central