For some analysts, the offshoring of supply chains, or nearshoring, has been described as the end of globalization. But for Kenneth Smith, former head of technical negotiations at T-MEC, this is a paradigm shift in which regionalization will be strengthened and, in this scenario, Mexico has several advantages that could help make North America the most competitive region in the world.

While appearing on Grupo Financiero Banorte’s Norte Economía podcast, Smith said companies are looking to reduce the risk of their value chains being paralyzed somewhere far away, as happened during the pandemic. However, this does not mean the end of foreign trade as we currently know it.

“Faced with these international shocks in terms of inflation, in terms of trade conflicts between the United States and China or even the war situation in Ukraine, Countries that manage to have cooperation and free trade schemes with their main partners, particularly with their neighbors, are those that will be best placed to deal with these external shocks.

“We are seeing a transition towards regionalization and this can also benefit our region because we already have 30 years of constant economic integration with the United States and Canada,” said the former head of technical negotiation of the T -DUDE.

The benefits of nearshoring will be felt in the years to come

Over the past four years, the United States has imposed prohibitive customs duties on China that have generated a substitution effect for Mexican products. This has not only resulted in an increase in foreign direct investment (FDI) from North America, since, Through the USMCA and other trade agreements, Mexico has become the gateway to the U.S. economy for other countries like Japan and South Korea.

Precisely, NAFTA and the T-MEC were the product of the effort to strengthen the economic integration of North America, but this, initially, For Mexico, it was the opportunity to integrate a region, “as a single production perimeter where borders are erased for practical reasons in terms of the flow of goods and investments”. to, in this sense, build the most competitive region in the world”, very similar to what the United States is proposing today.

Which sectors have the best opportunities?

In the current situation, In Mexico there are several economic areas that one can take advantage of, particularly in manufacturing and advanced manufacturing sectors and who have benefited from the new T-MEC ruleswhich did not include the original North American Free Trade Agreement (NAFTA), noted Kenneth Smith.

The first area of ​​opportunity lies in the use of information technology which can reduce delays in border crossings and other bureaucratic procedures. There is also what the expert calls the economy of the future and which has to do with the new digital era and cloud computing.

Others Industries that could benefit from the current scenario are those that require a high degree of intellectual property rights protection. This field includes biomedicine, large pharmaceutical companies, and other high-tech medical equipment.

In this regard, Smith warned that Mexico must promote several reforms and make strategic investments in order to take advantage of this new Mexican moment. In particular, he called for promoting economic growth in all regions of the country and not just in those that have traditionally benefited from NAFTA.

In the same form, The country must commit to renewable energies as foreign investors look for clean options to reduce their carbon footprint.

Finally, he indicated that, If the country can meet demand, it could double the FDI it receiveswhich is expected to reach $40 billion this year.