EL PASO, Texas (Border Report) – Trade between the U.S., Mexico and Canada is up 20% in the past three years. But how much of that is owed to a free trade agreement in force since July 1, 2020, is up for discussion.

U.S. trade with Canada and Mexico reached a record $1.4 trillion-plus in 2022, compared to $1.2 trillion in pre-pandemic 2019, according to the Bureau of Transportation Statistics of the U.S. Department of Transportation. This North American trade flow largely consisted of chemicals, vehicles, computer parts and agriproducts, the BTS reported.

Much of that trade goes back and forth through U.S.-Mexico ports of entry like El Paso, Laredo, and others in California, Arizona and New Mexico.

“The last three years have been a tremendous success for our border economy with record low unemployment and 11 million square feet of new construction,” said Jon Barela, CEO of the Borderplex Alliance, an El Paso-based regional business advocacy organization. “Our trade numbers continue to improve dramatically. […] Our job growth future is very bright; we are going to have an impressive next few years thanks in large part to the USMCA ratification.”

USMCA, or the U.S.-Mexico-Canada Agreement, turns 3 on Saturday. It was an overhaul of the 1994 North American Free Trade Agreement (NAFTA) to include novel e-commerce rules, shore up protections for the U.S. automotive industry and overcome a former U.S. president’s perception that it favored Mexico and Canada more than the United States.

“USMCA brought stability to the U.S.-Mexico relationship because, at the time, we had a president that was threatening to do away with NAFTA and close the border and all that,” said Jerry Pacheco, president and CEO of the New Mexico-based Border Industrial Association.

The treaty brought “a sense of relief” to a North American economy that was already interdependent and it updated rules for its continued growth, Pacheco said.

But three years later, there are some who say the treaty has not lived to its potential. Florida growers are asking the Commerce Department for a suspension of USMCA rules to stop Mexico from “dumping” tomatoes on the U.S. market. And Mexican industry leaders say the treaty is doing little to fully integrate Mexico into the North American supply chain.

“The USMCA has not detonated the development of Mexican industry in any way,” said Thor Salayandia, vice president of the Mexican Chamber of Industry. “The supply chains are not integrating Mexico. Mexico is being limited to being an assembly operation and that is not sustainable, that does not generate wealth.”

He called for U.S. and Canadian operations to develop suppliers in Mexico and transfer more of their technology to the Mexicans.

“The crime and violence in Mexico is the result of poverty (and poorly paid jobs) that exist because Mexico is seen only as a cost center,” Salayandia said. “What kind of neighbor is more convenient to the United States, an industrialized Mexico that is part of the value-chain, or a Mexico with violence and insecurity?”

Politics also get in the way of the USMCA fulfilling its full potential, said one of the men who negotiated the treaty in 2020.

“It is important to realize that for the purposes USMCA was created – facilitating trade and promotion investment – the agreement is clearly working,” said Ken Smith Ramos, a former Mexican trade official and now partner at Agon, a Mexico City business consultancy firm. But “there is sometimes a disconnect between the USMCA speech and the domestic speech.”

Speaking at a March forum sponsored by the Washington, D.C.-based Wilson Center, Smith Ramos cited the January North American Leaders Summit in Mexico City, where President Joe Biden spoke about North America as a single commercial block. Biden then returned to Washington and championed the Buy American initiative.

“What we see is the contrast between the statements that leaders make in public, when they are together, (of) this view of North America as an integrated region with no borders, (then) the president or the prime minister go back home and tend to their domestic constituencies,” he said at the forum.

Beyond any criticism there is opportunity, and Mexico is the center stage.

The nation south of the Rio Grande is being looked at by a myriad of companies trying to re-shore or near-shore some of their production from Asia, after delays, labor shortages and supply chain flaws bared by the pandemic.

Mexico closed 2022 with $35 billion in foreign investment, Smith Ramos said. Companies from Germany, Spain, Asia and the United Kingdom are investing in auto parts, machinery equipment and aerospace operations, Smith Ramos said.

But while the U.S. is investing billions in semiconductors and other key supplies for industry through the CHIPS Act, Mexico does not have such resources and sometimes has other priorities, he said, citing Mexico’s $10 billion investment in a tourist train through the Mayan Peninsula and an even bigger investment in a gasoline refinery in its southeast.

China has politics, too, and that will play into the hands of the North American trade block and benefit border communities like El Paso, Barela said.

“We are a model, not only for our country but for the entire continent of how you conduct binational economic endeavors,” Barela said. “The next few years will be very bright for our region. I believe we will land some mega projects, that are a billion-dollar and above in capital investment.”