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LATIN AMERICA: "Time to tune in: Latin American companies turn up the volume on global growth" repor

LATIN AMERICA: "Time to tune in: Latin American companies turn up the volume on global growth" report. 20-page report by Ernst & Young.

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back to index backLATINtalk December,  2016


With NAFTA on the Chopping Block, Implications For Nearshore IT Are Very Real

With Trump's plans to collapse, or at least disrupt, NAFTA, there implications for nearshore IT services are real, but are they a death-knell for the industry?

Last week, news agency CNN reported on a leaked memo suggesting that President-elect Donald Trump’s new administration will immediately focus on renegotiating NAFTA. While Trump’s goal is to get more U.S. citizens working, they may not necessarily have the right skills that U.S. companies are looking for, skills that – thanks to NAFTA – have been sourced from talent found in Mexico and Canada.

Unsurprisingly, many Mexicans in the border region are concerned about Trump’s plan for undoing NAFTA, but treaties like this are not necessarily easy to undo. NAFTA provided clear rules of the game and certain guarantees for trade and investment, which stimulated more regional trade and investment between the U.S., Mexico, and Canada.

Tinkering with these established policies would send a chill throughout the investment world and make it more difficult for Mexico to attract investment, particularly with manufacturing plants and startups,” said Paul Ganster, a San Diego State University professor with a specialty in Latin America. NAFTA did not invent Mexico’s exports to the U.S.; the whole series of trade arrangements that the U.S. is involved in, such as GSP and duty free imports from certain countries, also facilitated trade with Mexico before NAFTA was in place. Things like offshore manufacturing were very well-established; NAFTA simply accelerated all of that.”

History of Border Limitations

After 9/11, people that lived and worked in the Mexican border region were hugely inconvenienced by an implementation of security efforts that affected legitimate crossers and legitimate flow of cargo. The cost of these restrictions and slowdowns has had a huge economic impact – around $6-8 billion in the San Diego/Tijuana region alone. Approximately 40,000 people live in Tijuana and work in San Diego, many of whom are daily commuters, so heightened security makes things difficult. As a result, any further tightening up of border control by Trump and his administration with only serve to hinder these workers even more.

Border infrastructure tends to lag behind demand and growth of trade,” said Ganster. A good chunk of that money needs to come from Washington, so with an unsympathetic administration at the helm, and Congress, the act of pulling together the funds to reduce related bottlenecks will prove to be more difficult.”

To read entire article, please click here.

Source: NearshoreAmericas.com - GAI






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