Exercises: The USMCA and North American integration

1. a) Explain in your own words what a free trade agreement is.
2. b) Name two Mexican products exported to the United States or Canada and two products Mexico imports from those countries.
3. c) What advantage does a Mexican factory get from being able to sell to the United States tariff-free?

In one month, Mexico exported $55,000$ million dollars' worth of goods and imported $52,000$ million.

1. a) Compute the trade balance for that month and say whether there was a surplus or a deficit.
2. b) Nearshoring means foreign companies setting up factories in Mexico to supply the U.S. market. Explain two advantages Mexico offers for this trend, related to its geography and to the USMCA.

About $8$ out of every $10$ dollars of Mexican exports go to the United States.

1. a) Analyze two advantages and two risks of this trade concentration for the Mexican economy.
2. b) The USMCA rules of origin require a certain percentage of a car's value to be produced inside the region for it to avoid tariffs. Explain what these rules aim at and how they influence the carmakers' decisions.
3. c) Propose one measure that would help Mexico reduce its trade dependence on a single partner and justify it.