MCALLEN, RGV – One of the organizers of a forum on the new United States-Mexico-Canada trade agreement says its predecessor was the catalyst for huge advances along the Texas-Mexico border.

Dr. Kevin Peek, an economics professor at South Texas College, previewed STC’s 2019 Innovation Conference, which takes place from 8:30 a.m. to 2 p.m. on Nov. 1 at the college’s Technology Campus in McAllen. The conference is focused on USMCA.

“NAFTA, without a doubt, was the most important engine of economic growth in our region. Its successor, the USMCA, overall, looks like it is going to continue in that tradition. There are some changes but those changes won’t be too drastic, and, overall, most of them will be favorable for our region,” Peek predicted.

“It (USMCA) will have a tremendous impact on all of us.”

Dr. Kevin Peek, economics professor at South Texas College. (Photo: RGG/Steve Taylor)

The United States-Mexico-Canada trade agreement has been signed by the leaders of the United States, Mexico and Canada but must still be ratified by the congress of each nation.

In an exclusive interview with the Rio Grande Guardian, Peek said USMCA is, to a certain degree, going to be NAFTA 2.0.

“To truly understand the importance of the renegotiations of the North American Free Trade Agreement and the content of the USMCA for our region, we have to go back to before the NFTA was implemented in 1994,” Peek said.

“If we go back to 1993 and we look at the economic indicators of our area, they did not paint a very optimistic picture.”

Peek noted that unemployment in Hidalgo County was hovering at around 23, 24, or 25 percent in 1993. In Starr County it was as high as 31, 32, or 33 percent.

“Per capita income was roughly 60 percent of what it is today,” Peek said, while the Rio Grande Valley was third in the nation in terms of the unequal distribution of income.

“Those were the economic indicators of 1992. NAFTA was implemented in 1994 and almost overnight we start to see changes,” Peek said.

“Fast forward all the way to 2018…  we see per capita income is much more equitable.  We see that unemployment in our region, depending on where you are, is between four to seven percent. Per capita income has increased by roughly 30 percent, so circumstances are much better than they were and much of this is a direct or indirect consequence of the implementation of the NAFTA of 1994.”

Peek said NAFTA has had “a major positive impact” on both sides of the border.

“Definitely on our side but you can argue that Monterrey and Reynosa both grew as a direct consequence of the implementation of the NAFTA.”

Speaking of INNO 2019, Peek said the objective of the conference is to take a look at the innovations that are built in to NAFTA’s successor, USMCA. “We have an eclectic agenda of speakers,” he predicted.

Among the speakers are Jorge Espindola Alvarez of the Universidad Autónoma de Tamaulipas, and Blake Hastings of the Federal Reserve Bank of Dallas.

Click here to see the lineup of speakers.

“USMCA is an important topic. It is a timely topic. Our fundamental objective in this conference is to inform the public about the content of the USMCA, so they know not only how it is going to impact us but even more so, how they can benefit from this,” Peek said.

“As a consequence we have identified individuals who truly are leaders in their respective fields. For example, Blake Hastings, who specializes in binational trade. So, we are very excited about the individuals who will be participating in this conference.”

Blake Hastings

Peek said there are differing opinions about a specific provision within USMCA that requires the average hourly rate for workers making auto vehicles manufactured in North America go up.

He points out that U.S. Trade Office believes that “if we require firms in Mexico to pay $16 an hour to their workers, that will mean an increase in wages, greater per capita income, more consumption, more equitable distribution of income, which is wonderful.”

However, he said that will certainly deter certain firms in the United States from relocating to Mexico.

Peek said the view of the International Monetary Fund is that this provision will make this trading bloc less competitive. “If you are forcing Mexican firms to pay $16 an hour, it will be difficult for many of them. It will have an adverse impact on economic growth and development in this particular trading bloc.”

Peek concluded his preview of INNO’ 2019 by urging all interested parties to close closely at USMCA.

Jorge Espindola Alvarez

“If we are going to change that we need to be sure that provisions that are incorporated into that agreement, that the changes we are going to make, are not only going to continue that prosperity but, ideally, move us even further forward,” Peek said.

“If there are provisions that are detrimental, we want to be aware of that. The wisest approach is to take a little bit of time. Analyze it, make sure it is the right agreement before moving forward. Because, once it is implemented, the sunset is not for another 16 years.”

Editor’s Note: The main image accompanying the above news story is a file photo from Reuters showing a truck belonging to the Mexican company Olympics crossing into the United States at the World Trade Bridge in Laredo.