The United States-Mexico-Canada Agreement (USMCA) and Japanese Firms

Abstract

Building production networks is important for expanding value chains and achieve “locational interdependence” between advanced (e.g., USA) and emerging (e.g., Mexico) economies to achieve “location-specific advantages” within North American market region (Suder et al. in J World Bus 50(3):406–416, 2015). Internationalization decisions aims to achieve “institutional diversity and international dispersion” for regional market integration (Arregle et al. in J World Bus 53(6):896–910, 2018). In this aspect, regional free trade agreement such as NAFTA support the goals of business decisions for internationalization. Recently, U.S.-Mexican tensions remain high with Trump’s proposed building of border wall and Peña Nieto’s cancellation of a trip to Washington. In this fluid trade partnership context, this chapter examines how NAFTA talks affect global firms in MEXICO in general and those of Japan in particular. Japanese and Korean firms maintain their operations both in USA and in Mexico. Impacts of changes in NAFTA and other free trade agreements are discussed.

After decades of building vehicles in relative stability in North America and spending billions of dollars to move factory capacity and suppliers from Japan, the Japanese now must re-examine their supply chains and plant investments to make sure they can meet the local- content rules of the United States-Mexico-Canada Agreement. (Hans Greimel and Naoto Okamura, Automotive News, Nov 5, 2018).