The US and Mexico have a unique opportunity to both strengthen and deepen joint manufacturing, R&D, trade, facilitation, security and governance ties through the adoption of an strategy of Ally-Shoring.
The Ally-Shoring refers to the process by which countries re-engineer critical supply chains and procure essential materials, goods and services from trusted democratic partners and allies. It focuses on investing in short- and long-term relationships that protect and enhance joint economic and national security.
The COVID-19 pandemic exposed the challenge of over-reliance on a single country to obtain critical materials and products necessary to protect citizens. The shortage of personal protective equipment and other essential goods needed to respond to the COVID-19 crisis sparked new ideas to reduce dependency on supply chains. In other words, from those that make countries excessively reliant on a single source, to strategies that ensure the safety and health of citizens, as well as the stability of economies during global shocks.
An Ally-Shoring strategy provides a unique framework through which the United States and Mexico can build on more than thirty years of close co-production and trade, while keeping a forward-looking perspective.
Both nations can expand their collaboration by strengthening bilateral efforts to create and manufacture transformative exports that support advanced manufacturing, research and development (R&D), smart borders, and the joint development of U.S. and Mexican workforce skills to meet the evolving markets of the 21st century. An Ally-Shoring framework also supports and enhances the objectives of the USMCA.
These mutually beneficial collaborations will help both the United States and Mexico grow their economies, improve national security, strengthen democracy, and provide renewed leadership for open, transparent, and rules-based commercial and economic relations that sustain sound policies and strong economies both here and around the world.
As the United States seeks to readjust and refocus its foreign policy efforts under the new Biden Administration, a clear opportunity arises to engage with democratic-minded allies to achieve shared objectives in political and economic security.
In this context, the concept of "Ally-Shoring" holds tremendous potential. Ally-Shoring refers to a program aimed at securing materials, goods, and essential services among trusted partners and allies, reducing dependency on any one country—especially those that may not share the same values or long-term interests. Perhaps there is no better example of the promise of Ally-Shoring than the relationship between the United States and Mexico.
As the U.S. and its trade and production partners in North America continue to pursue economic growth, job creation, and supply chain integration—challenges exacerbated by the economic impact of COVID-19—the relationship between the United States and Mexico takes on even greater significance in building economic resilience.
The incoming Biden Administration is clearly committed to rebuilding economic and political partnerships with allies around the world. The United States had already begun to identify the critical areas of its supply chain and how to realign them, as well as the transformative technology sectors it aims to prioritize for development and export-focused strategies.
These changes open up the possibility for greater cross-border innovation, research and development, as well as the creation of intellectual property, as envisioned in the USMCA.
The recovery and reorientation of critical supply chains due to COVID-19 represent a unique opportunity to accelerate progress on the agendas outlined in the USMCA and to obtain mutual economic and political benefits by first refocusing and then expanding a significant portion of production and economic activity across North America.
Closer collaboration between the United States and Mexico at this time will not only help strengthen the economies of both countries, but also serve to build trust and reinforce institutions that uphold the rule of law in Mexico—an ongoing opportunity to improve investment, business development, border security, and overall economic activity.
Foreign Direct Investment (FDI) in Mexico, as an OECD member, will be strengthened by a commitment to solid political and economic institutions, combined with consistent trade and investment policies that promote and support clear and transparent rules of the game. Trade transparency across North America is a strategic, political, and economic asset that should be further supported and enhanced.
The bi-national business and civic leadership community is encouraging the Biden Administration to develop a comprehensive Ally-Shoring, (program), in which Mexico can be an important partner.
The United States and Mexico already share coproduction and closely integrated supply chains across multiple sectors, backed by strong commercial relationships between businesses and governments, as well as public-private partnerships.
A strong Ally-Shoring program with Mexico can deliver multiple benefits aligned with mutual goals in economic policy, national security, and foreign affairs:
Many countries, including Mexico, are eager to do business and welcome direct investment from various governments and private sector partners. However, they may prefer commercial participation with the United States due to its transparency and reliability in financial and trade practices, based on rules that support a level and fair playing field. It is in the interest of both countries to plan intentionally and collaborate in the redesign of supply chains and the improvement of acquisition and production in North America.
In addition to fulfilling the political, economic, and security strategic goals of the United States, Ally-Shoring also provides added benefits for U.S. companies and governments, including:
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