On Monday and Tuesday, Mexican President Andrés Manuel López Obrador, Canadian Prime Minister Justin Trudeau, and U.S. President Joe Biden met in Mexico City for the latest North American Leaders’ Summit. Since 1994, the three countries have been connected by the North American Free Trade Agreement (NAFTA), which was renegotiated between 2018 and 2020 to become the United States-Mexico-Canada Agreement (USMCA). The so-called Three Amigos summits began in 2005 to build on this economic cooperation and discuss other topics.
Recent changes to U.S. immigration policy loomed large at this year’s event. Last week, U.S. authorities announced that they will add Haitians, Cubans, and Nicaraguans to the nationalities of undocumented migrants immediately expelled at the U.S. southern border, even if they seek asylum. Until now, border authorities had often processed asylum-seekers from those countries because Mexico would not take them back; Cuba and Nicaragua either limited or refused to accept deportations of their nationals.
Meanwhile, Washington will offer up to 30,000 parole slots per month for migrants from Haiti, Cuba, Nicaragua, and Venezuela so that they can temporarily live and work in the United States without a formal visa. To be eligible, applicants must have a U.S. sponsor and enter the country via plane. Migrant rights groups slammed the further erosion of the U.S. asylum program under Biden, though some said the new quotas were important legal avenues for migration.
Another agenda item at the summit was Washington’s goal of making North America a hub for semiconductor manufacturing amid growing tensions with China and efforts to make U.S. supply chains more resilient after the disruptions of the COVID-19 pandemic. Though officials did not provide a detailed road map, the plan could be an economic boon for Mexico.
Last year, the U.S. Congress passed around $52 billion in funding to boost its microchip industry and attract investment from foreign chip companies. U.S. Commerce Secretary Gina Raimondo said on a visit to Mexico in September 2022 that Washington saw potential for Mexican plants to test and package microchips, steps that come after chip creation.
This week, the “three amigos” announced they will co-host an event with officials and industry envoys from all three nations in the first half of this year to coordinate better on semiconductors going forward. Trudeau told reporters on Wednesday that Canada’s exact role in the hub was “still somewhat to be determined”; the country is currently home to some of the world’s largest semiconductor producers and production plants for indium, a mineral used in chips.
Some coordination is already underway: Expansión reported that U.S. and Mexican officials have identified three specific technology plants in Mexico—Intel, Skyworks Solutions, and Walcom—that they envision programming U.S.-made chips. And last November, Arizona State University signed an agreement with Mexico’s ambassador to the United States to train workers in the semiconductor sector in northwest Mexican border states. $500 million in the U.S. microchips funding package passed last year is earmarked for such forms of “international cooperation.”
Washington said it is eager to cooperate with Mexico on microchips. But it’s unclear how much López Obrador and his government are committed to doing the same.
Hypothetically, a growing semiconductor industry in Mexico could introduce new jobs and strengthen the country’s technology sector. Mexican Economy Minister Tatiana Clouthier told Bloomberg last August that the government was considering introducing special incentives for semiconductor-related companies to grow their business in Mexico. Such measures usually take the form of tax breaks or other subsidies.
By December 2022, however, Reuters reported that Mexico City had not introduced any major financial incentives, and potential foreign investors were hesitating over problems accessing renewable energy in the country. (López Obrador’s efforts to increase state control over the electricity sector have privileged dirtier forms of fuel.) In their meeting on Tuesday, Biden reportedly urged López Obrador to implement Mexico’s own policies to promote the industry.
Even without new financial incentives from the Mexican government, some U.S. companies that previously relied on materials from Asia began in 2022 to buy those supplies from Mexico instead; they aimed to avoid shipping delays like those experienced during the pandemic, the New York Times reported last week. The trend was particularly pronounced in the textiles industry.
It is more complex to build up a semiconductor supply chain than a textile sector. But the millions of dollars being pumped into chips just across the border in the United States present Mexico with an opportunity if managed well.