Former ambassador: T-MEC opens the way to Just In Case and Just In Time

The Treaty between Mexico. The United States and Canada (T-MEC) provide Mexico with opportunities to benefit from both Just In Time (JIT, just in time,) and Just In Case (JIC, just in case), highlighted Roberto Zapata, senior partner at Consultores Internacionales Ansley and former Mexican ambassador to the World Trade Organization (WTO).

“Mexico has to know how to read the current circumstances to position itself, it has to know to catch what is relocated or those supply chains that create redundancy, just in case, the Just In Case,” said Zapata, in a forum organized by the Universidad Panamericana.

With JIT and JIC logistics, companies can have different management strategies for stocks.

On the one hand, JIT logistics relies on contractors and its proven benefits are increased efficiency and reduced costs. Its drawbacks are delayed delivery of goods when commercial stocks are depleted and manufacturing interruptions if essential workers are not available.

Rather, JIC logistics relies on stocks bought and stored to meet demand, and its benefits are direct possession and guaranteed delivery of goods. Its stated drawbacks are increased costs and staff.

Zapata stated that Mexico currently has opportunities related to these management strategies and gave the pharmaceutical, agricultural, automotive, food and semiconductor sectors as an example.

“These opportunities can be maximized thanks to the T-MEC, which with its flats, still generates certainty for investors,” said Zapata.

Currently there is a combination of changing consumer habits (consumers buy “things” rather than “experiences” during the Covid-19 lockdowns), replenishment and strengthening of supply chains (going from “just in time” to inventory management “just in case”).

According to Zapata, the T-MEC is an advantage that Mexico has and whose “high standards” will serve as a base or parameter for the positions that the United States will take in the future in the negotiation of new free trade agreements.

“There is a lot of talk about nearshoring or relocation of the chains and Mexico has the code of rules to support that. It seems to me that the value of this instrument (the T-MEC) is that it generates certainty regarding the commercial relationship with the United States, in a sea of ​​uncertainty at the world level in commercial terms ”, he commented.

Therefore, Zapata emphasized that Mexico knows how to read these circumstances, know how to take advantage of them and take the entire framework and the entire support network necessary to increase its competitiveness.

“Unfortunately, some signals that arrive today go in the opposite direction: one of the essential networks for competitiveness and for manufacturing in Mexico is to have certainty in the supply of energy,” he said.

Upward relocation

According to the firm Maersk – the largest shipping company in the world – nearshoring will intensify in Mexico, driven by its logistical and legislative advantages compared to the rest of Latin America, projected Ricardo Rocha, director of Logistics and Services for Latin America and the Caribbean of Maersk , the largest shipping company in the world.

Rocha stressed that Mexico is benefited by the trend that large US importers want to diversify their supplier risks from China and, in general, have a nearby supplier as part of the lessons left by the Covid-19 pandemic.

In the last decade, Mexico has gained participation in the total imports of products to the United States, going from 12% in 2010 to 14.9% in 2020.

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