Mexico Has Been Unable to Close Six Key Trade Agreements

Mexico has fallen behind in the negotiations of six trade agreements, which if ratified would generate significant economic gains for the country. In addition, experts warned that the arrival of investment in Mexico, under established agreements, will decrease due to the lack of certainty in the market.

Mexico has not been able to close the negotiations of key trade agreements with Ecuador, Brazil, Argentina and within the Pacific Alliance with New Zealand, Australia and Canada due to the COVID-19 pandemic and internal issues such as consultations or elections.

In May 2022, a new round of negotiations was held between Mexico and Ecuador to reach agreements on key issues. However, this effort has not progressed as each country is conducting internal consultations, especially on controversial trade issues surrounding shrimp and bananas, among other goods.

Meanwhile, the National Confederation of Industry of Brazil (CNI) emphasized the need to resume negotiations to modernize the Economic Complementation Agreement Number 53. However, the electoral process in Brazil has slowed down the negotiation efforts of the countries. In addition, since February 2021, Mexico has highlighted the need to modernize its economic and commercial relationship with Argentina, although so far it has not been possible to do so.

Meanwhile, in 2017 at the XII Summit of the Pacific Alliance, Mexico announced that it would start trade negotiations with Australia, Canada, New Zealand and Singapore. Although in recent years there have been attempts to resume talks and reach new agreements, these have been constantly suspended as consensus remains elusive.

According to the Ministry of Economy and the Bank of Mexico, trade between Mexico and its partners totaled US$28 billion in 1H22. Consequently, experts argue that the closing of these new agreements could substantially increase the country's income. Mexico currently has 23 Free Trade Agreements (FTA), therefore it is only surpassed by the EU’s 46 FTAs, the UK’s 38, Chile’s 31, the European Free Trade Association’s 29, Singapore’s 27 and Turkey’s 24. Mexico’s most important FTA is the US, Mexico and Canada Agreement (USMCA).

Daniel Becker, President, the Association of Banks of Mexico (ABM), said Mexico is expected to receive over US$40 billion in investment from US companies by 2024, but these investments are on hold until those companies have more certainty. “What is being suggested is that there should be increasing legal certainty, that there should be clear conditions to understand the investment mechanisms,” said Becker.

According to the International Chamber of Commerce (ICC), Mexico’s investment and trade are at risk, as Mexico is one of the countries with the highest number of disputes involving companies and the government, specifically in the energy and infrastructure industries. To date, the disputed projects are estimated to be worth over US$30 billion, which led Mexico to review its energy policies to avoid international conflict, as previously reported by MBN. The US and Canada have raised concerns around the matter.