Mexico Is Missing Out on Trade With Central America: COMCE

Despite Mexico’s numerous investment opportunities, the country has much to work to do to expand trade with its Central American neighbors. Foreign trade between Mexico and Central America has been growing steadily given the geographic proximity between the two regions but is still highly limited despite existing trade agreements. 

"The market represented by Central America, Mexico and the US is of 535 million potential consumers, but the information is not reaching you, the business people," says Francisco Lima, Minister General, Ministry for Economic Integration of Central America (SIECA), during the Latin American and Caribbean Business Meeting of the Mexican Business Council for Foreign Trade, Investment and Technology (COMCE). 

Mexico's trade with Central America has grown since the signing of a Free Trade Agreement with  Costa Rica, Guatemala, Honduras, El Salvador and Nicaragua. However, trade in the region has not been duly maximized since, while trade has increased, it is still highly limited. In 2020 and 2021, trade was hampered by the COVID-19 pandemic and migration issues from Central America to Mexico and the US, which led to the reinforcement of security on Mexico's southern border. 

One of the benefits put forward to facilitate trade in the region are peripheral customs, which guarantee the entry of products from Mexico to Central America and later allow the Mexican supplier to move them across the three countries that handle most of the regional trade: Guatemala, Honduras and Nicaragua. "This has been a costly process and we have only had two or three customs movements using these customs offices, but we are sure it is because the information is not getting to the right people," says Lima.

Many opportunities are being lost and if the regions were better connected and had more extensive trade, nearshoring opportunities could be expanded. "The topic of nearshoring now has two connotations: the theoretical one, which is what we would like to happen and the real one, which is what we can do," said Edgar López, Director, Grupo Inversor Veracruzano GRIVER. It is necessary to work on connecting Central America and Mexico and on building the infrastructure that will allow for efficient and capable supply chains that are not limited by the technical qualities of the ports. 

"Continental integration would be an extraordinary thing, but it is very complicated due to issues of legislation and regulations. The economies are very disparate, so integration is complicated, but we have the dream of the American continent. We can continue, there is much life ahead of us," says Sergio Contreras, Executive Vice President, COMCE.