Mexico’s Trade Has Not DiversifiedByPaloma Duran |Tue, 06/07/2022 - 11:43
Experts highlighted that Mexico has failed to take advantage of its multiple trade agreements, especially with Latin American and Caribbean countries, as its trade still depends on the US and Canada. Additionally, Mexico's commercial attractiveness continues to decline due to various trade obstacles, including policies promoted by President López Obrador.
According to data from the Bank of Mexico (Banxico), during the first Summit of the Americas in 1994, Mexico reached agreements for US$116 billion with various states, which represented 82 percent of its trade at that time. After almost 30 years, the country's trade with American countries has a value of US$687 billion in 2022. However, Mexico’s share in the continent’s trade fell to 69 percent, its lowest figure since the 1980s.
Experts explained that although Mexico is one of the countries with the largest number of trade agreements in the world, the country's trade relationship remains laser-focused on the US and Canada. Of the 12 treaties that the country currently has in force, the USMCA represents 64.41 percent of Mexico's trade. “Mexico is one of the countries that has the most treaties. But what are they for? The orientation of entrepreneurs has always been the US. For years, the government thought of strengthening trade with Central and South America. However, it never happened,” said Jorge Molina Larrondo, a public policy and risk analysis consultant.
Molina explained that despite Mexico's proximity to several countries and great relations, trade between the region remains low due to the many barriers to imports and exports. "Mexico has agreements with Latin American countries for companies that cannot export to the US market, but the agreements have been annulled due to the trade barriers generated by countries like Brazil and the lack of infrastructure to transport the products," said Molina.
According to the UN Economic Commission for Latin America and the Caribbean (ECLAC), the Americas have low levels of intra-regional trade due to a lack of infrastructure and agreements that have prioritized trade relations with Asia. Mexico is no exception, since its main trading partners after the US are China, with 11 percent of the market share, South Korea, with 2.6 percent, Germany, with 2.5 percent, Canada, with 2.4 percent and Japan, with 2.1 percent.
In addition to the lack of commercial diversity, Mexico has been classified among the 10 countries with the most complaints regarding trade obstacles. The ranking is headed by the US with 4,497 complaints, followed by Brazil with 2,685. Mexico ranks ninth with1,293complaints.
Recently, the Ministry of Economy announced that Mexico is litigating 59 commercial cases, of which 11 were appeal to the USMCA. Experts warned that the number of lawsuits against Mexico will increase due to López Obrador's policies on the energy, mining, oil and gas industries, wgich seek to cancel contracts and benefit state companies over private ones.