A New Era for Canada-Mexico Trade RelationsBy Jorge Rave | Thu, 02/18/2021 - 13:05
If you’re looking for a bright spot amid the weight of the ongoing pandemic, look no further than the Canada-Mexico relationship.
Spanning more than 75 years, our trading relationship remains strong but what’s more exciting is that it’s positioned for growth in 2021. This strategic partnership, characterized by deep diplomatic, cultural and economic ties, offers an abundance of trade opportunities for both Canadian and Mexican businesses and investors.
It’s clear that the COVID-19 pandemic has challenged the ways in which business is conducted worldwide but the importance of fostering strong relationships and creating business connections remains, especially as we head toward recovery.
Beyond these fundamentals, businesses should also spend time understanding the various tools at their disposal to unlock future trade opportunities.
Leverage Improved Market Access
The Canada-United States-Mexico Agreement (CUSMA), which replaced the North American Free Trade Agreement (NAFTA), is a key contributor to our countries’ strong alliance. Since NAFTA came into effect in 1994, our bilateral trade has increased more than ninefold, reaching C$43.9 billion in 2019. CUSMA reduces trade policy uncertainty and will help facilitate close commercial integration and opportunities for shared prosperity between Canada, Mexico and the US.
By doing business in Mexico, Canadian investors and exporters can gain immediate access to more than 45 markets globally because of the various trade agreements Mexico has signed. Mexico’s gross domestic product (GDP) is also forecast to grow by 5.6 percent this year and by 4.4 percent in 2022 and the country boasts a growing consumer class, which contributes to a positive trade environment in 2021 and beyond.
Understand Where the Opportunities Are
Canadian companies looking to do business in Mexico will find ample opportunities in a wide variety of sectors. Particularly noteworthy in 2021 are the advanced technologies and manufacturing, cleantech, agri-food and consumer goods sectors due to their growth and strategic importance to the future economy of Mexico. For information on other sectors of opportunity, a valuable resource is Export Development Canada’s (EDC) Doing business in Mexico guide.
Mexico’s appetite for advanced technologies is seeing significant growth:
- The rise in digitalization has magnified over the past year as the world adapts to the new reality brought on by the COVID-19 pandemic, and this momentum isn’t expected to slow down.
- Opportunities for Canadian exporters can be found in emerging areas such as Internet of Things, artificial intelligence, cybersecurity, telecom and IT services. In fact, Mexico is home to some of the largest ICT firms in the region, making it a gateway to other key markets in Latin America.
Strategic sectors of the Mexican economy are transitioning to become more sustainable — in many of which EDC is active through our Business Connections Program. This shift is opening doors for Canadian companies to supply the goods, services and expertise needed.
EDC’s Global Trade experts believe that the Canadian cleantech ecosystem is well-positioned to support this ambitious transformation. We’re seeing significant opportunities in virtually all facets of the supply chain. For example, technologies are needed to improve energy efficiency and power utilization in the manufacturing process across various sectors, which is expected to play an important role in a post-COVID-19 environment, driven by the idea of nearshoring.
There’s also increasing interest in cleantech solutions pertaining to air quality, water/wastewater and renewable energy — all areas in which Canada has expertise.
While many segments of the agri-food and consumer goods sector have been hit hard by the pandemic, there are still many pockets of growth:
- Mexico’s retail sector is expected to remain strong, thanks to its growing middle class and high consumer confidence index.
- The market offers opportunities for brands across all categories and segments, including in-store and e-commerce.
- Changing lifestyles of younger demographics have increased the demand for high-quality and healthier products. Again, all areas of strength for Canadian companies.
Look To Others for Inspiration and Help
Mexico is a priority market for EDC given the abundant prospects for the Canadian companies we serve. EDC has had on-the-ground representatives in Mexico — Monterrey and Mexico City — since 2000. Since then, we’ve supported more than 10,000 Canadian companies doing business in Mexico, facilitating C$40 billion in business.
Through collaborative efforts with trade ecosystem partners, EDC provides the financial solutions, knowledge and connections to support Canadian and Mexican businesses. In other words, we’re here to help you go, grow and succeed internationally.
Whether you’re a Canadian firm looking to expand to Mexico or a Mexican firm looking for investment opportunity in Canada, Export Development Canada and the Trade Commissioner Service are valuable resources to leverage. Together, these organizations offer support at every stage of the export journey.
Diversification remains one of the best ways to make your business resilient, profitable and ready to grow. Even if you’re not ready to export now, it’s valuable to start preparing for when the time comes. The Canada-Mexico partnership is full of business potential and no shortage of resources to help you navigate your export journey.
Jorge A. Rave builds and fosters relationships between Canadian businesses and Mexican private and public sector partners through EDC’s suite of financial, insurance and knowledge solutions.