What Will RCEP Bring to Mexico?By Sofía Hanna | Mon, 12/07/2020 - 18:10
On Nov. 15, a free trade agreement was signed by New Zealand, Australia, Brunei, Cambodia, Laos, Malaysia, Indonesia, Myanmar, Singapore, Thailand, Philippines, South Korea, Japan, Vietnam and China. The Regional Comprehensive Partnership (RCEP) is considered the largest trade agreement ever signed as its members represent 30 percent of the world's GDP. Under RCEP, import tariffs for the next 20 years will be abolished, while provisions on intellectual property, infrastructure, financial technology, e-commerce and technical services will be added. According to a BBC article, this new agreement will create new opportunities in the aforementioned countries as some of them already had treaties but with limitations.
What could be the impact of the RCEP in Mexico and Latin America? Adolfo Laborde, a research professor at Universidad Anáhuac’s School of Economics and Business in Mexico, said to Forbes there is an urgent need to generate a strategy of substitution or complementation of imports from Asia with national production, so Mexican companies can join a larger value chain. Meanwhile, Jack Caporal, trade expert at the Center for Strategic & International Studies (CSIS), highlighted to BBC News that standardization will make it easier for Latin American companies with a presence in Asia to do business in Mexico. Cynthia Arnson, a Wilson Center expert on relations between Asia and Latin America, said to BBC News that since 2000, following an increase in trade between Latin America and China, Latin American countries have sought greater integration with Asia. The same article mentions how important it is for Latin American countries to be part of agreements like RCEP.
Even though China accounts for nearly 10 percent of Mexico’s total trade and that the country has trade agreements with some RCEP members, there are still issues like the lack of a legal framework to foster preferential, tariff-free trade so investments can run smoothly. This generates an imbalance for the country, as mentioned in a previous MBN article. One of MBN’s previous pieces highlights Mexico is becoming more and more attractive in terms of new Asian investments. With RCEP building a united front among Asian countries, this could mean new opportunities for the country to create and strengthen bonds with the Asian market. Mexico is also on track to benefit from nearshoring as companies try to go to where demand is, as reported by MBN. The goal now should be to build strategic plans to make the country a stronger contender in the global market and use this to foster an economic recovery, according to a Forbes article.