Mexico-Asia-Pacific trade agreement will take effect on Sunday

Most Mexican products will have immediate and tariff-free access to 10 nations.

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This Sunday the Integral and Progressive Treaty of Trans-Pacific Partnership ( CPTPP) enters into force, an ambitious commercial pact that will bring greater investments to Mexico.

This commercial instrument replaces the Trans-Pacific Economic Cooperation Agreement (TPP, for its acronym in English), which was signed by 12 countries on February 4, 2016; however, the United States announced its exit from the agreement in January 2017.

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That is why the remaining 11 countries – Australia, Brunei, Canada, Chile, Japan, Malaysia, New Zealand, Peru, Singapore, Vietnam, and Mexico – agreed to take advantage of the benefits obtained from the TPP, by maintaining the level of access achieved to the markets.

The representatives of the 11 nations of the Asia-Pacific region signed the CPTPP in Santiago de Chile on March 8, which represented the beginning of a new era for one of the largest free trade zones worldwide.

Later, on April 24, Mexico became the first country to approve the trade agreement that, according to the provisions, enters into force 60 days after six countries, or 50 percent of the signatories, have ratified and notified the other parties.

The start date was defined after Australia was the sixth country to ratify it formally, followed by Canada, Japan, New Zealand, and Singapore.

According to the Ministry of Economy (SE), 90 percent of Mexican products will have immediate and tariff-free access to the markets of the partner countries, which together represent 500 million people.

To measure the relevance of the commercial instrument, the agency said that the 11 countries account for almost 15 percent of world trade, attracts 13 percent of foreign direct investment and contributes 13.5 percent of the world’s gross domestic product (GDP).

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After entering into operation also called TPP-11, indicated that Mexico will liberalize its trade with six new nations: Australia, Brunei Darussalam, Malaysia, New Zealand, Singapore, and Vietnam.

New generation rules will also be established, both with these nations and with four others and with which they have free trade agreements, such as Japan, Canada, Chile, and Peru.

In that sense, Mexico seeks to empower sectors and products such as automotive, aerospace, medical devices, electrical equipment, cosmetics, tequila, mezcal, beer, avocado, beef, pork, and orange juice.

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Contrary to this, it will grant greater openness to sensitive goods such as dairy products, through quotas in cheese, butter, and milk powder; the tariffs on rice have a tariff reduction of 10 years, and tuna, sardines, and garments will have a total liberalization in 16 years.

The SE has also emphasized the need to monitor the rules of origin of the textile and footwear sectors, due to the sensitivity they represent for those who promote them.

It is estimated that the Asia-Pacific commercial exchange amounted to 66 thousand 602 million dollars from 2008 to 2017, which represented a growth of 3.2 percent.

Mexico Trade Agreements

Since it has signed trade agreements in three continents, Mexico is positioned as a gateway to a potential market of over one billion consumers and 60% of the world´s GDP.

Mexico has a network of 10 FTAs with 45 countries, 32 Reciprocal Investment Promotion and Protection Agreements (RIPPAs) with 33 countries, 9 trade agreements (Economic Complementation and Partial Scope Agreements) within the framework of the Latin American Integration Association (ALADI) and and it is a member of the Trans-Pacific Partnership Agreement (TPP) .

In addition, Mexico is an active member in multilateral and regional organisms and forums such as the World Trade Organization (WTO), the Asia-Pacific Economic Cooperation (APEC), the Organization for Economic Cooperation and Development (OECD) and the ALADI.

Trade agreements   

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The following chart presents the Agreements signed by Mexico since it´s entry to GATT (General Agreement on Tariffs and Trade). Among which stand; North America Free Trade Agreement (NAFTA), the Free Trade Agreement with the European Union and the Latin American Integration Agreement (ALADI):

 Free Trade Agreements

 Multilateral and Regional Partnerships, Agencies and Forums

Source: El Finaciero, Pro Mexico, Gob.Mx, Bloomberg

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