Mexico breaks trade and export growth records

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As a proportion of GDP, the sum of exports and imports of the national economy increased from 60.5% to 75.8% from 2013 to 2018; There are 13 trade agreements with 50 countries.

Mexico broke record in commercial opening

Mexico broke a record in 2018 in its degree of commercial opening of its economy, reaching 75.8 percentage points.

This indicator is calculated as the ratio of foreign trade (exports plus imports) in relation to GDP.

The degree of openness of Mexico’s economy grew continuously during the last five years: it went from 60.5% in 2013 to 72.7% in 2017, its previous historical maximum.

Mexican economic growth relies heavily on domestic demand, as well as demand, especially for manufactured goods, from the United States. A less dynamic result in the United States affects, in particular, the automotive sector, but also other export sectors, with consequent negative effects on gross capital formation.

In general, Mexico remains a great defender of the multilateral trading system. Currently, it has signed 13 free trade agreements with 50 countries and seven partial scope agreements within the framework of the Latin American Integration Association (ALADI).

The last of these agreements to enter into force is the Transpacific Association Progressive Integration Treaty (TIPAT, or CPTPP), which began on December 30 for six of its 11 members: Australia, Canada, Japan, Mexico, New Zealand, and Singapore. The validity for Vietnam began on January 14, 2019.

Luz María de la Mora, Undersecretary of Foreign Trade of the Ministry of Economy, has reported that Mexico is interested in negotiating trade agreements with Ecuador – through the Pacific Alliance – and the United Kingdom – once Brexit concludes.

De la Mora has also indicated that the federal government is promoting the creation of a Free Trade Agreement (FTA) between Mexico and South Korea, through the incorporation of this Asian country to the Pacific Alliance.

South Korea must wait for another four accessions to be completed. The Pacific Alliance expressed its conviction that it will conclude this year the process of trade negotiations with Australia, Canada, New Zealand, and Singapore, candidates for associated states (CAE) to the Pacific Alliance itself.

An Associated State is one with which all parties to the Framework Agreement have a binding agreement “of high standards” in commercial matters.

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“Free trade agreements do help trade to occur faster, more efficiently and to grow,” said De la Mora.

Meanwhile, Mexico has negotiations to expand its trade agreements with Brazil and Argentina, two agricultural powers that Mexican businessmen are interested in selling mostly industrial products.

With the ongoing renegotiation of the agreement called ACE 53 with Brazil and ACE 6 with Argentina, Mexico expects to sell more manufactured products, including appliances, electrical and metalworking, in exchange for a larger purchase of agricultural goods, mainly grains. From another point of view, the Pacific Alliance and Mercosur signed an “action plan” in July that includes a series of measures to eliminate non-tariff barriers, promote interoperability of the foreign trade single windows and strengthen productive chains.

Finally, the Mexican Senate has ratified the Treaty between Mexico, the United States and Canada (T-MEC), which would replace, where appropriate, the North American Free Trade Agreement (NAFTA), and also hopes to sign the update of the Treaty of Free Trade between the European Union and Mexico (TLCUEM), with the estimate that it will enter into force in 2020.

In the 2019 Economic Policy Criteria, the Ministry of Finance stated that the commitment of the Mexican government is “to continue strengthening the commercial opening of the country with the objective of diversifying the destination of its exports and reducing its economic dependence on the United States.”

Source: el financiero, el economista

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