Mexico has been characterized as one of the most open economies in Latin America and the world since there are Mexican trade agreements with more than 46 countries.
For this reason, it has established itself as a benchmark for other developing regions, favoring businessmen with tariff preferences under the treaty to which they are subscribed.
The following article will mention the main Mexican trade agreements in force in 2023, highlighting their importance on the international scene and their implications for the country’s economy.
What are international trade agreements?
The Government of Mexico defines a trade agreement as “an agreement established by two or more countries under the protection of international law and to improve their relations in economic and trade terms.”
The alliance can be bilateral or multilateral, but it always includes reducing or eliminating tariff and non-tariff barriers, such as import quotas, sanitary and phytosanitary matters, or technical trade barriers.
While in the free trade agreement (FTA), rules and guidelines are established for exchanging products and services, leaving aside obstacles such as taxes or rates on imports and exports. The idea is to consolidate markets for the national products of each country, presenting competitive offers.
According to the Mexican Government, the treaties are designed to promote international investment flows and provide certainty to the operations carried out by foreign businessmen.
What are the most important Mexican trade agreements?
Currently, Mexico has 14 current international trade agreements signed with 46 countries, 32 agreements for the promotion and reciprocal protection of investments with 33 countries, and nine limited-scope agreements within the framework of the Latin American Integration Association (ALADI). Additionally, it is a member of the Trans-Pacific Partnership Agreement.
Although the Mexican trade agreements are valuable for our country, some are more relevant. This is either because they are entered into by more than one nation or because of their implications. Those that stand out among them include the:
Free Trade Agreement United States – Mexico – Canada (USMCA). It is the best known and most relevant for Mexico because the commercial relationship between the countries of North America is essential for continued technological and economic growth.
In 2020, the agreement replaced the North American Free Trade Agreement (NAFTA) that entered into force in 1994. New provisions included more rigor in verifying the country of origin for the textile, chemical, and automotive industries.
A chapter on digital trade was also included, in which customs duties are not imposed on digital products, in addition to cooperating on key aspects of cybersecurity.
Free Trade Agreement Mexico – European Union (TLCUEM). This Mexican trade agreement has been in force since July 2000. Germany, Austria, Belgium, Denmark, Spain, Finland, France, Greece, the Netherlands, Ireland, Italy, Luxembourg, Portugal, the United Kingdom, Sweden, Cyprus, Slovenia, Malta, the Czech Republic, Hungary, Poland, Estonia, Slovakia, Latvia, and Lithuania participate.
It seeks to promote trade between Mexico and the countries of the European Union, as well as to establish a legal framework for economic relations in both blocks.
The TLCUEM’s goals are eliminating tariffs for most products and protecting intellectual property, competition, transparency, and economic cooperation.
Free Trade Agreement Mexico – European Free Trade Association (EFTA). The Mexican trade agreement was signed in 2001 by four European countries: Iceland, Liechtenstein, Norway, and Switzerland, to strengthen the relationship between the signatories in political and economic terms.
Mexico-Israel Free Trade Agreement. This accord was signed in 2000 to intensify trade and the economy by easing taxes and import restrictions from both countries.
Mexico-Uruguay Free Trade Agreement. Its purpose is regional economic integration and to constitute a more extensive and secure market for goods and services produced in their territories.
Mexico-Panama Free Trade Agreement. This Mexican trade agreement was signed on April 3, 2014, and entered into force in July 2015.
This agreement has worked on the country’s economic integration with Central America, reinforcing legal security in international transactions and consolidating new markets for Mexican exports.
- Another relevant agreement is the FTA with Central America signed in 2011 between Mexico and Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.
The signing gave way to an agreement with better conditions and a balance between commercial commitments, the expansion of world trade, and international cooperation.
- There is also the relationship between Mexico, Peru, Colombia, and Chile through the so-called Pacific Alliance, in which thirty-two observer countries participate.
The four nations account for 38% of the GDP of Latin America and the Caribbean. This makes it a very beneficial cooperation between the signatory nations. Only in 2010, this group exported close to 445 billion dollars worth of goods.
- Likewise, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TIPAT), or CPTPP for its acronym in English, is in force.
This agreement was concretized among eleven Pacific nations, including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, with some Asian and American regions.
The group of countries accounts for more than 14.9% of world trade and 13.5% of GDP. Hence, Mexico maintains the FTA with several nations individually.
Benefits of Mexican trade agreements
Mexico’s trade agreements are profitable for the nation’s economy and companies and consumers.
As mentioned at this blog post’s beginning, foreign trade is key to development. Hence, Mexico has signed to date 14 trade agreements that promote the exchange of goods and services with other countries.
Among the benefits of Mexican trade agreements are:
- Cost reduction for consumers, company market expansion, increased competitiveness, and job creation.
- Lower tariff barriers can hinder the flow of goods and services.
- Prívate investment promotion.
- The mprovement of the regulations that protect intellectual property, electronic commerce, and employability.
- Greater options for goods and services in a country for consumers and companies.
- The further promotion of business competitiveness by achieving the development of innovative technologies and practices.
- The strengthening of regional economic integration.
- The opening of greater access to broader markets.
- The promotion of competitiveness and access to a greater variety of products and services.
- Support for the removal of standards and trade barriers.
- The promotion of the exchange of technology.
- The creation of long-term stability for investors, which can also promote jobs in export industries.
In their totality, Mexican trade agreements have generated a significant impact on the country’s economy and its relations with other nations.
Although the agreements have received some criticism and faced some challenges, they have generally strengthened new trade and investment opportunities through the negotiation of positive commercial terms between Mexico and its economic partners.
