Why is NAFTA renegotiation so important for Mexico.

             

By: Francisco De Rosenzweig M. 

     Established in 1994, by the United States, Mexico and Canada, the NAFTA agreement is one of the most important economic agreements in the world as it represents around the 16% of the global commerce each year.

        Considering that the NAFTA members exchange products worth 2600 million dollars each day, the fact that Mexico is the United States´ second most important Trade partner and Canada the third one, as well as that most of the investments in Mexico come from this countries, we can understand how important it is for Mexico and the other members of the agreement to preserve and do a good renegotiation of the NAFTA agreement. 

       While some people believe that Mexico should diversify its commerce more, especially as we have access to 60% of the world’s GDP through commercial agreements, the biggest part of our commerce still relies in North America. Although many agreements have been signed recently such as the Pacific Alliance agreement or the just signed TPP11 agreement that will open even more markets to Mexico in the future years in order to expand its commerce and depend less in the NAFTA. 

         On one hand it is certainly true that diversifying our commerce will help us have more competitive market options and just don't rely the biggest part of our economy in an only agreement or region, but on the other hand I still believe that the NAFTA agreement will continue to be the most important agreement for Mexico due to the proximity between the countries, the longstanding relationships as well as the fact that since the agreement entered into force the balance of trade with the United States has been positive for Mexico except for the first year while with Canada it has varied during the years. 

        Finally, taking into account that almost 85% of our exportations go into this region, it is crucial for Mexico to reach a better agreement or at least something similar. Despite I do believe that Mexico should diversify its commerce more in the near future, I also think that it is really important that we don't lose an agreement worth 108 million dollars per hour that is not only important economically, but politically and culturally as well, as the three countries have had a shared history for many years.