International trade regionalism in light of the TPP
Earlier this month, five years of discussion among twelve Pacific-Rim countries concluded with the finalization of the Trans Pacific Partnership (TPP), a trade agreement that many hope will expand the benefits that are derived from minimally restricted trade, and encourage greater partnership and integration among many Pacific Rim economies.
In light of this historic agreement only a year after Canada, Mexico, and the US celebrated 20 years of NAFTA, now is an apt time to call for a new and enhanced international trade regionalism among the NAFTA countries in a trilateral partnership to compete together more effectively as a coherent and cohesive unit.
THE NAFTA was a first-generation free-trade agreement that has created a deep level of cooperation, particularly between Mexico and the US. Among the three NAFTA nations, trade now flows at around 400% of the pre-accord levels that were registered in 1993. Nowhere is this more obvious than in what the trade data between Mexico and the US clearly demonstrate. Two decades into NAFTA, Mexico was ranked as the second largest export market for US goods in 2013 – accounting for 14.3% of all US exports. In fact, Mexico receives more products from the United States than does China, Japan, and Taiwan combined, as well as more than the economies of the UK, Germany, Belgium, Italy, and the Netherlands when counted as a single unit. On the import side, Mexico is also the second greatest importer to the US, having grown over 600% since the implementation of NAFTA in 1994. The international trade regionalism that has characterized the US-Mexico economic relationship for a bit more than twenty years has produced palpable and visible results.
NAFTA has led Mexico and the other NAFTA countries to look ahead, not only in terms of domestic competitiveness, but as members of a regional cooperative of sorts. As the three nations learn to further integrate their economic strategies, they will become an even more impressive dynamo, as a unit, on a global scale. It is in light of the new context of international trade regionalism that we must view the future potential of the TPP agreement for North America, as a whole.
New International Trade Regionalism
The conclusion of negotiations for the Trans Pacific Partnership provides an opportunity to envision the next step in the evolution of such trade agreements. Nations may now better perceive their role in a global economy, not only as individual actors, but as vital contributing economic members of and participants in their respective regions. As Mexico struggles to finalize domestic reforms long overdue, the country is at a watershed moment, balancing internal improvements with the opportunity to contribute to the regional collective in dealings with lucrative and promising Pacific-Rim markets. The three NAFTA nations have experimented with hub-and-spoke and dual-bilateral approaches, yet the advent of the TPP agreement may well be the moment for Mexico and Canada to capitalize on their synergies with the US to cement a long-term partnership in the vein of a new international trade regionalism that equally values the distinct qualities of each member nation and their capabilities to produce and approach new markets as an integrated unit.