The Mexican free trade agreements with the US and other countries around the globe have contributed to the country’s status among industrialized nations as an ideal base for export operations.
In the 1990s, Mexico signed the North American Free Trade Agreement, and became one of only two countries in the world to have unfettered, duty-free access to US consumer markets. But Mexico did not stop there its pursuit of free trade agreements at that time. Over the past two decades, Mexico has maneuvered into the unique position of successfully negotiating over forty free trade agreements with countries the world over – Mexican free trade agreements number more than those negotiated by both the US and China – combined. It’s participation in the newly minted Trans Pacific Partnership will further solidify Mexico’s position as a leader in world free trade.
Mexico’s strategic position globally as well as in the North American market, has led many manufacturers worldwide to shift operations to Mexico as an export base to the largest consumer market in the world, and also to additional markets extending beyond the borders of the US. In no other manufacturing sector is this opportunistic trend more apparent than in the automotive sector.
Automotive Export Manufacturing in Mexico
Since Mexico signed NAFTA and began pursuing FTAs with countries worldwide, vehicle production in the country has more than tripled. Approximately 80% of the vehicles manufactured in Mexico are made for export to other countries. Mexico is now one of the largest automobile producers in the world. Major automotive companies worldwide have established operations in Mexico to take advantage
of their strategic position in the global economy – This include global OEMs such as:
Additionally, automotive parts made in Mexico accounted for 34% of all auto components imported into the US during the calendar year 2014. In comparison, China wasn’t even a close second accounting for only 13% of such parts. Since 2008, Mexican imports of auto parts to the US are up by 86%.
Foreign Manufacturers Turning to Mexico
It comes as no surprise that manufacturers in other sectors are also eying the NAFTA’s southernmost signatory nation as an ideal base of operations for manufacturing export goods because of well-structured Mexican free trade agreements . Foreign investment in Mexico is growing. Today this is true even in industries that, until the recent past, have typically been dominated by China.
Mexican exports of electronics tripled to $78 billion between 2006 and 2013. In a geographic shift, even Asian companies are choosing Mexico as a platform for their production. Sharp, Sony, and Samsung now account for approximately one third of investment in Mexican electronics manufacturing. In fact, the single largest investor in Chinese markets, Taiwanese electronics-manufacturing giant Foxconn Technology Group, is the second largest exporter in Mexico, second only to General Motors.