Mexico’s seeks to expand its free trade network by negotiating agreements with two new partners

The Mexican government is the planet’s most aggressive in terms of actively and consistently increasing the geographic scope of its free trade network. The economic policy that it has pursued for a generation has been guided by the premise that free trade is an overall positive in terms of the promotion of the country’s economic growth and overall social well-being.

Since the 1990s, Mexican government officials and economic policymakers have embraced the view that the edification of an expanded free trade network is good economic policy due to the the benefits that international commerce that is unimpeded by tariffs, duties and other non-financial barriers accrue to those particiate in such arrangements. Some benefits of an expanded free trade network include:

  • Comparative advantage driven efficiencies – When each partner country or region does what is does best, it does so most efficiently. Consumers in participant nations have access to goods produced under optimal conditions, which results in favorable pricing. This, of course, is a clear economic gain for much of the population;
  • Increased exports – It follows that the comparative advantage that enables partners in free trade to concentrate on producing items efficiently and cost-effectively boosts their exports and export related income, thereby generating export related sources of employment in direct production activities and related services.
  • Reduced trade barriers – Lowering or eliminating tarriff and non-tarriff barriers to the free flow of good and services between two or more countries increases volumes of trade between nations.

Because of the aforementioned and a significant number of ancillary reasons,  officials from Mexico and Turkey met this past July 13th to begin the first round of talks for the purpose of hammering out a comprehensive free trade agreement between the two nations. The goal of a this move to expand Mexico’s free trade network by engaging with Turkey is to boost commercial trade volumes and gain preferential access to each others goods and services, as well as to promote increased investment between the two World Trade Organization members.

The present state of economic activity between the two nations can be summarized by the following information:

  • Between 1999 and 2013 commerical transactions between the future free trade partners totaled a modest $US 885 million.
  • As of 2013, Mexican exports to Turkey were valued at $US 358.1 million. The principal Mexican goods imported by Turkey were wheat, telephones and automobiles.
  • During the aforementioned period, Mexican imports from its future free trade partner totaled $US $526.9 million. Textile products, as well as those made of copper and aluminum were those most consumed.

Officials on both sides of the Mexico – Turkey Free Trade Agreement see significant gains to be made through a successful completion of negotiations. Mexico sees Turkey as desirable economic partner because it will be able to access its growing domestic consumer market, and cost-effective labor market. A free trade network that includes Turkey will also enable Mexico to make investments in the country in a streamlined and less cumbersome fashion, as well as enable Mexican businesses to leverage duty and tariff advantages built into free trade agreements that have been put into place between Turkey and is economic partners. From the Turkish perspective, Mexico is an attractive economic partner for its growing domestic consumer market, as well. Turkey also sees a FTA agreement with Mexico as a plus, in that it will have greater and more favorable access to services provided by Mexico’s well-developed financial sector, as well as will gain duty free access to Mexico’s substiantial supplier base and international distribution system.

In addition to kicking off talks to expand its free trade network by adding Turkey, Mexican officials also recently announced that free trade agreement negotiations with Jordan are scheduled to begin in August.