Since its entrance into the NAFTA with its North American partners the United States and Canada in 1994, Mexico has pursued a strategic goal of extending free trade agreements in order to position itself to benefit from customs and duty preferences in its trade with as many nations as possible.
Not only has this served to make Mexican exports more competitive worldwide, but has also resulted in Mexico’s ability to attract foreign direct investment, or FDI. Mexico’s network of free trade agreements factored into the decision making processes of automotive assemblers such as Audi, BMW, Nissan and Hyundai to expand existing and install new capacity in the nation. Mexico’s position of customs and duty preferences with a total of 44 countries enables these automotive manufacturers, and those of other industries with operations in Mexico, to export to third countries more competitively.
As a part of the Pacific Alliance trade group, that includes Mexico, Colombia, Chile and Peru, Mexico is the leader. The Pacific Alliance was established in 2012 for the purpose of:
- Increasing trade between the signatories to the trade agreement. Tariffs on ninety percent of the trade between the four nations were eliminated in 2013.
- Bringing about closer coordination and integration in financial markets. Financial agreements made as a result of the Pacific Alliance trade accord have made it easier for the participant nations to make cross borders mergers and acquisitions.
- Creating reciprocal relationships with other regional trading blocs. In addition to the agreements already concretized with the United States and the EU, Pacific Alliance trade partners also seek to reach similar collective groups such as the EU, ASEAN and others.
- Facilitating the flow of people. Relevant provisions of the Pacific Alliance trade agreement were designed for the purpose of easing the obstacles in existence to the greater movement of individuals between the four member nations, especially workers and students.
Although the Pacific Alliance is comprised of full members, Mexico, Colombia, Chile and Peru, a host of nations including Austrialia, Belgium, Canada, China, France, Portugal, South Korea, Spain, the US, France, Japan and New Zealand hold “observer” status. As observers the aforementioned nation can attend meetings and voice opinions as regard the actions of the four member nations. Most recently, Costa Rica began the process of becoming a full member of the group in February of this calendar year.
As the source of sixty percent of all Latin American exports, Mexico clearly leads the Pacific Alliance.