The diversification of Mexican export markets can represent an economic insurance policy against ups and downs registered by dominant and traditional trading partners.
It is a quantitatively demonstrable fact that the United States is, by far, Mexico’s largest trading partner. In a recent article published on the website Entorno Inteligente, Carlos Serrano, the chief economist for BBVA Bancomer, pointed out that “between 70% and 80% of Mexico’s merchandise sales to export markets” go to one buyer, the US. Given this reality many see Mexico’s signing on to the Trans Pacific Partnership, or the TPP, as a means by which Mexican export markets can diversify. Recent data reveals that the opportunity to participate with TPP countries on favorable terms is a circumstance upon which Mexican exporters have much room to capitalize. Between January and September of the present year, excluding the United States, only 9% of Mexico’s export trade was conducted between itself and TPP countries.
Current trends indicate that the aforementioned number will trend in the direction of positive growth. For example, while during the same January to September time frame mentioned above Mexican exports to the United States fell by 1.9%, shipped product volume to the remainder of Trans Pacific Partnership grew, albeit at a very modest rate of .9%. Some examples of the January to September expansion of trade with TPP partners when examined on a bilateral basis include a:
- 15% increase in trade with Australia;
- 12.3% boost in trade with Japan;
- 9.9% rise in commercial exchange between Mexico and New Zealand.
An economic insurance policy
Trade experts see these developments as favorably influencing the diversification of Mexican export markets. Most agree unequivocally that having preferential access to the nations that make up the Trans Pacific Partnership will provide some degree of insulation against the occasional economic dips that its largest trading partner and consumer of its exports, the United States of America, experiences from time to time.
To put things into perspective, in terms of dollars, concerning the room for potential growth in sales and opportunities to diversify Mexican export markets, during the period January to September 2015, the total value of Mexican goods imported by the United States totaled over US $240 billion. This number dwarfed the approximately US $14.3 billion dollars of merchandise that was exported to the remainder of the Trans Pacific Partnership nations.