The Trans-Pacific Partnership and Mexico
Provided that the treaty is a solid one, the Trans-Pacific Partnership and Mexico may make a good economic pairing
As negotiations progress among the possible signatories to the Trans-Pacific Partnership (TPP), it seems likely that the US, Mexico and the number of other countries along the Pacific rim that are part of the discussions will soon enter into an agreement that seeks to, among other things:
- lower tariffs on trade between partners;
- establish uniform intellectual property protections;
- standardize labor and environmental laws;
- create an investor-state dispute settlement mechanism.
The formally stated goal is to “enhance trade and investment among the TPP partner countries, to promote innovation, economic growth and development, and to support the creation and retention of jobs.” Should an agreement that achieves these goals eventually be crafted, the Trans-Pacific Partnership and Mexico will make a good match.
Mexico has been an interested party, and an active participant in the talks for a number of years. While the TPP has its opponents, many of those in favor of signing the accord argue that the agreement will result in a net benefit for Mexico. These advocates fear that Mexico’s economic growth has stagnated to some degree as of late, and feel the TPP might prove to be the much-needed “shot in the arm” that will reinvigorate the country’s economic progress. Most analysts seem to agree that, in general, there are three primary areas the agreement will impact Mexico.
1. Strengthened trade with the US – Approximately 70% of Mexico’s exports go to the US. Likewise, many of the other countries negotiating the TPP are direct competitors for US trade dollars. Maintaining strong ties with the United States is vital to Mexico. Such ties would be in danger of eroding, if the US entered a trade agreement of this magnitude, and the Trans-Pacific Partnership and Mexico were not linked.
As a member of the TPP, Mexico’s weak Peso and close proximity to the US mean a continued and strengthened economic partnership will, in all probability, be the result of the agreement. It has been likened to an opportunity to renegotiate the North American Free Trade Agreement without the difficulty of actually reopening the agreement.
2. Enhanced energy market – Mexico has recently overhauled its energy market structure and investment rules, ending the state monopoly on producing and selling sources of power. However, in spite of the country’s vast resources, the results of this reform have been seen to be lagging. Sales of oil and gas fields are not catching on as rapidly as had been hoped would be the case. This may stem from the lack of infrastructure Mexico faces, in addition to low oil prices worldwide. As a result of entering into the Trans-Pacific Partnership, the possibility becomes greater that Asian
countries may partner with Mexico to build up infrastructure in this vital sector. Additionally, increased economic activity resulting from the TPP could possibly increase oil prices marginally.
3. Stricter IP laws – Since the country has balked at less stringent agreements relating to intellectual property protections, some experts are concerned the Trans-Pacific Partnership regulations on IP are so strict as to pose a potential problem for ratification. However, should Mexico continue forward with the agreement and sign on, the rules will be far more in line with those of other advanced nations than with the country’s current IP regime.