Trade, T-MEC and Presidential Reforms | Sofia Ramirez Aguilar

Sofia Ramirez Aguilar

For those who doubt the reality of North American trade integration, Mexico has become the United States’ (US) major trading partner for the first time in history through 2023. Total trade volume –import and export– Mexico exchanged $738 billion (millions of dollars) and Canada was just below with $712 billion.

But what really matters is what the US bought from Mexico, because that’s what coastal installation: Almost $439 billion, 88% of everything we sold to the world in goods in 2023.

In percentage terms, 15.5% of the goods the US imported at the end of 2023 came from Mexico.exceeding China and Canada, maintaining this share for four quarters of the year and making a significant jump compared to Mexican exports in 2022.

However, Mexico and much of the advanced economy lost economic dynamism late last year. As for Mexico, although the annual balance was positive, between the second and third quarters Mexico lost 0.2 percentage points in import share what the US did; and although Mexico rebounded in the fourth quarter, Mexico again ranked below Canada in this area in December. A strong end to the year for Mexican trade, but not without some shocks.

We also feel this loss of dynamism in other indicators commercial linkas with zero growth secondary sector – within which production is allocated – between the third and fourth quarters of 2023. We have a good geographical position, but not everything has been decided yet.

An unfortunate confluence of factors led to us losing our competitiveness. Insecurity, legal changes in the electricity sector and severe drought across much of the country, particularly in regions where increased private investment was announced in 2023, have impacted our export performance.

Additionally, not all supply chain movements that leave China reach Mexico. That is, what China loses, Mexico does not gain in equal proportion. We’ll see, in 2023 imports that the US made from China They fell nearly 20%, but Mexico was only able to increase its U.S. sales by less than 5%, Gabriela Siller, director of economic analysis at Grupo Financiero BASE, noted in a report on X.

So on February 5, we received a package of 18 constitutional reforms sent by the Federal Executive Branch, which directly affect the system of democratic checks and balances, in economic competition and technical autonomy in the face of political-electoral interests.

This reform package does not contain fiscal impact assessments (CIEP in X) in terms of the Federal Budget and Fiscal Responsibility Act, which is detrimental to the viability of the system. Public finance and the provision of related public services such as daycare centers, kindergartens, full-day schools or the supply of medicines and medical services.

Because, in essence, it is not enough to raise the right to receive transfers or government services to constitutional rank, but translating constitutional text into public policy requires resources.

Moreover, in a broad sense T-MEK – and with respect to the remaining commercial instruments that Mexico has signed with third countries – some of these reform initiatives could lead to lawsuits for violation of specific aspects of the treaty. In particular, that Mexico cannot guarantee the conditions economic competition investors and companies in the US and Canada, as there will be no regulators with the autonomy and independence from political interests to ensure competition in key sectors such as telecommunications.

In this context of challenges and opportunities, there will be a review of the terms and outcomes of the USMCA in 2026 to that point. Based on this review, measures and mechanisms for ratification of the treaty in 2030 will be determined. Nothing insignificant, everything at stake is quite obvious: tradeeconomic growth and social progress, especially in Mexico.

The T-MEC review in 2026 is not being done in a hurry. Although media attention in 2024 will be focused on election fight in Mexico and in the United States, and while the terms of the bilateral relationship appear to be eroding due to discussions over immigration and fentanyl trafficking, this year we should prepare to table trade issues that we want to discuss with the new federal administrations in 2025 and thus achieving a revision of the treaty with clear arguments and positions.

North American triangular trade has had a huge impact not only on wealth, but also on employment, on the development of strategic sectors such as the mining of critical metals, medical equipment, semiconductors and microchips, and on cross-cutting issues such as clean and sufficient water and electricity. . We’ve documented all of this in the North American Project, an initiative that aims to recognize the progress of 40 years of trade openness in the region and chart a path to 2026, 2030 and even 2050.

Let’s not underestimate the importance of commercial exchange in North America. These three economies—Mexico, the United States, and Canada—are among the world’s most diversified and largest economies, together accounting for nearly a third of global GDP. And Mexico’s share has grown from 7% of global purchases made by the United States in 1994 to more than 15% in 2023.

The author is the director of the organization Mexico, how are we doing?
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