Mexico Bolsters Free Trade with Central America

On November 22 Mexico signed a free trade agreement with the Central American states of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. At the signing ceremony in San Salvador, El Salvador, Mexican foreign secretary Patricia Espinosa said: “This new agreement is very innovative because it fosters dialogue among companies, private investors and governments. I cannot stress enough that this is very good news for Mexico and the many Central American countries that are signing.”

Espinosa’s enthusiasm notwithstanding, the immediate effects of the pact will be small: Mexico already has bilateral free trade agreements with each of the Central American nations. Moreover, the Central American states already have privileged access to the United States, the chief destination of their exports, through a trade bloc known as DR-CAFTA that came into effect in 2009. Still, the Mexico-Central America deal is more ‘comprehensive’ than the pre-existing bilateral treaties Mexico signed, meaning it covers more areas of trade and reduces existing trade barriers within Central America.

Earlier this year, Mexico also announced its willingness to launch a trade agreement with Colombia, Chile and Peru. Two weeks ago, Mexico—along with Canada—formally expressed interest in joining the Trans-Pacific Partnership (TPP), a nascent trade bloc that cobbles together Asian and American Pacific nations. The United States is a TPP member but China is not, so the far-flung grouping may enable its smaller members to boost manufactured exports by skirting the headwind of Beijing’s trade agenda. In this light, the pact with Central America can be seen as part of a Mexican attempt to revive free trade across Latin America.

Disclaimer: This article is part of my contribution to Mexico Today, which compensates me. I conduct my own research, and the views expressed here are entirely my own.