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Mexican trade surprised on the upside in the first quarter, according to a new report from Maersk Line. Mexico will see the strongest growth in imports within TPP as a result of the US exit, according to a new Canada West Foundation report. (Photo: Cofemer)
Wednesday, June 14, 2017
Trade Talk

Mexico Benefits from TPP Without US


Mexico will gain most among TPP members from US exit.

BY LATINVEX STAFF

Mexico, Chile and Peru will benefit from the US exit from the Trans-Pacific Partnership agreement, according to a new report from the Canada West Foundation.

The report, The Art of the Trade Deal: Quantifying the benefits of a TPP without the United States, has new modelling that shows there are economic gains for every TPP country, even with the U.S. out of the pact.

The TPP was signed by 12 countries in February last year, but US President Donald Trump in January this year signed a decree to exit the pact. The remaining 11 countries are Australia, Brunei-Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Mexico will see a dramatic 19.19 percent increase in imports from TPP partners by 2035 as a result of the US exit compared with 0.35 percent change if the US had remained in TPP, according to the report, which was co-authored by Carlo Dade, Director of the Trade & Investment Centre at the Canada West Foundation, and Dan Ciuriak of Ciuriak Consulting.

That’s higher than any other TPP country. Canada, which will see the second-highest increase, is expected to boost imports from TPP countries by 5.4 percent versus 0.34 percent if the US had remained.

Mexico will also be among the top three beneficiaries in terms of import growth with all trade partners, going from an estimated 0.05 percent growth to 0.59 percent growth.

Mexico will see a 3.12 percent increase in exports to TPP partners by 2035 as a result of the US exit compared with 0.05 percent change if the US had remained in TPP, the report says.

That’s better than the average 2.4 percent increase for all the remaining TPP members and the fourth-best result among the countries.

Mexico will likely see the best result when exports to all countries – not just TPP members -- are calculated. The Canada West Foundation estimates Mexico will see a 0.47 percent increase – the highest among the remaining TPP countries. That compares with a 0.12 percent increase if the US had remained.

Meanwhile, Peru is expected to see a 2.86 percent increase in imports from TPP countries without the US compared with a 0.15 percent decline if the US had remained. Peru will also likely see a 0.34 percent increase in exports to TPP countries without the US in the TPP versus a 0.38 percent decline if the US had remained.

Chile will also improve its trade somewhat, according to the Canada West Foundation report.

MEXICO MARITIME TRADE GROWS

Mexican trade surprised on the upside in the first quarter, according to a new report from Maersk Line, the world’s largest shipping line.

Total Mexican imports and exports via maritime trade across all shipping lines rose 13 percent in the first quarter. Asian and European imports gained 8 percent and 13 percent and exports increased 34 percent and 13 percent respectively in the same markets, totaling nearly 593,037 TEUs.

However, Maersk Line believes it is unlikely Mexico can maintain this fast pace of growth and is keeping its 2017 growth forecasts of 3 percent for exports and 7 percent for imports.

“We remain conservative about this year’s trade performance as the current pace in activity is very difficult to maintain,” Mario Veraldo, Managing Director for Maersk Line in Mexico and Middle America, said in the report. “There are numerous factors limiting growth from higher Banxico rates slowing GDP to a stronger peso impacting competitiveness.

TEXAS GROUPS LAUNCH NAFTA CAMPAIGN

The Texas Association of Business, Texas Business Leadership Council, and The Borderplex Alliance announced the launch of a business-led, statewide effort to advocate in support of NAFTA, encouraging modernization of the two-decades old free trade agreement while maintaining the core benefits of this critical alliance for Texas, the U.S., Mexico and Canada.

The Texas Mexico Trade Coalition will bring together businesses across the state and Mexico, and industry sectors to carry a message to Washington that "NAFTA works, and it's time to make it work even better."

 

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