Mexico in the International Trade

From the time when the North American Free Trade Agreement or NAFTA was implemented in 1994, there was a resurgence of Mexico in the international trade. Trade between the country, Canada as well as the United States has tripled.

Mexico is regarded as the world’s 12th largest economy. Around 90% of trade in Mexico operates under agreements on free trade with more than 30 countries. At present, approximately 90% of exports from Mexico enter Canada and the U.S and around 65% of its imports are sourced from the two countries.

Mexico in the international trade is among the friendliest countries for trading. Among the regions as well as countries with agreements on free trade with Mexico are the European Union, Columbia, Israel, Bolivia, Venezuela, Costa Rica, Chile, Nicaragua, Guatemala, El Salvador, Honduras, Brazil, Argentina, Paraguay, Uruguay, Liechtenstein, Iceland, Japan, Norway and Switzerland.

China and the U.S are the primary sources of imports of Mexico. Mexico in the international trade offers first-fate opportunities for U.S companies who are interested in expanding into new location or tapping into new markets such as textile, food, beverage and clothing as well as other durable products like electronics, appliances, automobiles and furniture.

In 2000, 31 Mexican states corresponded to the economic arrangement parallel to that of China at present; high-volume production through low-cost capital for manufacturing. Most of such manufacturing has however shifted to China. Mexico’s niche at present transformed a manufacturing center for product of low to average volumes with high size and complexity. These include network communications, medical equipment as well as aviation or automotive components.

Mexico isn’t the country with the lowest production cost since it costs no less than four times more compared to Chinese labor. Nonetheless the counterbalance lies in shorter delivery time, cheaper shipping as well as the capacity for people of businesses in North America to communicate with facilities for production that are in a similar time zone, which is very much favorable.

Benefits of Mexico in the international trade include:

• Active development and implementation of laws on intellectual property to safeguard sophisticated ventures subcontracted for production in the country
• Lesser hidden costs. For example, cheaper shipping and minimal payments for inbound duty.
• Wait time for delivery is generally shorter compared to China
• A good number of representatives on site are English speaking or are employed in subsidiaries based in the U.S. A good number of products from Mexico are warehoused in the U.S.
• Culture wise, Mexicans are honest and open business people. Nonetheless they refrain from directly stating “no”—just like in Chinese culture. Usually, “no” can equate to “later” or “maybe.” You need to put this into consideration when discussing contract terms or asking for particular capabilities from factories and suppliers.

For more related information see: Comercio